-----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, Bc5FE5eVi/SNTAFApxcn6/8j8Uoc0dtUKTMO9NG3M+FkDPbx8dyiLh/Dm0e+zHS2 Xw5LTbf2XOEs2f0Qaju8Rg== 0000950129-01-001209.txt : 20010307 0000950129-01-001209.hdr.sgml : 20010307 ACCESSION NUMBER: 0000950129-01-001209 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20010305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIM INTERNATIONAL FUNDS INC /MD/ 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: 497 SEC ACT: SEC FILE NUMBER: 033-44611 FILM NUMBER: 1560790 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 MUTUAL FUNDS DATE OF NAME CHANGE: 20000323 FORMER COMPANY: FORMER CONFORMED NAME: AIM INTERNATIONAL FUNDS INC DATE OF NAME CHANGE: 19920909 497 1 h83699ce497.txt AIM INTERNATIONAL FUNDS, INC. - 497(C) 1 AIM ASIAN GROWTH FUND - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - AIM Asian Growth Fund seeks to provide long-term growth of capital. AIM--Registered Trademark-- PROSPECTUS MARCH 1, 2001 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- 2 --------------------- 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 Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 3 --------------------- 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 Directors 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 4 --------------------- 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, and a significant portion of the fund's return may be attributable to its investment in IPOs, which may have a magnified impact due to the fund's small asset base. As the fund's assets grow, it is probable that the effect of the fund's investment in IPOs on its total returns 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 5 --------------------- 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. Total return information in the bar chart and table below has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which had a magnified impact on the fund due to its small asset base. There is no guarantee that, as the fund's assets grow, it will continue to experience substantially similar 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 Return - ----------- ------ 1998.................................... -8.54% 1999.................................... 67.98% 2000.................................... -22.44%
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, 2000) 1 YEAR INCEPTION DATE - --------------------------------------------------------------------- Class A (26.71)% (0.82)% 11/03/97 Class B (26.85) (0.75) 11/03/97 Class C (23.61) 0.21 11/03/97 MSCI AC Asia Pacific Free ex-Japan Index(1) (29.97) (2.41)(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 6 --------------------- 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 0.76 0.81 0.81 Total Annual Fund Operating Expenses 2.06 2.76 2.76 Fee Waivers and Reimbursements(2) 0.14 0.14 0.14 Net Expenses 1.92 2.62 2.62 - -------------------------------------------------------
(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) Waivers have been restated to reflect current agreements. The investment advisor has contractually agreed to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the total operating expenses of Class A shares to 1.92% (e.g. if AIM waives 0.14% of Class A expenses, AIM will also waive 0.14% of Class B and Class C expenses). You may be charged a transaction or other fee by the financial institution managing your account. 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 $748 $1,160 $1,597 $2,808 Class B 779 1,156 1,659 2,922 Class C 379 856 1,459 3,090 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $748 $1,160 $1,597 $2,808 Class B 279 856 1,459 2,922 Class C 279 856 1,459 3,090 - ----------------------------------------------
4 7 --------------------- 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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 2000, the advisor received compensation of 0.86% 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 are - - Shuxin Cao, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1997. Prior to 1997, Mr. Cao was an international equity analyst for Boatmen's Trust Company. - - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1997 and has been associated with the advisor and/or its affiliates since 1989. - - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since its inception in 1997 and has been associated with the advisor and/or its affiliates since 1990. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM Asian Growth Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions, if any, will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 5 8 --------------------- 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. The Board of Directors of the fund has selected new independent auditors for the fund's current fiscal year. For more information regarding the change in independent auditors, see the Statement of Additional Information. Total return information in this table has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which have had a magnified impact on the fund due to its small asset base. There is no guarantee that, as the fund's assets grow, it will continue to experience substantially similar performance.
CLASS A -------------------------------------- YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997 ------------------ TO OCTOBER 31, 2000(a) 1999(a) 1998 ------- ------- ---------------- Net asset value, beginning of period $10.76 $ 7.69 $ 10.00 - ---------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.07) (0.03) 0.05 - ---------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.01 3.14 (2.36) ==================================================================================================== Total from investment operations (0.06) 3.11 (2.31) ==================================================================================================== Less distributions of dividends from net investment income -- (0.04) -- ==================================================================================================== Net asset value, end of period $10.70 $10.76 $ 7.69 ____________________________________________________________________________________________________ ==================================================================================================== Total return(b) (0.56)% 40.66% (23.10)% ____________________________________________________________________________________________________ ==================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $93,755 $25,420 $ 7,716 ____________________________________________________________________________________________________ ==================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.92%(c) 1.92% 1.92%(d) - ---------------------------------------------------------------------------------------------------- Without fee waivers 2.06%(c) 2.72% 4.88%(d) ==================================================================================================== Ratio of net investment income (loss) to average net assets (0.57)%(c) (0.50)% 0.70%(d) ____________________________________________________________________________________________________ ==================================================================================================== Portfolio turnover rate 64% 142% 79% ____________________________________________________________________________________________________ ====================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $65,936,105. (d) Annualized. 6 9 --------------------- AIM ASIAN GROWTH FUND --------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B -------------------------------------- YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997 ------------------ TO OCTOBER 31, 2000(a) 1999(a) 1998 ------- ------- ---------------- Net asset value, beginning of period $10.65 $ 7.63 $ 10.00 - ---------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.13) (0.01) - ---------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.02 3.16 (2.36) ==================================================================================================== Total from investment operations (0.15) 3.03 (2.37) ==================================================================================================== Less distributions of dividends from net investment income -- (0.01) -- ==================================================================================================== Net asset value, end of period $10.50 $ 10.65 $ 7.63 ____________________________________________________________________________________________________ ==================================================================================================== Total return(b) (1.41)% 39.76% (23.70)% ____________________________________________________________________________________________________ ==================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $39,852 $12,070 $ 3,030 ____________________________________________________________________________________________________ ==================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.67%(c) 2.79% 2.80%(d) - ---------------------------------------------------------------------------------------------------- Without fee waivers 2.76%(c) 3.59% 5.75%(d) ==================================================================================================== Ratio of net investment income (loss) to average net assets (1.32)%(c) (1.37)% (0.18)%(d) ____________________________________________________________________________________________________ ==================================================================================================== Portfolio turnover rate 64% 142% 79% ____________________________________________________________________________________________________ ====================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $30,719,909. (d) Annualized.
CLASS C -------------------------------------- YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997 ------------------ TO OCTOBER 31, 2000(a) 1999(a) 1998 ------- ------- ---------------- Net asset value, beginning of period $10.63 $ 7.61 $ 10.00 - ---------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.13) (0.01) - ---------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.03 3.16 (2.38) ==================================================================================================== Total from investment operations (0.14) 3.03 (2.39) ==================================================================================================== Less distributions of dividends from net investment income -- (0.01) -- ==================================================================================================== Net asset value, end of period $10.49 $10.63 $ 7.61 ____________________________________________________________________________________________________ ==================================================================================================== Total return(b) (1.32)% 39.86% (23.90)% ____________________________________________________________________________________________________ ==================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $6,797 $5,008 $ 686 ____________________________________________________________________________________________________ ==================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.67%(c) 2.79% 2.80%(d) - ---------------------------------------------------------------------------------------------------- Without fee waivers 2.76%(c) 3.59% 5.75%(d) ==================================================================================================== Ratio of net investment income (loss) to average net assets (1.32)%(c) (1.37)% (0.18)%(d) ____________________________________________________________________________________________________ ==================================================================================================== Portfolio turnover rate 64% 142% 79% ____________________________________________________________________________________________________ ====================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $7,166,373. (d) Annualized. 7 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 at the end of the month shares which is eight years after the date on which shares were purchased along with a pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(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 at the end of the month which is seven years after the date on 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 the end of the month which is eight years after the date on 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--10/00 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--10/00 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 Large Cap Opportunities Fund, 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--10/00 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. 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--10/00 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--10/00 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--10/00 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--10/00 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 that trade on days when the AIM Funds do not price their shares, 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 generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may 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--10/00 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 ON THE INTERNET: You can send us a request by e-mail or download prospectuses, annual or semiannual reports via our website: HTTP://WWW.AIMFUNDS.COM - -----------------------------------------------------
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-- --Registered Trademark-- 19 AIM EUROPEAN DEVELOPMENT FUND - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - AIM European Development Fund seeks to provide long-term growth of capital. AIM --Registered Trademark-- PROSPECTUS MARCH 1, 2001 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- 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 Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 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 Directors 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 companies. 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, and a significant portion of the fund's return may be attributable to its investment in IPOs, which may have a magnified impact due to the fund's small asset base. As the fund's assets grow, it is probable that the effect of the fund's investment in IPOs on its total returns 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. Total return information in the bar chart and table below has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which had a magnified impact on the fund due to its small asset base. There is no guarantee that, as the fund's assets grow, it will continue to experience substantially similar 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% 2000 -3.28%
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, 2000) 1 YEAR INCEPTION DATE - ------------------------------------------------------- Class A (8.59)% 27.87% 11/03/97 Class B (8.77) 28.68 11/03/97 Class C (4.89) 29.27 11/03/97 MSCI Europe Index(1) (8.39) 12.11(2) 10/31/97(2) - -------------------------------------------------------
(1) The Morgan Stanley Capital International Europe Index is an unmanaged index that is designed to represent the performance of developed stock markets in Europe. (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 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 0.39 0.44 0.44 Total Annual Fund Operating Expenses 1.69 2.39 2.39 - -------------------------------------------------------
(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. You may also be charged a transaction or other fee by the financial institution managing your account. 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 $712 $1,053 $1,417 $2,438 Class B 742 1,045 1,475 2,553 Class C 342 745 1,275 2,726 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $712 $1,053 $1,417 $2,438 Class B 242 745 1,275 2,553 Class C 242 745 1,275 2,726 - ----------------------------------------------
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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 2000, 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 are - - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty. - - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1997 and has been associated with the advisor and/or its affiliates since 1994. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM European Development Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions, if any, will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes any long-term and short-term capital gains, if any, annually. 5 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. The Board of Directors of the fund has selected new independent auditors for the fund's current fiscal year. For more information regarding the change in independent auditors, see the Statement of Additional Information.
CLASS A ---------------------------------------------- YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997 -------------------------- TO OCTOBER 31, 2000(a) 1999 1998(a) ----------- ----------- ---------------- Net asset value, beginning of period $ 16.42 $ 12.96 $ 10.00 - -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.21) (0.11) (0.08) - -------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 7.38 3.58 3.04 ============================================================================================================== Total from investment operations 7.17 3.47 2.96 ============================================================================================================== Less distributions from net investment income -- (0.01) -- ============================================================================================================== Net asset value, end of period $ 23.59 $ 16.42 $ 12.96 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) 43.67% 26.81% 29.60% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $273,605 $99,148 $76,686 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets 1.69%(c) 1.88% 1.98%(d)(e) - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (0.82)%(c) (0.69)% (0.58)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate 112% 122% 93% ______________________________________________________________________________________________________________ ==============================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include sales charges and is not annualized for periods less than one year. (c)Ratios are based on average daily net assets of $248,209,210. (d)Ratios of expenses to average net assets excluding waivers was 2.15%. (e)Annualized. 6 27 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B ---------------------------------------------- YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997 -------------------------- TO OCTOBER 31, 2000(a) 1999 1998(a) ----------- ----------- ---------------- Net asset value, beginning of period $ 16.20 $ 12.87 $ 10.00 - -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.38) (0.22) (0.18) - -------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 7.29 3.55 3.05 ============================================================================================================== Total from investment operations 6.91 3.33 2.87 ============================================================================================================== Net asset value, end of period $ 23.11 $ 16.20 $ 12.87 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) 42.65% 25.87% 28.70% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $169,614 $67,074 $50,121 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets 2.39%(c) 2.63% 2.72%(d)(e) - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.44)% (1.32)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate 112% 122% 93% ______________________________________________________________________________________________________________ ==============================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c)Ratios are based on average daily net assets of $156,672,483. (d)Ratios of expenses to average net assets excluding waivers was 2.89%. (e)Annualized.
CLASS C ---------------------------------------------- YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997 -------------------------- TO OCTOBER 31, 2000(a) 1999 1998(a) ----------- ----------- ---------------- Net asset value, beginning of period $ 16.21 $ 12.88 $10.00 - -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.38) (0.23) (0.18) - -------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 7.30 3.56 3.06 ============================================================================================================== Total from investment operations 6.92 3.33 2.88 ============================================================================================================== Net asset value, end of period $ 23.13 $ 16.21 $12.88 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) 42.69% 25.85% 28.80% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $54,164 $11,938 $9,639 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets 2.39%(c) 2.63% 2.72%(d)(e) - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.44)% (1.32)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate 112% 122% 93% ______________________________________________________________________________________________________________ ==============================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c)Ratios are based on average daily net assets of $42,288,606. (d)Ratios of expenses to average net assets excluding waivers was 2.89%. (e)Annualized. 7 28 ------------- 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 at the end of the month shares which is eight years after the date on which shares were purchased along with a pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(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 at the end of the month which is seven years after the date on 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 the end of the month which is eight years after the date on 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--10/00 29 ------------- 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--10/00 A-2 30 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, 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--10/00 31 ------------- 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. 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--10/00 A-4 32 ------------- 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--10/00 33 -------------- 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--10/00 A-6 34 -------------- 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--10/00 35 -------------- 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 that trade on days when the AIM Funds do not price their shares, 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 generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may 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--10/00 A-8 36 ----------------------------- 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 ON THE INTERNET: You can send us a request by e-mail or download prospectuses, annual or semiannual reports via our website: HTTP://WWW.AIMFUNDS.COM
- --------------------------------------------------------- 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-- --Registered Trademark-- 37 AIM GLOBAL AGGRESSIVE GROWTH FUND - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - AIM Global Aggressive Growth Fund seeks to provide above-average long-term growth of capital. AIM --Registered Trademark-- PROSPECTUS MARCH 1, 2001 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 APPEAR HERE] INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- 38 --------------------------------- 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 Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 39 --------------------------------- 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 Directors 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 40 --------------------------------- 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% 2000 (21.98)%
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, 2000) 1 YEAR 5 YEARS INCEPTION DATE - --------------------------------------------------------------------------------------------------- Class A (25.69)% 11.11% 13.77% 09/15/94 Class B (25.43) 11.33 14.04 09/15/94 Class C (22.99) -- 6.48 08/04/97 MSCI World Index(1) (13.18) 12.12 12.15(2) 08/31/94(2) MSCI AC World Index(3) (13.92) 11.29 11.58(2) 08/31/94(2) - ---------------------------------------------------------------------------------------------------
(1) The Morgan Stanley Capital International World Index measures the performance of 1,578 securities listed on major world stock exchanges. (2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history. (3) 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. The fund has elected to use the Morgan Stanley Capital International All Country World Index because it more closely reflects the performance of stocks in which the fund invests. 2 41 --------------------------------- 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 0.87% 0.87% 0.87% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.28 0.32 0.32 Total Annual Fund Operating Expenses 1.65 2.19 2.19 - -------------------------------------------------------
(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. You may also be charged a transaction or other fee by the financial institution managing your account. 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 $635 $971 $1,329 $2,337 Class B 722 985 1,375 2,387 Class C 322 685 1,175 2,524 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $635 $971 $1,329 $2,337 Class B 222 685 1,175 2,387 Class C 222 685 1,175 2,524 - ----------------------------------------------
3 42 --------------------------------- 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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 2000, the advisor received compensation of 0.87% 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 are - - Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994. - - 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. - - Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst with Prudential Securities. - - 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 Global Aggressive Growth Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions, if any, will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 43 --------------------------------- 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. The Board of Directors of the fund has selected new independent auditors for the fund's current fiscal year. For more information regarding the change in independent auditors, see the Statement of Additional Information.
CLASS A ------------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------------ 2000(a) 1999(a) 1998(a) 1997(a) 1996(a) ---------- -------- -------- ---------- -------- Net asset value, beginning of period $ 21.95 $ 15.87 $ 17.28 $ 15.76 $ 13.09 - ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss) (0.28) (0.17) (0.10) (0.15) (0.09) - ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) 5.56 6.25 (1.31) 1.67 2.81 ======================================================================================================================== Total from investment operations 5.28 6.08 (1.41) 1.52 2.72 ======================================================================================================================== Less distributions: Distributions from net realized gains (1.36) -- -- -- (0.05) ======================================================================================================================== Net asset value, end of period $ 25.87 $ 21.95 $ 15.87 $ 17.28 $ 15.76 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) 24.27% 38.31% 8.16% 9.65% 20.83% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,103,740 $852,198 $937,587 $1,242,505 $919,319 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets 1.65%(c) 1.80% 1.75% 1.75% 1.83% ======================================================================================================================== Ratio of net investment income (loss) to average net assets (0.96)%(c) (0.95)% (0.55)% (0.88)% (0.62)% ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate 62% 60% 50% 57% 44% ________________________________________________________________________________________________________________________ ========================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include sales charges. (c)Ratios are based on average daily net assets of $1,213,560,798. 5 44 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B ------------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------------ 2000(a) 1999(a) 1998(a) 1997(a) 1996(a) ---------- -------- -------- ---------- -------- Net asset value, beginning of period $ 21.35 $ 15.52 $ 17.00 $ 15.58 $ 13.02 - ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss) (0.42) (0.27) (0.19) (0.24) (0.17) - ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) 5.41 6.10 (1.29) 1.66 2.78 ======================================================================================================================== Total from investment operations 4.99 5.83 (1.48) 1.42 2.61 ======================================================================================================================== Less distributions: Distributions from net realized gains (1.36) -- -- -- (0.05) ======================================================================================================================== Net asset value, end of period $ 24.98 $ 21.35 $ 15.52 $ 17.00 $ 15.58 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) 23.56% 37.56% 8.71% 9.11% 20.09% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,158,979 $926,972 $947,293 $1,241,999 $807,215 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets 2.19%(c) 2.37% 2.32% 2.30% 2.37% ======================================================================================================================== Ratio of net investment income (loss) to average net assets (1.50)%(c) (1.52)% (1.11)% (1.44)% (1.16)% ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate 62% 60% 50% 57% 44% ________________________________________________________________________________________________________________________ ========================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges. (c)Ratios are based on average daily net assets of $1,302,989,286.
CLASS C ------------------------------------------------------- YEAR ENDED OCTOBER 31, AUGUST 4, THROUGH ----------------------------- OCTOBER 31, 2000(a) 1999(a) 1998(a) 1997(a) ------- ------- ------- ---------------------- Net asset value, beginning of period $21.35 $15.52 $17.00 $18.39 - --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.42) (0.27) (0.19) (0.04) - --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.42 6.10 (1.29) (1.35) ===================================================================================================================== Total from investment operations 5.00 5.83 (1.48) (1.39) ===================================================================================================================== Less distributions: Distributions from net realized gains (1.36) -- -- -- ===================================================================================================================== Net asset value, end of period $24.99 $21.35 $15.52 $17.00 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) 23.61% 37.56% 8.71% 7.56% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $50,908 $16,325 $13,186 $4,676 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets 2.19%(c) 2.37% 2.34% 2.36%(d) ===================================================================================================================== Ratio of net investment income (loss) to average net assets (1.50)%(c) (1.52)% (1.13)% (1.50)%(d) _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate 62% 60% 50% 57% _____________________________________________________________________________________________________________________ =====================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c)Ratios are based on average daily net assets of $41,785,990. (d)Annualized. 6 45 ------------- 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 at the end of the month shares which is eight years after the date on which shares were purchased along with a pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(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 at the end of the month which is seven years after the date on 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 the end of the month which is eight years after the date on 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--10/00 46 ------------- 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--10/00 A-2 47 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, 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--10/00 48 ------------- 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. 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--10/00 A-4 49 ------------- 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--10/00 50 -------------- 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--10/00 A-6 51 -------------- 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--10/00 52 -------------- 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 that trade on days when the AIM Funds do not price their shares, 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 generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may 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--10/00 A-8 53 --------------------------------- 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 ON THE INTERNET: You can send us a request by e-mail or download prospectuses, annual or semiannual reports via our website: HTTP://WWW.AIMFUNDS.COM
- --------------------------------------------------------- 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-- --Registered Trademark-- 54 AIM GLOBAL GROWTH FUND - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - AIM Global Growth Fund seeks to provide long-term growth of capital. AIM--Registered Trademark-- PROSPECTUS MARCH 1, 2001 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- 55 ---------------------- 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 Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 56 ---------------------- 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 Directors 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 57 ---------------------- 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% 2000........................... (22.15)%
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 - -16.94% (quarter ended December 31, 2000). 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, 2000) 1 YEAR 5 YEARS INCEPTION DATE - ------------------------------------------------------------------------- Class A (25.84)% 13.47% 14.84% 09/15/94 Class B (26.45) 13.71 15.11 09/15/94 Class C (23.35) -- 9.69 08/04/97 MSCI AC World Index(1) (13.92) 11.58 11.29(2) 08/31/94(2) MSCI World Index(3) (13.18) 12.12 12.15(2) 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. (3) The Morgan Stanley Capital International World Index measures the performance of 1,578 securities listed on major world stock exchanges. The fund has elected to use the Morgan Stanley Capital International World Index because it more closely reflects the performance of stocks in which the fund invests. 2 58 ---------------------- 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 0.84% 0.84% 0.84% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.29 0.33 0.33 Total Annual Fund Operating Expenses 1.63 2.17 2.17 Waiver(2) 0.03 0.03 0.03 Net Expenses 1.60 2.14 2.14 - -------------------------------------------------------
(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) Waivers have been restated to reflect current agreements. The investment advisor has contractually agreed to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the total operating expenses of Class A shares to 1.60% (e.g. if AIM waives 0.03% of Class A expenses, AIM will also waive 0.03% of Class B and Class C expenses). You may be charged a transaction or other fee by the financial institution managing your account. 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 would 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 $633 $965 $1,319 $2,316 Class B 720 979 1,364 2,367 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 $633 $965 $1,319 $2,316 Class B 220 679 1,164 2,367 Class C 220 679 1,164 2,503 - ----------------------------------------------
3 59 ---------------------- 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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 2000, the advisor received compensation of 0.83% 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 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. - - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1989. - - Benjamin A. Hock, Jr., Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1994 to 1999, he was, among other offices, head of equity research at John Hancock Advisers, Inc. - - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty. - - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994. - - Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1986. - - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM Global Growth Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions, if any, will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 60 ---------------------- 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. The Board of Directors of the fund has selected new independent auditors for the fund's current fiscal year. For more information regarding the change in independent auditors, see the Statement of Additional Information.
CLASS A -------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2000(a) 1999 1998 1997 1996 -------- -------- -------- -------- -------- Net asset value, beginning of period $ 23.43 $ 17.91 $ 16.65 $ 14.20 $ 12.32 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment loss (0.03) (0.10) (0.05) (0.04) (0.01) - ---------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 2.77 6.12 1.74 2.49 2.11 ====================================================================================================================== Total from investment operations 2.74 6.02 1.69 2.45 2.10 ====================================================================================================================== Less distributions from net realized gains (1.34) (0.50) (0.43) -- (0.22) ====================================================================================================================== Net asset value, end of period $ 24.83 $ 23.43 $ 17.91 $ 16.65 $ 14.20 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) 11.52% 34.43% 10.43% 17.25% 17.26% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $796,992 $388,549 $219,050 $178,917 $114,971 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.62%(c) 1.67% 1.70% 1.76% 1.94% - ---------------------------------------------------------------------------------------------------------------------- Without fee waivers 1.63%(c) 1.67% 1.70% 1.76% 1.93% ====================================================================================================================== Ratio of net investment income (loss) to average net assets (0.10)%(c) (0.57)% (0.27)% (0.30)% (0.13)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate 110% 93% 97% 96% 82% ______________________________________________________________________________________________________________________ ======================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include sales charges. (c)Ratios are based on average daily net assets of $620,045,047. 5 61 ---------------------- AIM GLOBAL GROWTH FUND ---------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B -------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2000(a) 1999(a) 1998(a) 1997 1996 -------- -------- -------- -------- -------- Net asset value, beginning of period $ 22.78 $ 17.52 $ 16.39 $ 14.05 $ 12.26 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.23) (0.15) (0.11) (0.05) - ---------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 2.71 5.99 1.71 2.45 2.06 ====================================================================================================================== Total from investment operations 2.54 5.76 1.56 2.34 2.01 ====================================================================================================================== Less distributions from net realized gains (1.34) (0.50) (0.43) -- (0.22) ====================================================================================================================== Net asset value, end of period $ 23.98 $ 22.78 $ 17.52 $ 16.39 $ 14.05 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) 10.95% 33.69% 9.78% 16.65% 16.60% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $806,409 $425,345 $282,456 $224,225 $121,848 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.16%(c) 2.23% 2.26% 2.29% 2.49% - ---------------------------------------------------------------------------------------------------------------------- Without fee waivers 2.17%(c) 2.23% 2.26% 2.29% 2.48% ====================================================================================================================== Ratio of net investment income (loss) to average net assets (0.64)%(c) (1.13)% (0.83)% (0.83)% (0.69)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate 110% 93% 97% 96% 82% ______________________________________________________________________________________________________________________ ======================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges. (c)Ratios are based on average daily net assets of $678,867,468.
CLASS C -------------------------------------------------- YEAR ENDED OCTOBER 31, AUGUST 4, THROUGH ----------------------------- OCTOBER 31, 2000(a) 1999(a) 1998(a) 1997 ------- ------- ------- ----------------- Net asset value, beginning of period $22.79 $17.52 $16.39 $17.39 - ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.23) (0.15) (0.03) - ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 2.70 6.00 1.71 (0.97) ================================================================================================================ Total from investment operations 2.53 5.77 1.56 (1.00) ================================================================================================================ Less distributions from net realized gains (1.34) (0.50) (0.43) -- ================================================================================================================ Net asset value, end of period $23.98 $22.79 $17.52 $16.39 ________________________________________________________________________________________________________________ ================================================================================================================ Total return(b) 10.90% 33.69% 9.78% (5.75)% ________________________________________________________________________________________________________________ ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $88,810 $31,356 $11,765 $1,100 ________________________________________________________________________________________________________________ ================================================================================================================ Ratio of expenses to average net assets: With fee waivers 2.16%(c) 2.23% 2.26% 2.29%(d) - ---------------------------------------------------------------------------------------------------------------- Without fee waivers 2.17%(c) 2.23% 2.26% 2.29%(d) ================================================================================================================ Ratio of net investment income (loss) to average net assets (0.64)%(c) (1.13)% (0.83)% (0.83)%(d) ________________________________________________________________________________________________________________ ================================================================================================================ Portfolio turnover rate 110% 93% 97% 96% ________________________________________________________________________________________________________________ ================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c)Ratios are based on average daily net assets of $67,566,969. (d)Annualized. 6 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 at the end of the month shares which is eight years after the date on which shares were purchased along with a pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(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 at the end of the month which is seven years after the date on 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 the end of the month which is eight years after the date on 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--10/00 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--10/00 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 Large Cap Opportunities Fund, 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--10/00 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. 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--10/00 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--10/00 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--10/00 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--10/00 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 that trade on days when the AIM Funds do not price their shares, 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 generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may 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--10/00 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 ON THE INTERNET: You can send us a request by e-mail or download prospectuses, annual or semiannual reports via our website: http://www.aimfunds.com
- --------------------------------------------------------- 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] - --Registered Trademark-- 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. AIM--Registered Trademark-- PROSPECTUS MARCH 1, 2001 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- 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 Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 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 Directors 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% 2000 ........................................... 0.85%
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, 2000) 1 YEAR 5 YEARS INCEPTION DATE - --------------------------------------------------------------------------------- Class A (3.95)% 2.87% 5.26% 09/15/94 Class B (4.31) 3.05 5.53 09/15/94 Class C (0.55) -- 1.24 08/04/97 Salomon Bros. World Gov't Bond Index(1) 1.59 3.10 5.49(2) 08/31/94(2) - ---------------------------------------------------------------------------------
(1) The Salomon Brothers World Government Bond 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 0.51 0.51 0.51 Total Annual Fund Operating Expenses 1.71 2.21 2.21 Fee Waivers(2) 0.46 0.46 0.46 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 waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the total operating expenses of Class A shares to 1.25% (e.g. if AIM waives 0.46% of Class A expenses, AIM will also waive 0.46% of Class B and Class C expenses). You may be charged a transaction or other fee by the financial institution managing your account. 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 $641 $988 $1,359 $2,398 Class B 724 991 1,385 2,418 Class C 324 691 1,185 2,544 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $641 $988 $1,359 $2,398 Class B 224 691 1,185 2,418 Class C 224 691 1,185 2,544 - ----------------------------------------------
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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 2000, the advisor received compensation of 0.24% 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 are - - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1992. - - Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management. - - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1992. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM Global Income Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions, if any, will consist primarily of ordinary income. DIVIDENDS The fund generally declares dividends daily and pays dividends, if any, monthly. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 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. The Board of Directors of the fund has selected new independent auditors for the fund's current fiscal year. For more information regarding the change in independent auditors, see the Statement of Additional Information.
CLASS A ---------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------- 2000 1999 1998 1997 1996(a) -------- ------- ------- ------- ------- Net asset value, beginning of period $ 9.72 $ 10.60 $ 10.93 $ 10.85 $ 10.74 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.66 0.67 0.71 0.72 0.79 - -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.79) (0.86) (0.27) 0.21 0.25 ==================================================================================================================== Total from investment operations (0.13) (0.19) 0.44 0.93 1.04 ==================================================================================================================== Less distributions: Dividends from net investment income (0.13) (0.61) (0.61) (0.72) (0.81) - -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- -- (0.07) (0.13) (0.12) - -------------------------------------------------------------------------------------------------------------------- Returns of capital (0.55) (0.08) (0.09) -- -- ==================================================================================================================== Total distributions (0.68) (0.69) (0.77) (0.85) (0.93) ==================================================================================================================== Net asset value, end of period $ 8.91 $ 9.72 $ 10.60 $ 10.93 $ 10.85 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(b) (1.38)% (1.94)% 3.95% 9.05% 10.22% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $105,636 $51,077 $58,115 $30,924 $21,926 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.25%(c) 1.25% 1.23% 1.25% 1.25% - -------------------------------------------------------------------------------------------------------------------- Without fee waivers 1.71%(c) 1.67% 1.73% 1.86% 2.02% ==================================================================================================================== Ratio of net investment income to average net assets 6.97%(c) 6.54% 6.38% 6.54% 7.27% ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate 184% 93% 47% 61% 83% ____________________________________________________________________________________________________________________ ====================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include sales charges. (c)Ratios are based on average daily net assets of $71,384,527. 5 78 ---------------------- AIM GLOBAL INCOME FUND ---------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B --------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------- 2000 1999 1998 1997 1996(a) ------- ------- ------- ------- ------- Net asset value, beginning of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $ 10.73 - ------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.61 0.62 0.65 0.67 0.74 - ------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.79) (0.85) (0.27) 0.21 0.24 =================================================================================================================== Total from investment operations (0.18) (0.23) 0.38 0.88 0.98 =================================================================================================================== Less distributions: Dividends from net investment income (0.12) (0.56) (0.55) (0.67) (0.75) - ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- -- (0.07) (0.13) (0.12) - ------------------------------------------------------------------------------------------------------------------- Returns of capital (0.51) (0.08) (0.09) -- -- =================================================================================================================== Total distributions (0.63) (0.64) (0.71) (0.80) (0.87) =================================================================================================================== Net asset value, end of period $ 8.91 $ 9.72 $ 10.59 $ 10.92 $ 10.84 ___________________________________________________________________________________________________________________ =================================================================================================================== Total return(b) (1.94)% (2.37)% 3.38% 8.48% 9.66% ___________________________________________________________________________________________________________________ =================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $60,391 $34,423 $36,525 $25,121 $16,787 ___________________________________________________________________________________________________________________ =================================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.75%(c) 1.75% 1.75% 1.76% 1.75% - ------------------------------------------------------------------------------------------------------------------- Without fee waivers 2.21%(c) 2.17% 2.25% 2.37% 2.53% =================================================================================================================== Ratio of net investment income to average net assets 6.47%(c) 6.04% 5.87% 6.03% 6.77% ___________________________________________________________________________________________________________________ =================================================================================================================== Portfolio turnover rate 184% 93% 47% 61% 83% ___________________________________________________________________________________________________________________ ===================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges. (c)Ratios are based on average daily net assets of $43,754,699. 6 79 ---------------------- AIM GLOBAL INCOME FUND ---------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS C ----------------------------------------------- YEAR ENDED AUGUST 4 OCTOBER 31, THROUGH ----------------------------- OCTOBER 31, 2000 1999 1998 1997(a) ------- ------- ------- -------------- Net asset value, beginning of period $ 9.71 $ 10.59 $ 10.92 $10.76 - --------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.60 0.62 0.66 0.15 - --------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.77) (0.86) (0.28) 0.17 =============================================================================================================== Total from investment operations (0.17) (0.24) 0.38 0.32 =============================================================================================================== Less distributions: Dividends from net investment income (0.12) (0.56) (0.55) (0.13) - --------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- -- (0.07) (0.03) - --------------------------------------------------------------------------------------------------------------- Returns of capital (0.51) (0.08) (0.09) -- =============================================================================================================== Total distributions (0.63) (0.64) (0.71) (0.16) =============================================================================================================== Net asset value, end of period $ 8.91 $ 9.71 $ 10.59 $10.92 _______________________________________________________________________________________________________________ =============================================================================================================== Total return(b) (1.84)% 2.47% 3.39% 2.99% _______________________________________________________________________________________________________________ =============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 1,780 $ 1,884 $ 1,785 $ 242 _______________________________________________________________________________________________________________ =============================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.75%(c) 1.75% 1.73% 1.76%(d) - --------------------------------------------------------------------------------------------------------------- Without fee waivers 2.21%(c) 2.17% 2.22% 2.37%(d) =============================================================================================================== Ratio of net investment income to average net assets 6.47%(c) 6.04% 5.88% 6.03%(d) _______________________________________________________________________________________________________________ =============================================================================================================== Portfolio turnover rate 184% 93% 47% 61% _______________________________________________________________________________________________________________ ===============================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c)Ratios are based on average daily net assets of $1,752,139. (d)Annualized. 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 at the end of the month shares which is eight years after the date on which shares were purchased along with a pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(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 at the end of the month which is seven years after the date on 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 the end of the month which is eight years after the date on 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--10/00 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--10/00 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 Large Cap Opportunities Fund, 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--10/00 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. 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--10/00 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--10/00 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--10/00 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--10/00 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 that trade on days when the AIM Funds do not price their shares, 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 generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may 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--10/00 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 ON THE INTERNET: You can send us a request by e-mail or download prospectuses, annual or semiannual reports via our website: HTTP://WWW.AIMFUNDS.COM
- --------------------------------------------------------- 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-- --Registered Trademark-- 89 AIM INTERNATIONAL EQUITY FUND --------------------------------------------------------------------------- AIM International Equity Fund seeks to provide long-term growth of capital. AIM--Registered Trademark-- PROSPECTUS MARCH 1, 2001 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- 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 Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 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 Directors 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% 2000 ........................................... -25.69%
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, 2000) 1 YEAR 5 YEARS INCEPTION DATE - ------------------------------------------------------------ Class A (29.78)% 9.20% 11.64% 04/07/92 Class B (29.63) 9.32 8.93 09/15/94 Class C (26.88) -- 5.14 08/04/97 MSCI EAFE Index(1) (14.17) 7.13 9.63(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 0.91% 0.91% 0.91% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 Other Expenses 0.27 0.31 0.31 Total Annual Fund Operating Expenses 1.48 2.22 2.22 Fee Waiver(2) 0.04 0.04 0.04 Net Expenses 1.44 2.18 2.18 - -----------------------------------------------------------
(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. You may also be charged a transaction or other fee by the financial institution managing your account. 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.... $692 $992 $1,314 $2,221 Class B.... 725 994 1,390 2,386 Class C.... 325 694 1,190 2,554 - --------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $692 $992 $1,314 $2,221 Class B 225 694 1,190 2,368 Class C 225 694 1,190 2,554 - ----------------------------------------------
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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 2000, the advisor received compensation of 0.87% 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 are - - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1992 and has been associated with the advisor and/or its affiliates since 1989. - - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty. - - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1994. - - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM International Equity Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions, if any, will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 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. The Board of Directors of the fund has selected new independent auditors for the fund's current fiscal year. For more information regarding the change in independent auditors, see the Statement of Additional Information.
CLASS A ------------------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------------------ 2000(a) 1999 1998(a) 1997(a) 1996(a) ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 21.73 $ 17.59 $ 16.64 $ 15.37 $ 13.65 - -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.08 (0.03) 0.05 0.04 0.04 - -------------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 0.72 4.49 0.96 1.68 2.07 ========================================================================================================================== Total from investment operations 0.80 4.46 1.01 1.72 2.11 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.11) (0.06) (0.02) (0.01) - -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.93) (0.21) -- (0.43) (0.38) ========================================================================================================================== Total distributions (0.93) (0.32) (0.06) (0.45) (0.39) ========================================================================================================================== Net asset value, end of period $ 21.60 $ 21.73 $ 17.59 $ 16.64 $ 15.37 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) 3.16% 25.73% 6.11% 11.43% 15.79% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $2,325,636 $2,058,419 $1,724,635 $1,577,390 $1,108,395 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.44%(c) 1.48% 1.45% 1.47% 1.58% - -------------------------------------------------------------------------------------------------------------------------- Without fee waivers 1.48%(c) 1.52% 1.49% 1.51% 1.60% ========================================================================================================================== Ratio of net investment income to average net assets 0.30%(c) (0.14)% 0.28% 0.24% 0.25% __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate 87% 86% 78% 50% 66% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include sales charges. (c) Ratios are based on average daily net assets of $2,554,953,820. 5 96 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- FINANCIAL HIGHLIGHTS (CONTINUED) - --------------------------------------------------------------------------------
CLASS B -------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2000(a) 1999(a) 1998(a) 1997(a) 1996(a) -------- -------- -------- -------- -------- Net asset value, beginning of period $ 21.11 $ 17.13 $ 16.27 $ 15.13 $ 13.54 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.11) (0.17) (0.09) (0.09) (0.07) - ---------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 0.74 4.36 0.95 1.66 2.04 ====================================================================================================================== Total from investment operations 0.63 4.19 0.86 1.57 1.97 ====================================================================================================================== Less distributions from net realized gains (0.93) (0.21) -- (0.43) (0.38) ====================================================================================================================== Net asset value, end of period $ 20.81 $ 21.11 $ 17.13 $ 16.27 $ 15.13 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) 2.42% 24.72% 5.29% 10.61% 14.88% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $997,843 $887,106 $744,987 $678,809 $368,355 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.18%(c) 2.27% 2.22% 2.25% 2.35% - ---------------------------------------------------------------------------------------------------------------------- Without fee waivers 2.22%(c) 2.31% 2.26% 2.28% 2.37% ====================================================================================================================== Ratio of net investment income (loss) to average net assets (0.44)%(c) (0.93)% (0.49)% (0.53)% (0.53)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate 87% 86% 78% 50% 66% ______________________________________________________________________________________________________________________ ======================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges. (c) Ratios are based on average daily net assets of $1,120,452,259. 6 97 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- FINANCIAL HIGHLIGHTS (CONTINUED) - --------------------------------------------------------------------------------
CLASS C ----------------------------------------------- AUGUST 4, YEAR ENDED OCTOBER 31, THROUGH -------------------------------- OCTOBER 31, 2000(a) 1999(a) 1998(a) 1997(a) -------- -------- -------- ----------- Net asset value, beginning of period $ 21.13 $ 17.14 $ 16.27 $ 17.64 - ------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.11) (0.17) (0.09) (0.02) - ------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.73 4.37 0.96 (1.35) ============================================================================================================= Total from investment operations 0.62 4.20 0.87 (1.37) ============================================================================================================= Less distributions from net realized gains (0.93) (0.21) -- -- ============================================================================================================= Net asset value, end of period $ 20.82 $ 21.13 $ 17.14 $ 16.27 _____________________________________________________________________________________________________________ ============================================================================================================= Total return(b) 2.37% 24.76% 5.35% 7.77% _____________________________________________________________________________________________________________ ============================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $253,998 $118,208 $ 58,579 $ 12,829 _____________________________________________________________________________________________________________ ============================================================================================================= Ratio of expenses to average net assets: With fee waivers 2.18%(c) 2.27% 2.22% 2.27%(d) - ------------------------------------------------------------------------------------------------------------- Without fee waivers 2.22%(c) 2.31% 2.26% 2.30%(d) ============================================================================================================= Ratio of net investment income (loss) to average net assets (0.44)%(c) (0.93)% (0.49)% (0.55)%(d) _____________________________________________________________________________________________________________ ============================================================================================================= Portfolio turnover rate 87% 86% 78% 50% _____________________________________________________________________________________________________________ =============================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $219,394,811. (d) Annualized. 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 at the end of the month shares which is eight years after the date on which shares were purchased along with a pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(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 at the end of the month which is seven years after the date on 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 the end of the month which is eight years after the date on 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--10/00 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--10/00 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 Large Cap Opportunities Fund, 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--10/00 101 ------------- 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. 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--10/00 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--10/00 103 -------------- 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--10/00 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--10/00 105 -------------- 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 that trade on days when the AIM Funds do not price their shares, 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 generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may 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--10/00 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 ON THE INTERNET: You can send us a request by e-mail or download prospectuses, annual or semiannual reports via our website: HTTP://WWW.AIMFUNDS.COM
- --------------------------------------------------------- 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-- --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 FUNDS, INC.) 11 GREENWAY PLAZA SUITE 100 HOUSTON, TEXAS 77046-1173 (713) 626-1919 ---------- THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TX 77210-4739 OR BY CALLING (800) 347-4246 ---------- STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 2001, RELATING TO THE AIM ASIAN GROWTH FUND PROSPECTUS DATED MARCH 1, 2001, THE AIM EUROPEAN DEVELOPMENT FUND PROSPECTUS DATED MARCH 1, 2001, THE AIM GLOBAL AGGRESSIVE GROWTH FUND PROSPECTUS DATED MARCH 1, 2001, THE AIM GLOBAL GROWTH FUND PROSPECTUS DATED MARCH 1, 2001, THE AIM GLOBAL INCOME FUND PROSPECTUS DATED MARCH 1, 2001, AND THE AIM INTERNATIONAL EQUITY FUND PROSPECTUS DATED MARCH 1, 2001 108 TABLE OF CONTENTS
PAGE INTRODUCTION..................................................................1 GENERAL INFORMATION ABOUT THE COMPANY.........................................1 The Company and its Shares...........................................1 PERFORMANCE...................................................................2 Total Return Calculations............................................4 Yield Quotations.....................................................4 Historical Portfolio Results.........................................5 PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................8 General Brokerage Policy.............................................8 Allocation of Portfolio Transactions.................................9 Allocation of IPO Securities Transactions............................9 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").............................21 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.........................................................23 Margin Transactions.................................................23 Illiquid Securities.................................................23 Rule 144A Securities................................................23 Foreign Securities..................................................24 Foreign Exchange Transactions.......................................27 Equity-Linked Derivatives...........................................27 Investment in Other Investment Companies............................28 Temporary Defensive Investments.....................................28 OPTIONS, FUTURES AND CURRENCY STRATEGIES.....................................28 Introduction........................................................28 General Risks of Options, Futures and Currency Strategies...........28 Cover...............................................................29 Writing Call Options................................................30 Writing Put Options.................................................30 Purchasing Put Options..............................................30 Purchasing Call Options.............................................31 Over-The-Counter Options............................................31
i 109 Index Options.......................................................32 Limitations on Options..............................................32 Interest Rate, Currency and Stock Index Futures Contracts...........32 Options on Futures Contracts........................................33 Forward Contracts...................................................33 Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.........................................34 INVESTMENT RESTRICTIONS......................................................34 Fundamental Restrictions............................................34 Non-Fundamental Restrictions........................................35 MANAGEMENT...................................................................36 Directors and Officers..............................................36 Remuneration of Directors...........................................40 AIM Funds Retirement Plan for Eligible Directors/Trustees...........41 Deferred Compensation Agreements....................................42 Investment Advisory and Other Services..............................43 THE DISTRIBUTION PLANS.......................................................47 The Class A and C Plan..............................................47 The Class B Plan....................................................48 Both Plans..........................................................48 THE DISTRIBUTOR..............................................................52 SALES CHARGES AND DEALER CONCESSIONS.........................................54 REDUCTIONS IN INITIAL SALES CHARGES..........................................57 CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS..................................60 HOW TO PURCHASE AND REDEEM SHARES............................................62 Backup Withholding..................................................63 NET ASSET VALUE DETERMINATION................................................65 DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.....................................66 Reinvestment of Dividends and Distributions.........................66 Tax Matters.........................................................66 Qualification as a Regulated Investment Company.....................66 Fund Distributions..................................................67 Investment in Foreign Financial Instruments.........................68 Hedging Transactions................................................68 PFIC Investments....................................................69 Redemption or Exchange of Shares....................................70 Foreign Income Taxes................................................70 Backup Withholding..................................................71 Reinstatement Privilege.............................................71 Foreign Shareholders................................................71 Miscellaneous Considerations; Effect of Future Legislation..........72 SHAREHOLDER INFORMATION......................................................72
ii 110
MISCELLANEOUS INFORMATION.....................................................75 Changes for Certain Account Information..............................75 Audit Reports........................................................75 Legal Matters........................................................75 Custodian and Transfer Agent.........................................75 Principal Holders of Securities......................................75 Other Information....................................................79 APPENDIX A...................................................................A-1 APPENDIX B...................................................................B-1 APPENDIX C...................................................................C-1 FINANCIAL STATEMENTS..........................................................FS
iii 111 INTRODUCTION AIM International Funds, Inc. (the "Company") is a series mutual fund. The rules and regulations of the Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information is included in the AIM Asian Growth Fund Prospectus dated March 1, 2001, the AIM European Development Fund Prospectus dated March 1, 2001, the AIM Global Aggressive Growth Fund Prospectus dated March 1, 2001, the AIM Global Growth Fund Prospectus dated March 1, 2001, the AIM Global Income Fund Prospectus dated March 1, 2001, and the AIM International Equity Fund Prospectus dated March 1, 2001 (individually, a "Prospectus" and collectively, the "Prospectuses"). Copies of each Prospectus and additional copies of this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Funds' (hereinafter defined) shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling (800) 347-4246. Investors must receive a Prospectus before they invest in the Funds. This Statement of Additional Information is intended to furnish prospective investors with additional information concerning the Funds. Some of the information required to be in this Statement of Additional Information is also included in each Fund's current Prospectus, and in order to avoid repetition, reference will be made herein to sections of the applicable Prospectus. Additionally, each Prospectus and this Statement of Additional Information omit certain information contained in the Company's Registration Statement filed with the SEC. Copies of the Registration Statement, including items omitted from each Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. GENERAL INFORMATION ABOUT THE COMPANY THE COMPANY AND ITS SHARES The Company was organized in 1991 as a Maryland corporation, and is registered with the SEC as an open-end, series, management investment company. The Company currently consists of six separate portfolios: AIM Asian Growth Fund (the "Asian Fund"), AIM European Development Fund ( the "European Fund"), AIM Global Aggressive Growth Fund (the "Aggressive Growth Fund"), AIM Global Growth Fund (the "Growth Fund"), AIM Global Income Fund ( the "Income Fund") and AIM International Equity Fund (the "Equity Fund") (individually, a "Fund" and collectively, the "Funds"). Each portfolio of the Company offers Class A, Class B and Class C shares. As used in each Prospectus, the term "majority of the outstanding shares" of the Company, of a particular Fund or of a class of a Fund means, respectively, the vote of the lesser of (i) 67% or more of the shares of the Company, such Fund or such class present at a meeting of shareholders, if the holders of more than 50% of the outstanding shares of the Company, such Fund or such class are present or represented by proxy or (ii) more than 50% of the outstanding shares of the Company, such Fund or such class. The assets received by the Company 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 Company'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 Company not readily identifiable as belonging to a particular Fund are allocated by or under the direction of the Board of Directors, 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 1 112 declared by the Board of Directors. 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 Company, 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. 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 (although Class B shareholders as well as Class A shareholders of a given Fund must approve any material increase in fees payable with respect to the Class A shares of such Fund under the Class A and C Plan). Each share of a particular class is entitled to one vote, to participate equally in dividends and distributions declared by the Company's Board of Directors with respect to the class of such Fund and, upon liquidation of the Fund, to participate proportionately in the 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 Company or one class of shares, a separate vote of shareholders of that portfolio or class is required. Shareholders of a portfolio or class are not entitled to vote on any matter which does not affect that portfolio or class but which requires a separate vote of another portfolio or class. An example of a matter which would be voted on separately by shareholders of a portfolio is the approval of an advisory agreement, and an example of a matter which would be voted on separately by shareholders of a class of shares is approval of a distribution plan. When issued, shares of the Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are fully transferable. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect directors, holders of more than 50% of the shares voting for the election of directors can elect all of the directors of the Company, and the holders of less than 50% of the shares voting for the election of directors will not be able to elect any directors. Under Maryland law and the Company's By-Laws, the Company need not hold an annual meeting of shareholders to elect directors unless a meeting is required under the Investment Company Act of 1940, as amended, (the "1940 Act"). Shareholders may remove directors from office, and a meeting of shareholders may be called at the request of the holders of 10% or more of the Company's outstanding shares. PERFORMANCE Each Fund's performance may be quoted in advertising in terms of yield (Income Fund) or total return. All advertisements of the Funds will disclose the maximum sales charge (including deferred sales charge) to which investments in shares of the Funds may be subject. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge 2 113 has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. From time to time, A I M Advisors, Inc. ("AIM") or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Voluntary fee waivers or reductions or commitments to assume expenses may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions or commitments to assume expenses, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions or reimbursement of expenses set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing a Fund's yield and total return. The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results. A Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market conditions. A shareholder's investment in a Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in any Fund. Some or all of the Funds may participate in the Initial Public Offering ("IPO") market, and a significant portion of those Funds' returns may be attributable to their investment in IPOs, which can have a magnified impact if a Fund has a small asset base, such as Asian Fund and European Fund. There is no guarantee that as the Funds' assets grow, they will continue to experience substantially similar performance by investing in IPOs. 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 Forbes New York Times Barron's Fortune Pension World Best's Review Hartford Courant Pensions & Investment Broker World Inc. Personal Investor Business Week Institutional Investor Philadelphia Inquirer Changing Times Insurance Forum USA Today Christian Science Monitor Insurance Week U.S. News & World Report Consumer Reports Investor's Daily Wall Street Journal Economist Journal of the American Washington Post FACS of the Week Society of CLU & ChFC CNN Financial Planning Kiplinger Letter CNBC Financial Product News Money PBS Financial Services Week Mutual Fund Forecaster Financial World Nation's Business
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services: 3 114 Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper, Inc.
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund. TOTAL RETURN CALCULATIONS Standardized total return for Class A shares of a Fund reflects the deduction of the maximum initial sales charge at the time of purchase. Standardized total return for Class B shares of a Fund reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period. Standardized total return for Class C shares of a Fund reflects the deduction of a 1% contingent deferred sales charge, if applicable, on a redemption of shares held for the period. Total returns quoted in advertising reflect all aspects of the applicable Fund's return, including the effect of reinvesting dividends and capital gain distributions, the deduction of charges and expenses and any change in such Fund's net asset value per share over the period. Average annual total returns are calculated by determining the growth or decline in value of a hypothetical investment in a particular Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. While average annual total returns are a convenient means of comparing investment alternatives, investors should realize that a Fund's performance is not constant over time, but changes from year to year, and that average annual total returns do not represent the actual year-to-year performance of such Fund. The stated period for quotations of average annual total return will be for periods of one year and the life of a Fund (commencing as of the effective date of its registration statement). 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: 4 115 YIELD = 2[((a-b)/(c x d) + 1)(6)-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, 2000 were as follows:
With Without Waivers Waivers ------- ------- Class A........................... 6.80% 6.10% Class B........................... 6.64% 5.90% Class C........................... 6.64% 5.90%
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, 2000 and since inception (which include the maximum sales charge and reinvestment of all dividends and distributions), were as follows:
Average Annual Total Return Cumulative Total Return --------------------------- ----------------------- Periods ended October 31, 2000 Periods ended October 31, 2000 ------------------------------ ------------------------------ One Five Since One Five Since Class A Shares: Year Years Inception Year Years Inception - --------------- -------- ----- --------- -------- ------- ---------- Aggressive Growth Fund 18.39% 14.78% 16.93%** 18.39% 99.24% 160.72%** Asian Fund (6.14)% N/A 0.55%*** (6.14)% N/A 1.66%*** European Fund 35.79% N/A 30.80%*** 35.79% N/A 123.27%*** Equity Fund (2.50)% 10.91% 12.46%* (2.50)% 67.86% 173.37%* Growth Fund 6.18% 16.74% 17.39%** 6.18% 116.79% 167.07%** Income Fund (6.02)% 2.84% 5.00%** (6.02)% 15.04% 34.81%**
* 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, 2000 and since inception (which include the contingent deferred sales charge applicable to the period and reinvestment of all dividends and distributions) were as follows: 5 116
Average Annual Total Return Cumulative Total Return --------------------------- ----------------------- Periods ended October 31, 2000 Periods ended October 31, 2000 ------------------------------ ------------------------------ One Five Since One Five Since Class B Shares: Year Years Inception Year Years Inception - --------------- -------- ----- --------- -------- ------- --------- Aggressive Growth Fund 18.56% 15.02% 17.23%* 18.56% 101.35% 164.76%* Asian Fund (6.34)% N/A 0.71%** (6.34)% N/A 2.13%** European Fund 37.72% N/A 31.75%** 37.72% N/A 128.20%** Equity Fund (2.51)% 11.05% 10.00%* (2.51)% 68.90% 79.27%* Growth Fund 5.90% 17.02% 17.70%* 5.90% 119.40% 171.45%* Income Fund (6.52)% 3.03% 5.29%* (6.52)% 16.07% 37.13%*
* 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, 2000 and since inception (which include the maximum contingent deferred sales charge and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Total Return --------------------------- ----------------------- Periods ended October 31, 2000 Periods ended October 31, 2000 ------------------------------ ------------------------------ One Since One Since Class C Shares: Year Inception Year Inception - --------------- -------- --------- -------- --------- Aggressive Growth Fund 22.61% 11.79%* 22.61% 43.51%* Asian Fund (2.30)% 1.65%** (2.30)% 5.03%** European Fund 41.75% 32.37%** 41.75% 131.40%** Equity Fund 1.38% 6.89%* 1.38% 24.10%* Growth Fund 9.90% 14.12%* 9.90% 53.41%* Income Fund (2.75)% 0.59%* (2.75)% 1.94%*
* 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, 2000, 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 $1,184, $939, $1,358, $975, $1,062 and $940, 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, 2000, and the five-year period ended October 31, 2000, 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 $1,992, $1,017, $2,233, $1,679, $2,168 and $1,150, respectively, assuming the maximum sales charge was paid and all distributions were reinvested. 6 117 During the one-year period ended October 31, 2000, 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 $1,186, $937, $1,377, $975, $1,059 and $935, 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, 2000, and the five-year period ended October 31, 2000, 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 $2,013, $1,021, $2,282, $1,689, $2,194 and $1,161, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. During the one-year period ended October 31, 2000, 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 $1,226, $977, $1,418, $1,014, $1,099 and $972, 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, 2000, and for the period August 4, 1997 (inception date for Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund) through October 31, 2000, 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 $1,435, $1,050, $2,314, $1,241, $1,534, and $1,019, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. 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 Russell 2000 Stock 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 7 118 Advertising for the Income Fund may from time to time include discussions of general economic conditions and interest rates. From time to time, each Fund's advertising may include discussions of general domestic and international economic conditions and interest rates, and may make reference to international economic sources such as The Bundesbank (the German equivalent of the U.S. Federal Reserve Board). Each Fund's advertising may also include references to the use of the Fund as part of an individual's overall retirement investment program. From time to time, each Fund's sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation. Also from time to time, sales literature and/or advertisements for the Funds may disclose (i) the largest holdings in the Funds' portfolios, (ii) certain selling group members and/or (iii) certain institutional shareholders. PORTFOLIO TRANSACTIONS AND BROKERAGE GENERAL BROKERAGE POLICY AIM makes decisions to buy and sell securities for the Funds, selects broker-dealers, effects the Funds' investment transactions, allocates brokerage fees in such transactions, and where applicable, negotiates commissions and spreads on transactions. Since purchases and sales of portfolio securities by the Funds are usually principal transactions, the Funds incur little or no brokerage commission. AIM's primary consideration in effecting a security transaction is to obtain the most favorable execution of the order, which includes the best price on the security and a low commission rate (as applicable). While AIM 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 Company. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses. 8 119 Under the 1940 Act, certain persons affiliated with the Company are prohibited from dealing with the Company as principal in any purchase or sale of securities unless an exemptive order allowing such transactions is obtained from the SEC. The 1940 Act also prohibits the Company from purchasing a security being publicly underwritten by a syndicate of which certain persons affiliated with the Company are members except in accordance with certain conditions. These conditions may restrict the ability of the Funds to purchase municipal securities being publicly underwritten by such syndicate, and the Funds may be required to wait until the syndicate has been terminated before buying such securities. At such time, the market price of the securities may be higher or lower than the original offering price. A person affiliated with the Company may, from time to time, serve as placement agent or financial advisor to an issuer of Municipal Securities and be paid a fee by such issuer. The Funds may purchase such Municipal Securities directly from the issuer, provided that the purchase is reviewed by the Company's Board of Directors and a determination is made that the placement fee or other remuneration paid by the issuer to a person affiliated with the Company is fair and reasonable in relation to the fees charged by others performing similar services. ALLOCATION OF PORTFOLIO TRANSACTIONS AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by a Fund and one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of a Fund and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among such Fund and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect the Funds' ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell. Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM could have an adverse effect on the price or amount of securities available to the Funds. In 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 9 120 may occur, based on the extent to which an AIM Fund or account has participated in previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM Fund and account with an asset level of less than $500 million will be placed in one of three tiers, depending upon its asset level. The AIM Funds and accounts in the tier containing funds 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 and 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 Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts not receiving a full Allocation, the Allocation may be made only to certain AIM Funds or accounts so that each may receive close to or exactly 40 basis points. When an AIM Fund and/or account with substantially identical investment objectives and policies participates in syndicates, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund participates, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such syndicate transactions will be the same for each AIM Fund and account. SECTION 28(e) STANDARDS Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which it exercises investment discretion." The services provided by the broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in recognition of research services provided to them, Funds may pay a broker higher commissions than those available from another broker. Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Company's directors with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of custody services, as well as the providing of equipment used to communicate research information, the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information. The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities. 10 121 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, 2000, International Equity Fund had common stock holdings in OM Gruppen A.B. having a market value of $2,038,377. As of October 31, 2000, European Development Fund had common stock holdings in OM Gruppen A.B. having a market value of $451,980. As of October 31, 2000, Aggressive Growth Fund had common stock holdings of OM Gruppen A.B. having a market value of $2,179,509. OM Gruppen A.B. is a regular broker/dealer of the Company, as defined in Rule 10b-1. As of October 31, 2000, Global Growth Fund had common stock holdings in Morgan Stanley Dean Witter & Co. having a market value of $25,499,219. Morgan Stanley Dean Witter & Co. is a regular broker/dealer of the Company, as defined in Rule 10b-1. As of October 31, 2000, Global Growth Fund had common stock holdings in Goldman Sachs Group, Inc. having a market value of $7,985,000. Goldman Sachs Group, Inc. is a regular broker/dealer of the Company, as defined in Rule 10b-1. As of October 31, 2000, Global Income Fund had investments in Lehman Brothers Holdings Inc. having a market value of $2,741,450. Lehman Brothers Holdings Inc. is a regular broker/dealer of the Company, as defined in Rule 10b-1. As of October 31, 2000, Global Income Fund had investments in Merrill Lynch & Co. having a market value of $910,380. Merrill Lynch & Co. is a regular broker/dealer of the Company, as defined in Rule 10b-1. As of October 31, 2000, International Equity Fund had common stock holdings of BNP Paribas having a market value of $67,102,925. As of October 31, 2000, European Fund had common stock holdings of BNP Paribas having a market value of $7,734,189. As of October 31, 2000, Global Growth Fund had common stock holdings of BNP Paribas having a market value of $20,521,036. BNP Paribas is a regular broker/dealer of the Company, as defined in Rule 10b-1. As of October 31, 2000, International Equity Fund had common stock holdings of Societe Generale having a market value of $41,845,782. As of October 31, 2000, European Fund had common stock holdings of Societe Generale having a market value of $3,661,967. Societe Generale is a regular broker/dealer of the Company, as defined in Rule 10b-1. BROKERAGE COMMISSIONS PAID For the fiscal years ended October 31, 2000, 1999 and 1998, Aggressive Growth Fund paid brokerage commissions of $4,389,277, $4,648,141 and $5,519,840, respectively. For the fiscal year ended October 31, 2000, 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 $127,480,187 and the related brokerage commissions were $123,730. For the fiscal years ended October 31, 2000, 1999 and 1998, Equity Fund paid brokerage commissions of $12,585,724, $9,975,166 and $8,743,049, respectively. For the fiscal year ended October 11 122 31, 2000, 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 $91,153,894 and the related brokerage commissions were $165,313. For the fiscal years ended October 31, 2000, 1999 and 1998, Growth Fund paid brokerage commissions of $3,310,002, $1,919,718 and $1,482,482, respectively. For the fiscal year ended October 31, 2000, 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 $77,411,443 and the related brokerage commissions were $90,140. For the fiscal years ended October 31, 2000, 1999 and 1998, Income Fund paid brokerage commissions of $0, $813 and $2,638, respectively. For the fiscal year ended October 31, 2000, 1999, and the period November 3, 1997 to October 31, 1998, European Fund paid brokerage commissions of $2,421,258, $915,158 and $563,626, respectively. For the fiscal year ended October 31, 2000, 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 $36,902,441 and the related brokerage commissions were $72,252. For the fiscal year ended October 31, 2000, 1999, and the period November 3, 1997 to October 31, 1998, Asian Fund paid brokerage commissions of $399,380, $327,148 and $75,694, respectively. For the fiscal year ended October 31, 2000, 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 $35,346 and the related brokerage commissions were $125. 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." 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 Directors without shareholder approval. Each Fund's investment policies, strategies and practices are also non-fundamental. The Board of Directors of the Company 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 12 123 ownership of any security. Any percentage limitations with respect to assets of a Fund will be applied at the time of purchase. Any percentage limitations with respect to assets of a Fund will be applied at the time of purchase. A later change in percentage resulting from changes in asset values will not be considered a violation of the percentage limitations. The percentage limitations applicable to borrowings, reverse repurchase agreements and dollar roll transactions will be applied in accordance with applicable provisions of the 1940 Act and the rules and regulations promulgated thereunder which specifically limit each Fund's borrowing abilities. 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 13 124 Receipts ("EDRs"), or other securities representing underlying securities of Asian issuers. The Asian Fund may also satisfy such requirement by investing up to 20% of its total assets in securities exchangeable for or convertible into equity securities of Asian companies. The Asian Fund will not invest in Japanese securities. Any change to such policy must be submitted by AIM to the Company's Board of Directors prior to the effectiveness of such change. The Asian Fund considers an issuer of securities to be an Asian company if: (i) it is organized under the laws of a country in Asia and has a principal office in a country in Asia; (ii) it derives a significant portion (i.e., 50% or more) of its total revenues from business in Asia; or (iii) its equity securities are traded principally on a stock exchange in Asia or in an over-the-counter market in Asia. The Asian Fund also considers shares of Asian closed-end management investment companies, the assets of which are invested primarily in Asian equity securities, to be securities of Asian companies. There are no prescribed limits on geographic asset distribution within Asia. Under normal market conditions, at least three countries will be represented in the Asian Fund's portfolio of investments. The Asian Fund intends to invest in securities of issuers in Asia as well as countries such as Australia and New Zealand. The Asian Fund may invest, without limit, in "developing" countries or "emerging markets." For a description of the risk factors associated with investment in emerging markets, 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 14 125 European issuers. Investments in foreign securities may include securities issued by enterprises that have undergone or are currently undergoing privatization. The European Fund considers an issuer of securities to be a European company if; (i) it is organized under the laws of a European country and has a principal office in a European country; (ii) it derives a significant portion (i.e., 50% or more) of its total revenues from business in Europe; or (iii) its equity securities are traded principally on a stock exchange in Europe or in an over-the-counter market in Europe. The European Fund also considers European equity securities of closed-end management investment companies, the assets of which are invested primarily in European equity securities, to be securities of European companies. There are no prescribed limits on geographic asset distribution within the European community. Under normal market conditions, at least three European countries will be represented in the European Fund's portfolio of investments. The European Fund intends to invest in securities of issuers in Western Europe (such as the United Kingdom, Germany and the Netherlands) as well as companies of issuers in Eastern Europe (such as Croatia, the Czech Republic, Russia and Turkey). Many of the countries in Eastern Europe are "developing" countries or "emerging markets." The European Fund may invest up to 65% of its total assets in securities of European issuers located in "developing" countries or "emerging markets." The European Fund may invest up to 20% of its total assets in securities of non-European companies. A description of other investment strategies European Fund may pursue follows after the section entitled "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 Israel South Africa United States Egypt
The above lists may include foreign countries that have not yet been approved by the Company's advisor. European Fund will only invest in foreign countries that have been approved by the advisor. The word "Development" in European Fund's name is designed to address the general restructuring taking place in Europe as well as a more dramatic political and economic restructuring taking place in regions such as Eastern Europe. Also consistent with the name, the Fund has the ability to invest a significant portion of its total assets in securities issued in emerging markets. PRIVATIZED ENTERPRISES. The governments of certain foreign countries have, to varying degrees, embarked on privatization programs contemplating the sale of all or part of their interests in state 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 15 126 an initial equity offering, investments in the initial offering of equity securities of a state enterprise or former state enterprise and investments in the securities of a state enterprise following its initial equity offering. In certain jurisdictions, the ability of foreign entities, such as European Fund, to participate in privatizations may be limited by local law, or the price or terms on which European Fund may be able to participate may be less advantageous than for local investors. Moreover, there can be no assurance that governments that have embarked on privatization programs will continue to divest their ownership of state enterprises, that proposed privatizations will be successful or that governments will not re-nationalize enterprises that have been privatized. In the case of the enterprises in which European Fund may invest, large blocks of the stock of those enterprises may be held by a small group of stockholders, even after the initial equity offerings by those enterprises. The sale of some portion or all of those blocks could have an adverse effect on the price of the stock of any such enterprise. Prior to making an initial equity offering, most state enterprises or former state enterprises go through an internal reorganization or management changes. Such reorganizations are made in an attempt to better enable these enterprises to compete in the private sector. However, certain reorganizations could result in a management team that does not function as well as the enterprise's prior management and may have a negative effect on such enterprise. In addition, the privatization of an enterprise by its government may occur over a number of years, with the government continuing to hold a controlling position in the enterprise even after the initial equity offering for the enterprise. Prior to privatization, most of the state enterprises in which European Fund may invest enjoy the protection of and receive preferential treatment from the respective sovereigns that own or control them. After making an initial equity offering these enterprises may no longer have such protection or receive such preferential treatment and may become subject to market competition from which they were previously protected. Some of these enterprises may not be able to effectively operate in a competitive market and may suffer losses or experience bankruptcy due to such competition. AGGRESSIVE GROWTH FUND AND GROWTH FUND Aggressive Growth Fund and Growth Fund have their own investment objective and investment program as discussed herein. The investment objective of Aggressive Growth Fund is to provide above-average long-term growth of capital appreciation. 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 16 127 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 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 17 128 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 markets, such as Western European countries, Canada, Japan, Australia, New Zealand and the United States. Income Fund may, however, invest up to 20% of its total assets in securities of issuers in developing countries such as Turkey, Poland and Mexico. Although Income Fund will invest at least 65% of its total assets in non-convertible debt securities of foreign and domestic issuers, it may invest up to 10% of its total assets in common stocks, preferred stocks and similar equity securities of foreign and domestic issuers. Income Fund may also invest up to 10% of its total assets in convertible debt securities of foreign and domestic issuers. Income Fund may invest less than 35% of its total assets in high yield debt securities (i.e., "junk bonds"). Such securities, at the time of purchase, are rated below investment grade or are determined by AIM to be non-investment grade quality. For a description of the various rating categories of corporate debt securities in which Income Fund may invest, see Appendix B. While generally providing greater income and opportunity for gain, non-investment grade debt securities may be subject to greater risks than higher-rated securities. Economic downturns tend to disrupt the market for junk bonds and adversely affect their values. Such economic downturns may be expected to result in increased price volatility for junk bonds and of the value of shares of the Fund, and increased issuer defaults on junk bonds. In addition, many issuers of junk bonds are substantially leveraged, which may impair their ability to meet their obligations. In some cases, junk bonds are subordinated to the prior payment of senior indebtedness, which potentially limits a Fund's ability to fully recover principal or to receive payments when senior securities are subject to a default. The credit rating of a debt security does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. Junk bonds have speculative characteristics which are likely to increase in number and significance with each successive lower rating category. Credit ratings evaluate the safety of principal and interest payments, not market value risk of high yield bonds. Also, since credit rating agencies may fail to timely change the credit ratings to reflect subsequent events, AIM continuously monitors the issuers of high yield bonds in Income Fund's portfolio to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to attempt to assure the bonds' liquidity so that Income Fund can meet redemption requests. The achievement of Income Fund's investment objective may be more dependent on AIM's own credit analysis than might be the case for a fund which invests in higher quality bonds. Income Fund may retain a portfolio security whose ratings has been changed. When the secondary market for junk bonds becomes more illiquid, or in the absence of readily available market quotations for such securities, the relative lack of reliable objective data makes it more difficult for the directors to value a Fund's securities, and judgment plays a more important role in determining such valuations. Increased illiquidity in the junk bond market also may affect a Fund's ability to dispose of such securities at desirable prices. In the event the Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds without regard to their investment merits, thereby decreasing the asset base upon which 18 129 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 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 19 130 the United States Government or by one of its agencies or instrumentalities, including but not limited to the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC"). U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through to investors of their pro-rata share of monthly payments (including any principal prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees paid to the guarantor of such securities and the services of the underlying mortgage loans. GNMA, FNMA, and FHLMC each guarantee timely distributions of interest to certificate holders. GNMA and FNMA guarantee timely distributions of scheduled principal. FHLMC has in the past guaranteed only the ultimate collection of principal of the underlying mortgage loan; however, FHLMC Gold Participation Certificates now guarantee timely payment of monthly principal reductions. Although their close relationship with the U.S. Government is believed to make them high-quality securities with minimal credit risks, the U.S. Government is not obligated by law to support either FNMA or FHLMC. However, historically there have not been any defaults of FNMA or FHLMC issues. See Appendix C for a more complete description of these securities. Mortgage-backed securities consist of interests in underlying mortgages generally with maturities of up to thirty years. However, due to early unscheduled payments of principal on the underlying mortgages, the securities have a shorter average life and, therefore, less volatility than a comparable thirty-year bond. The value of U.S. Government Agency Mortgage-Backed Securities, like other traditional debt instruments, will tend to decline as interest rates rise and increase as interest rates decline. 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, 20 131 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. REAL ESTATE INVESTMENT TRUSTS ("REITs") To the extent consistent with the Funds' investment objectives and policies, the Funds may invest in equity and/or debt securities issued by REITs. Such investments will not exceed 5% of the total assets of any of the Funds. REITs are trusts which sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States, or both. To the extent that a Fund has the ability to invest in REITs, such Fund could conceivably own real estate directly as a result of a default on the securities it owns. A Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, environmental liability risks, risks related to general and local economic condition, adverse change in the climate for real estate, increases in property taxes and operating expense, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates. In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs. REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS Each Fund may enter into repurchase agreements and reverse repurchase agreements. The Fund may enter into repurchase agreements with institutions believed by the Company's Board of Directors to present minimal credit risk. A repurchase agreement is an instrument under which a Fund acquires ownership of a debt security and the seller (usually a broker or bank) agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the Fund's holding period. In the event of bankruptcy or other default of a seller of a repurchase agreement, the Fund may experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period in which the Fund seeks to enforce its rights thereto; (b) a possible reduced levels of income and lack of access to income during this period; and (c) expenses of enforcing its rights. A repurchase agreement is collateralized by the security acquired by the Fund and its value is marked to market daily in order to minimize the Fund's risk. Repurchase agreements usually are for short periods, such as one or two days, but may be entered into for longer periods of time. Repurchase agreements are considered to be loans by the Funds under the 1940 Act. Repurchase 21 132 agreements will be secured by U.S. Treasury securities, U.S. Government agency securities (including, but not limited to those which have been stripped of their interest payments and mortgage backed securities) and commercial paper. A reverse repurchase agreement involves the sale of securities held by a Fund, with an agreement that the Fund will repurchase such securities at an agreed-upon price, date, and interest payment. Each Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. During the time a reverse repurchase agreement is outstanding, the applicable Fund will segregate liquid assets having a value equal to the repurchase price under such reverse repurchase agreement. Any investment gains made by a Fund with monies borrowed through reverse repurchase agreements will cause the net asset value of the Fund's shares to rise faster than would be the case if the Fund had no such borrowings. On the other hand, if the 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, letters of credit, 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 22 133 delivery basis. The payment obligation and the interest rate that will be received on the delayed delivery securities are fixed at the time the buyer enters into the commitment. Each Fund will only make commitments to purchase when-issued or delayed delivery securities with the intention of actually acquiring such securities, but each Fund may sell these securities before the settlement date if it is deemed advisable. If a Fund purchases a when-issued security or enters into a delayed delivery agreement, the Fund's custodian bank will segregate cash or liquid securities in an amount at least equal to the when-issued commitment or delayed delivery agreement commitment. SHORT SALES Each Fund may from time to time make short sales "against the box." A short sale is a transaction in which a party sells a security it does not own in anticipation of a decline in the market value of that security. A Fund will not make short sales of securities or maintain a short position unless at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. This is a technique known as selling short "against the box." Such short sales will be used by the Funds for the purpose of deferring recognition of gain or loss for federal income tax purposes. In no event may more than 10% of the value of a Fund's total assets be deposited or pledged as collateral for such sales at any time. 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 Company's Board of Directors, will consider whether securities purchased under Rule 144A are illiquid and thus subject to each Fund's restriction of investing no more than 15% of its net assets in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination AIM will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the security and of marketplace trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will also 23 134 be monitored by AIM and, if as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, a Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that the Fund does not invest more than 15% of its net assets in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of the Fund's investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. FOREIGN SECURITIES Each of the Funds may invest in foreign securities. ADRs, EDRs and other securities representing underlying securities of foreign issuers are treated as foreign securities. These securities may not necessarily be denominated in the same currency as the securities into which they may be converted. ADRs are receipts typically issued by a United States bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership arrangement. Generally, ADRs, in registered form, are designed for use in the United States securities markets, and EDRs, in bearer form, are designed for use in European securities markets. ADRs and EDRs may be listed on stock exchanges, or traded in OTC markets in the United States or Europe, as the case may be. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates. To the extent a Fund invests in securities denominated in foreign currencies, each Fund bears the risk of changes in the exchange rates between U.S. currency and the foreign currency, as well as the 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 24 135 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. 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 25 136 negative effects on the economies and securities markets for certain developing markets. Economies in emerging markets generally are heavily dependent upon international trade and accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries with which they trade. Also, the securities markets of developing countries are substantially smaller, less developed, less liquid and more volatile than the securities markets of the United States and other more developed countries. Disclosure, regulatory and accounting standards in many respects are less stringent than in the United States and other developed markets. There also may be a lower level of monitoring and regulation of developing markets and the activities of investors in such markets, and enforcement of existing regulations has been extremely limited. In addition, brokerage commissions, custodial services and other costs relating to investment in foreign markets generally are more expensive than in the United States; this is particularly true with respect to emerging markets. Such markets have different settlement and clearance procedures. In certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such settlement problems may cause emerging market securities to be illiquid. The inability of the Funds to make intended securities purchases due to settlement problems could cause the Funds to miss attractive investment opportunities. Inability to dispose of a portfolio security caused by settlement problems could result either in losses to the Funds due to subsequent declines in value of the portfolio security or, if the Funds have entered into contract to sell the security, could result in possible liability to the purchaser. Certain emerging markets may lack clearing facilities equivalent to those in developed countries. Accordingly, settlements can pose additional risks in such markets and ultimately can expose the Funds to the risk of losses resulting from the Funds' inability to recover from a counterparty. The risk also exists that an emergency situation may arise in one or more emerging markets as a result of which trading of securities may cease or may be substantially curtailed and prices for the Funds' portfolio securities in such markets may not be readily available. The Funds' portfolio securities in the affected markets will be valued at fair value determined in good faith by or under the direction of the Board of Directors. Investment in certain emerging markets securities is restricted or controlled to varying degrees. These restrictions or controls may at times limit or preclude foreign investment in certain emerging market securities and increase the costs and expenses of the Fund. Emerging markets may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if a deterioration occurs in an emerging market's balance of payments, the market could impose temporary restrictions on foreign capital remittances. Eastern European Markets. European Fund intends to invest in the securities of issuers domiciled in Eastern European countries. Investment in the securities of issuers in Eastern European markets involves certain additional risks not involved in investment in securities of issuers in more developed markets, such as (i) low or non-existent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities, as compared to securities of comparable issuers in more developed capital markets, (ii) uncertain national policies and social, political and economic instability (including the possibility that such countries could revert to a centralist planned government), increasing the potential for expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments, (iii) possible fluctuations in exchange rates, differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments, (iv) national policies which may limit European Fund's investment opportunities such as restrictions on 26 137 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. 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 27 138 ("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 investments 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 the investing 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. 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 28 139 AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed. (2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded. (3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments. (4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract, forward contract or option thereon at any particular time. (5) As described below, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time. (6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction. COVER Transactions using forward contracts, futures contracts and options (other than options purchased by a Fund) expose a Fund to an obligation to another party. A Fund will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward contracts or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities. Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, the Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid. Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations. 29 140 WRITING CALL OPTIONS Each of the Funds may write (sell) covered call options on securities, futures contracts, forward contracts, indices and currencies. As the writer of a call option, a Fund would have the obligation to deliver the underlying security, cash or currency (depending on the type of derivative) to the holder (buyer) at a specified price (the exercise price) at any time until (American style) or on (European style) a certain date (the expiration date). So long as the obligation of a Fund continues, it may be assigned an exercise notice, requiring it to deliver the underlying security, cash or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option identical to that previously sold. When writing a call option a Fund, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security, contract or currency above the exercise price, and retains the risk of loss should the price of the security, contract or currency decline. Unlike one who owns securities, contracts or currencies not subject to an option, a Fund has no control over when it may be required to sell the underlying securities, contracts or currencies, since most options may be exercised at any time prior to the option's expiration. If a call option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received. Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both. WRITING PUT OPTIONS Each of the Funds may write (sell) covered put options on securities, futures contracts, forward contracts, indices and currencies. As the writer of a put option, a Fund would have the obligation to buy the underlying security, contract or currency (depending on the type of derivative) at the exercise price at any time until (American style) or on (European style) the expiration date. This obligation terminates upon the expiration of the put option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option identical to that previously sold. A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the lower price it is willing to pay for the underlying security, contract or currency. The risk in such a transaction would be that the market price of the underlying security, contract or currency would decline below the exercise price less the premium received. PURCHASING PUT OPTIONS Each of the Funds may purchase covered put options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a put option, a Fund would have the right to sell the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such option or permit such option to expire. 30 141 A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon exercise of said option. Conversely, if the underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost. A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar." PURCHASING CALL OPTIONS Each of the Funds may purchase covered call options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a call option, a Fund would have the right to purchase the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such options or permit such options to expire. Call options may be purchased by a Fund for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected decline in the market price of the underlying security, contract or currency and, in such event, could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Each of the Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads." OVER-THE-COUNTER OPTIONS Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no 31 142 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. 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 32 143 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. 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 33 144 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. (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 34 145 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 Directors 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 Directors. 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. Any investment restriction that involves a maximum or minimum percentage of securities or assets (other than with respect to borrowing) 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. 35 146 (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 Company is vested in the Company's Board of Directors. The Board of Directors approves all significant agreements between the Company 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 Company and to AIM, subject always to the objectives, restrictions and policies of the applicable Fund and to the general supervision of the Company's Board of Directors. Certain directors and officers of the Company are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. DIRECTORS AND OFFICERS The directors and officers of the Company and their principal occupations during at least the last five years are set forth below. Unless otherwise indicated, the address of each director and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. All of the Company's executive officers hold similar offices with some or all of the other AIM Funds. 36 147
POSITIONS HELD PRINCIPAL OCCUPATION DURING AT LEAST NAME, ADDRESS AND AGE WITH REGISTRANT THE PAST 5 YEARS - ----------------------------------------- ---------------------- --------------------------------------------------- *ROBERT H. GRAHAM(54) Director, Director, President and Chief Executive Officer, Chairman and A I M Management Group Inc.; Director and President 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 and Vice Chairman, AMVESCAP PLC. BRUCE L. CROCKETT(56) Director Director, ACE Limited (insurance company). 906 Frome Lane Formerly, Director, President and Chief Executive McLean, VA 22102 Officer, COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company). OWEN DALY II(76) Director 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. ALBERT R. DOWDEN(59) Director Chairman of the Board of Directors, Cortland 1815 Central Park Drive Trust, Inc. (investment company) and DHJ Media, P.O. Box 774000-PMB #222 Inc.; and Director, Magellan Insurance Company. Steamboat Springs, CO 80477 Formerly, Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation and Annuity and Life Re (Holdings), Ltd.
- --------------- * A director who is an "interested person" of A I M Advisors, Inc. and the Company as defined in the 1940 Act. 37 148
POSITIONS HELD PRINCIPAL OCCUPATION DURING AT LEAST NAME, ADDRESS AND AGE WITH REGISTRANT THE PAST 5 YEARS - ----------------------------------------- ---------------------- --------------------------------------------------- EDWARD K. DUNN, JR.(65) Director Formerly, Chairman of the Board of Directors, 2 Hopkins Plaza, 8th Floor, Mercantile Mortgage Corp.; 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 M. FIELDS(49) Director Chief Executive Officer, Twenty First Century 434 New Jersey Avenue, S.E. Group, Inc. (a governmental affairs company). Washington, D.C. 20003 Formerly, Member of the U.S. House of Representatives. **CARL FRISCHLING(64) Director Partner, Kramer, Levin, Naftalis & Frankel LLP 919 Third Avenue (law firm). New York, NY 10022 PREMA MATHAI-DAVIS(50) Director Member, Visiting Committee, Harvard University 370 East 76th Street Graduate School of Education, New School University. New York, NY 10021 Formerly, Chief Executive Officer, YWCA of the USA; Commissioner, New York City Department of the Aging; LEWIS F. PENNOCK(58) Director and Commissioner, New York City Metropolitan 6363 Woodway, Suite 825 Transportation Authority. Houston, TX 77057 LOUIS S. SKLAR(61) Director Executive Vice President, Development and The Williams Tower, 50th Floor Operations, Hines Interests Limited Partnership 2800 Post Oak Blvd. (real estate development). Houston, TX 77056 GARY T. CRUM(53) 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.
- ---------- ** A director who is an "interested person" of the Company as defined in the 1940 Act. 38 149
POSITIONS HELD PRINCIPAL OCCUPATION DURING AT LEAST NAME, ADDRESS AND AGE WITH REGISTRANT THE PAST 5 YEARS - ----------------------------------------- ---------------------- --------------------------------------------------- CAROL F. RELIHAN(46) Senior Vice Director, Senior Vice President, General Counsel President and and Secretary, A I M Advisors, Inc.; Senior Vice Secretary President, General Counsel and Secretary, A I M Management Group Inc.; Director, Vice President and General Counsel, Fund Management Company; Vice President, A I M Capital Management, Inc. and A I M Distributors, Inc.; and General Counsel and Vice President, A I M Fund Services, Inc. DANA R. SUTTON(42) Vice President and Vice President and Fund Controller, A I M Treasurer Advisors, Inc.; and Assistant Vice President and Assistant Treasurer, Fund Management Company. ROBERT G. ALLEY(52) Vice President Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. MELVILLE B. COX(57) 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(60) Vice President Vice President, A I M Capital Management, Inc. - ----------------------------------------- ---------------------- ---------------------------------------------------
The standing committees of the Board of Directors are the Audit Committee, the Capitalization Committee, the Investments Committee and the Nominating and Compensation Committee. The members of the Audit Committee are Messrs. Crockett, Daly, Dowden, 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 Capitalization Committee are Messrs. Graham (Chairman) and Pennock. The Capitalization Committee is responsible for: (i) increasing or decreasing the aggregate number of shares of any class of the Company's common stock by classifying and reclassifying the Company's authorized but unissued shares of common stock, up to the Company's authorized capital; (ii) fixing the terms of such classified or reclassified shares of common stock; and (iii) issuing such classified or reclassified shares of 39 150 common stock upon the terms set forth in the applicable fund's prospectus, up to the Company's authorized capital. The members of the Investments Committee are Messrs. Crockett, Daly, Dowden, 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, Dowden, 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 directors as long as the Company maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the independent directors; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the independent directors. The Nominating and Compensation Committee will consider nominees recommended by a shareholder to serve as directors, provided (i) that such person is a shareholder of record at the time he or she submits such names and is entitled to vote at the meeting of shareholders at which directors will be elected, and (ii) that the Nominating and Compensation Committee or the Board of Directors, as applicable, shall make the final determination of persons to be nominated. All of the Company's directors also serve as directors or trustees of some or all of the investment companies managed or advised by AIM. All of the Company's executive officers hold similar offices with some or all of the other investment companies managed or advised by AIM. REMUNERATION OF DIRECTORS Each director is reimbursed for expenses incurred in connection with each meeting of the Board of Directors or any committee thereof. Each director who is not also an officer of the Company is compensated for his or her services according to a fee schedule which recognizes the fact that such director also serves as a director or trustee of other AIM Funds. Each such director receives a fee, allocated among the AIM Funds for which he 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 director of the Company: 40 151
RETIREMENT BENEFITS TOTAL AGGREGATE ACCRUED COMPENSATION COMPENSATION BY ALL APPLICABLE FROM ALL APPLICABLE DIRECTOR FROM COMPANY(1) AIM FUNDS(2) AIM FUNDS(3) - ------------------- --------------- ----------------- ------------------- Charles T. Bauer(4) $ 0 $ 0 $ 0 Bruce L. Crockett 7,875 60,951 111,500 Owen Daly II 7,875 97,195 111,500 Albert R. Dowden(5) 0 0 13,435 Edward K. Dunn, Jr 7,875 22,138 111,500 Jack Fields 7,731 23,019 108,500 Carl Frischling(6) 7,875 107,507 111,500 Robert H. Graham 0 0 0 Prema Mathai-Davis 7,723 22,606 111,500 Lewis F. Pennock 7,875 67,995 111,500 Louis S. Sklar 7,685 87,538 111,000
(1) The total amount of compensation deferred by all directors of the Company during the fiscal year ended October 31, 2000, including earnings was $59,831. (2) During the fiscal year ended October 31, 2000, the total amount of expenses allocated to the Company in respect of such retirement benefits was $30,382. Data reflect compensation earned for the calendar year ended December 31, 2000. (3) Each director 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, 2000. (4) Mr. Bauer was a director and officer until September 30, 2000, when he retired. (5) Mr. Dowden was elected to serve as a Director on December 14, 2000. (6) The Company paid the law firm of Kramer Levin Naftalis & Frankel LLP $35,567 in legal fees for services provided to the Funds during the fiscal year ended October 31, 2000. Mr. Frischling, a director of the Company, is a partner in such firm. AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each director (who is not an employee of any of the AIM Funds, AIM Management or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Directors. Pursuant to the Plan, a director becomes eligible to retire and to receive full benefits under the Plan when he or she has attained age 65 and has completed at least five years of continuous service with one or more of the regulated investment companies managed, administered or distributed by AIM or its affiliates (the "Applicable AIM Funds"). Each 41 152 eligible director is entitled to receive an annual benefit from the Applicable AIM Funds commencing on the first day of the calendar quarter coincident with or following his 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 director during the twelve-month period immediately preceding the director's retirement (including amounts deferred under a separate agreement between the Applicable AIM Funds and the director) and based on the number of such director's years of service (not in excess of 10 years of service) completed with respect to any of the Applicable AIM Funds. Such benefit is payable to each eligible director in quarterly installments. If an eligible director dies after attaining the normal retirement date but before receipt of all benefits under the Plan, the director's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased director for no more than ten years beginning the first day of the calendar quarter following the date of the director's death. Payments under the plan are not secured or funded by any Applicable AIM Fund. Set forth below is a table that shows the estimated annual benefits payable to an eligible director upon retirement assuming the retainer amount reflected below and various years of service. The estimated credited years of service for Messrs. Crockett, Daly, Dowden, Dunn, Fields, Frischling, Pennock, and Sklar and Dr. Mathai-Davis are 13, 13, 0, 2, 3, 23, 19, 11 and 2 years, respectively. ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
Number of Years of Service with the Applicable AIM Estimated Annual Benefits Upon Funds Retirement - ------------------ ------------------------------- 10 $75,000 9 $67,500 8 $60,000 7 $52,500 6 $45,000 5 $37,500
DEFERRED COMPENSATION AGREEMENTS Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (the "Deferring Directors") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Directors may elect to defer receipt of up to 100% of their compensation payable by the Company, and such amounts are placed into a deferral account. Currently, the Deferring Directors may select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Directors' deferral accounts will be paid in cash, 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 Director's retirement benefits commence under the Plan. The Company's Board of Directors, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Director's termination of service as a director of the Company. If a Deferring Director dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary in a single lump sum payment as soon as practicable after such Deferring Director's death. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Directors have the status of unsecured creditors of the Company and of each other AIM Fund from which they are deferring compensation. 42 153 INVESTMENT ADVISORY AND OTHER SERVICES AIM serves as the investment advisor to each Fund pursuant to a Master Investment Advisory Agreement dated June 21, 2000 (the "Investment Advisory Agreement"). AIM was organized in 1976, and together with its subsidiaries, advises or manages approximately 130 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 directors and officers of AIM are also executive officers of the Company and their affiliations are shown under "Management" herein. AIM and the Company have adopted a Code of Ethics which requires investment personnel and certain other employees to (a) pre-clear all personal securities transactions subject to the Code of Ethics; (b) file reports regarding such transactions; (c) refrain from personally engaging in (i) short-term trading of a security, (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security (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 Directors 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 Company, on behalf of the Funds, has entered into the Investment Advisory Agreement and a Master Administrative Services Agreement dated June 21, 2000 ("Administrative Services Agreement"), with AIM. A prior investment advisory agreement with substantially similar terms to the Investment Advisory Agreement and a prior administrative services agreement with substantially similar terms to the Administrative Services Agreement, were in effect prior to June 21, 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 directors and shareholders meetings; the cost of preparing and distributing reports and notices to shareholders; the fees and other expenses incurred by the Company on behalf of 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 Company's Board of Directors 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 directors who are not parties to the Investment Advisory Agreement or "interested persons" of any such party (the "Non-Interested Directors") 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 43 154 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%
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 contractually agreed to waive advisory fees under the Investment Advisory Agreement in order to achieve the following annual fee structure for Equity Fund: 0.95% of the first $500 million of Equity Fund's average daily net assets; 0.90% of the next $500 million of Equity Fund's average daily net assets; and 0.85% of Equity Fund's average daily net assets exceeding $1 billion. AIM has also voluntarily agreed, 44 155 when net assets of a Fund exceed $5 billion, to waive advisory fees for such Fund of 0.025% for each $5 billion increment in net assets, up to a maximum waiver of 0.175% on assets in excess of $35 billion. With respect to Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund for the fiscal years ended October 31, 2000, 1999 and 1998, and with respect to Asian Fund and European Fund for the fiscal year ended October 31, 2000, 1999 and the period November 3, 1997 (inception date) through October 31, 1998, AIM received advisory fees, net of advisory fee waivers, from each Fund pursuant to the prior investment advisory agreement then in effect as follows:
2000 1999 1998 ----------- ----------- ----------- Aggressive Growth Fund $22,245,857 $15,416,368 $20,126,609 Asian Fund $ 893,672 $ 39,283 $ 11,388 Equity Fund $33,855,808 $24,083,233 $21,628,803 European Fund $ 4,248,118 $ 1,607,698 $ 410,537 Growth Fund $11,306,836 $ 5,898,665 $ 4,042,472 Income Fund $ 286,749 $ 280,344 $ 152,633
Under a former Master Sub-Advisory Agreement terminated effective June 21, 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 June 21, 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. With respect to Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund for the fiscal years ended October 31, 2000, 1999 and 1998, and with respect to Asian Fund and European Fund for the fiscal year ended October 31, 2000, 1999 and the period November 3, 1997 (inception date) through October 31, 1998, AIM waived advisory fees for each Fund as follows:
2000 1999 1998 ---------- ---------- ---------- Aggressive Growth Fund $ 0 $ -0- $ -0- Asian Fund $ 92,285 $ 207,130 $ 51,040 Equity Fund $1,697,400 $1,122,543 $ 978,165 European Fund $ 0 $ -0- $ 114,120 Growth Fund $ 125,000 $ -0- $ -0- Income Fund $ 531,491 $ 423,180 $ 365,730
Although these fees are higher than those paid by most mutual funds which invest in domestic securities, they are competitive with such fees paid by mutual funds which invest primarily in foreign securities. The Company believes such fees are justified due to the higher costs and additional expenses associated with managing and operating funds holding primarily foreign securities. 45 156 For the fiscal year ended October 31, 2000, AIM waived advisory fees for Asian Fund, Equity Fund, Growth Fund and Income Fund which represented 0.09%, 0.04%, 0.01% and 0.45% of such Fund's average daily net assets. In addition, if a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The Master Investment Advisory Agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary. AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fees, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee. For the fiscal year ended October 31, 2000, each Fund paid 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:
Payments -------- Aggressive Growth Fund......................... 0.01% Asian Fund..................................... 0.05% Equity Fund.................................... 0.01% European Fund.................................. 0.02% Growth Fund.................................... 0.01% Income Fund.................................... 0.04%
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 Directors. Currently, AIM is paid 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 payment for AIM's costs or such reasonable compensation as may be approved by the Company's Board of Directors. The Administrative Services Agreement will continue in effect from year to year only if such continuance is specifically approved at least annually (i)(a) by the Company's Board of Directors 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 Directors, by votes cast in person at a meeting called for such purpose. With respect to Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund for the fiscal years ended October 31, 2000, 1999 and 1998, and with respect to Asian Fund and European Fund for the fiscal year ended October 31, 2000, 1999 and the period November 3, 1997 (inception date) through 46 157 October 31, 1998, AIM received payment of administrative service costs from each Fund pursuant to the prior administrative services agreement then in effect as follows:
2000 1999 1998 -------- -------- -------- Aggressive Growth Fund $182,264 $127,117 $116,964 Asian Fund $ 50,000 $ 74,007 $ 74,604 Equity Fund $222,616 $150,312 $115,146 European Fund $109,571 $ 75,332 $ 69,060 Growth Fund $145,994 $ 97,142 $ 80,267 Income Fund $ 50,000 $ 66,799 $ 81,456
In addition, the Transfer Agency and Service Agreement for the Funds provides that A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"), P.O. Box 4739, Houston, Texas 77210-4739, a registered transfer agent and wholly owned subsidiary of AIM, will perform certain shareholder services for the Funds for a fee per account serviced. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares, prepare and transmit payments for dividends and distributions declared by the Funds, maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts. THE DISTRIBUTION PLANS THE CLASS A AND C PLAN The Company has adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and Class C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan provides that for Aggressive Growth Fund, Growth Fund and Income Fund the Class A shares pay 0.50% per annum of their average daily net assets, for Equity Fund the Class A shares pay 0.30% per annum of their average daily net assets and for Asian Fund and European Fund the Class A shares pay 0.35% per annum of their average daily net assets as compensation to AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Class A shares. Such plan provides that the Class C shares pay compensation to AIM Distributors at an annual rate of 1.00% per annum of the average daily net assets attributable to Class C shares for the purpose of financing any activity which is primarily intended to result in the sale of 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 including AIM Distributors, acting as principal, for providing 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 47 158 characterized as a service fee, and payments to dealers and other financial institutions including AIM Distributors, acting as principal, in excess of such amount would be characterized as an asset-based sales charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Company with respect to the Fund. THE CLASS B PLAN The Company has also adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (the "Class B Plan", and collectively with the Class A and C Plan, the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class B shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class B shares to selected dealers and other institutions which furnish continuing personal shareholder services to their customers who purchase and own Class B shares. Any amounts not paid as a service fee would constitute an asset-based sales charge. Amounts paid in accordance with the Class B Plan may be used to finance any activity primarily intended to result in the sale of Class B shares, including but not limited to printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class B Plan. BOTH PLANS Pursuant to an incentive program, AIM Distributors may enter into agreements ("Shareholder Service Agreements") with investment dealers selected from time to time by AIM Distributors for the provision of distribution assistance in connection with the sale of the Funds' shares to such dealers' customers, and for the provision of continuing personal shareholder services to customers who may from time to time directly or beneficially own shares of the Funds. The distribution assistance and continuing personal shareholder services to be rendered by dealers under the Shareholder Service Agreements may include, but shall not be limited to, the following: distributing sales literature; answering routine customer inquiries concerning the Funds; assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of several special investment plans offered in connection with the purchase of the Funds' shares; assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions; investing dividends and any capital gains distributions automatically in the Funds' shares; and providing such other information and services as the Funds or the customer may reasonably request. Under the Plans, in addition to the Shareholder Service Agreements authorizing payments to selected dealers, banks may enter into Shareholder Service Agreements authorizing payments under the Plans to be made to banks which provide services to their customers who have purchased shares. Services provided pursuant to Shareholder Service Agreements with banks may include some or all of the following: answering shareholder inquiries regarding a Fund and the Company; performing sub-accounting; establishing and maintaining shareholder accounts and records; processing customer purchase and redemption transactions; providing periodic statements showing a shareholder's account balance and the integration of such statements with those of other transactions and balances in the shareholder's other accounts serviced by the bank; forwarding applicable prospectuses, proxy 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. 48 159 Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement generally will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rate of 0.25% of the average daily net asset value of the Funds' shares purchased or acquired through exchange. Fees calculated in this manner shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which the Fund's shares are held. Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made to dealers and other financial institutions who provide continuing personal shareholder services to their customers who purchase and own shares of the Funds to no more than 0.25% per annum of the average daily net assets of the funds attributable to the customers of such dealers or financial institutions, and by imposing a cap on the total sales charges, including asset based sales charges, that may be paid by the Funds and their respective classes. AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A and Class C shares. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM Distributors will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM Distributors and the Fund. Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Funds on an agency basis, may receive payments from the Funds pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the Funds, in making dealer incentive and shareholder servicing payments to dealers and other financial institutions under the Plans. These payments are an obligation of the Fund and not of AIM Distributors. For the fiscal year ended October 31, 2000, the Funds paid the following amounts under the Class A and C Plan and the Class B Plan adopted by the Company:
% of Class Average Daily Net Assets ------------------------------- Class A Class B Class C Class A Class B Class C ----------- ----------- ----------- -------- ------- ------- Aggressive Growth Fund $ 6,067,804 $13,029,893 $ 417,860 0.50% 1.00% 1.00% Asian Fund $ 230,776 $ 307,199 $ 71,664 0.35% 1.00% 1.00% Equity Fund $ 7,664,862 $11,204,523 $ 2,193,948 0.30% 1.00% 1.00% European Fund $ 868,732 $ 1,566,725 $ 422,886 0.35% 1.00% 1.00% Growth Fund $ 3,100,225 $ 6,788,675 $ 675,670 0.50% 1.00% 1.00% Income Fund $ 356,923 $ 437,547 $ 17,521 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, 2000 follows: 49 160
ASIAN EUROPEAN AGGRESSIVE GROWTH INCOME EQUITY FUND FUND GROWTH FUND FUND FUND FUND ---------- ---------- ----------- ---------- ---------- ---------- CLASS A Advertising ...................... $ 22,855 $ 64,643 $ 47,235 $ 37,108 $ 2,475 $ 382,816 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) .................... $ 2,260 $ 7,012 $ 5,077 $ 4,143 $ 259 $ 41,393 Seminars ......................... $ 5,287 $ 18,088 $ 12,921 $ 10,422 $ 719 $ 105,219 Compensation to Underwriters to partially offset other marketing costs ............................ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Compensation to Dealers .......... $ 200,374 $ 778,989 $6,002,571 $3,048,552 $ 353,470 $7,135,433 (includes Finder's Fees) Compensation to Sales Personnel .. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Annual Report Total .............. $ 230,776 $ 868,732 $6,067,804 $3,100,225 $ 356,923 $7,664,861
An estimate by category of actual fees paid by the Funds under the Class B Plan during the year ended October 31, 2000 as follows:
ASIAN EUROPEAN AGGRESSIVE GROWTH INCOME EQUITY FUND FUND GROWTH FUND FUND FUND FUND ----------- ----------- ----------- ----------- ----------- ----------- CLASS B Advertising ...................... $ 11,433 $ 47,624 $ 106,840 $ 115,661 $ 9,784 $ 167,577 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) .................... $ 1,270 $ 5,851 $ 12,136 $ 12,834 $ 776 $ 18,311 Seminars ......................... $ 4,234 $ 16,777 $ 33,313 $ 32,907 $ 646 $ 47,570 Compensation to Underwriters to partially offset other marketing costs ............................ $ 230,399 $ 1,175,044 $ 9,772,420 $ 5,091,506 $ 328,160 $ 8,403,392 Compensation to Dealers .......... $ 59,863 $ 321,429 $ 3,105,184 $ 1,535,767 $ 98,181 $ 2,567,673 Compensation to Sales Personnel .. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Annual Report Total .............. $ 307,199 $ 1,566,725 $13,029,893 $ 6,788,675 $ 437,547 $11,204,523
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, 2000 as follows: 50 161
ASIAN EUROPEAN AGGRESSIVE GROWTH INCOME EQUITY FUND FUND GROWTH FUND FUND FUND FUND ---------- ---------- ----------- ---------- ---------- ---------- CLASS C Advertising ...................... $ 4,322 $ 30,130 $ 20,428 $ 33,558 $ 1,420 $ 115,147 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) .................... $ 427 $ 3,129 $ 2,514 $ 3,319 $ 0 $ 13,051 Seminars ......................... $ 0 $ 6,803 $ 6,982 $ 11,734 $ 0 $ 35,728 Compensation to Underwriters to partially offset other marketing costs ............................ $ 34,921 $ 202,008 $ 163,638 $ 247,706 $ 4,262 $ 799,373 Compensation to Dealers .......... $ 31,994 $ 180,816 $ 224,298 $ 379,353 $ 11,839 $1,230,649 Compensation to Sales Personnel .. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Annual Report Total .............. $ 71,664 $ 422,886 $ 417,860 $ 675,670 $ 17,521 $2,193,948
The Plans require AIM Distributors to provide the Board of Directors at least quarterly with a written report of the amounts expended pursuant to the Plans and the purposes for which such expenditures were made. The Board of Directors reviews these reports in connection with their decisions with respect to the Plans. As required by Rule 12b-1, the Plans and related forms of Shareholder Service Agreements were approved by the Board of Directors, including a majority of the directors who are not "interested persons" (as defined in the 1940 Act) of the Company and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related to the Plans ("Qualified Directors"). In approving the Plans in accordance with the requirements of Rule 12b-1, the directors considered various factors and determined that there is a reasonable likelihood that the Plans would benefit each class of the Funds and their respective shareholders. The Plans do not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee. Unless the Plans are terminated earlier in accordance with their terms, the Plans continue in effect as long as such continuance is specifically approved at least annually by the Board of Directors, including a majority of the Qualified Directors. The Plans may be terminated by the vote of a majority of the Independent Directors, or, with respect to a particular class, by the vote of a majority of the outstanding voting securities of that class. Any change in the Plans that would increase materially the distribution expenses paid by the applicable class requires shareholder approval; otherwise, it may be amended by the directors, including a majority of the Qualified Directors, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plans are in effect, the selection or nomination of the Qualified Directors is committed to the discretion of the Qualified Directors. In the event the Class A and C Plan is amended in a manner which the Board of Directors determines would materially increase the charges paid under the Class A and C Plan, the Class B shares of the Funds will no longer convert into Class A shares of the same 51 162 Funds unless the Class B shares, voting separately, approve such amendment. If the Class B shareholders do not approve such amendment, the Board of Directors will (i) create a new class of shares of the Funds which is identical in all material respects to the Class A shares as they existed prior to the implementation of the amendment and (ii) ensure that the existing Class B shares of the Funds will be exchanged or converted into such new class of shares no later than the date the Class B shares were scheduled to convert into Class A shares. The principal differences between the Class A and C Plan, on the one hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan allows payment to AIM Distributors or to dealers or financial institutions of up to 0.50% of average daily net assets of the Class A shares of Aggressive Growth Fund, Income Fund, and Growth Fund, of up to 0.35% of average daily net assets of the Class A shares of Asian Fund and European Fund, and of up to 0.30% of average daily net assets of the Class A shares of Equity Fund, as compared to 1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan obligates the Class B shares to continue to make payments to AIM Distributors following termination of the Class B shares Distribution Agreement with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors unless there has been a complete termination of the Class B Plan (as defined in such Plan) and (iii) the Class B Plan expressly authorizes AIM Distributors to assign, transfer or pledge its rights to payments pursuant to the Class B Plan. THE DISTRIBUTOR The Company has entered into distribution arrangements with AIM Distributors, P. O. Box 4739, Houston, Texas 77210-4739, a registered broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor in the continuous offering of Class A, Class B and Class C shares of the Funds. Certain directors and officers of the Company are affiliated with AIM Distributors. A Master Distribution Agreement with AIM Distributors relating to the Class A and Class C shares of the Funds was approved by the Board of Directors on 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 Directors 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 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, 52 163 and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. AIM Distributors anticipates that it will require a number of years to recoup from Class B Plan payments the sales commissions paid to dealers and institutions in connection with sales of Class B shares. In the future, if multiple distributors serve a Fund, each such distributor (or its assignee or transferee) would receive a share of the payments under the Class B Plan based on the portion of the Fund's Class B shares sold by or attributable to the distribution efforts of that distributor. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. The Company (on behalf of any class of the Funds) or AIM Distributors may terminate the Distribution Agreements on sixty (60) days' written notice without penalty. The Distribution Agreements will terminate automatically in the event of their assignment. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset based distribution fees in respect of the outstanding Class B shares attributable to the distribution efforts of AIM Distributors; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments to AIM Distributors. Termination of the Class B Plan or Distribution Agreement does not affect the obligation of the Funds and their Class B shareholders to pay contingent deferred sales charges. From time to time, AIM Distributors may transfer and sell its right to payments under the Distribution Agreements relating to Class B shares in order to finance distribution expenditures in respect of Class B shares. The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by AIM Distributors for the fiscal years ended October 31, 2000, 1999 and 1998:
2000 1999 1998 ---- ---- ---- Sales Amount Sales Amount Sales Amount Charges Retained Charges Retained Charges Retained ---------- ---------- ---------- ---------- ---------- ---------- Aggressive Growth Fund $3,762,517 $ 667,333 $1,335,400 $ 267,534 $3,546,968 $ 622,054 Asian Fund* $ 403,908 $ 64,327 $ 251,652 $ 43,007 $ 180,148 $ 27,913 Equity Fund $5,026,625 $ 735,919 $2,227,910 $ 446,482 $3,608,107 $ 592,247 European Fund* $2,672,361 $ 432,931 $ 870,792 $ 143,067 $1,357,500 $ 207,603 Growth Fund $3,448,542 $ 619,969 $1,035,250 $ 195,571 $1,200,898 $ 208,115 Income Fund $ 141,875 $ 26,727 $ 159,748 $ 28,250 $ 285,983 $ 50,768
- ---------- * Asian Fund and European Fund commenced operations November 3, 1997. 53 164 The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C shareholders and retained by AIM Distributors for the fiscal years ended October 31, 2000, 1999 and 1998 for Class A, Class B and Class C shares:
2000 1999 1998 -------- -------- -------- Aggressive Growth Fund $ 72,714 $101,594 $200,802 Asian Fund* $ 10,620 $240,319 $ 496 Equity Fund $263,758 $157,129 $208,603 European Fund* $117,258 $ 50,219 $ 7,299 Growth Fund $ 44,181 $ 24,812 $ 29,133 Income Fund $ 6,061 $ 3,743 $ 9,510
* 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 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 Euroland Growth Fund, AIM European Development Fund, AIM European Small Company Fund, AIM Global Utilities Fund, AIM International Emerging Growth 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 Technology Fund, AIM Select Growth Fund, AIM Small Cap Equity Fund, AIM Small Cap Growth Fund, AIM Small Cap Opportunities Fund, AIM Value Fund, AIM Value II Fund, AIM Weingarten Fund and AIM Worldwide Spectrum Fund.
Dealer Concession Investor's Sales Charge ---------- ----------------------------- As a As a As a Percentage Percentage Percentage of the of the Public of the Net Public Amount of Investment in Offering Amount Offering Single Transaction(1) Price Invested Price --------------------- ------------- ---------- ---------- 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 Global 54 165 Aggressive Growth Fund, AIM Global Consumer Products and Services Fund, AIM Global Financial Services 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.
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, or instead of, amounts paid to dealers as a sales commission, 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. 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 or of average daily net assets of the AIM Fund attributable to that particular dealer. At the option of the dealer, 55 166 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. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), which are sold at net asset value and are subject to a contingent deferred sales charge, for all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), and which are sold at net asset value and are not subject to a contingent deferred sales charge, in an amount up to 0.10% of such purchases of Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to 0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments with respect to Class B shares will equal 4.00% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions. Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares are considered sales of such Class B or Class C shares for purposes of the sales charges and dealer concessions discussed above. AIM Distributors may pay investment dealers or other financial service firms for share purchases (measured on an annual basis) of Class A Shares of all AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases and up to 0.10% of the net asset value of any Class A shares of AIM 56 167 Limited Maturity Treasury Fund sold at net asset value to an employee benefit plan in accordance with this paragraph. REDUCTIONS IN INITIAL SALES CHARGES Reductions in the initial sales charges shown in the sales charge tables (quantity discounts) apply to purchases of shares of the AIM Funds that are otherwise subject to an initial sales charge, provided that such purchases are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of the AIM Funds will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges. The term "purchaser" means: o an individual and his or her spouse and children, including any trust established exclusively for the benefit of any such person; or a pension, profit-sharing, or other benefit plan established exclusively for the benefit of any such person, such as an IRA, Roth IRA, a single-participant money-purchase/profit-sharing plan or an individual participant in a 403(b) plan (unless such 403(b) plan qualifies as the purchaser as defined below); o a 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), if: a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the Funds will not accept contributions submitted with respect to individual participants); b. each transmittal must be accompanied by a single check or wire transfer; and c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal; o a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code) and 457 plans, although more than one beneficiary or participant is involved; o a Simplified Employee Pension (SEP), Salary Reduction and other Elective Simplified Employee Pension account (SAR-SEP) or a Savings Incentive Match Plans for Employees IRA (SIMPLE IRA), where the employer has notified the distributor in writing that all of its related employee SEP, SAR-SEP or SIMPLE IRA accounts should be linked; or o any other organized group of persons, whether incorporated or not, provided the organization has been in existence for at least six months and has some purpose other than the purchase at a discount of redeemable securities of a registered investment company. Investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled, by virtue of the foregoing definition, to the reduced sales charge. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to persons or entities who qualify for a reduction in the sales charge as provided herein. 57 168 1. LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced initial sales charges by completing the appropriate section of the account application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992. The LOI confirms such purchaser's intention as to the total investment to be made in shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund, and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) within the following 13 consecutive months. By marking the LOI section on the account application and by signing the account application, the purchaser indicates that he understands and agrees to the terms of the LOI and is bound by the provisions described below. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI, as described under "Sales Charges and Dealer Concessions." It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge. The offering price may be further reduced as described under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI. At any time during the 13-month period after meeting the original obligation, a purchaser may revise his intended investment amount upward by submitting a written and signed request. Such a revision will not change the original expiration date. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the investor will pay the increased amount of sales charge as described below. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI. Purchases made more than 90 days before signing an LOI will be applied toward completion of the LOI based on the value of the shares purchased calculated at the public offering price on the effective date of the LOI. To assure compliance with the provisions of the 1940 Act, out of the initial purchase (or subsequent purchases if necessary) the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released. If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date. If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he must give written notice to AIM Distributors. If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, a cancellation of the LOI will automatically be effected. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time. 2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also qualify for reduced initial sales charges based upon such purchaser's existing investment in shares of any of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) 58 169 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; 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 59 170 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; 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; o Qualified State Tuition Programs created and maintained in accordance with Section 529 of the U.S. Internal Revenue Code of 1986, as amended; or o Participants in select brokerage programs for defined contribution plans and rollover IRAs who purchase shares through an electronic brokerage platform offered by entities with which AIM Distributors has entered into a written agreement. As used above, immediate family includes an individual and his or her spouse, children, parents and parents of spouse. CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS Former GT Global funds Class A shares that are subject to a contingent deferred sales charge and that were purchased before June 1, 1998 are entitled to the following waivers from the contingent deferred sales charge otherwise due upon redemption: (1) minimum required distributions made in connection with an IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other retirement plan following attainment of age 70 1/2; (2) total or partial redemptions resulting from a distribution following retirement in the case of a tax-qualified employer-sponsored retirement plan; (3) when a redemption results from a tax-free return of an excess contribution pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability of the employee; (4) redemptions pursuant to a Fund's right to liquidate a shareholder's account involuntarily; (5) redemptions pursuant to distributions from a tax-qualified employer-sponsored retirement plan, which is invested in the former GT Global funds, which are permitted to be made without penalty pursuant to the Code, other than tax-free rollovers or transfers of assets, and the proceeds of which are reinvested in the former GT Global funds; (6) redemptions made in connection with participant-directed exchanges between options in an employer-sponsored benefit plan; (7) redemptions made for the purpose of providing cash to fund a loan 60 171 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 and AIM Advisor Real Estate Fund by shareholders of record on April 30, 1995, of these Funds, except that shareholders whose broker-dealers maintain a single omnibus account with AFS on behalf of those shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995, from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996; o Redemptions following the death or post-purchase disability of (1) any registered shareholders on an account or (2) a settlor of a living trust, of shares held in the account at the time of death or initial determination of post-purchase disability; o Certain distributions from individual retirement accounts, Section 403(b) retirement plans, Section 457 deferred compensation plans and Section 401 qualified plans, where redemptions result from (i) required minimum distributions to plan participants or beneficiaries who are age 70-1/2 or older, and only with respect to that portion of such distributions that does not exceed 12% annually of the participant's or beneficiary's account value in a particular AIM Fund; (ii) in kind transfers of assets where the participant or beneficiary notifies the distributor of the transfer no later than the time the transfer occurs; (iii) tax-free rollovers or transfers of assets to another plan of the type described above invested in Class B or Class C shares of one or more of the AIM 61 172 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 62 173 result in relatively low expenses of distribution, be permitted to purchase Class A shares of the Funds through AIM Distributors without payment of a sales charge. The persons who may purchase Class A shares of the Funds without a sales charge are under the caption "Reduction in Initial Sales Charges - Purchases at Net Asset Value." You may also be charged a transaction or other fee by the financial institution managing your account. 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. 63 174 Interest and dividend payments are subject to backup withholding in all five situations discussed above. Redemption proceeds and long-term distributions are subject to backup withholding only if (1) (2) or (5) above applies. Certain payees and payments are exempt from backup withholding and information reporting. A complete listing of such exempt entities appears in the Instructions for the Requester of Form W-9 (which can be obtained from the IRS) and includes, among others, the following: o a corporation o an organization exempt from tax under Section 501(a), an individual retirement plan (IRA), or a custodial account under Section 403(b)(7) o the United States or any of its agencies or instrumentalities o a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities o a foreign government or any of its political subdivisions, agencies or instrumentalities o an international organization or any of its agencies or instrumentalities o a foreign central bank of issue o a dealer in securities or commodities required to register in the U.S. or a possession of the U.S. o a futures commission merchant registered with the Commodity Futures Trading Commission o a real estate investment trust o an entity registered at all times during the tax year under the 1940 Act o a common trust fund operated by a bank under Section 584(a) o a financial institution o a middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List o a trust exempt from tax under Section 664 or described in Section 4947 Investors should contact the IRS if they have any questions concerning entitlement to an exemption from backup withholding. NOTE: Section references are to sections of the Code. IRS PENALTIES--Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment. 64 175 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. 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 Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having sixty (60) days or less to maturity are valued at amortized cost, which approximates market value. (See also "Purchasing Shares-- How to Purchase Shares," and "Redeeming Shares--How to Redeem Shares" and "Pricing of Shares" in each Prospectus.) Generally, trading in foreign securities, as well as corporate bonds, U.S. Government securities and money market instruments, is substantially completed each day at various times prior to the close of the 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 65 176 occur between the times at which they are determined and the close of the customary trading session of the NYSE which will not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. Fund securities primarily traded in foreign markets may be traded in such markets on days which are not business days of the Fund. Because the net asset value per share of each Fund is determined only on business days of the Fund, the net asset value per share of a Fund may be significantly affected on days when an investor can not exchange or redeem shares of the Fund. DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS Income dividends and capital gains distributions are automatically reinvested in additional shares of the same class of each Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth in each Prospectus under the caption "Special Plans - Automatic Investment Plan," and "Special Plans-Automatic Dividend Investment." If a shareholder's account does not have any shares in it on a dividend or capital gains distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested. TAX MATTERS The following is only a summary of certain additional tax considerations generally affecting each Fund and its shareholders that are not described in each Fund's Prospectus. No attempt is made to present a detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in each Fund's Prospectus is not intended as a substitute for careful tax planning. QUALIFICATION AS A REGULATED INVESTMENT COMPANY Each Fund intends to qualify each year as a regulated investment company under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In order to qualify for tax treatment as a regulated investment company under the Code, each Fund is required, among other things, to derive at least 90% of its gross income in each taxable year from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies and other income (including but not limited to gains from options, futures or forward contracts derived with respect to the Fund's business of investing in such stock, securities or currencies) (the "Income Requirement"). Foreign currency gains (including gains from options, futures or forward contracts on foreign currencies) that are not "directly related" to a Fund's principal business may, under regulations not yet issued, not be qualifying income for purposes of the Income Requirement. At the close of each quarter of its taxable year, at least 50% of the value of each Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of its total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses (the "Asset Diversification Test"). For purposes of the Asset Diversification Test, it is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related 66 177 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. 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. Legislation enacted in 1997 lowers the maximum capital gain tax rate from 20% to 18% with respect to certain assets (including readily tradable stock) which are held for five years and for which the holding period begins after December 31, 2000. In connection with this new legislation, a Fund may make an election to treat any readily tradable stock it holds on January 1, 2001 as being sold on January 2, 2001 at its closing market price on that date and reacquired on that date for the same amount. If a Fund makes this election, it will recognize any gain, but not loss, on the deemed sale, which may cause a Fund to increase the amount of distributions that the Fund would make for its taxable year that includes January 2, 2001. The Funds have not yet determined whether they will make this election with respect to any shares in their respective portfolios. 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 67 178 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 that are held at year end are treated as if they are sold for their fair market value on the last business day of the taxable year, regardless of whether a taxpayer's obligations (or rights) under such contracts have terminated (by delivery, exercise, entering into a closing transaction or otherwise) as of such date. Any gain or loss recognized as a consequence of the year-end deemed disposition of Section 1256 contracts is combined with any other gain or loss that was previously recognized upon the termination of Section 1256 contracts during that taxable year. The net amount of such gain or loss for the entire taxable year (including gain or loss arising as a consequence of the year-end deemed sale of such contracts) is deemed to be 60% long-term (taxable at a maximum 20% to non-corporate shareholders) and 40% short-term gain or loss. However, in the case of Section 1256 contracts that are forward foreign currency exchange contracts, the net gain or loss is separately determined and (as discussed above) can be treated as ordinary income or loss. The Funds may engage in certain hedging transactions (such as short sales "against the box") that may be subject to special tax treatment as "constructive sales" under Section 1259 of the Code if a Fund holds certain "appreciated financial positions" (defined generally as any interest (including a future or forward contract, short sale or option) with respect to stock, certain debt instruments, or partnership interest if there would be a gain were such interest sold, assigned, or otherwise terminated at its fair market value.) Upon entering into a constructive sales transaction with respect to an appreciated financial position, a Fund will be deemed to have constructively sold such appreciated financial position and will recognize gain as if such position were sold, assigned or otherwise terminated at its fair market value on the date of such constructive sale (and will generally take into account any gain in the taxable year which includes such date). Other hedging transactions in which the Funds may engage may result in "straddles" or "conversion transactions" for U.S. federal income tax purposes. The straddle and conversion transaction rules may affect the character of gains (or in the case of the straddle rules, losses) realized by the Funds. In addition, losses realized by the Funds on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. Because only a few regulations implementing the straddle rules and the conversion transaction rules have been promulgated, the tax consequences to the Funds of hedging transactions are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the Funds (and, if they are conversion transactions, the amount of ordinary income) which is taxed as ordinary income when distributed to shareholders. Each Fund may make one or more of the elections available under the Code which are applicable to straddles. If a Fund makes any of the elections, the amount, character, and timing of the recognition of 68 179 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 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. Any loss in excess of previously recognized income will be treated as a short term loss. 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. 69 180 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 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, 70 181 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 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. 71 182 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 1, 2001. 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. The Company will issue share certificates upon written request to AFS. Otherwise, shares are held on the shareholder's behalf and recorded on the Fund's books. The Company will not issue certificates for shares held in prototype retirement plans. SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption. Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect. Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan. TERMS AND CONDITIONS OF EXCHANGES. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends, and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange. 72 183 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 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. 73 184 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 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 74 185 represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes. MISCELLANEOUS INFORMATION CHANGES FOR CERTAIN ACCOUNT INFORMATION The Transfer Agent may impose certain copying changes for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. AUDIT REPORTS The Board of Directors will issue to shareholders semi-annually the Funds' financial statements. Financial statements, audited by independent auditors, will be issued annually. Due to an investment in another AIM Fund, which KPMG LLP represented to the AIM Fund was inadvertent, and new SEC rules regarding auditor independence, KPMG LLP resigned as independent public accountants for the Company. The Board of Directors of the Company has selected PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110 as the independent public accountants to audit the financial statements of the Funds. LEGAL MATTERS Legal matters for the Company are passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103. CUSTODIAN AND TRANSFER AGENT State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds. Under its contract with the Company relating to each Fund, the Custodian is authorized to establish separate accounts in foreign currencies and to cause foreign securities owned by each Fund to be held in its offices outside the United States and with certain foreign banks and securities depositories. The Custodian attends to the collection of principal and income, pays and collects all monies for securities bought and sold by each Fund, and performs certain other ministerial duties. AFS, a wholly owned subsidiary of AIM, P.O. Box 4739, Houston, Texas 77210-4739, is the transfer and dividend disbursing agent for the Class A, Class B and Class C shares of each of the Funds. Each Fund pays the Custodian and the Transfer Agent such compensation as may be agreed upon from time to time. Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank National Association), 712 Main, Houston, Texas 77002, serves as Sub-Custodian for retail purchases of the AIM Funds. PRINCIPAL HOLDERS OF SECURITIES To the best knowledge of the Company, the names and addresses of the holders of 5% or more of the outstanding shares of each class of each of the Company's portfolios as of February 5, 2001, and the amount of outstanding shares held by such holders, are set forth below: 75 186
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------- AIM International Equity Fund - Class A shares Merrill Lynch, Pierce, 36.13%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch, Pierce, 31.71%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce, 51.13%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 AIM Global Aggressive Growth Fund - Class A shares Merrill Lynch, Pierce 10.78% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246
- ---------- * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. ** A shareholder who holds 25% or more of the outstanding shares of a Fund may be presumed to be in "control" of such Fund, as defined in the 1940 Act. 76 187
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------- Class B shares Merrill Lynch, Pierce, 21.02% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce, 27.44% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 AIM Global Growth Fund - Class A shares Merrill Lynch, Pierce, 8.11% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch, Pierce, 11.97% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246
- ---------- * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. 77 188
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------ Class C shares Merrill Lynch, Pierce 28.19% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 AIM Global Income Fund - Class A shares Charles Schwab Co. Inc. 12.06% -0- Reinvestment Account 101 Montgomery St. San Francisco, CA 94104 Class C shares First Clearing Corporation 6.06% -0- J. Stuart Johnson IRA 3000 Pennsylvania Avenue West Warren, PA 16365 AIM European Development Fund - Class A shares Merrill Lynch, Pierce, 7.16% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 Charles Schwab Co. Inc. 5.36% -0- Reinvestment Account 101 Montgomery St. San Francisco, CA 94104 Class B shares Merrill Lynch Pierce 9.59% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246
- ---------- * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. 78 189
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- --------------- ------------ ------------- Class C shares Merrill Lynch, Pierce, 21.69% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 AIM Asian Growth Fund - Class B shares Merrill Lynch, Pierce, 5.72% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch Pierce 12.21% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 2nd Floor Jacksonville, FL 32246
As of February 5, 2001, the directors and officers of the Company 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 Company have filed with the SEC under the 1933 Act and the 1940 Act, and reference is hereby made to the Registration Statement for further information with respect to each portfolio of the Company and the securities offered hereby. The Registration Statement is available for inspection by the public at the Securities and Exchange Commission in Washington, D.C. - ---------- * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. 79 190 APPENDIX A - -------------------------------------------------------------------------------- DESCRIPTION OF MONEY MARKET OBLIGATIONS The following list does not purport to be an exhaustive list of all Money Market Obligations, and the Funds reserve the right to invest in Money Market Obligations other than those listed below: 1. GOVERNMENT OBLIGATIONS. U.S. GOVERNMENT DIRECT OBLIGATIONS -- Bills, notes, and bonds issued by the U.S. Treasury. U.S. GOVERNMENT AGENCIES SECURITIES -- Certain federal agencies such as the Government National Mortgage Association have been established as instrumentalities of the U. S. Government to supervise and finance certain types of activities. Issues of these agencies, while not direct obligations of the U. S. Government, are either backed by the full faith and credit of the United States or are guaranteed by the Treasury or supported by the issuing agencies' right to borrow from the Treasury. FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated obligations issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities that are determined by the Fund's investment advisor to be of comparable quality to the other obligations in which the Fund may invest. Such securities also include debt obligations of supranational entities. Supranational entities include international organizations designated or supported by governmental entities to promote economic reconstruction or development and international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the World Bank), the European Coal and Steel Community, the Asian Development Bank and the InterAmerican Development Bank. The percentage of the Fund's assets invested in securities issued by foreign governments will vary depending on the relative yields of such securities, the economic and financial markets of the countries in which the investments are made and the interest rate climate of such countries. 2. BANK INSTRUMENTS. BANKERS' ACCEPTANCES -- A bill of exchange or time draft drawn on and accepted by a commercial bank. It is used by corporations to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less. CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument with a specific maturity. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market, prior to maturity. TIME DEPOSITS -- A non-negotiable receipt issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market. EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S. dollar-denominated obligation issued by a foreign branch of a domestic bank. YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S. dollar-denominated obligation issued by a domestic branch of a foreign bank. A-1 191 3. COMMERCIAL INSTRUMENTS. COMMERCIAL PAPER -- The term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few days to nine months. MASTER DEMAND NOTES -- Master demand notes are demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with the issuers. The interest rate on a master demand note is periodically redetermined according to a prescribed formula. Although there is no secondary market in master demand notes, the payee may demand payment of the principal amount of the note on relatively short notice. Master demand notes may be secured or unsecured. 4. REPURCHASE AGREEMENTS -- A repurchase agreement is a contractual undertaking whereby the seller of securities (limited to U.S. Government securities, including securities issued or guaranteed by the U.S. Treasury or the various agencies and instrumentalities of the U.S. Government) agrees to repurchase the securities at a specified price on a future date determined by negotiations. A-2 192 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-1 193 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-2 194 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-3 195 DUFF & PHELPS FIXED-INCOME RATINGS ARE AS FOLLOWS: *AAA Highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt. *AA+, AA AND AA- High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. *A+, A AND A- Protection factors are average but adequate. However, risk factors are more variable and greater in periods of economic stress. *BBB+, BBB AND BBB- Below average protection factors but still considered sufficient for prudent investment. Considerable variability in risk during economic cycles. BB+, BB AND BB- Below investment grade but deemed likely to meet obligations when due. Present or prospective financial protection factors fluctuate according to industry conditions or company fortunes. Overall quality may move up or down frequently within this category. B+, B AND B- Below investment grade and possessing risk that obligations will not be met when due. Financial protection factors will fluctuate widely according to economic cycles, industry conditions and/or company fortunes. Potential exists for frequent changes in quality rating within this category or into a higher or lower quality rating grade. CCC Well below investment grade securities. May be in default or have considerable uncertainty as to timely payment of interest, preferred dividends and/or principal. Protection factors are narrow and risk can be substantial with unfavorable economic/industry conditions, and/or with unfavorable company developments. DD Defaulted debt obligations. Issuer failed to meet scheduled principal and/or interest payments. DP Preferred stock with dividend arrearages. B-4 196 FITCH IBCA, INC.'S BOND RATINGS ARE AS FOLLOWS: *AAA Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events. *AA Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated 'AAA.' Because bonds rated in the 'AAA' and 'AA' categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated 'F-1+.' *A Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings. *BBB Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds, and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings. BB Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified which could assist the obligor in satisfying its debt service requirements. B Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue. CCC Bonds have certain identifiable characteristics which, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment. CC Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time. B-5 197 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. 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-6 198 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. C-1 199 Loans not provided from FNMA's own portfolio are purchased only from primary lenders that satisfy certain criteria developed by FNMA, including depth of mortgage origination experience, servicing experience and financial capacity. FNMA may purchase an entire loan pool from a single lender, and issue Certificates backed by that loan pool alone, or may package a pool made up of loans purchased from various lenders. 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 C-2 200 maturity of the mortgages in the pool. Foreclosures impose little risk to principal investment because of the GNMA guarantee. As the prepayment rates of individual mortgage pools will vary widely, it is not possible to accurately predict the average life of a particular issue of GNMA Certificates. However, statistics published by the Federal Housing Authority indicate that the average life of a single-family dwelling mortgage with 25- to 30-year maturity, the type of mortgage which backs the vast majority of GNMA Certificates, is approximately 12 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-3 201 FINANCIAL STATEMENTS FS 202 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, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the periods in the two-year period 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the AIM Asian Growth Fund as of October 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the periods in the two-year period then ended and the period November 3, 1997 (date operations commenced) through October 31, 1998, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP December 6, 2000 Houston, Texas FS-1 203 SCHEDULE OF INVESTMENTS October 31, 2000
MARKET SHARES VALUE STOCKS & OTHER EQUITY INTERESTS-88.22% AUSTRALIA-11.25% Brambles Industries Ltd. (Air Freight) 102,500 $ 2,657,553 - --------------------------------------------------------------- BRL Hardy Ltd. (Beverages-Alcoholic) 502,000 1,969,803 - --------------------------------------------------------------- Computershare Ltd. (Computers-Software & Services) 850,800 3,682,452 - --------------------------------------------------------------- CSL Ltd. (Health Care-Drugs-Generic & Other) 75,000 1,334,155 - --------------------------------------------------------------- ERG Ltd. (Electrical Equipment) 825,000 4,041,186 - --------------------------------------------------------------- Foster's Brewing Group Ltd. (Beverages-Alcoholic) 934,000 2,115,687 =============================================================== 15,800,836 =============================================================== CAYMAN ISLANDS-1.02% ASAT Holdings Ltd.-ADR (Electronics-Semiconductor)(a) 217,000 1,437,625 =============================================================== CHINA-0.96% AsiaInfo Holdings, Inc. (Computers-Software & Services)(a) 111,200 1,348,300 =============================================================== HONG KONG-34.13% Asia Satellite Telecommunications Holdings Ltd. (Telecommunications-Cellular/Wireless) 860,000 1,742,275 - --------------------------------------------------------------- China Mobile Ltd. (Telecommunications-Cellular/ Wireless)(a) 544,000 3,487,627 - --------------------------------------------------------------- Dah Sing Financial Group (Banks-Regional) 1,017,600 4,371,022 - --------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks-Regional) 707,500 3,574,240 - --------------------------------------------------------------- Denway Motors Ltd. (Auto Parts & Equipment)(a) 11,450,000 1,849,853 - --------------------------------------------------------------- Esprit Holdings Ltd. (Retail-Specialty Apparel) 4,028,000 3,460,392 - --------------------------------------------------------------- Giordano International Ltd. (Retail-Specialty Apparel) 7,207,000 4,227,725 - --------------------------------------------------------------- HKR International Ltd. (Land Development) 1,372,600 571,990 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 360,800 4,487,447 - --------------------------------------------------------------- Johnson Electric Holdings Ltd. (Electrical Equipment) 1,558,000 3,136,376 - --------------------------------------------------------------- Legend Holdings Ltd. (Computers-Hardware) 4,254,000 3,600,000 - --------------------------------------------------------------- Li & Fung Ltd. (Distributors-Food & Health) 2,752,000 5,116,553 - --------------------------------------------------------------- Shangri-La Asia Ltd. (Lodging-Hotels) 2,856,000 2,819,746 - --------------------------------------------------------------- SINA.com (Computers-Software & Services)(a) 154,000 1,073,188 - --------------------------------------------------------------- Sunevision Holdings Ltd. (Computers-Software & Services)(a) 851,787 415,026 - --------------------------------------------------------------- Television Broadcasts Ltd. (Broadcasting-Television, Radio & Cable) 311,000 1,702,744 - --------------------------------------------------------------- Wing Hang Bank Ltd. (Banks-Major Regional) 746,500 2,278,074 =============================================================== 47,914,278 ===============================================================
MARKET SHARES VALUE INDIA-4.28% Infosys Technologies Ltd. (Computers-Software & Services)(b) 15,100 $ 2,319,991 - --------------------------------------------------------------- ITC Ltd. (Tobacco) 90,000 1,468,670 - --------------------------------------------------------------- ITC Ltd.-GDR (Tobacco) 19,600 355,740 - --------------------------------------------------------------- Satyam Computer Services Ltd. (Computers-Software & Services) 284,000 1,870,823 =============================================================== 6,015,224 =============================================================== INDONESIA-1.18% Gulf Indonesia Resources Ltd. (Oil-International Integrated)(a) 152,700 1,660,613 =============================================================== NEW ZEALAND-0.80% Sky Network Television Ltd. (Broadcasting-Television, Radio & Cable)(a) 855,000 1,051,188 - --------------------------------------------------------------- Sky Network Television Ltd.-ADR (Broadcasting-Television, Radio & Cable)(a) 5,400 66,434 =============================================================== 1,117,622 =============================================================== PHILIPPINES-1.54% Bank of the Philippine Islands (Banks-Major Regional) 1,146,388 1,164,127 - --------------------------------------------------------------- SM Prime Holdings, Inc. (Land Development) 12,824,900 992,255 =============================================================== 2,156,382 =============================================================== SINGAPORE-13.74% Chartered Semiconductor Manufacturing Ltd.-ADR (Electronics-Semiconductors)(a) 43,000 1,999,500 - --------------------------------------------------------------- Datacraft Asia Ltd. (Communications Equipment) 488,384 3,345,430 - --------------------------------------------------------------- DBS Group Holdings Ltd. (Banks-Money Center) 376,137 4,433,204 - --------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 854,000 1,701,873 - --------------------------------------------------------------- Keppel Land Ltd. (Land Development) 2,006,000 2,992,496 - --------------------------------------------------------------- NatSteel Broadway Ltd. (Electronics-Component Distributors) 928,000 1,077,902 - --------------------------------------------------------------- Singapore Airlines Ltd. (Airlines) 253,000 2,535,330 - --------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing-Newspapers) 84,000 1,200,478 =============================================================== 19,286,213 =============================================================== SOUTH KOREA-5.04% Hyundai Motor Co. Ltd. (Automobiles) 122,000 1,394,286 - --------------------------------------------------------------- Korea Telecom Corp. (Telephone)(a) 12,620 743,332 - --------------------------------------------------------------- Korea Telecom Corp.-ADR (Telephone) 70,284 2,591,723 - --------------------------------------------------------------- Pohang Iron & Steel Co. Ltd.-ADR (Iron & Steel) 72,100 1,140,081 - --------------------------------------------------------------- Samsung Electronics N.V. (Electronics-Component Distributors) 9,614 1,204,391 =============================================================== 7,073,813 ===============================================================
FS-2 204
MARKET SHARES VALUE TAIWAN-11.49% Advantech Co., Ltd. (Computers-Hardware) 448,500 $ 1,678,840 - --------------------------------------------------------------- Ambit Microsystems Corp. (Electronics-Component Distributors) 342,600 1,589,791 - --------------------------------------------------------------- Compal Electronics Inc. (Computers-Hardware) 1,501,115 2,289,404 - --------------------------------------------------------------- Far Eastern Textile Ltd. (Textiles-Apparel) 185,051 152,277 - --------------------------------------------------------------- Hon Hai Precision Industry Co., Ltd. (Electronics-Component Distributors) 585,000 3,058,469 - --------------------------------------------------------------- Macronix International Co., Ltd. (Electronics-Component Distributors)(a) 1,181,540 1,681,387 - --------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. Ltd. (Electronics-Semiconductors)(a) 983,760 2,982,474 - --------------------------------------------------------------- United Microelectronics Corp. Ltd. (Electronics-Component Distributors)(a) 1,000,400 1,764,046 - --------------------------------------------------------------- VIA Technologies Inc. (Electronics-Semiconductors)(a) 130,000 933,024 =============================================================== 16,129,712 =============================================================== THAILAND-1.66% Advanced Info Service Public Co. Ltd. (Telephone)(a) 284,000 2,336,015 ===============================================================
MARKET SHARES VALUE UNITED STATES OF AMERICA-1.13% UTStarcom, Inc. (Communications Equipment)(a) 79,400 $ 1,588,000 =============================================================== Total Stocks & Other Equity Interests (Cost $134,055,048) 123,864,633 ===============================================================
PRINCIPAL AMOUNT U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES-0.77% COMPUTERS (HARDWARE)-0.77% Compal Electronics Inc. (Taiwan), Conv. Unsec. Bonds, 0.00%, 10/19/05 (Acquired 10/12/00; Cost $1,000,000)(c)(d) $1,000,000 1,077,500 ===============================================================
SHARES MONEY MARKET FUNDS-7.06% STIC Liquid Assets Portfolio(e) 4,959,611 4,959,611 - ------------------------------------------------------------- STIC Prime Portfolio(e) 4,959,610 4,959,610 ============================================================= Total Money Market Funds (Cost $9,919,221) 9,919,221 ============================================================= TOTAL INVESTMENTS-96.05% (Cost $144,974,269) 134,861,354 ============================================================= OTHER ASSETS LESS LIABILITIES-3.95% 5,543,188 ============================================================= NET ASSETS-100.00% $140,404,542 _____________________________________________________________ =============================================================
Investment Abbreviations: ADR - American Depositary Receipt Conv. - Convertible GDR - Global Depositary Receipt Ltd. - Limited Unsec. - Unsecured Notes to Schedule of Investments: (a) Non-income producing security. (b) Security fair valued in accordance with the procedures established by the Board of Directors. (c) 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 market value at 10/31/00 represented 0.77% of the Fund's net assets. (d) Zero coupon bond issued at a discount. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. (e) The money market fund and the Fund are affiliated by having the same investment advisor. See Notes to Financial Statements. FS-3 205 STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 ASSETS: Investments, at market value (cost $144,974,269) $134,861,354 - ------------------------------------------------------------ Foreign currencies, at value (cost $440,069) 433,251 - ------------------------------------------------------------ Receivables for: Investments sold 348,460 - ------------------------------------------------------------ Capital stock sold 5,888,884 - ------------------------------------------------------------ Dividends 104,999 - ------------------------------------------------------------ Investment for deferred compensation plan 13,351 ============================================================ Total assets $141,650,299 ============================================================ LIABILITIES: Payables for: Capital stock reacquired 975,349 - ------------------------------------------------------------ Deferred compensation plan 13,351 - ------------------------------------------------------------ Accrued advisory fees 19,655 - ------------------------------------------------------------ Accrued administrative services fees 4,235 - ------------------------------------------------------------ Accrued distribution fees 62,740 - ------------------------------------------------------------ Accrued directors' fees 395 - ------------------------------------------------------------ Accrued transfer agent fees 66,447 - ------------------------------------------------------------ Accrued operating expenses 103,585 ============================================================ Total liabilities 1,245,757 ============================================================ Net assets applicable to shares outstanding $140,404,542 ____________________________________________________________ ============================================================ NET ASSETS: Class A $ 93,755,440 ____________________________________________________________ ============================================================ Class B $ 39,851,704 ____________________________________________________________ ============================================================ Class C $ 6,797,398 ____________________________________________________________ ============================================================ CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 8,765,621 ____________________________________________________________ ============================================================ Class B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 3,796,542 ____________________________________________________________ ============================================================ Class C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 647,845 ____________________________________________________________ ============================================================ Class A: Net asset value and redemption price per share $ 10.70 - ------------------------------------------------------------ Offering price per share: (Net asset value of $10.70 divided by 94.50%) $ 11.32 ____________________________________________________________ ============================================================ Class B: Net asset value and offering price per share $ 10.50 ____________________________________________________________ ============================================================ Class C: Net asset value and offering price per share $ 10.49 ____________________________________________________________ ============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 2000 INVESTMENT INCOME: Dividends (net of foreign withholding tax of $187,425) $ 961,627 - ------------------------------------------------------------ Dividends from affiliated money market funds 423,834 - ------------------------------------------------------------ Interest 12,271 - ------------------------------------------------------------ Security lending income 7,105 ============================================================ Total investment income 1,404,837 ============================================================ EXPENSES: Advisory fees 985,957 - ------------------------------------------------------------ Administrative services fees 50,000 - ------------------------------------------------------------ Custodian fees 189,767 - ------------------------------------------------------------ Distribution fees -- Class A 230,776 - ------------------------------------------------------------ Distribution fees -- Class B 307,199 - ------------------------------------------------------------ Distribution fees -- Class C 71,664 - ------------------------------------------------------------ Transfer agent fees -- Class A 260,996 - ------------------------------------------------------------ Transfer agent fees -- Class B 134,172 - ------------------------------------------------------------ Transfer agent fees -- Class C 31,300 - ------------------------------------------------------------ Directors' fees 6,620 - ------------------------------------------------------------ Other 136,314 ============================================================ Total expenses 2,404,765 ============================================================ Less: Fees waived (126,985) - ------------------------------------------------------------ Expenses paid indirectly (1,867) ============================================================ Net expenses 2,275,913 ============================================================ Net investment income (loss) (871,076) ============================================================ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 1,135,311 - ------------------------------------------------------------ Foreign currencies (254,607) ============================================================ 880,704 ============================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (29,166,419) - ------------------------------------------------------------ Foreign currencies (9,626) ============================================================ (29,176,045) ============================================================ Net gain (loss) on investment securities and foreign currencies (28,295,341) ============================================================ Net increase (decrease) in net assets resulting from operations $(29,166,417) ____________________________________________________________ ============================================================
See Notes to Financial Statements. FS-4 206 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2000 and 1999
2000 1999 ------------ ----------- OPERATIONS: Net investment income (loss) $ (871,076) $ (202,477) - ----------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 880,704 926,182 - ----------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies (29,176,045) 6,896,839 ========================================================================================= Net increase (decrease) in net assets resulting from operations (29,166,417) 7,620,544 ========================================================================================= Distributions to shareholders from net investment income: Class A -- (43,024) - ----------------------------------------------------------------------------------------- Class B -- (3,910) - ----------------------------------------------------------------------------------------- Class C -- (898) - ----------------------------------------------------------------------------------------- Share transactions-net: Class A 87,843,677 12,107,278 - ----------------------------------------------------------------------------------------- Class B 36,793,037 7,604,535 - ----------------------------------------------------------------------------------------- Class C 2,437,146 3,780,454 ========================================================================================= Net increase in net assets 97,907,443 31,064,979 ========================================================================================= NET ASSETS: Beginning of year 42,497,099 11,432,120 ========================================================================================= End of year $140,404,542 $42,497,099 _________________________________________________________________________________________ ========================================================================================= NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $205,259,013 $36,066,914 - ----------------------------------------------------------------------------------------- Undistributed net investment income (loss) (27,256) (7,889) - ----------------------------------------------------------------------------------------- Undistributed net realized gain (loss) from investment securities and foreign currencies (54,706,288) (747,438) - ----------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) of investment securities and foreign currencies (10,120,927) 7,185,512 ========================================================================================= $140,404,542 $42,497,099 _________________________________________________________________________________________ =========================================================================================
See Notes to Financial Statements. FS-5 207 NOTES TO FINANCIAL STATEMENTS October 31, 2000 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2000, undistributed net investment income was increased by $851,709, undistributed net realized gains decreased by $54,839,554 and paid in capital increased by $53,987,845 as a result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above. C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund has a capital loss carryforward of $54,943,768 as of October 31, 2000 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2005. 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 FS-6 208 denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in 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. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $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. AIM has contractually agreed to waive fees and reimburse expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit total operating expenses of Class A shares to 1.92% (e.g. if AIM waives 0.10% of Class A expenses, AIM will also waive 0.10% of Class B and Class C expenses). During the year ended October 31, 2000, AIM waived fees of $92,285. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the year ended October 31, 2000, AIM was paid $50,000 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. For the year ended October 31, 2000, AFS was paid $249,956 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.35% 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, 2000, the Class A, Class B and Class C shares paid AIM Distributors $196,076, $307,199 and $71,664, respectively, as compensation under the Plans and AIM Distributors waived fees of $34,700. AIM Distributors received commissions of $64,327 from sales of the Class A shares of the Fund during the year ended October 31, 2000. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 2000, AIM Distributors received $10,620 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2000, the Fund paid legal fees of $4,062 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,503 and reductions in custodian fees of $364 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $1,867. 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 Citibank, N.A. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 2000, the Fund did not borrow under the line of credit agreement. The FS-7 209 funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. At October 31, 2000, there were no securities on loan to brokers. For the year ended October 31, 2000, the Fund received fees of $7,105 for securities lending. NOTE 7-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2000 was $70,839,981 and $59,912,761, respectively. The amount of unrealized appreciation (depreciation) of investment securities as of October 31, 2000 is as follows: Aggregate unrealized appreciation of investment securities $ 13,529,198 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (23,851,018) ========================================================= Net unrealized appreciation (depreciation) of investment securities $(10,321,820) _________________________________________________________ ========================================================= Cost of investments for tax purposes is $145,183,174.
NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the years October 31, 2000 and 1999 were as follows:
2000 1999 -------------------------- -------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sold: Class A 8,636,312 $109,857,994 7,418,728 $ 73,010,343 - ---------------------------------------------------------------------------------------------------------------------- Class B 1,506,797 19,210,223 1,590,485 15,858,499 - ---------------------------------------------------------------------------------------------------------------------- Class C 844,431 10,972,106 1,155,486 11,034,900 ====================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 5,228 39,837 - ---------------------------------------------------------------------------------------------------------------------- Class B -- -- 494 3,756 - ---------------------------------------------------------------------------------------------------------------------- Class C -- -- 118 897 ====================================================================================================================== Issued in connection with acquisitions:* Class A 5,417,888 76,520,172 -- -- - ---------------------------------------------------------------------------------------------------------------------- Class B 2,222,098 30,887,919 -- -- - ---------------------------------------------------------------------------------------------------------------------- Class C 35,470 492,438 -- -- ====================================================================================================================== Reacquired: Class A (7,649,919) (98,534,489) (6,066,544) (60,942,902) - ---------------------------------------------------------------------------------------------------------------------- Class B (1,065,606) (13,305,105) (854,740) (8,257,720) - ---------------------------------------------------------------------------------------------------------------------- Class C (703,160) (9,027,398) (774,549) (7,255,343) ====================================================================================================================== 9,244,311 $127,073,860 2,474,706 $ 23,492,267 ______________________________________________________________________________________________________________________ ======================================================================================================================
* As of the close of business on June 9, 2000, the Fund acquired all the net assets of New Pacific Growth Fund pursuant to a plan of reorganization approved by New Pacific Growth Fund's shareholders on May 31, 2000. The acquisition was accomplished by a tax-free exchange of 7,675,456 shares of the Fund for 16,613,124 shares of New Pacific Growth Fund outstanding as of the close of business on June 9, 2000. New Pacific Growth Fund's net assets at that date were $107,900,529, including $11,869,606 of unrealized appreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $77,097,622. FS-8 210 NOTE 9-FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A -------------------------------------- NOVEMBER 3, 1997 YEAR ENDED (DATE OPERATIONS OCTOBER 31, COMMENCED) TO ------------------ OCTOBER 31, 2000(a) 1999(a) 1998 ------- ------- ---------------- Net asset value, beginning of period $ 10.76 $ 7.69 $ 10.00 - ---------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.07) (0.03) 0.05 - ---------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.01 3.14 (2.36) ==================================================================================================== Total from investment operations (0.06) 3.11 (2.31) ==================================================================================================== Less distributions of dividends from net investment income -- (0.04) -- ==================================================================================================== Net asset value, end of period $ 10.70 $ 10.76 $ 7.69 ____________________________________________________________________________________________________ ==================================================================================================== Total return(b) (0.56)% 40.66% (23.10)% ____________________________________________________________________________________________________ ==================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $93,755 $25,420 $ 7,716 ____________________________________________________________________________________________________ ==================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.92%(c) 1.92% 1.92%(d) - ---------------------------------------------------------------------------------------------------- Without fee waivers 2.06%(c) 2.72% 4.88%(d) ==================================================================================================== Ratio of net investment income (loss) to average net assets (0.57)%(c) (0.50)% 0.70%(d) ____________________________________________________________________________________________________ ==================================================================================================== Portfolio turnover rate 64% 142% 79% ____________________________________________________________________________________________________ ====================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $65,936,105. (d) Annualized.
CLASS B -------------------------------------- NOVEMBER 3, 1997 YEAR ENDED (DATE OPERATIONS OCTOBER 31, COMMENCED) TO ------------------- OCTOBER 31, 2000(a) 1999(a) 1998 ------- ------- ---------------- Net asset value, beginning of period $ 10.65 $ 7.63 $ 10.00 - ---------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.13) (0.01) - ---------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.02 3.16 (2.36) ==================================================================================================== Total from investment operations (0.15) 3.03 (2.37) ==================================================================================================== Less distributions of dividends from net investment income -- (0.01) -- ==================================================================================================== Net asset value, end of period $ 10.50 $ 10.65 $ 7.63 ____________________________________________________________________________________________________ ==================================================================================================== Total return(b) (1.41)% 39.76% (23.70)% ____________________________________________________________________________________________________ ==================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $39,852 $12,070 $ 3,030 ____________________________________________________________________________________________________ ==================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.67%(c) 2.79% 2.80%(d) - ---------------------------------------------------------------------------------------------------- Without fee waivers 2.76%(c) 3.59% 5.75%(d) ==================================================================================================== Ratio of net investment income (loss) to average net assets (1.32)%(c) (1.37)% (0.18)%(d) ____________________________________________________________________________________________________ ==================================================================================================== Portfolio turnover rate 64% 142% 79% ____________________________________________________________________________________________________ ====================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $30,719,909. (d) Annualized. FS-9 211 NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C -------------------------------------- NOVEMBER 3, 1997 YEAR ENDED (DATE OPERATIONS OCTOBER 31, COMMENCED) TO ------------------ OCTOBER 31, 2000(a) 1999(a) 1998 ------- ------- ---------------- Net asset value, beginning of period $10.63 $ 7.61 $ 10.00 - ---------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.13) (0.01) - ---------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.03 3.16 (2.38) ==================================================================================================== Total from investment operations (0.14) 3.03 (2.39) ==================================================================================================== Less distributions of dividends from net investment income -- (0.01) -- ==================================================================================================== Net asset value, end of period $10.49 $10.63 $ 7.61 ____________________________________________________________________________________________________ ==================================================================================================== Total return(b) (1.32)% 39.86% (23.90)% ____________________________________________________________________________________________________ ==================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $6,797 $5,008 $ 686 ____________________________________________________________________________________________________ ==================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.67%(c) 2.79% 2.80%(d) - ---------------------------------------------------------------------------------------------------- Without fee waivers 2.76%(c) 3.59% 5.75%(d) ==================================================================================================== Ratio of net investment income (loss) to average net assets (1.32)%(c) (1.37)% (0.18)%(d) ____________________________________________________________________________________________________ ==================================================================================================== Portfolio turnover rate 64% 142% 79% ____________________________________________________________________________________________________ ====================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $7,166,373. (d) Annualized. FS-10 212 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, 2000, 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 periods in the two-year period 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the AIM European Development Fund as of October 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the periods in the two-year period then ended and the period November 3, 1997 (date operations commenced) through October 31, 1998, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP December 6, 2000 Houston, Texas FS-11 213 SCHEDULE OF INVESTMENTS October 31, 2000
MARKET SHARES VALUE FOREIGN STOCKS & OTHER EQUITY INTERESTS-91.91% DENMARK-5.57% GN Store Nord A.S. (Communications Equipment) 222,500 $ 4,313,294 - -------------------------------------------------------------- Novo Nordisk A.S.-Class B (Health Care-Drugs-Generic & Other)(a) 44,800 9,502,132 - -------------------------------------------------------------- Vestas Wind Systems A.S. (Manufacturing-Specialized) 190,900 10,340,217 - -------------------------------------------------------------- William Demant A.S. (Electronics- Instrumentation) 74,200 3,553,721 ============================================================== 27,709,364 ============================================================== FINLAND-3.31% Elcoteq Network-Class A (Manufacturing-Specialized) 258,400 8,815,505 - -------------------------------------------------------------- Nokia Oyj (Communications Equipment) 186,000 7,654,093 ============================================================== 16,469,598 ============================================================== FRANCE-20.72% Alcatel S.A. (Communications Equipment) 103,300 6,303,201 - -------------------------------------------------------------- Altran Technologies S.A. (Services- Commercial & Consumer) 21,900 4,477,231 - -------------------------------------------------------------- Assurances Generales de France (Insurance-Multi-Line) 70,600 3,864,496 - -------------------------------------------------------------- Aventis S.A. (Chemicals-Diversified)(a) 72,700 5,244,233 - -------------------------------------------------------------- BNP Paribas (Banks-Major Regional) 89,700 7,734,189 - -------------------------------------------------------------- Egide S.A. (Electronics-Component Distribution)(a) 8,300 4,508,029 - -------------------------------------------------------------- Galeries Lafayette (Retail-Department Stores) 29,300 4,726,921 - -------------------------------------------------------------- Havas Advertising S.A. (Services-Advertising/ Marketing) 292,000 4,705,832 - -------------------------------------------------------------- M6 Metropole Television (Broadcasting- Television, Radio & Cable) 94,000 4,148,201 - -------------------------------------------------------------- Metrologic Group (Computers-Software & Services) 40,000 3,309,735 - -------------------------------------------------------------- NRJ Group (Broadcasting-Television, Radio Cable)(a) 116,526 3,856,702 - -------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 21,800 3,890,670 - -------------------------------------------------------------- PSA Peugeot Citroen (Automobiles) 20,600 3,793,635 - -------------------------------------------------------------- Renault S.A. (Automobiles) 6,100 301,285 - -------------------------------------------------------------- Riber S.A. (Electrical Equipment)(a) 387,900 8,289,038 - -------------------------------------------------------------- Royal Canin S.A. (Foods) 52,200 4,717,900 - -------------------------------------------------------------- Sanofi-Synthelabo S.A. (Health Care-Drugs-Generic & Other) 80,300 4,225,089 - -------------------------------------------------------------- Schneider Electric S.A. (Housewares)(a) 19,700 1,283,138 - -------------------------------------------------------------- Silicon-On-Insulator Technologies (SOITEC) (Electronics-Component Distribution)(a) 239,000 5,415,490 - -------------------------------------------------------------- Societe Generale-Class A (Banks-Major Regional) 64,500 3,661,967 - -------------------------------------------------------------- Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 46,100 2,515,594 - --------------------------------------------------------------
MARKET SHARES VALUE FRANCE-(CONTINUED) STMicroelectronics N.V. (Electronics-Semiconductors) 102,000 $ 5,146,129 - -------------------------------------------------------------- Total Fina Elf S.A. (Oil-International Integrated) 48,637 6,959,098 ============================================================== 103,077,803 ============================================================== GERMANY-8.09% ADVA A.G. Optical Networking (Communications Equipment)(a) 83,400 6,122,246 - -------------------------------------------------------------- Altana A.G. (Health Care-Drugs-Generic & Other) 29,200 3,543,623 - -------------------------------------------------------------- Comroad A.G. (Communications Equipment)(a) 59,200 2,861,173 - -------------------------------------------------------------- ELMOS Semiconductor A.G. (Electronics-Semiconductors)(a) 74,100 2,452,514 - -------------------------------------------------------------- Gfk A.G. (Services-Commercial & Consumer) 65,719 2,498,605 - -------------------------------------------------------------- Heidelberger Druckmaschinen A.G. (Machinery-Diversified) 53,700 2,836,888 - -------------------------------------------------------------- Medion A.G. (Electronics-Component Distributors) 42,500 4,328,115 - -------------------------------------------------------------- MLP A.G.-Pfd. (Services-Commercial & Consumer) 43,000 5,802,220 - -------------------------------------------------------------- Parsytec A.G. (Computers-Software & Service)(a) 48,000 2,097,863 - -------------------------------------------------------------- Siemens A.G. (Manufacturing-Diversified) 28,900 3,678,898 - -------------------------------------------------------------- Tecis Holding A.G. (Computers-Software & Services) 55,700 4,027,387 ============================================================== 40,249,532 ============================================================== IRELAND-0.94% Ryanair Holdings PLC-ADR (Airlines)(a) 116,200 4,684,312 ============================================================== ITALY-2.45% Gruppo Editoriale L'Espresso (Publishing) 248,816 2,721,823 - -------------------------------------------------------------- Riunione Adriatica di Sicurta S.P.A. (Insurance Brokers) 721,200 9,468,357 ============================================================== 12,190,180 ============================================================== LUXEMBOURG-1.95% Thiel Logistik A.G. (Services-Commercial & Consumer)(a) 62,800 9,699,730 ============================================================== NETHERLANDS-2.74% Koninklijke (Royal) Philips Electronics N.V. (Electrical Equipment) 159,000 6,248,856 - -------------------------------------------------------------- Koninklijke Numico N.V. (Foods) 103,800 4,853,752 - -------------------------------------------------------------- Nutreco Holding N.V. (Agricultural Products) 58,400 2,517,707 ============================================================== 13,620,315 ============================================================== NORWAY-1.50% TGS Nopec Geophysical Co. A.S.A. (Oil & Gas-Exploration & Production)(a) 206,100 2,621,261 - -------------------------------------------------------------- Tomra Systems A.S.A. (Manufacturing-Specialized) 119,850 4,818,336 ============================================================== 7,439,597 ==============================================================
FS-12 214
MARKET SHARES VALUE SPAIN-2.84% NH Hoteles, S.A. (Investment Management) 695,700 $ 7,852,397 - -------------------------------------------------------------- Promotoba de Informaciones S.A. (Prisa) (Publishing)(a) 108,200 2,084,403 - -------------------------------------------------------------- Telefonica S.A. (Telephone)(a) 218,900 4,174,240 ============================================================== 14,111,040 ============================================================== SWEDEN-7.05% Assa Abloy A.B.-Class B (Metal Fabricators) 59,150 1,089,256 - -------------------------------------------------------------- Biacore International A.B. (Electronics-Instrumentation)(a) 232,900 9,883,163 - -------------------------------------------------------------- HiQ International A.B. (Services-Data Processing) 355,700 2,883,563 - -------------------------------------------------------------- Micronic Laser Systems A.B. (Electronics-Semiconductors)(a) 219,200 6,537,586 - -------------------------------------------------------------- OM Grupppen A.B. (Investment Banking/ Brokerage) 12,650 451,980 - -------------------------------------------------------------- PartnerTech A.B. (Communications Equipment) 108,800 1,655,134 - -------------------------------------------------------------- POOLIA A.B.-B Shares (Services-Employment) 56,600 2,379,175 - -------------------------------------------------------------- Proffice A.B.-B Shares (Services-Employment) 153,000 5,053,194 - -------------------------------------------------------------- Q-Med A.B. (Healthcare-Medical Products)(a) 294,000 5,149,274 ============================================================== 35,082,325 ============================================================== SWITZERLAND-16.16% Adecco S.A. (Services-Commercial & Consumer) 3,830 2,648,801 - -------------------------------------------------------------- Charles Voegele Holding A.G. (Retail-Department Stores) 31,300 5,886,274 - -------------------------------------------------------------- Compagnie Financiere Richemont A.G.-Units Tobacco)(b) 2,575 7,163,523 - -------------------------------------------------------------- ESEC Holding A.G. (Equipment- Semiconductor)(a) 12,500 4,312,024 - -------------------------------------------------------------- Huber & Suhner A.G. (Metal Fabricators) 4,300 3,768,152 - -------------------------------------------------------------- Julius Baer Holding A.G.-Class B (Banks-Major Regional) 245 1,213,209 - -------------------------------------------------------------- Kudelski S.A. (Electronics-Component Distributors)(a) 4,900 6,597,674 - -------------------------------------------------------------- Micronas Semiconductor Holding A.G. (Electronics-Semiconductors)(a) 11,500 4,990,820 - -------------------------------------------------------------- Nestle S.A. (Foods)(a) 2,500 5,181,383 - -------------------------------------------------------------- Serono S.A.-Class B (Health Care-Drugs-Generic & Other) 5,520 4,966,249 - -------------------------------------------------------------- Straumann A.G. (Health Care-Specialized Services) 7,110 15,368,803 - -------------------------------------------------------------- Swatch Group A.G. (The)-Class B (Consumer-Jewelry, Novelties & Gifts) 2,900 3,840,205 - -------------------------------------------------------------- Synthes Stratec, Inc. (Health Care-Medical Products & Supplies)(c) 7,000 4,459,467 - -------------------------------------------------------------- Tecan A.G. (Health Care-Medical Products & Supplies) 9,300 9,986,647 ============================================================== 80,383,231 ==============================================================
MARKET SHARES VALUE UNITED KINGDOM-18.59% ARC International PLC (Electronics- Semiconductors)(a) 735,400 $ 3,629,023 - -------------------------------------------------------------- ARM Holdings PLC (Electronics- Semiconductor)(a) 454,250 4,483,229 - -------------------------------------------------------------- Bookham Technology PLC (Communications Equipment)(a) 77,600 2,555,544 - -------------------------------------------------------------- BP Amoco PLC (Oil-International Integrated) 621,400 5,271,605 - -------------------------------------------------------------- Capita Group PLC (Services-Commercial & Consumer) 714,000 5,440,573 - -------------------------------------------------------------- Chloride Group PLC (Electrical Equipment) 2,050,000 6,099,508 - -------------------------------------------------------------- CMG PLC (Computers-Software & Services) 128,400 2,141,195 - -------------------------------------------------------------- J.D. Wetherspoon PLC (Leisure Time-Products) 223,350 1,008,169 - -------------------------------------------------------------- Logica PLC (Computers-Software & Services) 135,600 4,012,953 - -------------------------------------------------------------- Marconi PLC (Communications Equipment) 498,600 6,295,931 - -------------------------------------------------------------- Matalan PLC (Retail-Discounters) 785,000 7,405,768 - -------------------------------------------------------------- NDS Group PLC-ADR (Broadcasting-Television Radio & Cable)(a) 64,700 4,852,500 - -------------------------------------------------------------- Pace Micro Technology PLC (Communications Equipment) 524,000 3,741,825 - -------------------------------------------------------------- Royal Bank of Scotland Group PLC (Banks-Major Regional) 302,400 6,789,835 - -------------------------------------------------------------- Shell Transport & Trading Co. (Oil- International Integrated) 877,700 7,063,741 - -------------------------------------------------------------- Shire Pharmaceuticals Group PLC (Health Care Drugs-Generic & Other)(a) 173,100 3,517,323 - -------------------------------------------------------------- Spirent PLC (Communications Equipment) 1,042,900 9,672,320 - -------------------------------------------------------------- Vodafone Group PLC (Telecommunications- Cellular/Wireless) 1,280,186 5,327,993 - -------------------------------------------------------------- Volex Group PLC (Electrical Equipment) 100,000 3,142,281 ============================================================== 92,451,316 ============================================================== Total Foreign Stocks & Other Equity Interests (Cost $382,818,074) 457,168,343 ============================================================== MONEY MARKET FUNDS-7.12% STIC Liquid Assets Portfolio(d) 17,695,135 17,695,135 - -------------------------------------------------------------- STIC Prime Portfolio(d) 17,695,135 17,695,135 ============================================================== Total Money Market Funds (Cost $35,390,270) 35,390,270 ============================================================== TOTAL INVESTMENTS-99.03% (Cost $418,208,344) 492,558,613 ============================================================== OTHER ASSETS LESS LIABILITIES-0.97% 4,824,712 ============================================================== NET ASSETS-100.00% $497,383,325 ______________________________________________________________ ==============================================================
Investment Abbreviations: ADR - American Depositary Receipt Notes to Schedule of Investments: (a)Non-income producing security. (b)Consists of more than one class of securities traded together as a unit. In addition to the security listed, each unit includes common or preferred shares of the issuer. (c)Security fair valued in accordance with the procedures established by the Board of Directors. (d)The money market fund and the Fund are affiliated by having the same investment advisor. See Notes to Financial Statements. FS-13 215 STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 ASSETS: Investments, at market value (cost $418,208,344) $492,558,613 - ------------------------------------------------------------ Foreign currencies, at value (cost $9,705,467) 9,796,033 - ------------------------------------------------------------ Receivables for: Investments sold 6,518,004 - ------------------------------------------------------------ Capital stock sold 3,062,183 - ------------------------------------------------------------ Dividends and interest 436,863 - ------------------------------------------------------------ Collateral for securities loaned 18,355,666 - ------------------------------------------------------------ Investment for deferred compensation plan 14,444 - ------------------------------------------------------------ Other assets 95,312 ============================================================ Total assets $530,837,118 ============================================================ LIABILITIES: Payables for: Investments purchased 11,926,794 - ------------------------------------------------------------ Collateral upon return of securities loaned 18,355,666 - ------------------------------------------------------------ Capital stock reacquired 2,111,996 - ------------------------------------------------------------ Deferred compensation plan 14,444 - ------------------------------------------------------------ Accrued advisory fees 409,851 - ------------------------------------------------------------ Accrued administrative services fees 10,515 - ------------------------------------------------------------ Accrued distribution fees 301,124 - ------------------------------------------------------------ Accrued directors' fees 1,999 - ------------------------------------------------------------ Accrued transfer agent fees 150,926 - ------------------------------------------------------------ Accrued operating expenses 170,478 ============================================================ Total liabilities 33,453,793 ============================================================ Net assets applicable to shares outstanding $497,383,325 ____________________________________________________________ ============================================================ NET ASSETS: Class A $273,604,785 ____________________________________________________________ ============================================================ Class B $169,614,261 ____________________________________________________________ ============================================================ Class C $ 54,164,279 ____________________________________________________________ ============================================================ CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 11,596,194 ____________________________________________________________ ============================================================ Class B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 7,337,967 ____________________________________________________________ ============================================================ Class C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 2,341,714 ____________________________________________________________ ============================================================ Class A: Net asset value and redemption price per share $ 23.59 - ------------------------------------------------------------ Offering price per share: (Net asset value of $23.59 divided by 94.50%) $ 24.96 ____________________________________________________________ ============================================================ Class B: Net asset value and offering price per share $ 23.11 ____________________________________________________________ ============================================================ Class C: Net asset value and offering price per share $ 23.13 ____________________________________________________________ ============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 2000 INVESTMENT INCOME: Dividends (net of foreign withholding tax of $392,530) $ 2,183,664 - ------------------------------------------------------------ Dividends from affiliated money market funds 1,521,653 - ------------------------------------------------------------ Interest 22,487 - ------------------------------------------------------------ Security lending income 144,534 ============================================================ Total investment income 3,872,338 ============================================================ EXPENSES: Advisory fees 4,248,118 - ------------------------------------------------------------ Administrative services fees 109,571 - ------------------------------------------------------------ Custodian fees 428,055 - ------------------------------------------------------------ Distribution fees -- Class A 868,732 - ------------------------------------------------------------ Distribution fees -- Class B 1,566,725 - ------------------------------------------------------------ Distribution fees -- Class C 422,886 - ------------------------------------------------------------ Transfer agent fees -- Class A 480,324 - ------------------------------------------------------------ Transfer agent fees -- Class B 376,924 - ------------------------------------------------------------ Transfer agent fees -- Class C 101,738 - ------------------------------------------------------------ Directors' fees 6,941 - ------------------------------------------------------------ Other 354,098 ============================================================ Total expenses 8,964,112 ============================================================ Less: Expenses paid indirectly (11,899) ============================================================ Net expenses 8,952,213 ============================================================ Net investment income (loss) (5,079,875) ============================================================ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES Net realized gain (loss) from: Investment securities 10,775,266 - ------------------------------------------------------------ Foreign currencies (3,009,052) ============================================================ 7,766,214 ============================================================ Change in net unrealized appreciation (depreciation) of: Investment securities 36,293,246 - ------------------------------------------------------------ Foreign currencies (49,489) ============================================================ 36,243,757 ============================================================ Net gain on investment securities and foreign currencies 44,009,971 ============================================================ Net increase in net assets resulting from operations $38,930,096 ____________________________________________________________ ============================================================
See Notes to Financial Statements. FS-14 216 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2000 and 1999
2000 1999 ------------ ------------ OPERATIONS: Net investment income (loss) $ (5,079,875) $ (1,719,011) - ------------------------------------------------------------------------------------------ Net realized gain (loss) from investment securities and foreign currencies 7,766,214 (5,794,428) - ------------------------------------------------------------------------------------------ Change in net unrealized appreciation of investment securities and foreign currencies 36,243,757 43,126,751 ========================================================================================== Net increase in net assets resulting from operations 38,930,096 35,613,312 ========================================================================================== Distributions to shareholders from net investment income: Class A -- (80,229) - ------------------------------------------------------------------------------------------ Share transactions-net: Class A 149,580,238 2,449,615 - ------------------------------------------------------------------------------------------ Class B 88,697,953 3,977,973 - ------------------------------------------------------------------------------------------ Class C 42,014,471 (246,455) ========================================================================================== Net increase in net assets 319,222,758 41,714,216 ========================================================================================== NET ASSETS: Beginning of year 178,160,567 136,446,351 ========================================================================================== End of year $497,383,325 $178,160,567 __________________________________________________________________________________________ ========================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $424,964,898 $152,753,815 - ------------------------------------------------------------------------------------------ Undistributed net investment income (loss) (17,336) (9,989) - ------------------------------------------------------------------------------------------ Undistributed net realized gain (loss) from investment securities and foreign currencies (1,854,528) (12,629,793) - ------------------------------------------------------------------------------------------ Unrealized appreciation of investment securities and foreign currencies 74,290,291 38,046,534 ========================================================================================== $497,383,325 $178,160,567 __________________________________________________________________________________________ ==========================================================================================
See Notes to Financial Statements. FS-15 217 NOTES TO FINANCIAL STATEMENTS October 31, 2000 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2000, undistributed net investment income was increased by $5,072,528, undistributed net realized gains increased by $3,009,051 and paid in capital decreased by $8,081,579 as a result of differing book/tax treatment of foreign currency transactions, net operating loss and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above. C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund has a capital loss carryforward of $1,620,590 as of October 31, 2000 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2007. E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the FS-16 218 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. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $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. For the year ended October 31, 2000, AIM was paid $109,571 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. For the year ended October 31, 2000, AFS was paid $539,265 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.35% 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, 2000, the Class A, Class B and Class C shares paid AIM Distributors $868,732, $1,566,725, and $422,886, respectively, as compensation under the Plans. AIM Distributors received commissions of $432,931 from sales of the Class A shares of the Fund during the year ended October 31, 2000. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 2000, AIM Distributors received $117,258 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2000, the Fund paid legal fees of $4,602 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $6,088 and reductions in custodian fees of $5,811 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $11,899. 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 Citibank, N.A. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 2000, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to not less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or FS-17 219 guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly and failed to return the securities. At October 31, 2000, securities with an aggregate value of $17,428,717 were on loan to brokers. The loans were secured by cash collateral of $18,355,666. For the year ended October 31, 2000, the Fund received fees of $144,534 for securities lending. NOTE 7-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2000 was $697,671,504 and $453,712,085, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2000 is as follows: Aggregate unrealized appreciation of investment securities $ 89,996,432 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities $(15,880,101) ========================================================= Net unrealized appreciation of investment securities $ 74,116,331 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $418,442,282.
FS-18 220 NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the years October 31, 2000 and 1999 were as follows:
2000 1999 -------------------------- -------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sold: Class A 14,973,472 $398,349,739 7,243,646 $103,416,688 - ---------------------------------------------------------------------------------------------------------------------- Class B 5,164,473 138,279,616 3,045,028 43,081,822 - ---------------------------------------------------------------------------------------------------------------------- Class C 2,755,179 71,725,762 2,148,542 29,835,245 ====================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 5,672 76,739 ====================================================================================================================== Reacquired: Class A (9,417,238) (248,769,501) (7,125,444) (101,043,812) - ---------------------------------------------------------------------------------------------------------------------- Class B (1,967,360) (49,581,663) (2,797,703) (39,103,849) - ---------------------------------------------------------------------------------------------------------------------- Class C (1,150,167) (29,711,291) (2,160,106) (30,081,700) ====================================================================================================================== 10,358,359 $280,292,662 359,635 $ 6,181,133 ______________________________________________________________________________________________________________________ ======================================================================================================================
NOTE 9-FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ---------------------------------------------- NOVEMBER 3, 1997 (DATE OPERATIONS YEAR ENDED YEAR ENDED COMMENCED) OCTOBER 31, OCTOBER 31, TO OCTOBER 31, 2000(a) 1999 1998(a) ----------- ----------- ---------------- Net asset value, beginning of period $ 16.42 $ 12.96 $ 10.00 - -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.21) (0.11) (0.08) - -------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 7.38 3.58 3.04 ============================================================================================================== Total from investment operations 7.17 3.47 2.96 ============================================================================================================== Less distributions from net investment income -- (0.01) -- ============================================================================================================== Net asset value, end of period $ 23.59 $ 16.42 $ 12.96 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) 43.67% 26.81% 29.60% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $273,605 $99,148 $76,686 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets: 1.69%(c) 1.88% 1.98%(d)(e) - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (0.82)%(c) (0.69)% (0.58)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate 112% 122% 93% ______________________________________________________________________________________________________________ ==============================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $248,209,210. (d) Ratios of expenses to average net assets excluding waivers was 2.15%. (e) Annualized. FS-19 221 NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B ---------------------------------------------- NOVEMBER 3, 1997 (DATE OPERATIONS YEAR ENDED YEAR ENDED COMMENCED) TO OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000(a) 1999 1998(a) ----------- ----------- ---------------- Net asset value, beginning of period $ 16.20 $ 12.87 $ 10.00 - -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.38) (0.22) (0.18) - -------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 7.29 3.55 3.05 ============================================================================================================== Total from investment operations 6.91 3.33 2.87 ============================================================================================================== Net asset value, end of period $ 23.11 $ 16.20 $ 12.87 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) 42.65% 25.87% 28.70% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $169,614 $67,074 $50,121 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets: 2.39%(c) 2.63% 2.72%(d)(e) - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.44)% (1.32)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate 112% 122% 93% ______________________________________________________________________________________________________________ ==============================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $156,672,483. (d) Ratios of expenses to average net assets excluding waivers was 2.89%. (e) Annualized.
CLASS C ---------------------------------------------- NOVEMBER 3, 1997 (DATE OPERATIONS YEAR ENDED YEAR ENDED COMMENCED) TO OCTOBER 31, OCTOBER 31, OCTOBER 31, 2000(a) 1999 1998(a) ----------- ----------- ---------------- Net asset value, beginning of period $ 16.21 $ 12.88 $10.00 - -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.38) (0.23) (0.18) - -------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 7.30 3.56 3.06 ============================================================================================================== Total from investment operations 6.92 3.33 2.88 ============================================================================================================== Net asset value, end of period $ 23.13 $ 16.21 $12.88 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) 42.69% 25.85% 28.80% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $54,164 $11,938 $9,639 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets: 2.39%(c) 2.63% 2.72%(d)(e) - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.44)% (1.32)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate 112% 122% 93% ______________________________________________________________________________________________________________ ==============================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $42,288,606. (d) Ratios of expenses to average net assets excluding waivers was 2.89%. (e) Annualized. FS-20 222 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, 2000, 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 periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Aggressive Growth Fund as of October 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the periods in the five-year period then ended in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP December 6, 2000 Houston, Texas FS-21 223 SCHEDULE OF INVESTMENTS October 31, 2000
MARKET SHARES VALUE DOMESTIC COMMON STOCKS-34.04% BROADCASTING (TELEVISION, RADIO & CABLE)-0.66% Hispanic Broadcasting Corp.(a) 490,400 $ 15,325,000 =============================================================== COMMUNICATIONS EQUIPMENT-6.85% CommScope, Inc.(a) 379,700 9,611,156 - --------------------------------------------------------------- Comverse Technology, Inc.(a) 255,800 28,585,650 - --------------------------------------------------------------- Dycom Industries, Inc.(a) 316,200 11,897,025 - --------------------------------------------------------------- JDS Uniphase Corp.(a) 1,090,776 88,761,897 - --------------------------------------------------------------- Polycom, Inc.(a) 300,000 19,500,000 =============================================================== 158,355,728 =============================================================== COMPUTERS (HARDWARE)-0.61% National Instruments Corp.(a) 300,000 14,006,250 =============================================================== COMPUTERS (PERIPHERALS)-2.63% Actel Corp.(a) 500,000 18,312,500 - --------------------------------------------------------------- QLogic Corp.(a) 368,700 35,671,725 - --------------------------------------------------------------- Silicon Storage Technology, Inc.(a) 300,000 6,825,000 =============================================================== 60,809,225 =============================================================== COMPUTERS (SOFTWARE & SERVICES)-0.09% Starmedia Network, Inc.(a) 325,100 1,991,237 =============================================================== ELECTRICAL EQUIPMENT-2.67% Cree, Inc.(a) 125,000 12,406,250 - --------------------------------------------------------------- Sanmina Corp.(a) 273,400 31,253,037 - --------------------------------------------------------------- Vishay Intertechnology, Inc.(a) 600,000 18,000,000 =============================================================== 61,659,287 =============================================================== ELECTRONICS (COMPONENT DISTRIBUTORS)-3.06% Power-One, Inc.(a) 900,000 63,843,750 - --------------------------------------------------------------- Sawtek Inc.(a) 138,000 7,020,750 =============================================================== 70,864,500 =============================================================== ELECTRONICS (INSTRUMENTATION)-0.86% Alpha Industries, Inc.(a) 500,000 19,937,500 =============================================================== ELECTRONICS (SEMICONDUCTORS)-6.05% Dallas Semiconductor Corp. 300,000 11,887,500 - --------------------------------------------------------------- Integrated Device Technology, Inc.(a) 675,000 38,010,937 - --------------------------------------------------------------- Intersil Holding Corp.(a) 150,000 7,190,625 - --------------------------------------------------------------- Micrel, Inc.(a) 391,600 17,719,900 - --------------------------------------------------------------- Microchip Technology Inc.(a) 1,500,000 47,437,500 - --------------------------------------------------------------- Semtech Corp.(a) 550,000 17,737,500 =============================================================== 139,983,962 =============================================================== EQUIPMENT (SEMICONDUCTOR)-0.12% Credence Systems Corp.(a) 150,000 2,812,500 ===============================================================
MARKET SHARES VALUE HEALTH CARE (DRUGS-GENERIC & OTHER)-0.93% Alpharma Inc.-Class A 250,000 $ 9,703,125 - --------------------------------------------------------------- Medicis Pharmaceutical Corp.-Class A(a) 160,100 11,787,363 =============================================================== 21,490,488 =============================================================== HEALTH CARE (HOSPITAL MANAGEMENT)-1.71% Health Management Associates, Inc.-Class A(a) 400,000 7,925,000 - --------------------------------------------------------------- Province Healthcare Co.(a) 752,700 31,707,488 =============================================================== 39,632,488 =============================================================== OIL & GAS (DRILLING & EQUIPMENT)-1.39% Cooper Cameron Corp.(a) 100,000 5,450,000 - --------------------------------------------------------------- National-Oilwell, Inc.(a) 700,000 20,475,000 - --------------------------------------------------------------- Patterson Energy, Inc.(a) 225,000 6,328,125 =============================================================== 32,253,125 =============================================================== RESTAURANTS-0.62% CEC Entertainment Inc.(a) 450,000 14,343,750 =============================================================== RETAIL (BUILDING SUPPLIES)-0.31% Fastenal Co. 125,000 7,179,688 =============================================================== RETAIL (SPECIALTY)-0.27% Linens 'n Things, Inc.(a) 200,000 6,150,000 =============================================================== RETAIL (SPECIALTY-APPAREL)-1.84% Abercrombie & Fitch Co.-Class A(a) 500,000 11,781,250 - --------------------------------------------------------------- Men's Wearhouse, Inc. (The)(a) 660,000 19,305,000 - --------------------------------------------------------------- Too Inc.(a) 500,000 11,468,750 =============================================================== 42,555,000 =============================================================== SERVICES (DATA PROCESSING)-0.86% Concord EFS, Inc.(a) 483,807 19,987,277 =============================================================== SERVICES (EMPLOYMENT)-1.32% Robert Half International Inc.(a) 1,000,000 30,500,000 =============================================================== TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.78% Powerwave Technologies, Inc.(a) 375,000 18,046,875 =============================================================== TEXTILES (APPAREL)-0.41% Quicksilver, Inc.(a) 500,000 9,562,500 =============================================================== Total Domestic Common Stocks (Cost $486,833,062) 787,446,380 =============================================================== FOREIGN STOCKS & OTHER EQUITY INTERESTS-54.99% AUSTRALIA-0.92% Brambles Industries Ltd. (Air Freight) 235,000 6,092,927 - ---------------------------------------------------------------
FS-22 224
MARKET SHARES VALUE AUSTRALIA-(CONTINUED) ERG Ltd. (Electrical Equipment) 3,098,000 $ 15,175,266 =============================================================== 21,268,193 =============================================================== BRAZIL-3.98% Brasil Telecom Participacoes S.A.-ADR (Telephone) 60,400 3,272,925 - --------------------------------------------------------------- Companhia Brasileira de Distribuicao Grupo Pao de Acucar-ADR (Retail-Food Chains) 277,419 9,883,052 - --------------------------------------------------------------- Companhia de Bebidas das Americas-ADR (Beverages-Alcoholic) 721,100 16,269,819 - --------------------------------------------------------------- Embratel Participacoes S.A.-ADR (Telephone) 285,200 4,616,675 - --------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 762,000 20,196,292 - --------------------------------------------------------------- Tele Celular Sul Participacoes S.A.-ADR (Telecommunications-Cellular/ Wireless) 114,200 2,876,412 - --------------------------------------------------------------- Tele Centro Oeste Celular Participacoes S.A.-ADR (Telecommunication-Cellular/ Wireless) 696,000 7,047,000 - --------------------------------------------------------------- Tele Nordeste Celular Participacoes S.A.-ADR (Telecommunications-Cellular/ Wireless) 115,000 4,743,750 - --------------------------------------------------------------- Tele Norte Leste Participacoes S.A.-ADR (Telephone) 843,181 18,655,380 - --------------------------------------------------------------- Telemig Celular S.A.-ADR (Telecommunications-Cellular/ Wireless) 84,200 4,420,500 =============================================================== 91,981,805 =============================================================== CANADA-7.42% ATS Automation Tooling Systems, Inc. (Machinery-Diversified)(a) 324,000 5,748,969 - --------------------------------------------------------------- Celestica Inc. (Electronics-Semiconductors)(a) 268,000 19,262,500 - --------------------------------------------------------------- Certicom Corp. (Computers-Software & Services)(a) 306,400 10,131,081 - --------------------------------------------------------------- C-MAC Industries, Inc. (Electronics-Component Distributors)(a) 407,300 22,934,460 - --------------------------------------------------------------- Cognos, Inc. (Computers-Software & Services)(a) 442,600 18,367,900 - --------------------------------------------------------------- Descartes Systems Group Inc, (The) (Computers-Software & Services)(a) 260,000 10,537,550 - --------------------------------------------------------------- Exfo Electro-Optical Engineering Inc. (Communications Equipment)(a) 160,300 6,111,437 - --------------------------------------------------------------- Four Seasons Hotels, Inc. (Lodging-Hotels) 338,300 24,695,900 - --------------------------------------------------------------- Onex Corp. (Investments) 1,033,100 16,369,423 - --------------------------------------------------------------- Pivotal Corp. (Computers-Software & Services)(a) 122,000 7,457,250 - --------------------------------------------------------------- Research in Motion Ltd. (Telecommunications-Cellular/ Wireless)(a) 151,000 15,100,000 - --------------------------------------------------------------- Sears Canada, Inc. (Retail-Department Stores) 192,400 3,369,803 - --------------------------------------------------------------- Shaw Communications Inc.-Class B (Broadcasting-Television, Radio & Cable) 312,300 6,389,953 - ---------------------------------------------------------------
MARKET SHARES VALUE CANADA-(CONTINUED) Tundra Semiconductor Corp. (Electronics-Semiconductors) 146,000 $ 5,257,644 =============================================================== 171,733,870 =============================================================== DENMARK-2.61% Vestas Wind Systems A.S. (Manufacturing-Specialized) 925,000 50,103,200 - --------------------------------------------------------------- William Demant A.S. (Electronics-Instrumentation) 214,900 10,292,380 =============================================================== 60,395,580 =============================================================== FINLAND-0.28% Elcoteq Network-Class A (Manufacturing-Specialized) 192,000 6,550,220 =============================================================== FRANCE-5.06% Altran Technologies S.A. (Services-Commercial & Consumer) 164,700 33,671,233 - --------------------------------------------------------------- Business Objects S.A.-ADR (Computers-Software & Services)(a) 200,000 15,759,375 - --------------------------------------------------------------- Galeries Lafayette (Retail-Department Stores) 70,000 11,292,986 - --------------------------------------------------------------- Havas Advertising S.A. (Services-Advertising/ Marketing) 880,000 14,181,960 - --------------------------------------------------------------- M6 Metropole Television (Broadcasting-Television, Radio & Cable) 343,000 15,136,521 - --------------------------------------------------------------- NRJ Group (Broadcasting-Television, Radio & Cable)(a) 290,800 9,624,709 - --------------------------------------------------------------- Silicon-On-Insulator Technologies (SOITEC) (Electronics-Component Distributors)(a) 250,000 5,664,739 - --------------------------------------------------------------- Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 216,000 11,786,730 =============================================================== 117,118,253 =============================================================== GERMANY-3.50% ADVA A.G. Optical Networking (Communications Equipment)(a) 172,800 12,684,941 - --------------------------------------------------------------- Heidelberger Druckmaschinen A.G. (Machinery-Diversified) 182,500 9,641,194 - --------------------------------------------------------------- Medion A.G. (Electronics-Component Distributors) 85,500 8,707,149 - --------------------------------------------------------------- MLP A.G.-Pfd. (Services-Commercial & Consumer) 120,000 16,192,242 - --------------------------------------------------------------- Porsche A.G.-Pfd. (Automobiles) 6,270 21,018,090 - --------------------------------------------------------------- Tecis Holding A.G. (Computers-Software & Services) 175,200 12,667,832 =============================================================== 80,911,448 =============================================================== HONG KONG-2.70% China Mobile Ltd. (Telecommunications-Cellular/ Wireless)(a) 3,428,000 21,977,177 - --------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks-Regional) 3,047,000 15,393,230 - --------------------------------------------------------------- Esprit Holdings Ltd. (Retail-Specialty Apparel) 3,506,000 3,011,950 - ---------------------------------------------------------------
FS-23 225
MARKET SHARES VALUE HONG KONG-(CONTINUED) Hutchison Whampoa Ltd. (Retail-Food Chains) 1,776,500 $ 22,095,205 =============================================================== 62,477,562 =============================================================== INDIA-0.48% Infosys Technologies Ltd. (Computers-Software & Services)(b) 45,000 6,913,882 - --------------------------------------------------------------- Satyam Computer Services Ltd. (Computers-Software & Services) 645,000 4,248,875 =============================================================== 11,162,757 =============================================================== ISRAEL-1.51% NICE Systems Ltd.-ADR (Communications Equipment)(a) 259,000 12,108,250 - --------------------------------------------------------------- Orbotech, Ltd. (Computers-Software & Services)(a) 430,650 22,797,534 =============================================================== 34,905,784 =============================================================== ITALY-0.98% Gruppo Editoriale L'Espresso (Publishing) 2,080,000 22,753,325 =============================================================== JAPAN-3.59% Bellsystem 24, Inc. (Services- Commercial & Consumer) 42,000 15,088,668 - --------------------------------------------------------------- Circle K Japan Co. Ltd. (Retail-Food Chains) 244,200 7,877,780 - --------------------------------------------------------------- Crayfish Co. Ltd.-ADR (Computers- Software & Services)(a) 373,900 584,219 - --------------------------------------------------------------- Hokuto Corp. (Agricultural Products) 288,850 9,159,336 - --------------------------------------------------------------- Sanix Inc. (Services-Commercial & Consumer) 155,250 7,953,512 - --------------------------------------------------------------- Softbank Corp. (Computers-Software & Services) 204,000 12,245,796 - --------------------------------------------------------------- Trend Micro Inc. (Computers-Software & Services)(a) 115,550 10,907,437 - --------------------------------------------------------------- Yahoo Japan Corp. (Computers-Software & Services)(a) 224 19,297,072 =============================================================== 83,113,820 =============================================================== MEXICO-5.93% Cemex S.A. de C.V.-ADR (Construction-Cement & Aggregates) 259,400 5,479,825 - --------------------------------------------------------------- Cemex S.A. de C.V. Wts.-ADR (Construction-Cement & Aggregates) expiring 12/13/02 (c) 16,212 32,424 - --------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 566,300 10,865,881 - --------------------------------------------------------------- Controladora Comercial Mexicana S.A. de C.V.-ADR-Units (Retail-General Merchandise)(d) 2,579,000 2,858,963 - --------------------------------------------------------------- Corporacion Interamericana de Entretenimiento S.A. Class B (Entertainment)(a) 3,288,144 14,855,451 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-ADR (Beverages-Alcoholic) 446,880 17,065,230 - ---------------------------------------------------------------
MARKET SHARES VALUE MEXICO-(CONTINUED) Grupo Financiero Banamex Accival, S.A. de C.V. (Banacci) (Financial-Diversified)(a) 7,104,000 $ 11,040,100 - --------------------------------------------------------------- Grupo Financiero Bancomer, S.A. de C.V.-Class O (Banks-Regional)(a) 11,940,000 7,392,261 - --------------------------------------------------------------- Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 3,161,000 8,429,774 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 323,000 17,482,375 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 2,014,000 5,149,791 - --------------------------------------------------------------- Organizacion Soriana S.A. de C.V.-Class B (Retail-Department Stores) 1,776,000 5,572,056 - --------------------------------------------------------------- Telefonos de Mexico S.A. de C.V.- Class L-ADR (Telephone) 198,600 10,711,987 - --------------------------------------------------------------- Tubos de Acero de Mexico S.A.-ADR (Oil & Gas-Drilling & Equipment) 541,800 8,240,778 - --------------------------------------------------------------- Wal-Mart de Mexico S.A. de C.V.-Series C (Retail-General Merchandise)(a) 5,300,000 12,083,246 =============================================================== 137,260,142 =============================================================== NETHERLANDS-0.36% Nutreco Holding N.V. (Agricultural Products) 194,900 8,402,416 =============================================================== NORWAY-0.40% Tomra Systems A.S.A. (Manufacturing-Specialized) 231,700 9,315,050 =============================================================== PHILIPPINES-0.11% SM Prime Holdings, Inc. (Land Development) 32,000,000 2,475,822 =============================================================== SINGAPORE-1.47% Chartered Semiconductor Manufacturing Ltd.-ADR (Electronics- Semiconductors)(a) 172,600 8,025,900 - --------------------------------------------------------------- Datacraft Asia Ltd. (Communications Equipment) 867,880 5,944,978 - --------------------------------------------------------------- DBS Group Holdings Ltd. (Banks-Money Center) 640,813 7,552,713 - --------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 1,939,000 3,864,089 - --------------------------------------------------------------- Keppel Land Ltd. (Land Development) 3,413,000 5,091,419 - --------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing-Newspapers) 240,000 3,429,938 =============================================================== 33,909,037 =============================================================== SOUTH KOREA-1.12% Hyundai Motor Co. Ltd. (Automobiles) 475,124 5,429,989 - --------------------------------------------------------------- Korea Telecom Corp.-ADR (Telephone) 274,500 10,122,188 - --------------------------------------------------------------- Pohang Iron & Steel Co. Ltd.-ADR (Iron & Steel) 265,700 4,201,381 - --------------------------------------------------------------- Samsung Electronics N.V. (Electronics-Component Distributors) 48,200 6,038,242 =============================================================== 25,791,800 ===============================================================
FS-24 226
MARKET SHARES VALUE SPAIN-1.06% NH Hoteles, S.A. (Investment Management) 1,667,800 $ 18,824,534 - --------------------------------------------------------------- Promotoba de Informaciones S.A. (Prisa) (Publishing)(a) 289,800 5,582,810 =============================================================== 24,407,344 =============================================================== SWEDEN-1.14% Assa Abloy A.B.-Class B (Metal Fabricators) 920,000 16,942,062 - --------------------------------------------------------------- Biacore International A.B. (Electronics- Instrumentation)(a) 167,800 7,120,630 - --------------------------------------------------------------- OM Grupppen A.B. (Investment Banking/Brokerage) 61,000 2,179,509 =============================================================== 26,242,201 =============================================================== SWITZERLAND-4.16% Charles Voegele Holding A.G. (Retail-Department Stores) 104,900 19,727,480 - --------------------------------------------------------------- ESEC Holding A.G. (Equipment- Semiconductors)(a) 17,000 5,864,352 - --------------------------------------------------------------- Kudelski S.A. (Electronics-Component Distributors)(a) 12,200 16,426,863 - --------------------------------------------------------------- Micronas Semiconductor Holding A.G. (Electronics-Semiconductors)(a) 26,700 11,587,381 - --------------------------------------------------------------- Straumann A.G. (Health Care-Specialized Services) 8,100 17,508,763 - --------------------------------------------------------------- Synthes Stratec, Inc. (Health Care-Medical Products & Supplies)(b) 14,000 8,918,934 - --------------------------------------------------------------- Tecan A.G. (Health Care-Medical Products & Supplies) 15,100 16,214,878 =============================================================== 96,248,651 =============================================================== TAIWAN-1.15% Compal Electronics Inc. (Computers-Hardware) 3,641,300 5,553,475 - --------------------------------------------------------------- Far Eastern Textile Ltd. (Textiles-Apparel) 676,965 557,069 - --------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. Ltd. (Electronics- Semiconductors)(a) 3,713,280 11,257,585 - --------------------------------------------------------------- United Microelectronics Corp. Ltd. (Electronics-Component Distributors)(a) 5,284,400 9,318,200 =============================================================== 26,686,329 ===============================================================
MARKET SHARES VALUE THAILAND-0.20% Advanced Info Service Public Co. Ltd. (Telephone)(a) 569,000 $ 4,680,254 =============================================================== UNITED KINGDOM-4.86% ARM Holdings PLC (Electronics- Semiconductors)(a) 1,393,450 13,752,683 - --------------------------------------------------------------- Bookham Technology PLC (Communications Equipment)(a) 171,300 5,641,297 - --------------------------------------------------------------- CMG PLC (Computers-Software & Services) 612,000 10,205,695 - --------------------------------------------------------------- Dimension Data Holdings PLC (Computers-Software & Services)(a) 1,536,126 13,466,381 - --------------------------------------------------------------- J.D. Wetherspoon PLC (Leisure Time-Products) 469,600 2,119,706 - --------------------------------------------------------------- Logica PLC (Computers-Software & Services) 559,200 16,548,991 - --------------------------------------------------------------- Matalan PLC (Retail-Discounters) 1,600,000 15,094,560 - --------------------------------------------------------------- NDS Group PLC-ADR (Broadcasting- Television, Radio & Cable)(a) 100,000 7,500,000 - --------------------------------------------------------------- Pace Micro Technology PLC (Communications Equipment) 1,360,000 9,711,608 - --------------------------------------------------------------- Shire Pharmaceuticals Group PLC (Health Care-Drugs-Generic & Other)(a) 908,400 18,458,325 =============================================================== 112,499,246 =============================================================== Total Foreign Stocks & Other Equity Interests (Cost $905,093,017) 1,272,290,909 =============================================================== MONEY MARKET FUNDS-9.60% STIC Liquid Assets Portfolio(e) 111,077,016 111,077,016 - --------------------------------------------------------------- STIC Prime Portfolio(e) 111,077,016 111,077,016 =============================================================== Total Money Market Funds (Cost $222,154,032) 222,154,032 =============================================================== TOTAL INVESTMENTS-98.63% (Cost $1,614,080,111) 2,281,891,321 =============================================================== OTHER ASSETS LESS LIABILITIES-1.37% 31,735,771 =============================================================== NET ASSETS-100.00% $2,313,627,092 _______________________________________________________________ ===============================================================
Investment Abbreviations ADR - American Depositary Receipt GDR - Global Depositary Receipt Pfd. - Preferred Wts. - Warrants Notes to Schedule of Investments: (a) Non-income producing security. (b) Security fair valued in accordance with the procedures established by the Board of Directors. (c) Non-income producing security acquired as part of a unit with or in exchange for other securities. (d) Each unit represents three B shares and one C share. (e) The money market fund and the Fund are affiliated by having the same investment advisor. See Notes to Financial Statements. FS-25 227 STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 ASSETS: Investments, at market value (cost $1,614,080,111) $2,281,891,321 - ------------------------------------------------------------- Foreign currencies, at value (cost $36,401,071) 36,604,081 - ------------------------------------------------------------- Receivables for: Investments sold 8,384,239 - ------------------------------------------------------------- Capital stock sold 4,132,695 - ------------------------------------------------------------- Dividends and interest 2,560,804 - ------------------------------------------------------------- Collateral for securities loaned 277,475,346 - ------------------------------------------------------------- Investment for deferred compensation plan 48,943 - ------------------------------------------------------------- Other assets 322,202 ============================================================= Total assets 2,611,419,631 ============================================================= LIABILITIES: Payables for: Investments purchased 12,052,502 - ------------------------------------------------------------- Capital stock reacquired 3,655,996 - ------------------------------------------------------------- Collateral upon return of securities loaned 277,475,346 - ------------------------------------------------------------- Deferred compensation plan 48,943 - ------------------------------------------------------------- Accrued advisory fees 1,691,908 - ------------------------------------------------------------- Accrued administrative services fees 15,096 - ------------------------------------------------------------- Accrued distribution fees 1,853,706 - ------------------------------------------------------------- Accrued directors' fees 867 - ------------------------------------------------------------- Accrued transfer agent fees 563,326 - ------------------------------------------------------------- Accrued operating expenses 434,849 ============================================================= Total liabilities 297,792,539 ============================================================= Net assets applicable to shares outstanding $2,313,627,092 _____________________________________________________________ ============================================================= NET ASSETS: Class A $1,103,740,292 _____________________________________________________________ ============================================================= Class B $1,158,978,687 _____________________________________________________________ ============================================================= Class C $ 50,908,113 _____________________________________________________________ ============================================================= CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 42,670,252 _____________________________________________________________ ============================================================= Class B: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 46,400,165 _____________________________________________________________ ============================================================= Class C: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 2,037,273 _____________________________________________________________ ============================================================= Class A: Net asset value and redemption price per share $ 25.87 - ------------------------------------------------------------- Offering price per share: (Net asset value of $25.87 divided by 95.25%) $ 27.16 _____________________________________________________________ ============================================================= Class B: Net asset value and offering price per share $ 24.98 _____________________________________________________________ ============================================================= Class C: Net asset value and offering price per share $ 24.99 _____________________________________________________________ =============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 2000 INVESTMENT INCOME: Dividends (net of foreign withholding tax of $1,196,779) $ 8,064,739 - ------------------------------------------------------------ Dividends from affiliated money market funds 9,148,451 - ------------------------------------------------------------ Interest 103,328 - ------------------------------------------------------------ Security lending income 367,900 ============================================================ Total investment income 17,684,418 ============================================================ EXPENSES: Advisory fees 22,245,857 - ------------------------------------------------------------ Administrative services fees 182,264 - ------------------------------------------------------------ Custodian fees 1,520,123 - ------------------------------------------------------------ Distribution fees -- Class A 6,067,804 - ------------------------------------------------------------ Distribution fees -- Class B 13,029,893 - ------------------------------------------------------------ Distribution fees -- Class C 417,860 - ------------------------------------------------------------ Transfer agent fees -- Class A 2,130,793 - ------------------------------------------------------------ Transfer agent fees -- Class B 2,783,318 - ------------------------------------------------------------ Transfer agent fees -- Class C 89,259 - ------------------------------------------------------------ Directors' fees 9,264 - ------------------------------------------------------------ Other 1,091,832 ============================================================ Total expenses 49,568,267 ============================================================ Less: Expenses paid indirectly (55,407) ============================================================ Net expenses 49,512,860 ============================================================ Net investment income (loss) (31,828,442) ============================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 470,167,710 - ------------------------------------------------------------ Foreign currencies (6,488,869) ============================================================ 463,678,841 ============================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (36,865,762) - ------------------------------------------------------------ Foreign currencies (18,069) ============================================================ (36,883,831) ============================================================ Net gain from investment securities and foreign currencies 426,795,010 ============================================================ Net increase in net assets resulting from operations $394,966,568 ____________________________________________________________ ============================================================
See Notes to Financial Statements. FS-26 228 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2000 and 1999
2000 1999 -------------- -------------- OPERATIONS: Net investment income (loss) $ (31,828,442) $ (21,800,341) - ---------------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 463,678,841 195,571,025 - ---------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies (36,883,831) 394,291,022 ============================================================================================== Net increase in net assets resulting from operations 394,966,568 568,061,706 ============================================================================================== Distributions to shareholders from net realized gains: Class A (51,990,426) -- - ---------------------------------------------------------------------------------------------- Class B (58,426,813) -- - ---------------------------------------------------------------------------------------------- Class C (1,135,421) -- - ---------------------------------------------------------------------------------------------- Share transactions-net: Class A 112,191,153 (361,902,444) - ---------------------------------------------------------------------------------------------- Class B 84,244,285 (307,272,112) - ---------------------------------------------------------------------------------------------- Class C 38,282,689 (1,457,883) ============================================================================================== Net increase (decrease) in net assets 518,132,035 (102,570,733) ============================================================================================== NET ASSETS: Beginning of year 1,795,495,057 1,898,065,790 ============================================================================================== End of year $2,313,627,092 $1,795,495,057 ______________________________________________________________________________________________ ============================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $1,218,746,808 $ 992,683,210 - ---------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (108,263) (13,357,764) - ---------------------------------------------------------------------------------------------- Undistributed net realized gain from investment securities and foreign currencies 427,253,871 111,551,104 - ---------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 667,734,676 704,618,507 ============================================================================================== $2,313,627,092 $1,795,495,057 ______________________________________________________________________________________________ ==============================================================================================
See Notes to Financial Statements. FS-27 229 NOTES TO FINANCIAL STATEMENTS October 31, 2000 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2000, undistributed net investment income was increased by $45,077,943, undistributed net realized gains decreased by $36,423,414 and paid-in capital decreased by $8,654,529 as a result of book/tax differences due to utilization of a portion of the proceeds from redemptions as distributions for federal income tax purposes, foreign currency transactions and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above. C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations FS-28 230 arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. G. Bond Premiums -- It has been the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. In November 2000, a revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was issued and is effective for fiscal years beginning after December 15, 2000. The revised Guide will require the Fund to amortize premium and discount on all fixed-income securities. Upon initial adoption, the Fund will be required to adjust the cost of its fixed-income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding. Adopting this accounting principle will not effect the Fund's net asset value, but will change the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. The Fund expects that the impact of the adoption of this principle will not be material to the financial statements. H. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.90% 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. For the year ended October 31, 2000, AIM was paid $182,264 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. For the year ended October 31, 2000, AFS was paid $3,024,696 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.50% 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, 2000, the Class A, Class B and Class C shares paid AIM Distributors $6,067,804, $13,029,893 and $417,860, respectively, as compensation under the Plans. AIM Distributors received commissions of $667,333 from sales of the Class A shares of the Fund during the year ended October 31, 2000. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 2000, AIM Distributors received $72,714 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2000, the Fund paid legal fees of $7,964 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $34,299 and reductions in custodian fees of $21,108 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $55,407. 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 Citibank, N.A. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 2000, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. FS-29 231 NOTE 6-PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly and failed to return the securities. At October 31, 2000, securities with an aggregate value of $268,671,196 were on loan to brokers. The loans were secured by cash collateral of $277,475,346. For the year ended October 31, 2000, the Fund received fees of $367,900 for securities lending. NOTE 7-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2000 was $1,456,299,617 and $1,558,928,652, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2000 is as follows: Aggregate unrealized appreciation of investment securities $ 781,574,831 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (115,619,284) ========================================================= Net unrealized appreciation of investment securities $ 665,955,547 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $1,615,935,774.
NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the years October 31, 2000 and 1999 were as follows:
2000 1999 ---------------------------- ------------------------------ SHARES AMOUNT SHARES AMOUNT ----------- ------------- ----------- --------------- Sold: Class A 18,396,903 $ 547,555,973 44,392,973 $ 788,784,876 - ---------------------------------------------------------------------------------------------------------------------------- Class B 6,080,280 181,657,597 2,884,425 50,807,802 - ---------------------------------------------------------------------------------------------------------------------------- Class C 1,805,060 53,447,289 812,924 14,207,396 ============================================================================================================================ Issued as reinvestment of dividends: Class A 1,995,404 49,763,525 -- -- - ---------------------------------------------------------------------------------------------------------------------------- Class B 2,238,791 54,178,748 -- -- - ---------------------------------------------------------------------------------------------------------------------------- Class C 42,452 1,027,748 -- -- ============================================================================================================================ Reacquired: Class A (16,549,844) (485,128,345) (64,640,003) (1,150,687,320) - ---------------------------------------------------------------------------------------------------------------------------- Class B (5,346,711) (151,592,060) (20,494,580) (358,079,914) - ---------------------------------------------------------------------------------------------------------------------------- Class C (574,953) (16,192,348) (897,630) (15,665,279) ============================================================================================================================ 8,087,382 $ 234,718,127 (37,941,891) $ (670,632,439) ____________________________________________________________________________________________________________________________ ============================================================================================================================
NOTE 9-FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ------------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------------ 2000(a) 1999(a) 1998(a) 1997(a) 1996(a) ---------- -------- -------- ---------- -------- Net asset value, beginning of period $ 21.95 $ 15.87 $ 17.28 $ 15.76 $ 13.09 - -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.28) (0.17) (0.10) (0.15) (0.09) - -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.56 6.25 (1.31) 1.67 2.81 ========================================================================================================================== Total from investment operations 5.28 6.08 (1.41) 1.52 2.72 ========================================================================================================================== Less distributions: Distributions from net realized gains (1.36) -- -- -- (0.05) ========================================================================================================================== Net asset value, end of period $ 25.87 $ 21.95 $ 15.87 $ 17.28 $ 15.76 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) 24.27% 38.31% 8.16% 9.65% 20.83% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,103,740 $852,198 $937,587 $1,242,505 $919,319 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets 1.65%(c) 1.80% 1.75% 1.75% 1.83% ========================================================================================================================== Ratio of net investment income (loss) to average net assets (0.96)%(c) (0.95)% (0.55)% (0.88)% (0.62)% __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate 62% 60% 50% 57% 44% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include sales charges. (c) Ratios are based on average daily net assets of $1,213,560,798. FS-30 232 NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B ------------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------------ 2000(a) 1999(a) 1998(a) 1997(a) 1996(a) ---------- -------- -------- ---------- -------- Net asset value, beginning of period $ 21.35 $ 15.52 $ 17.00 $ 15.58 $ 13.02 - -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.42) (0.27) (0.19) (0.24) (0.17) - -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.41 6.10 (1.29) 1.66 2.78 ========================================================================================================================== Total from investment operations 4.99 5.83 (1.48) 1.42 2.61 ========================================================================================================================== Less distributions: Distributions from net realized gains (1.36) -- -- -- (0.05) ========================================================================================================================== Net asset value, end of period $ 24.98 $ 21.35 $ 15.52 $ 17.00 $ 15.58 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) 23.56% 37.56% 8.71% 9.11% 20.09% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,158,979 $926,972 $947,293 $1,241,999 $807,215 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets 2.19%(c) 2.37% 2.32% 2.30% 2.37% ========================================================================================================================== Ratio of net investment income (loss) to average net assets (1.50)%(c) (1.52)% (1.11)% (1.44)% (1.16)% __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate 62% 60% 50% 57% 44% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges. (c) Ratios are based on average daily net assets of $1,302,989,286.
CLASS C ------------------------------------------------------- AUGUST 4, 1997 YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED) ----------------------------- TO OCTOBER 31, 2000(a) 1999(a) 1998(a) 1997(a) ------- ------- ------- ---------------------- Net asset value, beginning of period $21.35 $15.52 $17.00 $18.39 - --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.42) (0.27) (0.19) (0.04) - --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.42 6.10 (1.29) (1.35) ===================================================================================================================== Total from investment operations 5.00 5.83 (1.48) (1.39) ===================================================================================================================== Less distributions: Distributions from net realized gains (1.36) -- -- -- ===================================================================================================================== Net asset value, end of period $24.99 $21.35 $15.52 $17.00 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) 23.61% 37.56% 8.71% 7.56% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $50,908 $16,325 $13,186 $4,676 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets 2.19%(c) 2.37% 2.34% 2.36%(d) ===================================================================================================================== Ratio of net investment income (loss) to average net assets (1.50)%(c) (1.52)% (1.13)% (1.50)%(d) _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate 62% 60% 50% 57% _____________________________________________________________________________________________________________________ =====================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $41,785,990. (d) Annualized. FS-31 233 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, 2000, 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 periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Growth Fund as of October 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the periods in the five-year period then ended in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP December 6, 2000 Houston, Texas FS-32 234 SCHEDULE OF INVESTMENTS October 31, 2000
MARKET SHARES VALUE DOMESTIC COMMON STOCKS-47.74% BANKS (MONEY CENTER)-1.18% Chase Manhattan Corp. (The) 440,000 $ 20,020,000 =============================================================== BIOTECHNOLOGY-1.75% Amgen Inc.(a) 303,000 17,555,062 - --------------------------------------------------------------- Protein Design Labs, Inc.(a) 89,500 12,089,492 =============================================================== 29,644,554 =============================================================== COMMUNICATIONS EQUIPMENT-5.53% ADC Telecommunications, Inc.(a) 612,000 13,081,500 - --------------------------------------------------------------- Comverse Technology, Inc.(a) 255,000 28,496,250 - --------------------------------------------------------------- JDS Uniphase Corp.(a) 188,768 15,360,996 - --------------------------------------------------------------- Redback Networks Inc.(a) 221,000 23,522,687 - --------------------------------------------------------------- Scientific-Atlanta, Inc. 190,700 13,051,031 =============================================================== 93,512,464 =============================================================== COMPUTERS (HARDWARE)-2.22% McDATA Corp.-Class B(a) 37,600 3,134,312 - --------------------------------------------------------------- Sun Microsystems, Inc.(a) 311,000 34,482,125 =============================================================== 37,616,437 =============================================================== COMPUTERS (NETWORKING)-2.61% Cisco Systems, Inc.(a) 392,500 21,145,937 - --------------------------------------------------------------- Juniper Networks, Inc.(a) 118,000 23,010,000 =============================================================== 44,155,937 =============================================================== COMPUTERS (PERIPHERALS)-4.09% Brocade Communications Systems, Inc.(a) 99,000 22,510,125 - --------------------------------------------------------------- EMC Corp.(a) 525,000 46,757,813 =============================================================== 69,267,938 =============================================================== COMPUTERS (SOFTWARE & SERVICES)-10.17% America Online, Inc.(a) 128,000 6,455,040 - --------------------------------------------------------------- Ariba, Inc.(a) 127,000 16,049,625 - --------------------------------------------------------------- BEA Systems, Inc.(a) 225,000 16,143,750 - --------------------------------------------------------------- Mercury Interactive Corp.(a) 203,000 22,533,000 - --------------------------------------------------------------- Rational Software Corp.(a) 446,000 26,620,625 - --------------------------------------------------------------- Siebel Systems, Inc.(a) 285,000 29,907,188 - --------------------------------------------------------------- TIBCO Software Inc.(a) 141,700 8,927,100 - --------------------------------------------------------------- VERITAS Software Corp.(a) 267,000 37,651,172 - --------------------------------------------------------------- Vitria Technology, Inc.(a) 290,000 7,793,750 =============================================================== 172,081,250 =============================================================== ELECTRICAL EQUIPMENT-0.49% Sanmina Corp.(a) 72,500 8,287,656 ===============================================================
MARKET SHARES VALUE ELECTRONICS (INSTRUMENTATION)-1.41% Waters Corp.(a) 328,500 $ 23,836,781 =============================================================== ELECTRONICS (SEMICONDUCTORS)-2.38% Analog Devices, Inc.(a) 130,000 8,450,000 - --------------------------------------------------------------- Applied Micro Circuits Corp.(a) 166,000 12,688,625 - --------------------------------------------------------------- SDL, Inc.(a) 43,000 11,147,750 - --------------------------------------------------------------- Xilinx, Inc.(a) 110,000 7,968,125 =============================================================== 40,254,500 =============================================================== ENTERTAINMENT-0.52% Time Warner Inc. 115,000 8,729,650 =============================================================== FINANCIAL (DIVERSIFIED)-0.53% American Express Co. 150,000 9,000,000 =============================================================== HEALTH CARE (DRUGS-GENERIC & OTHER)-3.64% Andrx Group(a) 42,800 3,081,600 - --------------------------------------------------------------- Forest Laboratories, Inc.(a) 236,000 31,270,000 - --------------------------------------------------------------- Genentech, Inc.(a) 330,000 27,225,000 =============================================================== 61,576,600 =============================================================== HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-1.81% Allergan, Inc. 160,000 13,450,000 - --------------------------------------------------------------- Pfizer Inc. 400,000 17,275,000 =============================================================== 30,725,000 =============================================================== HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.48% Medtronic, Inc. 185,000 10,047,813 - --------------------------------------------------------------- PE Corp-PE Biosystems Group 273,000 31,941,000 =============================================================== 41,988,813 =============================================================== HEALTH CARE (SPECIALIZED SERVICES)-0.48% Alza Corp.(a) 100,000 8,093,750 =============================================================== INSURANCE (MULTI-LINE)-1.55% American International Group, Inc. 268,000 26,264,000 =============================================================== INVESTMENT BANKING/BROKERAGE-1.98% Goldman Sachs Group, Inc. (The) 80,000 7,985,000 - --------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 317,500 25,499,219 =============================================================== 33,484,219 =============================================================== LEISURE TIME (PRODUCTS)-0.53% Harley-Davidson, Inc. 185,000 8,914,688 =============================================================== NATURAL GAS-0.52% Dynegy Inc.-Class A 191,000 8,845,688 ===============================================================
FS-33 235
MARKET SHARES VALUE POWER PRODUCERS (INDEPENDENT)-0.47% Calpine Corp.(a) 100,000 $ 7,893,750 =============================================================== SERVICES (DATA PROCESSING)-0.46% Ceridian Corp.(a) 310,000 7,750,000 =============================================================== TELECOMMUNICATIONS (CELLULAR/ WIRELESS)-0.94% Powerwave Technologies, Inc.(a) 330,000 15,881,250 =============================================================== Total Domestic Common Stocks (Cost $596,805,209) 807,824,925 =============================================================== FOREIGN STOCKS & OTHER EQUITY INTERESTS-39.92% AUSTRALIA-1.29% AMP Ltd. (Insurance-Life/Health) 448,840 4,045,892 - --------------------------------------------------------------- Brambles Industries Ltd. (Air Freight) 335,000 8,685,662 - --------------------------------------------------------------- Computershare Ltd.-Wts., expiring 07/26/01 (Computers-Software & Services) 100,000 55,982 - --------------------------------------------------------------- Foster's Brewing Group Ltd. (Beverages-Alcoholic) 3,998,000 9,056,228 =============================================================== 21,843,764 =============================================================== BRAZIL-0.96% Companhia de Bebidas das Americas-ADR (Beverages-Alcoholic) 408,600 9,219,037 - --------------------------------------------------------------- Tele Norte Leste Participacoes S.A.-ADR (Telephone) 314,800 6,964,950 =============================================================== 16,183,987 =============================================================== CANADA-3.32% Bombardier Inc.-Class B (Aerospace/Defense) 1,296,320 20,327,941 - --------------------------------------------------------------- C-MAC Industries, Inc. (Electronics-Component Distributors)(a) 184,400 10,383,291 - --------------------------------------------------------------- Celestica Inc. (Electronics-Semiconductors)(a) 205,000 14,603,549 - --------------------------------------------------------------- Nortel Networks Corp. (Communications Equipment) 239,184 10,882,872 =============================================================== 56,197,653 =============================================================== DENMARK-1.35% Novo Nordisk A.S.-Class B (Health Care- Drugs-Generic & Other)(a) 108,050 22,917,531 =============================================================== FINLAND-1.27% Nokia Oyj (Communications Equipment) 521,000 21,439,691 =============================================================== FRANCE-7.02% Alcatel S.A. (Communications Equipment) 330,000 20,135,919 - --------------------------------------------------------------- Aventis S.A. (Chemicals-Diversified)(a) 290,600 20,962,504 - --------------------------------------------------------------- BNP Paribas (Banks-Major Regional) 238,000 20,521,036 - --------------------------------------------------------------- Havas Advertising S.A. (Services-Advertising/ Marketing) 647,900 10,441,468 - --------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 43,020 7,677,827 - --------------------------------------------------------------- Schneider Electric S.A. (Housewares)(a) 82,200 5,354,006 - ---------------------------------------------------------------
MARKET SHARES VALUE FRANCE-(CONTINUED) Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 151,500 $ 8,267,082 - --------------------------------------------------------------- STMicroelectronics N.V. (Electronics-Semiconductors) 274,000 13,823,914 - --------------------------------------------------------------- Total Fina Elf S.A. (Oil-International Integrated) 81,459 11,655,348 =============================================================== 118,839,104 =============================================================== GERMANY-0.49% Siemens A.G. (Manufacturing-Diversified) 64,900 8,261,608 =============================================================== HONG KONG-1.59% China Mobile Ltd. (Telecommunications- Cellular/Wireless)(a) 1,496,000 9,590,973 - --------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks-Regional) 828,000 4,182,998 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 781,000 9,713,681 - --------------------------------------------------------------- Shangri-La Asia Ltd. (Lodging-Hotels) 3,478,000 3,433,850 =============================================================== 26,921,502 =============================================================== ISRAEL-1.99% Check Point Software Technologies Ltd. (Computers-Software & Services)(a) 213,000 33,733,875 =============================================================== JAPAN-5.72% Advantest Corp. (Electronics-Instrumentation) 43,200 5,633,836 - --------------------------------------------------------------- Crayfish Co. Ltd.-ADR (Computers-Software & Services)(a) 152,200 237,812 - --------------------------------------------------------------- Hirose Electric Co. Ltd. (Electronics-Component Distributors) 44,000 5,080,878 - --------------------------------------------------------------- Hoya Corp. (Manufacturing-Specialized) 50,000 4,133,254 - --------------------------------------------------------------- Matsushita Communication Industrial Co., Ltd. (Telephone) 46,000 6,028,502 - --------------------------------------------------------------- Murata Manufacturing Co., Ltd. (Electronics-Component Distributors) 49,000 5,864,822 - --------------------------------------------------------------- NEC Corp. (Computers-Hardware) 358,000 6,824,360 - --------------------------------------------------------------- Nippon Telegraph & Telephone Corp. (Telecommunications-Long Distance) 478 4,350,034 - --------------------------------------------------------------- NTT Data Corp. (Computers-Software & Services)(a) 318 2,477,203 - --------------------------------------------------------------- NTT DoCoMo, Inc. (Telecommunications- Cellular/Wireless) 266 6,557,669 - --------------------------------------------------------------- Ricoh Co., Ltd. (Office Equipment & Supplies) 230,000 3,541,218 - --------------------------------------------------------------- Rohm Co. Ltd. (Electronics-Component Distributors) 17,000 4,286,028 - --------------------------------------------------------------- Sanix Inc. (Services-Commercial & Consumer) 72,900 3,734,693 - --------------------------------------------------------------- Sanyo Electric Co., Ltd. (Electronics-Component Distributors) 1,332,000 10,132,063 - --------------------------------------------------------------- Sharp Corp. (Electrical Equipment) 185,000 2,356,688 - --------------------------------------------------------------- Sony Corp. (Electrical Equipment) 113,400 9,062,439 - ---------------------------------------------------------------
FS-34 236
MARKET SHARES VALUE JAPAN-(CONTINUED) Takeda Chemical Industries Ltd. (Health Care-Drugs-Generic & Other) 94,000 $ 6,194,015 - --------------------------------------------------------------- Tokyo Electron Ltd. (Electronics- Semiconductors) 67,000 5,243,825 - --------------------------------------------------------------- Trend Micro Inc. (Computers-Software & Services)(a) 52,550 4,960,500 =============================================================== 96,699,839 =============================================================== MEXICO-1.51% Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 376,100 7,216,419 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 105,200 5,693,950 - --------------------------------------------------------------- Telefonos de Mexico S.A. de C.V.- Class L-ADR (Telephone) 137,300 7,405,619 - --------------------------------------------------------------- Wal-Mart de Mexico S.A. de C.V.-Series C (Retail-General Merchandise)(a) 2,327,000 5,305,229 =============================================================== 25,621,217 =============================================================== NETHERLANDS-2.99% Koninklijke (Royal) Philips Electronics N.V. (Electrical Equipment) 537,000 21,104,627 - --------------------------------------------------------------- Royal Dutch Petroleum Co. (Oil-International Integrated) 291,840 17,309,657 - --------------------------------------------------------------- VNU N.V. (Publishing) 257,930 12,148,522 =============================================================== 50,562,806 =============================================================== SINGAPORE-0.50% DBS Group Holdings Ltd. (Banks-Money Center) 459,283 5,413,174 - --------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 782,600 1,559,585 - --------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing-Newspapers) 106,000 1,514,889 =============================================================== 8,487,648 =============================================================== SOUTH KOREA-0.57% Korea Telecom Corp.-ADR (Telephone) 178,000 6,563,750 - --------------------------------------------------------------- Samsung Electronics N.V. (Electronics-Component Distributors) 24,000 3,006,593 =============================================================== 9,570,343 =============================================================== SPAIN-1.10% Telefonica S.A. (Telephone)(a) 868,380 16,559,282 - ---------------------------------------------------------------
MARKET SHARES VALUE SPAIN-(CONTINUED) Telefonica S.A.-ADR (Telephone)(a) 34,248 $ 1,984,243 =============================================================== 18,543,525 =============================================================== SWITZERLAND-3.34% Adecco S.A. (Services-Commercial & Consumer) 12,958 8,961,661 - --------------------------------------------------------------- Compagnie Financiere Richemont A.G.-Units (Tobacco)(b) 5,000 13,909,754 - --------------------------------------------------------------- Julius Baer Holding A.G.-Class B (Banks-Major Regional) 875 4,332,888 - --------------------------------------------------------------- Nestle S.A. (Foods)(a) 8,300 17,202,192 - --------------------------------------------------------------- Serono S.A.-Class B (Health Care-Drugs-Generic & Other) 13,520 12,163,712 =============================================================== 56,570,207 =============================================================== UNITED KINGDOM-4.91% ARM Holdings PLC (Electronics- Semiconductors)(a) 720,400 7,110,002 - --------------------------------------------------------------- BP Amoco PLC (Oil-International Integrated) 1,389,100 11,784,337 - --------------------------------------------------------------- Marconi PLC (Communications Equipment) 1,098,000 13,864,644 - --------------------------------------------------------------- Shell Transport & Trading Co. (Oil-International Integrated) 1,491,000 11,999,587 - --------------------------------------------------------------- Spirent PLC (Communications Equipment) 1,706,000 15,822,205 - --------------------------------------------------------------- Vodafone Group PLC (Telecommunications- Cellular/Wireless) 3,501,234 14,571,749 - --------------------------------------------------------------- WPP Group PLC (Services-Advertising/ Marketing) 594,600 7,982,773 =============================================================== 83,135,297 =============================================================== Total Foreign Stocks & Other Equity Interests (Cost $555,989,403) 675,529,597 =============================================================== MONEY MARKET FUNDS-10.25% STIC Liquid Assets Portfolio(c) 86,744,451 86,744,451 - --------------------------------------------------------------- STIC Prime Portfolio(c) 86,744,451 86,744,451 =============================================================== Total Money Market Funds (Cost $173,488,902) 173,488,902 =============================================================== TOTAL INVESTMENTS-97.91% (Cost $1,326,283,514) 1,656,843,424 =============================================================== OTHER ASSETS LESS LIABILITIES-2.09% 35,366,989 =============================================================== NET ASSETS-100.00% $1,692,210,413 _______________________________________________________________ ===============================================================
Investment Abbreviations: ADR - American Depositary Receipt GDR - Global Depositary Receipt Ltd. - Limited Wts. - Warrants Notes to Schedule of Investments: (a) Non-income producing security. (b) Consists of more than one class of securities traded together as a unit. In addition to the security listed, each unit includes common or preferred shares of the issuer. (c) The money market fund and the Fund are affiliated by having the same investment advisor. See Notes to Financial Statements. FS-35 237 STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 ASSETS: Investments, at market value (cost $1,326,283,514) $1,656,843,424 - ------------------------------------------------------------- Foreign currencies, at market value (cost $10,044,949) 10,056,555 - ------------------------------------------------------------- Receivables for: Investments sold 4,412,018 - ------------------------------------------------------------- Capital stock sold 52,492,656 - ------------------------------------------------------------- Dividends and interest 2,226,247 - ------------------------------------------------------------- Investment for deferred compensation plan 32,356 - ------------------------------------------------------------- Other assets 332,147 ============================================================= Total assets $1,726,395,403 ============================================================= LIABILITIES: Payables for: Investments purchased 28,300,956 - ------------------------------------------------------------- Capital stock reacquired 2,719,689 - ------------------------------------------------------------- Deferred compensation plan 32,356 - ------------------------------------------------------------- Accrued advisory fees 1,035,837 - ------------------------------------------------------------- Accrued administrative services fees 13,262 - ------------------------------------------------------------- Accrued distribution fees 1,232,429 - ------------------------------------------------------------- Accrued directors' fees 825 - ------------------------------------------------------------- Accrued transfer agent fees 412,954 - ------------------------------------------------------------- Accrued operating expenses 436,682 ============================================================= Total liabilities 34,184,990 ============================================================= Net assets applicable to shares outstanding $1,692,210,413 _____________________________________________________________ ============================================================= NET ASSETS: Class A $ 796,991,823 _____________________________________________________________ ============================================================= Class B $ 806,408,561 _____________________________________________________________ ============================================================= Class C $ 88,810,029 _____________________________________________________________ ============================================================= CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 32,093,243 _____________________________________________________________ ============================================================= Class B: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 33,631,933 _____________________________________________________________ ============================================================= Class C: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 3,702,778 _____________________________________________________________ ============================================================= Class A: Net asset value and redemption price per share $ 24.83 - ------------------------------------------------------------- Offering price per share: (Net asset value of $24.83 divided by 95.25%) $ 26.07 _____________________________________________________________ ============================================================= Class B: Net asset value and offering price per share $ 23.98 _____________________________________________________________ ============================================================= Class C: Net asset value and offering price per share $ 23.98 _____________________________________________________________ =============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 2000 INVESTMENT INCOME: Dividends (net of foreign withholding tax of $634,651) $14,918,005 - ------------------------------------------------------------ Dividends from affiliated money market funds 5,318,415 - ------------------------------------------------------------ Interest 448,848 ============================================================ Total investment income 20,685,268 ============================================================ EXPENSES: Advisory fees 11,431,836 - ------------------------------------------------------------ Administrative services fees 145,994 - ------------------------------------------------------------ Custodian fees 707,290 - ------------------------------------------------------------ Distribution fees -- Class A 3,100,225 - ------------------------------------------------------------ Distribution fees -- Class B 6,788,675 - ------------------------------------------------------------ Distribution fees -- Class C 675,670 - ------------------------------------------------------------ Transfer agent fees -- Class A 1,120,848 - ------------------------------------------------------------ Transfer agent fees -- Class B 1,474,643 - ------------------------------------------------------------ Transfer agent fees -- Class C 146,770 - ------------------------------------------------------------ Directors' fees 8,853 - ------------------------------------------------------------ Other 665,411 ============================================================ Total expenses 26,266,215 ============================================================ Less: Fees waived by advisor (125,000) - ------------------------------------------------------------ Expenses paid indirectly (26,785) ============================================================ Net expenses 26,114,430 ============================================================ Net investment income (loss) (5,429,162) ============================================================ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS: Net realized gain (loss) from: Investment securities (1,494,323) - ------------------------------------------------------------ Foreign currencies (2,234,055) - ------------------------------------------------------------ Option contracts written 152,919 ============================================================ (3,575,459) ============================================================ Change in net unrealized appreciation (depreciation) of: Investment securities 22,263,986 - ------------------------------------------------------------ Foreign currencies (341,656) - ------------------------------------------------------------ Option contracts written 921,195 ============================================================ 22,843,525 ============================================================ Net gain on investment securities, foreign currencies and option contracts 19,268,066 ============================================================ Net increase in net assets resulting from operations $13,838,904 ____________________________________________________________ ============================================================
See Notes to Financial Statements. FS-36 238 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2000 and 1999
2000 1999 -------------- ------------ OPERATIONS: Net investment income (loss) $ (5,429,162) $ (6,059,211) - -------------------------------------------------------------------------------------------- Net realized gain (loss) from investment securities, foreign currencies and option contracts (3,575,459) 63,983,622 - -------------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities, foreign currencies and option contracts 22,843,525 140,454,322 ============================================================================================ Net increase in net assets resulting from operations 13,838,904 198,378,733 ============================================================================================ Distributions to shareholders from net realized gains: Class A (22,377,539) (6,185,053) - -------------------------------------------------------------------------------------------- Class B (25,278,124) (7,892,012) - -------------------------------------------------------------------------------------------- Class C (1,981,428) (358,333) - -------------------------------------------------------------------------------------------- Share transactions-net: Class A 420,853,851 84,486,765 - -------------------------------------------------------------------------------------------- Class B 399,786,433 49,407,333 - -------------------------------------------------------------------------------------------- Class C 62,117,243 14,141,472 ============================================================================================ Net increase in net assets 846,959,340 331,978,905 ============================================================================================ NET ASSETS: Beginning of year 845,251,073 513,272,168 ============================================================================================ End of year $1,692,210,413 $845,251,073 ____________________________________________________________________________________________ ============================================================================================ NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $1,364,256,905 $568,723,576 - -------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (47,437) (806,662) - -------------------------------------------------------------------------------------------- Undistributed net realized gain from investment securities, foreign currencies and option contracts (2,127,865) 55,673,261 - -------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities, foreign currencies and option contracts 330,128,810 221,660,898 ============================================================================================ $1,692,210,413 $845,251,073 ____________________________________________________________________________________________ ============================================================================================
See Notes to Financial Statements. FS-37 239 NOTES TO FINANCIAL STATEMENTS October 31, 2000 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 long-term growth of capital. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2000, undistributed net investment income was increased by $6,188,387, undistributed net realized gains decreased by $4,588,576 and paid in capital decreased by $1,599,811 as a result of book/tax differences due to utilization of a portion of the proceeds from redemptions as distributions for federal income tax purposes, foreign currency transactions and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above. C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in FS-38 240 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, on a covered basis; that is, the Fund will own the underlying security. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability. The amount of the liability is subsequently "marked-to-market" to reflect the current market value of the option written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. A call option gives the purchaser of such option the right to buy, and the writer (the Fund) the obligation to sell, the underlying security at the stated exercise price during the 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. Bond Premiums -- It has been the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. In November 2000, a revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was issued and is effective for fiscal years beginning after December 15, 2000. The revised Guide will require the Fund to amortize premium and discount on all fixed-income securities. Upon initial adoption, the Fund will be required to adjust the cost of its fixed-income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding. Adopting this accounting principle will not effect the Fund's net asset value, but will change the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. The Fund expects that the impact of the adoption of this principle will not be material to the financial statements. I. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% 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. AIM has contractually agreed to waive fees and reimburse expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit total operating expenses of Class A shares to 1.60% (e.g. if AIM waives 0.07% of Class A expenses, AIM will also waive 0.07% of Class B and Class C expenses). During the year ended October 31, 2000, AIM waived fees of $125,000. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the year ended October 31, 2000, AIM was paid $145,994 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. For the year ended October 31, 2000, AFS was paid $1,505,470 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.50% of the Fund's average daily net assets of Class A shares FS-39 241 and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset- based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 2000, the Class A, Class B and Class C shares paid AIM Distributors $3,100,225, $6,788,675 and $675,670, respectively, as compensation under the Plans. AIM Distributors received commissions of $619,969 from sales of the Class A shares of the Fund during the year ended October 31, 2000. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 2000, AIM Distributors received $44,181 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2000, the Fund paid legal fees of $5,756 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $18,741 and reductions in custodian fees of $8,044 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $26,785. 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 Citibank, N.A. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 2000, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. During the year ended October 31, 2000, there were no securities on loan. NOTE 7-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2000 was $1,624,906,363 and $1,387,676,119, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2000 is as follows: Aggregate unrealized appreciation of investment securities $363,980,808 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (38,626,309) ========================================================= Net unrealized appreciation of investment securities $325,354,499 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $1,331,488,925.
NOTE 8-OPTION CONTRACTS WRITTEN Transactions in call options written during the year ended October 31, 2000 are summarized as follows:
CALL OPTION CONTRACTS ----------------------- NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- ---------- Beginning of year 1,444 $1,753,505 - --------------------------------------------------------- Closed (640) (1,214,039) - --------------------------------------------------------- Exercised (804) (539,466) ========================================================= End of year -- $ 0 _________________________________________________________ =========================================================
FS-40 242 NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the years October 31, 2000 and 1999 were as follows:
2000 1999 --------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------- ----------- ------------- Sold: Class A 15,127,777 $ 406,628,704 10,512,070 $ 211,966,029 - ------------------------------------------------------------------------------------------------------------------------- Class B 6,900,851 184,168,116 4,204,829 83,820,436 - ------------------------------------------------------------------------------------------------------------------------- Class C 2,828,982 75,283,012 944,252 18,989,474 ========================================================================================================================= Issued as reinvestment of dividends: Class A 806,611 20,568,517 314,736 5,777,296 - ------------------------------------------------------------------------------------------------------------------------- Class B 942,086 23,307,209 411,104 7,371,231 - ------------------------------------------------------------------------------------------------------------------------- Class C 77,109 1,907,682 37,653 676,846 ========================================================================================================================= Issued in connection with acquisitions: Class A 7,688,264 213,107,428* 3,763,754 74,083,124** - ------------------------------------------------------------------------------------------------------------------------- Class B 10,539,727 282,469,092* 1,833,252 35,223,535** - ------------------------------------------------------------------------------------------------------------------------- Class C 91,163 2,444,182* -- --** ========================================================================================================================= Reacquired: Class A (8,110,012) (219,450,798) (10,242,303) (207,339,684) - ------------------------------------------------------------------------------------------------------------------------- Class B (3,420,141) (90,157,984) (3,903,318) (77,007,869) - ------------------------------------------------------------------------------------------------------------------------- Class C (670,330) (17,517,633) (277,476) (5,524,848) ========================================================================================================================= 32,802,087 $ 882,757,527 7,598,553 $ 148,035,570 _________________________________________________________________________________________________________________________ =========================================================================================================================
* As of the close of business on June 9, 2000, the Fund acquired all the net assets of AIM Global Growth & Income Fund pursuant to a plan of reorganization approved by AIM Global Growth & Income Fund's shareholders on May 31, 2000. The acquisition was accomplished by a tax-free exchange of 18,319,154 shares of the Fund for 74,783,315 shares of AIM Global Growth & Income Fund outstanding as of the close of business on June 9, 2000. AIM Global Growth & Income Fund's net assets at that date were $498,020,702, including $85,624,387 of unrealized appreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $1,254,996,609. ** 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. NOTE 9-FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A -------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2000(a) 1999 1998 1997 1996 -------- -------- -------- -------- -------- Net asset value, beginning of period $ 23.43 $ 17.91 $ 16.65 $ 14.20 $ 12.32 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment loss (0.03) (0.10) (0.05) (0.04) (0.01) - ---------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 2.77 6.12 1.74 2.49 2.11 ====================================================================================================================== Total from investment operations 2.74 6.02 1.69 2.45 2.10 ====================================================================================================================== Less distributions from net realized gains (1.34) (0.50) (0.43) -- (0.22) ====================================================================================================================== Net asset value, end of period $ 24.83 $ 23.43 $ 17.91 $ 16.65 $ 14.20 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) 11.52% 34.43% 10.43% 17.25% 17.26% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $796,992 $388,549 $219,050 $178,917 $114,971 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.62%(c) 1.67% 1.70% 1.76% 1.94% - ---------------------------------------------------------------------------------------------------------------------- Without fee waivers 1.63%(c) 1.67% 1.70% 1.76% 1.93% ====================================================================================================================== Ratio of net investment income (loss) to average net assets (0.10)%(c) (0.57)% (0.27)% (0.30)% (0.13)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate 110% 93% 97% 96% 82% ______________________________________________________________________________________________________________________ ======================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include sales charges. (c) Ratios are based on average daily net assets of $620,045,047. FS-41 243 NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B -------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2000(a) 1999(a) 1998(a) 1997 1996 -------- -------- -------- -------- -------- Net asset value, beginning of period $ 22.78 $ 17.52 $ 16.39 $ 14.05 $ 12.26 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.23) (0.15) (0.11) (0.05) - ---------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 2.71 5.99 1.71 2.45 2.06 ====================================================================================================================== Total from investment operations 2.54 5.76 1.56 2.34 2.01 ====================================================================================================================== Less distributions from net realized gains (1.34) (0.50) (0.43) -- (0.22) ====================================================================================================================== Net asset value, end of period $ 23.98 $ 22.78 $ 17.52 $ 16.39 $ 14.05 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) 10.95% 33.69% 9.78% 16.65% 16.60% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $806,409 $425,345 $282,456 $224,225 $121,848 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.16%(c) 2.23% 2.26% 2.29% 2.49% - ---------------------------------------------------------------------------------------------------------------------- Without fee waivers 2.17%(c) 2.23% 2.26% 2.29% 2.48% ====================================================================================================================== Ratio of net investment income (loss) to average net assets (0.64)%(c) (1.13)% (0.83)% (0.83)% (0.69)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate 110% 93% 97% 96% 82% ______________________________________________________________________________________________________________________ ======================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges. (c) Ratios are based on average daily net assets of $678,867,468.
CLASS C ------------------------------------------------- AUGUST 4, 1997 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ----------------------------- OCTOBER 31, 2000(a) 1999(a) 1998(a) 1997 ------- ------- ------- ---------------- Net asset value, beginning of period $ 22.79 $ 17.52 $ 16.39 $17.39 - --------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.17) (0.23) (0.15) (0.03) - --------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 2.70 6.00 1.71 (0.97) =============================================================================================================== Total from investment operations 2.53 5.77 1.56 (1.00) =============================================================================================================== Less distributions from net realized gains (1.34) (0.50) (0.43) -- =============================================================================================================== Net asset value, end of period $ 23.98 $ 22.79 $ 17.52 $16.39 _______________________________________________________________________________________________________________ =============================================================================================================== Total return(b) 10.90% 33.69% 9.78% (5.75)% _______________________________________________________________________________________________________________ =============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $88,810 $31,356 $11,765 $1,100 _______________________________________________________________________________________________________________ =============================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.16%(c) 2.23% 2.26% 2.29%(d) - --------------------------------------------------------------------------------------------------------------- Without fee waivers 2.17%(c) 2.23% 2.26% 2.29%(d) =============================================================================================================== Ratio of net investment income (loss) to average net assets (0.64)%(c) (1.13)% (0.83)% (0.83)%(d) _______________________________________________________________________________________________________________ =============================================================================================================== Portfolio turnover rate 110% 93% 97% 96% _______________________________________________________________________________________________________________ ===============================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $67,566,969. (d) Annualized. FS-42 244 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, 2000, 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 periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Income Fund as of October 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the periods in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP December 6, 2000 Houston, Texas FS-43 245 SCHEDULE OF INVESTMENTS October 31, 2000
PRINCIPAL MARKET AMOUNT VALUE U.S. DOLLAR DENOMINATED BONDS & NOTES-67.01% AIR FREIGHT-0.33% Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 $ 530,000 $ 551,200 ============================================================== AIRLINES-1.46% Air 2 US-Series C, Equipment Trust Ctfs., 10.13%, 10/01/20 (Acquired 10/28/99; Cost $450,000)(a) 450,000 463,248 - -------------------------------------------------------------- Delta Air Lines, Inc., Deb., 10.38%, 12/15/22 500,000 531,790 - -------------------------------------------------------------- Unsec. Notes, 7.90%, 12/15/09 1,000,000 928,400 - -------------------------------------------------------------- Dunlop Standard Aerospace Holdings PLC (United Kingdom), Sr. Unsec. Yankee Sub. Notes, 11.88%, 05/15/09 530,000 530,000 ============================================================== 2,453,438 ============================================================== AUTOMOBILES-0.43% DaimlerChrysler N.A. Holding Corp., Gtd. Notes, 8.00%, 06/15/10 700,000 721,931 ============================================================== BANKS (MAJOR REGIONAL)-1.62% BB&T Corp., Putable Sub. Notes, 6.38%, 06/30/05 125,000 118,456 - -------------------------------------------------------------- Crestar Financial Corp., Sub. Notes, 8.75%, 11/15/04 75,000 78,792 - -------------------------------------------------------------- Midland Bank PLC (United Kingdom), Yankee Sub. Notes, 7.65%, 05/01/25 280,000 282,176 - -------------------------------------------------------------- Regions Financial Corp., Putable Sub. Notes, 7.75%, 09/15/24 500,000 509,135 - -------------------------------------------------------------- Republic New York Corp., Sub. Deb., 9.50%, 04/15/14 370,000 414,766 - -------------------------------------------------------------- Sub. Notes, 9.70%, 02/01/09 400,000 443,140 - -------------------------------------------------------------- UBS Preferred Funding Trust I, Gtd. Bonds, 8.62%, 10/29/49 855,000 865,715 ============================================================== 2,712,180 ============================================================== BANKS (MONEY CENTER)-2.79% BSCH Issuance Ltd. (Cayman Islands), Gtd. Sub. Notes, 7.63%, 09/14/10 800,000 790,728 - -------------------------------------------------------------- First Union Corp., Putable Sub. Deb., 6.55%, 10/15/35 1,500,000 1,442,775 - -------------------------------------------------------------- 7.50%, 04/15/35 1,000,000 999,890 - -------------------------------------------------------------- NCNB Corp., Sub. Notes, 9.38%, 09/15/09 1,300,000 1,444,651 ============================================================== 4,678,044 ============================================================== BANKS (REGIONAL)-2.40% Banponce Trust I-Series A, Gtd. Notes, 8.33%, 02/01/27 360,000 323,086 - -------------------------------------------------------------- Mercantile Bancorp., Inc., Unsec. Sub. Notes, 7.30%, 06/15/07 400,000 393,464 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT VALUE BANKS (REGIONAL)-(CONTINUED) NBD Bank N.A. Michigan, Putable Sub. Deb., 8.25%, 11/01/24 $1,350,000 $ 1,419,471 - -------------------------------------------------------------- Riggs Capital Trust II-Series C, Gtd. Sec. Bonds, 8.88%, 03/15/27 570,000 410,423 - -------------------------------------------------------------- Union Planters Bank N.A., Unsec. Sub. Notes, 6.50%, 03/15/08 155,000 138,911 - -------------------------------------------------------------- Union Planters Capital Trust, Gtd. Bonds, 8.20%, 12/15/26 400,000 347,792 - -------------------------------------------------------------- US Bancorp, Sub. Deb., 7.50%, 06/01/26 1,000,000 997,690 ============================================================== 4,030,837 ============================================================== BEVERAGES (ALCOHOLIC)-0.23% J Seagram & Sons, Gtd. Deb., 9.65%, 08/15/18 300,000 387,036 ============================================================== BROADCASTING (TELEVISION, RADIO & CABLE)-7.88% Adelphia Communications Corp., Sr. Unsec. Notes, 10.88%, 10/01/10 700,000 661,500 - -------------------------------------------------------------- AT&T Corp.-Liberty Media Corp., Bonds, 7.88%, 07/15/09 85,000 82,170 - -------------------------------------------------------------- Sr. Unsec. Deb., 8.25%, 02/01/30 1,050,000 937,734 - -------------------------------------------------------------- British Sky Broadcasting Group PLC (United Kingdom), Sr. Unsec. Gtd. Yankee Notes, 8.20%, 07/15/09 665,000 615,504 - -------------------------------------------------------------- Charter Communications Holdings, LLC/Charter Communications Holdings Capital Corp., Sr. Unsec. Disc. Notes, 9.92%, 04/01/11(b) 1,000,000 590,000 - -------------------------------------------------------------- Clear Channel Communications, Inc., Unsec. Deb., 7.25%, 10/15/27 1,300,000 1,148,654 - -------------------------------------------------------------- Comcast Cable Communications, Unsec. Notes, 8.50%, 05/01/27 1,000,000 1,074,580 - -------------------------------------------------------------- Cox Enterprises, Inc., Notes, 8.00%, 02/15/07 (Acquired 02/16/00; Cost $297,759)(a) 300,000 301,263 - -------------------------------------------------------------- CSC Holdings Inc., Sr. Unsec. Deb., 7.63%, 07/15/18 1,000,000 893,820 - -------------------------------------------------------------- 7.88%, 02/15/18 1,000,000 916,810 - -------------------------------------------------------------- Sr. Unsec. Notes, 7.88%, 12/15/07 1,875,000 1,818,487 - -------------------------------------------------------------- Series B, Sr. Notes, 8.13%, 07/15/09 1,300,000 1,273,480 - -------------------------------------------------------------- Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes, 10.25%, 11/01/07(b) 940,000 690,900 - -------------------------------------------------------------- Knology Holdings, Inc., Sr. Disc. Notes, 11.88%, 10/15/07(b) 700,000 316,750 - -------------------------------------------------------------- Lenfest Communications, Inc., Sr. Unsec. Sub. Notes, 8.25%, 02/15/08 650,000 656,591 - -------------------------------------------------------------- TCI Communications, Inc., Sr. Deb., 8.75%, 08/01/15 750,000 777,615 - --------------------------------------------------------------
FS-44 246
PRINCIPAL MARKET AMOUNT VALUE BROADCASTING (TELEVISION, RADIO & CABLE)-(CONTINUED) United Pan-Europe Communications N.V. (Netherlands)-Series B, Sr. Unsec. Disc. Yankee Notes, 13.75%, 02/01/10(b) $1,200,000 $ 462,000 ============================================================== 13,217,858 ============================================================== BUILDING MATERIALS-0.26% Dayton Superior Corp., Sr. Unsec. Gtd. Sub. Notes, 13.00%, 06/15/09 450,000 429,750 ============================================================== CHEMICALS-0.20% Agrium, Inc., Unsec. Yankee Notes, 7.00%, 02/01/04 350,000 335,559 ============================================================== COMMUNICATIONS EQUIPMENT-0.07% ProNet Inc., Sr. Sub. Notes, 11.88%, 06/15/05 250,000 111,250 ============================================================== COMPUTERS (NETWORKING)-0.28% Exodus Communications, Inc., Sr. Unsec. Notes, 11.25%, 07/01/08 510,000 466,650 ============================================================== COMPUTERS (PERIPHERALS)-0.11% Equinix Inc., Sr. Unsec. Notes, 13.00%, 12/01/07 250,000 188,125 ============================================================== CONSTRUCTION (CEMENT & AGGREGATES)-0.13% Schuff Steel Co., Sr. Unsec. Gtd. Sub. Notes, 10.50%, 06/01/08 350,000 222,250 ============================================================== CONSUMER FINANCE-2.25% American General Finance Corp., Sr. Notes, 8.45%, 10/15/09 270,000 284,467 - -------------------------------------------------------------- Capital One Bank, Unsec. Notes, 7.25%, 05/01/06 1,450,000 1,370,757 - -------------------------------------------------------------- Capital One Financial Corp., Sr. Notes, 8.25%, 06/15/05 550,000 554,774 - -------------------------------------------------------------- Household Finance Corp., Unsec. Notes, 6.88%, 03/01/07 900,000 867,339 - -------------------------------------------------------------- MBNA Capital I-Series A, Gtd. Bonds, 8.28%, 12/01/26 835,000 697,601 ============================================================== 3,774,938 ============================================================== ELECTRIC COMPANIES-3.67% CILCORP Inc., Bonds, 9.38%, 10/15/29 1,000,000 1,107,820 - -------------------------------------------------------------- Cleveland Electric Illuminating Co. (The), 1st Mortgage, 6.86%, 10/01/08 500,000 474,930 - -------------------------------------------------------------- Series D, Sr. Sec. Notes, 7.88%, 11/01/17 1,500,000 1,474,065 - -------------------------------------------------------------- El Paso Electric Co. Series D, Sec. First Mortgage Bonds, 8.90%, 02/01/06 500,000 525,570 - -------------------------------------------------------------- Series E, Sec. First Mortgage Bonds, 9.40%, 05/01/11 1,000,000 1,055,790 - -------------------------------------------------------------- Niagara Mohawk Holdings Inc.-Series H, Sr. Unsec. Disc. Notes, 8.50%, 07/01/10(b) 1,400,000 1,133,062 - -------------------------------------------------------------- Public Service Company of New Mexico-Series A, Sr. Unsec. Notes, 7.10%, 08/01/05 120,000 118,354 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT VALUE ELECTRIC COMPANIES-(CONTINUED) Texas-New Mexico Power Co., Sr. Sec. Notes, 6.25%, 01/15/09 $ 300,000 $ 268,557 ============================================================== 6,158,148 ============================================================== ELECTRICAL EQUIPMENT-1.08% Emerson Electric Co., Unsec. Notes, 7.13%, 08/15/10 1,000,000 1,004,130 - -------------------------------------------------------------- GE Global Insurance Holdings Corp., Notes, 7.75%, 06/15/30 800,000 813,544 ============================================================== 1,817,674 ============================================================== ELECTRONICS (COMPONENT DISTRIBUTORS)-0.74% Israel Electric Corp. Ltd. (Israel), Sr. Sec. Medium Term Yankee Notes, 7.75%, 03/01/09 (Acquired 04/13/00-10/23/00; Cost $949,217)(a) 1,000,000 939,350 - -------------------------------------------------------------- Yankee Deb., 7.75%, 12/15/27 (Acquired 06/09/00; Cost $307,293)(a) 350,000 301,689 ============================================================== 1,241,039 ============================================================== ENGINEERING & CONSTRUCTION-0.38% Washington Group International, Inc., Sr. Unsec. Gtd. Notes, 11.00%, 07/01/10 (Acquired 06/28/00; Cost $744,465)(a) 750,000 639,375 ============================================================== ENTERTAINMENT-2.30% Callahan Nordrhein Westfalen (Denmark), Sr. Unsec. Yankee Notes, 14.00%, 07/15/10 (Acquired 06/29/00-08/11/00; Cost $523,438)(a) 525,000 509,250 - -------------------------------------------------------------- Time Warner Inc., Deb., 9.13%, 01/15/13 1,000,000 1,118,240 - -------------------------------------------------------------- 9.15%, 02/01/23 1,600,000 1,793,632 - -------------------------------------------------------------- Gtd. Bonds, 6.95%, 01/15/28 500,000 447,950 ============================================================== 3,869,072 ============================================================== FINANCIAL (DIVERSIFIED)-3.01% AIG SunAmerica Global Financing I, Sr. Unsec. Notes, 7.40%, 05/05/03 (Acquired 10/17/00; Cost $335,415)(a) 330,000 335,577 - -------------------------------------------------------------- AIG SunAmerica Global Financing II, Sr. Sec. Notes, 7.60%, 06/15/05 (Acquired 06/08/00; Cost $700,000)(a) 700,000 718,935 - -------------------------------------------------------------- Citigroup Inc., Deb., Deb., 6.63%, 01/15/28 1,000,000 868,860 - -------------------------------------------------------------- Unsec. Sub. Notes, 7.25%, 10/01/10 715,000 710,302 - -------------------------------------------------------------- General Motors Acceptance Corp., Notes, 6.85%, 06/17/04 300,000 297,318 - -------------------------------------------------------------- Heller Financial, Inc., Sr. Unsec. Notes, 7.38%, 11/01/09 500,000 478,050 - -------------------------------------------------------------- 8.00%, 06/15/05 450,000 454,509 - -------------------------------------------------------------- Pinnacle Partners, Sr. Notes, 8.83%, 08/15/04 (Acquired 08/02/00; Cost $1,000,000)(a) 1,000,000 1,016,010 - --------------------------------------------------------------
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PRINCIPAL MARKET AMOUNT VALUE FINANCIAL (DIVERSIFIED)-(CONTINUED) Source One Mortgage Services Corp., Deb., 9.00%, 06/01/12 $ 150,000 $ 165,700 ============================================================== 5,045,261 ============================================================== GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.54% Hollywood Casino Corp., Sr. Sec. Gtd. Sub. Notes, 11.25%, 05/01/07 350,000 368,375 - -------------------------------------------------------------- Park Place Entertainment Corp., Sr. Unsec. Sub. Notes, 8.88%, 09/15/08(c) 550,000 541,750 ============================================================== 910,125 ============================================================== HEALTH CARE (DRUGS-GENERIC & OTHER)-0.15% Warner Chilcott, Inc., Sr. Unsec. Gtd. Sub. Notes, 12.63%, 02/15/08(c) 250,000 256,250 ============================================================== HOMEBUILDING-0.28% K. Hovanian Enterprises Inc., Sr. Unsec. Gtd. Notes, 10.50%, 10/01/07(c) 500,000 472,500 ============================================================== HOUSEHOLD PRODUCTS (NON-DURABLES)-0.26% Procter & Gamble Co. (The), Putable Deb., 8.00%, 09/01/24 400,000 431,608 ============================================================== INSURANCE (LIFE/HEALTH)-0.09% Torchmark Corp., Notes, 7.88%, 05/15/23 165,000 147,612 ============================================================== INSURANCE (PROPERTY-CASUALTY)-0.56% Terra Nova Insurance PLC (United Kingdom), Sr. Unsec. Gtd. Yankee Notes, 7.00%, 05/15/08 500,000 469,825 - -------------------------------------------------------------- 7.20%, 08/15/07 500,000 477,245 ============================================================== 947,070 ============================================================== INVESTMENT BANKING/BROKERAGE-2.18% Lehman Brothers Holdings Inc., Notes, 8.50%, 08/01/15 1,390,000 1,440,513 - -------------------------------------------------------------- Sr. Sub. Notes, 7.38%, 01/15/07 1,000,000 980,930 - -------------------------------------------------------------- Series E, Medium Term Notes, 9.20%, 02/10/28(d) 1,100,000 90,761 - -------------------------------------------------------------- Lehman Brothers Inc., Putable Sr. Notes, 8.80%, 03/01/15 215,000 229,246 - -------------------------------------------------------------- Merrill Lynch & Co., Unsec. Notes, 6.88%, 11/15/18 1,000,000 910,380 ============================================================== 3,651,830 ============================================================== IRON & STEEL-0.03% Acme Metals Inc., Sr. Unsec. Gtd. Notes, 10.88%, 12/15/07(e) 438,000 59,130 ============================================================== LEISURE TIME (PRODUCTS)-0.17% Marvel Enterprises, Inc., Sr. Unsec. Gtd. Sub. Notes, 12.00%, 06/15/09 440,000 282,700 ============================================================== LODGING-HOTELS-0.06% John Q. Hammons Hotels, Inc., Sec. First Mortgage Notes, 9.75%, 10/01/05 100,000 93,750 ==============================================================
PRINCIPAL MARKET AMOUNT VALUE MACHINERY (DIVERSIFIED)-0.26% Actuant Corp., Sr. Unsec. Gtd. Sub. Notes, 13.00%, 05/01/09 (Acquired 07/21/00; Cost $444,038)(a) $ 450,000 $ 438,750 ============================================================== MANUFACTURING (DIVERSIFIED)-0.96% Glenoit Corp., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 04/15/07(e) 380,000 64,600 - -------------------------------------------------------------- Honeywell International Inc., Notes, 7.50%, 03/01/10 1,500,000 1,550,100 ============================================================== 1,614,700 ============================================================== MANUFACTURING (SPECIALIZED)-0.39% First Wave Marine, Inc., Sr. Unsec. Notes, 11.00%, 02/01/08 250,000 68,125 - -------------------------------------------------------------- MMI Products, Inc.-Series B, Sr. Unsec. Sub. Notes, 11.25%, 04/15/07 260,000 255,450 - -------------------------------------------------------------- Tekni-Plex, Inc., Sr. Sub. Notes, 12.75%, 06/15/10(c) 365,000 333,975 ============================================================== 657,550 ============================================================== METALS MINING-0.14% Rio Algom Ltd. (Canada), Unsec. Yankee Deb., 7.05%, 11/01/05 250,000 242,695 ============================================================== NATURAL GAS-3.65% Coastal Corp. (The), Sr. Unsec. Deb., 6.70%, 02/15/27 900,000 856,440 - -------------------------------------------------------------- Dynegy Inc., Sr. Unsec. Deb., 7.13%, 05/15/18 1,100,000 989,472 - -------------------------------------------------------------- Enron Corp.-Series A, Medium Term Notes, 8.38%, 05/23/05 1,300,000 1,353,820 - -------------------------------------------------------------- KN Capital Trust III-Series B, Unsec. Gtd. Bonds, 8.56%, 04/15/27 1,000,000 914,080 - -------------------------------------------------------------- Northern Border Partners, L.P., Sr. Unsec. Gtd. Notes, 8.88%, 06/15/10 (Acquired 09/07/00; Cost $1,038,660)(a) 1,000,000 1,040,480 - -------------------------------------------------------------- Nova Gas Transmission Ltd. (Canada), Yankee Deb., 8.50%, 12/15/12 450,000 479,781 - -------------------------------------------------------------- Sonat Inc., Unsec. Notes, 7.63%, 07/15/11 500,000 498,055 ============================================================== 6,132,128 ============================================================== OIL & GAS (DRILLING & EQUIPMENT)-1.06% Petroleum Geo-Services A.S.A. (Norway), Yankee Notes, 7.50%, 03/31/07 1,820,000 1,778,013 ============================================================== OIL & GAS (EXPLORATION & PRODUCTION)-3.00% Anadarko Petroleum Corp., Deb., 7.73%, 09/15/96 1,200,000 1,198,980 - -------------------------------------------------------------- Apache Crop., Sr. Unsec. Notes, 7.00%, 02/01/18 1,000,000 931,980 - -------------------------------------------------------------- Statoil (Norway), Yankee Unsec. Deb., 7.38%, 05/01/16 (Acquired 06/01/00; Cost $281,547)(a) 300,000 285,852 - -------------------------------------------------------------- DevX Energy, Inc., Sr. Unsec. Gtd. Sub. Notes, 12.50%, 07/01/08 160,000 112,800 - -------------------------------------------------------------- ONEOK, Inc., Unsec. Notes, 7.75%, 08/15/06 400,000 404,220 - --------------------------------------------------------------
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PRINCIPAL MARKET AMOUNT VALUE OIL & GAS (EXPLORATION & PRODUCTION)-(CONTINUED) Parker & Parsley Petroleum Co., Sr. Unsec. Notes, 8.25%, 08/15/07 $ 620,000 $ 607,929 - -------------------------------------------------------------- Pogo Producing Co.-Series B, Sr. Unsec. Sub. Notes, 10.38%, 02/15/09 500,000 527,500 - -------------------------------------------------------------- Talisman Energy Inc. (Canada), Yankee Deb., 7.13%, 06/01/07 250,000 244,150 - -------------------------------------------------------------- Triton Energy Ltd. (Cayman Islands), Sr. Yankee Notes, 8.88%, 10/01/07 (Acquired 09/27/00; Cost $325,000)(a) 325,000 325,000 - -------------------------------------------------------------- Union Pacific Resources Group Inc., Unsec. Deb., 7.50%, 10/15/26 400,000 389,488 ============================================================== 5,027,899 ============================================================== OIL & GAS (REFINING & MARKETING)-1.48% Giant Industries, Inc., Sr. Unsec. Gtd. Sub. Notes, 9.00%, 09/01/07 346,000 323,510 - -------------------------------------------------------------- Petroleos Mexicanos-Series P (Mexico), Unsub. Yankee Notes, 9.50%, 09/15/27 800,000 813,760 - -------------------------------------------------------------- Texas Petrochemical Corp., Sr. Unsec. Sub. Notes, 11.13%, 07/01/06 560,000 462,000 - -------------------------------------------------------------- Tosco Corp., Unsec. Deb., 7.80%, 01/01/27 900,000 877,842 ============================================================== 2,477,112 ============================================================== OIL (DOMESTIC INTEGRATED)-1.37% Amerada Hess Corp., Bonds, 7.88%, 10/01/29 900,000 920,241 - -------------------------------------------------------------- Occidental Petroleum Corp., Sr. Unsec. Notes, 8.45%, 02/15/29 1,300,000 1,375,803 ============================================================== 2,296,044 ============================================================== OIL (INTERNATIONAL INTEGRATED)-1.09% YPF Sociedad Anonima (Argentina), Yankee Bonds, 8.00%, 02/15/04 1,400,000 1,380,484 - -------------------------------------------------------------- 9.13%, 02/24/09 450,000 456,579 ============================================================== 1,837,063 ============================================================== PAPER & FOREST PRODUCTS-0.25% Domtar, Inc. (Canada), Unsec. Yankee Deb., 9.50%, 08/01/16 400,000 413,500 ============================================================== PHOTOGRAPHY/IMAGING-0.32% Polaroid Corp., Sr. Unsec. Notes, 11.50%, 02/15/06 670,000 539,350 ============================================================== POWER PRODUCERS (INDEPENDENT)-0.82% AES Corp. (The), Sr. Unsec. Notes, 9.38%, 09/15/10 200,000 199,860 - -------------------------------------------------------------- 9.50%, 06/01/09 700,000 714,000 - -------------------------------------------------------------- Kincaid Generation LLC, Sec. Bonds, 7.33%, 06/15/20 (Acquired 04/30/98; Cost $495,220)(a) 494,000 461,450 ============================================================== 1,375,310 ==============================================================
PRINCIPAL MARKET AMOUNT VALUE PUBLISHING (NEWSPAPERS)-1.98% News America Holdings, Inc., Putable Notes, Putable Notes, 8.45%, 08/01/34 $1,500,000 $ 1,496,970 - -------------------------------------------------------------- Sr. Gtd. Deb., 9.25%, 02/01/13 1,250,000 1,346,475 - -------------------------------------------------------------- Sr. Unsec. Gtd. Putable Bonds, 7.43%, 10/01/26 500,000 487,205 ============================================================== 3,330,650 ============================================================== RAILROADS-0.42% CSX Corp., Sr. Unsec. Putable Deb., 7.25%, 05/01/27 350,000 348,173 - -------------------------------------------------------------- Railamerica Transportation Corp., Sr. Unsec. Gtd. Sub. Notes, 12.88%, 08/15/10(c) 375,000 350,625 ============================================================== 698,798 ============================================================== REAL ESTATE INVESTMENT TRUSTS-0.55% ERP Operating L.P., Unsec. Notes, 7.13%, 10/15/17 600,000 520,848 - -------------------------------------------------------------- Health Care REIT, Inc., Sr. Unsec. Notes, 7.63%, 03/15/08 200,000 168,208 - -------------------------------------------------------------- Spieker Properties, Inc., Unsec. Deb., 7.35%, 12/01/17 250,000 227,532 ============================================================== 916,588 ============================================================== RETAIL (SPECIALTY)-0.26% Amazon.com, Inc., Conv. Deb., 4.75%, 02/01/09 (Acquired 01/29/99; Cost $501,875)(a) 500,000 316,875 - -------------------------------------------------------------- CSK Auto Inc.-Series A, Sr. Gtd. Sub. Deb, 11.00%, 11/01/06 130,000 57,850 - -------------------------------------------------------------- Neff Corp., Sr. Unsec. Gtd. Sub. Notes, 10.25%, 06/01/08 200,000 70,000 ============================================================== 444,725 ============================================================== SAVINGS & LOAN COMPANIES-0.89% Dime Capital Trust I-Series A, Gtd. Bonds, 9.33%, 05/06/27 250,000 228,095 - -------------------------------------------------------------- Sovereign Bancorp, Inc., Medium Term Sub. Notes, 8.00%, 03/15/03 600,000 581,268 - -------------------------------------------------------------- St. Paul Bancorp, Inc., Sr. Unsec. Notes, 7.13%, 02/15/04 200,000 195,794 - -------------------------------------------------------------- Washington Mutual Cap I, Sec. Gtd. Bonds, 8.38%, 06/01/27 200,000 180,384 - -------------------------------------------------------------- Washington Mutual, Inc., Sub. Notes, 8.25%, 04/01/10 300,000 303,810 ============================================================== 1,489,351 ============================================================== SERVICES (COMMERCIAL & CONSUMER)-0.13% Avis Group Holdings, Inc., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 05/01/09 200,000 215,000 ============================================================== SERVICES (EMPLOYMENT)-0.14% MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes, 11.38%, 01/15/08 260,000 240,500 ==============================================================
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PRINCIPAL MARKET AMOUNT VALUE SOVEREIGN DEBT-3.43% Banque Cent de Tunisie (Tunisia), Unsec. Yankee Bonds, 8.25%, 09/19/27 $1,750,000 $ 1,491,875 - -------------------------------------------------------------- Newfoundland (Province of) (Canada), Unsec. Yankee Deb., 9.00%, 06/01/19 500,000 570,685 - -------------------------------------------------------------- Quebec (Province of) (Canada)-Series A, Medium Term Putable Yankee Notes, 6.29%, 03/06/26 1,000,000 994,030 - -------------------------------------------------------------- Republica Orient (Uruguay), Unsec. Yankee Bonds, 7.88%, 07/15/27 3,000,000 2,692,500 ============================================================== 5,749,090 ============================================================== TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.60% Crown Castle International Corp., Sr. Unsec. Notes, 10.75%, 08/01/11 300,000 309,750 - -------------------------------------------------------------- Nextel International, Inc., Sr. Notes, 12.75%, 08/01/10(c) 330,000 301,950 - -------------------------------------------------------------- Spectrasite Holdings, Inc., Sr. Unsec. Disc. Notes, 11.25%, 04/15/09(b) 775,000 403,000 ============================================================== 1,014,700 ============================================================== TELECOMMUNICATIONS (LONG DISTANCE)-2.31% 360networks Inc. (Canada), Sr. Unsec. Yankee Sr. Unsec. Yankee Notes, 12.00%, 08/01/09 230,000 182,850 - -------------------------------------------------------------- Sr. Yankee Notes, 12.50%, 12/15/05 430,000 378,400 - -------------------------------------------------------------- Call-Net Enterprises, Inc. (Canada), Sr. Unsec. Disc. Yankee Notes, 8.94%, 08/15/08(b) 330,000 100,650 - -------------------------------------------------------------- ECONOPHONE, Inc., Sr. Unsec. Notes, 13.50%, 07/15/07 750,000 378,750 - -------------------------------------------------------------- Esprit Telecom Group PLC (United Kingdom), Sr. Unsec. Yankee Notes, 11.50%, 12/15/07 225,000 52,875 - -------------------------------------------------------------- MCI Communications Corp., Sr. Unsec. Putable Deb., 7.13%, 06/15/27 1,500,000 1,480,140 - -------------------------------------------------------------- Primus Telecommunications Group, Inc., Sr. Unsec. Notes, 11.25%, 01/15/09 750,000 386,250 - -------------------------------------------------------------- Sprint Corp., Putable Deb., 9.00%, 10/15/19 200,000 218,836 - -------------------------------------------------------------- Tele1 Europe B.V. (Netherlands), Sr. Unsec. Yankee Notes, 13.00%, 05/15/09 500,000 432,500 - -------------------------------------------------------------- Versatel Telecom International N.V. (Netherlands), Sr. Yankee Notes, 13.25%, 05/15/08 340,000 260,100 ============================================================== 3,871,351 ============================================================== TELEPHONE-3.85% AT&T Canada Inc. (Canada), Sr. Unsec. Yankee Notes, 7.65%, 09/15/06 370,000 363,336 - -------------------------------------------------------------- CFW Communications Co., Sr. Notes, 13.00%, 08/15/10(c)(f) 535,000 473,475 - -------------------------------------------------------------- Deutsche Telekom International Finance B.V. (Netherlands), Unsec. Unsub. Yankee Bonds, 8.00%, 06/15/10 800,000 818,040 - -------------------------------------------------------------- ICG Services, Inc., Sr. Unsec. Disc. Notes, 10.00%, 02/15/08(b)(e) 600,000 75,000 - -------------------------------------------------------------- Intermedia Communications, Inc.-Series B, Sr. Disc. Notes, 11.25%, 07/15/07(b) 700,000 584,500 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT VALUE TELEPHONE-(CONTINUED) Koninklijke (Royal) KPN N.V. (Netherlands), Sr. Unsec. Unsub. Yankee Notes, 7.50%, 10/01/05 (Acquired 09/27/00; Cost $899,424)(a) $ 900,000 $ 894,654 - -------------------------------------------------------------- NTL Communications Corp.-Series B, Sr. Unsec. Notes, 12.38%, 10/01/08(b) 825,000 482,625 - -------------------------------------------------------------- NTL Inc.-Series B, Sr. Disc. Notes, 11.50%, 02/01/06(b) 450,000 420,750 - -------------------------------------------------------------- Qwest Capital Funding, Unsec. Gtd. Notes, 7.90%, 08/15/10 (Acquired 08/24/00; Cost $902,898)(a) 900,000 917,946 - -------------------------------------------------------------- Verizon Global Funding Corp.,-Series REGS, Conv. Euro Bonds, 4.25%, 09/15/05 500,000 553,703 - -------------------------------------------------------------- Williams Communications Group, Inc., Sr. Unsec. Notes, 10.70%, 10/01/07 450,000 387,000 - -------------------------------------------------------------- XO Communications, Inc., Sr. Unsec. Notes, 10.75%, 11/15/08 550,000 484,000 ============================================================== 6,455,029 ============================================================== TRUCKERS-0.19% Travelcenters of America, Inc., Sr. Unsec. Gtd. Sub. Notes, 10.25%, 04/01/07 290,000 314,650 ============================================================== WASTE MANAGEMENT-1.53% Allied Waste North America Inc.-Series B, Sr. Unsec. Gtd. Sub. Notes, 10.00%, 08/01/09 300,000 261,000 - -------------------------------------------------------------- Browning-Ferris Industries, Inc., Deb., 9.25%, 05/01/21 350,000 292,250 - -------------------------------------------------------------- Waste Management, Inc., Sr. Unsec. Notes, 7.13%, 12/15/17 90,000 77,397 - -------------------------------------------------------------- Unsec. Putable Notes, 7.10%, 08/01/26 2,000,000 1,937,120 ============================================================== 2,567,767 ============================================================== Total U.S. Dollar Denominated Bonds & Notes (Cost $118,237,884) 112,442,503 ============================================================== PRINCIPAL AMOUNT(g) NON-U.S. DOLLAR DENOMINATED BONDS & NOTES-13.36% CANADA-6.31% AT&T Canada Inc. (Telephone), Sr. Unsec. Notes, 7.15%, 09/23/04 CAD 800,000 518,620 - -------------------------------------------------------------- Bell Mobility Cellular Inc. (Telecommunications-Cellular/Wireless), Deb., 6.55%, 06/02/08 CAD 750,000 470,433 - -------------------------------------------------------------- Canadian Government (Sovereign Debt), Bonds, 6.00%, 06/01/08 CAD 7,520,000 4,970,574 - -------------------------------------------------------------- Canadian Pacific Ltd.-Series D (Manufacturing-Diversified), Unsec. Medium Term Notes, 5.85%, 03/30/09 (Acquired 03/24/99; Cost $661,308)(a) CAD 1,000,000 603,817 - --------------------------------------------------------------
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PRINCIPAL MARKET AMOUNT(g) VALUE CANADA-(CONTINUED) Clearnet Communications Inc. (Telecommunications- Cellular/Wireless), Sr. Disc. Notes, 10.40%, 05/15/08(b) CAD 1,200,000 $ 661,952 - -------------------------------------------------------------- 11.75%, 08/13/07(b) CAD 1,100,000 650,003 - -------------------------------------------------------------- Clearnet Communications Inc. (Telecommunications- Cellular/Wireless), Sr. Unsec. Disc. Notes, 10.75%, 02/15/09(b) CAD 1,300,000 683,068 - -------------------------------------------------------------- Export Development Corp. (Sovereign Debt), Sr. Unsec. Unsub. Notes, 6.50%, 12/21/04 NZD 415,000 159,086 - -------------------------------------------------------------- Ontario (Province of) (Sovereign Debt), Unsec. Unsub. Notes, 6.25%, 12/03/08 NZD 1,500,000 555,287 - -------------------------------------------------------------- Poco Petroleums Ltd. (Oil & Gas-Exploration & Production), Medium Term Notes, 6.60%, 09/11/07 CAD 750,000 477,711 - -------------------------------------------------------------- Rogers Cablesystems (Broadcasting-Television, Radio & Cable), Sr. Sec. Second Priority Deb., 9.65%, 01/15/14 CAD 300,000 209,193 - -------------------------------------------------------------- TransCanada PipeLines-Series Q (Natural Gas), Deb., 10.63%, 10/20/09 CAD 375,000 304,555 - -------------------------------------------------------------- Westcoast Energy Inc.-Series V (Natural Gas), Unsec. Deb., 6.45%, 12/18/06 CAD 500,000 327,185 ============================================================== 10,591,484 ============================================================== FRANCE-0.23% Vivendi Environment (Waste Management), Sr. Conv. Gtd. Bonds, 1.50%, 01/01/05 EUR 150,000 385,291 ============================================================== GREECE-1.23% Hellenic Republic (Sovereign Debt), Bonds, 6.00%, 05/19/10 GRD 2,400,000 2,060,680 ============================================================== NETHERLANDS-1.35% Grapes Communications N.V. (Telecommunications-Cellular/Wireless), Sr. Notes, 13.50%, 05/15/10 (Acquired 05/03/00; Cost $589,420)(a)(f) EUR 650,000 300,634 - -------------------------------------------------------------- Koninklijke (Royal) KPN N.V. (Telephone), Sr. Unsec. Unsub. Euro Bonds, 6.25%, 10/04/05 EUR 1,000,000 842,243 - -------------------------------------------------------------- Mannesmann Finance B.V. (Machinery- Diversified), Gtd. Unsec. Unsub. Euro Notes, 4.75%, 05/27/09 EUR 690,000 516,342 - -------------------------------------------------------------- Tecnost International N.V. (Telephone)- Series E, Gtd. Medium Term Notes, 6.13%, 07/30/09 EUR 290,000 228,548 - -------------------------------------------------------------- Tele1 Europe B.V. (Telecommunications-Long Distance), Sr. Euro Notes, 11.88%, 12/01/09 EUR 500,000 371,183 ============================================================== 2,258,950 ==============================================================
PRINCIPAL MARKET AMOUNT(g) VALUE NEW ZEALAND-0.63% Inter-American Development Bank (Banks-Money Center), Unsec. Bonds, 5.75%, 04/15/04 NZD 2,000,000 $ 755,289 - -------------------------------------------------------------- International Bank for Reconstruction & Development-Class E (Banks-Money Center), Unsec. Medium Term Notes, 5.50%, 04/15/04 NZD 800,000 300,844 ============================================================== 1,056,133 ============================================================== NORWAY-0.10% Enitel ASA (Telecommunications-Long Distance), Sr. Unsec. Unsub. Euro Notes, 12.50%, 04/15/10(h) EUR 300,000 165,487 ============================================================== UNITED KINGDOM-1.12% Airtours PLC (Services-Commercial & Consumer), Conv. Sub. Notes, 5.75%, 01/05/04 (Acquired 12/09/98; Cost $494,636)(a) GBP 299,000 357,482 - -------------------------------------------------------------- British Sky Broadcasting Group PLC (Broadcasting-Television, Radio & Cable), Sr. Gtd. Unsec. Unsub. Notes, 7.75%, 07/09/09 GBP 450,000 639,689 - -------------------------------------------------------------- Jazztel PLC (Telephone), Sr. Unsec. Notes, 13.25%, 12/15/09 EUR 285,000 176,332 - -------------------------------------------------------------- Sutton Bridge Financial Ltd. (Electric Companies), Gtd. Euro Bonds, 8.63%, 06/30/22 (Acquired 05/29/97; Cost $733,585)(a) GBP 450,000 701,723 ============================================================== 1,875,226 ============================================================== UNITED STATES OF AMERICA-2.39% Federal National Mortgage Association (Sovereign Debt), Sr. Unsub. Notes, 6.38%, 08/15/07 AUD 3,785,000 1,905,621 - -------------------------------------------------------------- John Hancock Global Fund (Insurance-Life/ Health), Sr. Sec. Sub Medium Term Notes, 6.75%, 02/15/06 AUD 900,000 458,652 - -------------------------------------------------------------- KFW International Finance (Investment Banking/ Brokerage), Gtd. Unsec. Unsub. Euro Medium Term Notes, 7.25%, 07/16/07 AUD 3,100,000 1,653,137 ============================================================== 4,017,410 ============================================================== Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $26,030,027) 22,410,661 ============================================================== SHARES STOCKS & OTHER EQUITY INTERESTS-1.03% BANKS (MAJOR REGIONAL)-0.05% Societe Generale-Class A 1,400 79,485 ============================================================== BANKS (REGIONAL)-0.70% First Republic Capital Corp.-Series A-Pfd. (Acquired 05/26/99; Cost $750,000)(a) 750 672,187 - --------------------------------------------------------------
FS-49 251
MARKET SHARES VALUE BANKS (REGIONAL)-(CONTINUED) Westpac Banking Corp., STRYPES Trust-$3.14 Conv. Pfd. 16,000 $ 495,000 ============================================================== 1,167,187 ============================================================== BROADCASTING (TELEVISION, RADIO & CABLE)-0.00% Knology Holdings Inc.-Wts., expiring 10/22/07 (Acquired 03/12/98; Cost $0)(a)(h) 700 1,750 ============================================================== BUILDING MATERIALS-0.01% Dayton Superior Corp.-Wts., expiring 06/15/09 (Acquired 08/07/00; Cost $0)(a)(h) 450 9,225 ============================================================== COMMUNICATIONS EQUIPMENT-0.00% Loral Space & Communications Ltd.(i) 254 1,445 ============================================================== COMPUTERS (PERIPHERALS)-0.02% Equinix Inc.-Wts., expiring 12/01/07 (Acquired 05/30/00; Cost $0)(a)(h) 250 27,562 ============================================================== ELECTRICAL EQUIPMENT-0.00% Electronic Retailing Systems International, Inc.-Wts., expiring 02/01/04(h) 290 290 ============================================================== HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-0.04% Glaxo Wellcome PLC (United Kingdom) 2,607 75,071 ============================================================== RAILROADS-0.00% Railamerica Transportation Corp.-Wts., expiring 08/15/10 (Acquired 10/01/00; Cost $0)(a)(h) 375 3,844 ============================================================== TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.09% WebLink Wireless, Inc.(i) 20,100 159,544 ============================================================== TELECOMMUNICATIONS (LONG DISTANCE)-0.07% Enitel ASA (Norway)-Wts., expiring 04/03/05 (Acquired 07/14/00; Cost $0)(a)(h) 300 1,909 - -------------------------------------------------------------- Tele1 Europe B.V.-ADR (Netherlands)(i) 8,806 69,347 - -------------------------------------------------------------- Versatel Telecom International N.V.-ADR (Netherlands)(i) 2,450 49,000 ============================================================== 120,256 ============================================================== TELEPHONE-0.05% Esat Telecom Group PLC (Ireland)-Wts., expiring 02/01/07 (Acquired 06/17/97; Cost $0)(a)(h) 350 81,550 ============================================================== Total Stocks & Other Equity Interests (Cost $1,982,723) 1,727,209 ============================================================== PRINCIPAL AMOUNT U.S. GOVERNMENT AGENCY SECURITIES-0.44% FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC")-0.44% Pass Through Certificates 8.50%, 03/01/10 (Cost $757,293) $ 724,249 743,935 ==============================================================
PRINCIPAL AMOUNT U.S. TREASURY SECURITIES-13.61% U.S. TREASURY BILLS-1.78% 5.63%,02/28/01(j) $3,000,000 2,991,810 ============================================================== U.S. TREASURY BONDS-3.00% 6.13%,08/15/29 4,850,000 5,028,577 ============================================================== U.S. TREASURY NOTES-8.83% 6.50%, 02/28/02 3,000,000 3,011,760 - -------------------------------------------------------------- 7.25%, 08/15/04 5,000,000 5,235,450 - -------------------------------------------------------------- 5.63%, 05/15/08 5,400,000 5,328,342 - -------------------------------------------------------------- 5.75%, 08/15/10 1,250,000 1,249,225 ============================================================== 14,824,777 ============================================================== Total U.S. Treasury Securities (Cost $22,749,828) 22,845,164 ============================================================== ASSET-BACKED SECURITIES-1.13% AIRLINES-0.29% Airplanes Pass Through Trust-Series D, Gtd. Sub. Euro Bonds, 10.88%, 03/15/12 227,171 171,527 - -------------------------------------------------------------- United Air Lines, Inc.-Series 95A2, Pass Through Ctfs., 9.56%, 10/19/18 300,000 321,198 ============================================================== 492,725 ============================================================== FINANCIAL (DIVERSIFIED)-0.72% Beaver Valley II Funding Corp., Sec. Lease Obligations Deb., 9.00%, 06/01/17 200,000 210,804 - -------------------------------------------------------------- Citicorp Lease-Class A2, Series 1999-1, Pass Through Ctfs., 8.04%, 12/13/19 (Acquired 06/01/00-07/14/00; Cost $997,449)(a) 1,000,000 995,930 ============================================================== 1,206,734 ============================================================== POWER PRODUCERS (INDEPENDENT)-0.12% Panda Funding Corp., Series A-1, Pooled Project Bonds, 11.63%, 08/20/12 197,179 194,221 ============================================================== Total Asset-Backed Securities (Cost $1,965,123) 1,893,680 ============================================================== SHARES MONEY MARKET FUNDS-0.69% STIC Liquid Assets Portfolio(k) 579,213 579,213 - -------------------------------------------------------------- STIC Prime Portfolio(k) 579,213 579,213 ============================================================== Total Money Market Funds (Cost $1,158,426) 1,158,426 ============================================================== TOTAL INVESTMENTS-97.27% (Cost $172,881,304) 163,221,578 ============================================================== OTHER ASSETS LESS LIABILITIES-2.73% 4,585,991 ============================================================== NET ASSETS-100.00% $167,807,569 ______________________________________________________________ ==============================================================
FS-50 252 Notes to Schedule of Investments: (a) 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 aggregate market value of these securities at 10/31/00 was $12,961,594, which represented 7.75% of the Fund's net assets. (b) Discounted bond at purchase. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. (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 1993, as amended. (d) Zero coupon bond issued at a discount. The interest rate shown represents the rate of original issue discount. (e) Defaulted security. Currently, the issuer is in default with respect to interest payments. (f) Consists of more than one class of securities traded together as a unit. In addition to the security listed, each unit includes common or preferred shares of the issuer. (g) Foreign denominated security. Par value is denominated in currency indicated. (h) Acquired as part of a unit with or in exchange for other securities. (i) Non-income producing security. (j) U.S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Fund. (k) The money market fund and the Fund are affiliated by having the same investment advisor. Investment Abbreviations: ADR - American Depositary Receipt AUD - Australian Dollar CAD - Canadian Dollar Conv. - Convertible Ctfs. - Certificates Deb. - Debentures Disc. - Discounted GBP - British Pound Sterling GDR - Global Depositary Receipt GRD - Greek Drachma Gtd. - Guaranteed NZD - New Zealand Dollar Pfd. - Preferred REGS - Regulation S REIT - Real Estate Investment Trust Sec. - Secured Sr. - Senior STRYPES - Structured Yield Product Exchangeable for Stock Sub. - Subordinated Unsec. - Unsecured Unsub. - Unsubordinated Wts. - Warrants See Notes to Financial Statements. FS-51 253 STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 ASSETS: Investments, at market value (cost $172,881,304) $163,221,578 - ------------------------------------------------------------ Foreign currencies, at value (cost $304,158) 303,880 - ------------------------------------------------------------ Cash 2,061 - ------------------------------------------------------------ Receivables for: Foreign currency contracts closed 203,267 - ------------------------------------------------------------ Investments sold 7,716,014 - ------------------------------------------------------------ Capital stock sold 99,409 - ------------------------------------------------------------ Dividends and interest 3,486,150 - ------------------------------------------------------------ Foreign currency contracts outstanding 626,792 - ------------------------------------------------------------ Investment for deferred compensation plan 26,673 - ------------------------------------------------------------ Other assets 25,431 ============================================================ Total assets $175,711,255 ============================================================ LIABILITIES: Payables for: Investments purchased 7,015,313 - ------------------------------------------------------------ Capital stock reacquired 202,651 - ------------------------------------------------------------ Dividends 282,126 - ------------------------------------------------------------ Foreign currency contracts closed 14,848 - ------------------------------------------------------------ Deferred compensation plan 26,673 - ------------------------------------------------------------ Accrued advisory fees 92,153 - ------------------------------------------------------------ Accrued administrative services fees 4,235 - ------------------------------------------------------------ Accrued distribution fees 74,082 - ------------------------------------------------------------ Accrued directors' fees 1,571 - ------------------------------------------------------------ Accrued transfer agent fees 86,707 - ------------------------------------------------------------ Accrued operating expenses 103,327 ============================================================ Total liabilities 7,903,686 ============================================================ Net assets applicable to shares outstanding $167,807,569 ____________________________________________________________ ============================================================ NET ASSETS: Class A $105,636,419 ____________________________________________________________ ============================================================ Class B $ 60,391,218 ____________________________________________________________ ============================================================ Class C $ 1,779,932 ____________________________________________________________ ============================================================ CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 11,851,374 ____________________________________________________________ ============================================================ Class B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 6,777,381 ____________________________________________________________ ============================================================ Class C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 199,782 ____________________________________________________________ ============================================================ Class A: Net asset value and redemption price per share $ 8.91 - ------------------------------------------------------------ Offering price per share: (Net asset value of $8.91 divided by 95.25%) $ 9.35 ____________________________________________________________ ============================================================ Class B: Net asset value and offering price per share $ 8.91 ____________________________________________________________ ============================================================ Class C: Net asset value and offering price per share $ 8.91 ____________________________________________________________ ============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 2000 INVESTMENT INCOME: Interest $ 9,182,039 - ------------------------------------------------------------ Dividends (net of foreign withholding tax of $1,117) 132,351 - ------------------------------------------------------------ Dividends from affiliated money market funds 294,558 ============================================================ Total investment income 9,608,948 ============================================================ EXPENSES: Advisory fees 818,240 - ------------------------------------------------------------ Administrative services fees 50,000 - ------------------------------------------------------------ Custodian fees 55,257 - ------------------------------------------------------------ Distribution fees -- Class A 356,923 - ------------------------------------------------------------ Distribution fees -- Class B 437,547 - ------------------------------------------------------------ Distribution fees -- Class C 17,521 - ------------------------------------------------------------ Transfer agent fees -- Class A 188,159 - ------------------------------------------------------------ Transfer agent fees -- Class B 115,184 - ------------------------------------------------------------ Transfer agent fees -- Class C 4,613 - ------------------------------------------------------------ Directors' fees 8,021 - ------------------------------------------------------------ Other 174,229 ============================================================ Total expenses 2,225,694 ============================================================ Less: Fees waived (531,491) - ------------------------------------------------------------ Expenses paid indirectly (2,184) ============================================================ Net expenses 1,692,019 ============================================================ Net investment income 7,916,929 ============================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY CONTRACTS: Net realized gain (loss) from: Investment securities (11,769,828) - ------------------------------------------------------------ Foreign currencies 100,234 - ------------------------------------------------------------ Foreign currency contracts 1,532,812 ============================================================ (10,136,782) ============================================================ Change in net unrealized appreciation (depreciation) of: Investment securities 572,832 - ------------------------------------------------------------ Foreign currencies (21,180) - ------------------------------------------------------------ Foreign currency contracts 622,544 ============================================================ 1,174,196 ============================================================ Net gain (loss) on investment securities, foreign currencies and foreign currency contracts (8,962,586) ============================================================ Net increase in net assets resulting from operations $ 1,045,657 ____________________________________________________________ ============================================================
See Notes to Financial Statements. FS-52 254 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2000 and 1999
2000 1999 ------------- ----------- OPERATIONS: Net investment income $ 7,916,929 $ 6,368,021 - ------------------------------------------------------------------------------------------ Net realized gain (loss) from investment securities, foreign currencies and foreign currency contracts (10,136,782) (4,008,006) - ------------------------------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) of investment securities, foreign currencies and foreign currency contracts 1,174,196 (4,471,227) ========================================================================================== Net increase (decrease) in net assets resulting from operations (1,045,657) (2,111,212) ========================================================================================== Distributions to shareholders from net investment income: Class A (697,810) (3,538,334) - ------------------------------------------------------------------------------------------ Class B (427,241) (2,065,556) - ------------------------------------------------------------------------------------------ Class C (22,193) (102,985) - ------------------------------------------------------------------------------------------ Distributions in excess of net investment income: Class A (4,541,889) (483,962) - ------------------------------------------------------------------------------------------ Class B (2,529,211) (310,211) - ------------------------------------------------------------------------------------------ Class C (95,826) (15,757) - ------------------------------------------------------------------------------------------ Share transactions-net: Class A 60,321,560 (1,856,726) - ------------------------------------------------------------------------------------------ Class B 29,421,207 1,178,036 - ------------------------------------------------------------------------------------------ Class C 41,717 263,914 ========================================================================================== Net increase (decrease) in net assets 80,424,657 (9,042,793) ========================================================================================== NET ASSETS: Beginning of year 87,382,912 96,425,705 ========================================================================================== End of year $ 167,807,569 $87,382,912 __________________________________________________________________________________________ ========================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $ 317,756,543 $95,576,239 - ------------------------------------------------------------------------------------------ Undistributed net investment income (45,909) (45,192) - ------------------------------------------------------------------------------------------ Undistributed net realized gain (loss) from investment securities, foreign currencies and foreign currency contracts (140,850,904) (3,069,640) - ------------------------------------------------------------------------------------------ Unrealized appreciation (depreciation) of investment securities, foreign currencies and foreign currency contracts (9,052,161) (5,078,495) ========================================================================================== $ 167,807,569 $87,382,912 __________________________________________________________________________________________ ==========================================================================================
See Notes to Financial Statements. FS-53 255 NOTES TO FINANCIAL STATEMENTS October 31, 2000 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2000, undistributed net investment income was increased by $396,525, undistributed net realized gains decreased by $127,644,482 and paid in capital increased by $127,247,958 as a result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above. C. Distributions -- Distributions from income are declared and paid monthly and are recorded on ex-dividend date. Distributions from net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund has a capital loss carryforward of $140,223,848 as of October 31, 2000 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2008. E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in 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 FS-54 256 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 foreign currency contracts at October 31, 2000 were as follows:
SETTLEMENT CONTRACT TO UNREALIZED DATE DELIVER RECEIVE VALUE APPRECIATION ---------- ----------- ----------- ----------- ------------ 12/29/00 AUD 6,200,000 $ 3,404,793 $ 3,215,929 $188,864 12/11/00 AUD 1,500,000 835,740 777,863 57,877 11/06/00 CAD 5,675,000 3,837,571 3,716,192 121,379 01/10/01 CAD 6,500,000 4,334,200 4,263,460 70,740 12/29/00 EUR 4,500,000 3,945,825 3,829,545 116,280 12/29/00 NZD 4,400,000 1,817,420 1,745,768 71,652 ----------- ----------- ----------- -------- $28,775,000 $18,175,549 $17,548,757 $626,792 =========== =========== =========== ========
G. Bond Premiums -- It has been the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. In November 2000, a revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was issued and is effective for fiscal years beginning after December 15, 2000. The revised Guide will require the Fund to amortize premium and discount on all fixed-income securities. Upon initial adoption, the Fund will be required to adjust the cost of its fixed-income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding. Adopting this accounting principle will not effect the Fund's net asset value, but will change the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. The Fund expects that the impact of the adoption of this principle will not be material to the financial statements. H. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.70% 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. AIM has contractually agreed to waive fees and reimburse expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit total operating expenses of Class A shares to 1.25% (e.g. if AIM waives 0.42% of Class A expenses, AIM will also waive 0.42% of Class B and Class C expenses). During the year ended October 31, 2000, AIM waived fees of $531,491. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the year ended October 31, 2000, AIM was paid $50,000 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. For the year ended October 31, 2000, AFS was paid $180,411 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.50% 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, 2000, the Class A, Class B and Class C shares paid AIM Distributors $356,923 $437,547 and $17,521, respectively, as compensation under the Plans. AIM Distributors received commissions of $26,727 from sales of the Class A shares of the Fund during the year ended October 31, 2000. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 2000, AIM Distributors received $6,061 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2000, the Fund paid legal fees of $4,080 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,638 and reductions in custodian fees of $546 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $2,184. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' FS-55 257 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 Citibank, N.A. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 2000, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to not less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. During the year ended October 31, 2000, there were no securities on loan. NOTE 7-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2000 was $218,113,120 and $207,030,385, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2000 is as follows: Aggregate unrealized appreciation of investment securities $ 1,448,230 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (11,108,220) ========================================================= Net unrealized appreciation (depreciation) of investment securities $ (9,659,990) _________________________________________________________ ========================================================= Cost of investments for tax purposes is $172,881,568.
NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the years October 31, 2000 and 1999 were as follows:
2000 1999 -------------------------- -------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sold: Class A 2,364,069 $ 22,041,534 2,496,536 $ 26,051,117 - ---------------------------------------------------------------------------------------------------------------------- Class B 696,358 6,483,160 1,275,307 13,306,447 - ---------------------------------------------------------------------------------------------------------------------- Class C 70,602 655,664 101,598 1,053,223 ====================================================================================================================== Issued as reinvestment of dividends: Class A 423,455 3,901,231 315,101 3,238,097 - ---------------------------------------------------------------------------------------------------------------------- Class B 225,452 2,081,717 188,786 1,938,556 - ---------------------------------------------------------------------------------------------------------------------- Class C 9,446 87,470 9,111 93,556 ====================================================================================================================== Issued in connection with acquisition:* Class A 7,153,743 65,569,432 -- -- - ---------------------------------------------------------------------------------------------------------------------- Class B 4,551,701 41,673,944 -- -- - ---------------------------------------------------------------------------------------------------------------------- Class C 22,050 202,039 -- -- ====================================================================================================================== Reacquired: Class A (3,345,608) (31,190,637) (3,041,035) (31,145,940) - ---------------------------------------------------------------------------------------------------------------------- Class B (2,239,193) (20,817,614) (1,370,398) (14,066,967) - ---------------------------------------------------------------------------------------------------------------------- Class C (96,253) (903,456) (85,444) (882,865) ====================================================================================================================== 9,835,822 $ 89,784,484 (110,438) $ (414,776) ______________________________________________________________________________________________________________________ ======================================================================================================================
* As of the close of business on June 16, 2000, the Fund acquired all the net assets of AIM Global Government Income Fund pursuant to a plan of reorganization approved by AIM Global Government Income Fund's shareholders on May 31, 2000. The acquisition was accomplished by a tax-free exchange of 11,727,494 shares of the Fund for 13,800,813 shares of AIM Global Government Income Fund outstanding as of the close of business on June 16, 2000. AIM Global Government Income Fund's net assets at that date of $107,445,415, including ($5,147,862) of unrealized (depreciation), were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $75,391,518. FS-56 258 NOTE 9-FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ---------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------- 2000 1999 1998 1997 1996(a) -------- ------- ------- ------- ------- Net asset value, beginning of period $ 9.72 $ 10.60 $ 10.93 $ 10.85 $ 10.74 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.66 0.67 0.71 0.72 0.79 - -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.79) (0.86) (0.27) 0.21 0.25 ==================================================================================================================== Total from investment operations (0.13) (0.19) 0.44 0.93 1.04 ==================================================================================================================== Less distributions: Dividends from net investment income (0.13) (0.61) (0.61) (0.72) (0.81) - -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- -- (0.07) (0.13) (0.12) - -------------------------------------------------------------------------------------------------------------------- Returns of capital (0.55) (0.08) (0.09) -- -- ==================================================================================================================== Total distributions (0.68) (0.69) (0.77) (0.85) (0.93) ==================================================================================================================== Net asset value, end of period $ 8.91 $ 9.72 $ 10.60 $ 10.93 $ 10.85 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(b) (1.38)% (1.94)% 3.95% 9.05% 10.22% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $105,636 $51,077 $58,115 $30,924 $21,926 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.25%(c) 1.25% 1.23% 1.25% 1.25% - -------------------------------------------------------------------------------------------------------------------- Without fee waivers 1.71%(c) 1.67% 1.73% 1.86% 2.02% ==================================================================================================================== Ratio of net investment income to average net assets 6.97%(c) 6.54% 6.38% 6.54% 7.27% ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate 184% 93% 47% 61% 83% ____________________________________________________________________________________________________________________ ====================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include sales charges. (c) Ratios are based on average daily net assets of $71,384,527.
CLASS B --------------------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------------------- 2000 1999 1998 1997 1996(a) ------- ------- ------- ------- ------- Net asset value, beginning of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $ 10.73 - ------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.61 0.62 0.65 0.67 0.74 - ------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.79) (0.85) (0.27) 0.21 0.24 =================================================================================================================== Total from investment operations (0.18) (0.23) 0.38 0.88 0.98 =================================================================================================================== Less distributions: Dividends from net investment income (0.12) (0.56) (0.55) (0.67) (0.75) - ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- -- (0.07) (0.13) (0.12) - ------------------------------------------------------------------------------------------------------------------- Returns of capital (0.51) (0.08) (0.09) -- -- =================================================================================================================== Total distributions (0.63) (0.64) (0.71) (0.80) (0.87) =================================================================================================================== Net asset value, end of period $ 8.91 $ 9.72 $ 10.59 $ 10.92 $ 10.84 ___________________________________________________________________________________________________________________ =================================================================================================================== Total return(b) (1.94)% (2.37)% 3.38% 8.48% 9.66% ___________________________________________________________________________________________________________________ =================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $60,391 $34,423 $36,525 $25,121 $16,787 ___________________________________________________________________________________________________________________ =================================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.75%(c) 1.75% 1.75% 1.76% 1.75% - ------------------------------------------------------------------------------------------------------------------- Without fee waivers 2.21%(c) 2.17% 2.25% 2.37% 2.53% =================================================================================================================== Ratio of net investment income to average net assets 6.47%(c) 6.04% 5.87% 6.03% 6.77% ___________________________________________________________________________________________________________________ =================================================================================================================== Portfolio turnover rate 184% 93% 47% 61% 83% ___________________________________________________________________________________________________________________ ===================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges. (c) Ratios are based on average daily net assets of $43,754,699. FS-57 259 NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C ----------------------------------------------- AUGUST 4, 1997 YEAR ENDED (DATE SALES OCTOBER 31, COMMENCED) ----------------------------- TO OCTOBER 31, 2000 1999 1998 1997(a) ------- ------- ------- -------------- Net asset value, beginning of period $ 9.71 $ 10.59 $ 10.92 $10.76 - --------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.60 0.62 0.66 0.15 - --------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.77) (0.86) (0.28) 0.17 =============================================================================================================== Total from investment operations (0.17) (0.24) 0.38 0.32 =============================================================================================================== Less distributions: Dividends from net investment income (0.12) (0.56) (0.55) (0.13) - --------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- -- (0.07) (0.03) - --------------------------------------------------------------------------------------------------------------- Returns of capital (0.51) (0.08) (0.09) -- =============================================================================================================== Total distributions (0.63) (0.64) (0.71) (0.16) =============================================================================================================== Net asset value, end of period $ 8.91 $ 9.71 $ 10.59 $10.92 _______________________________________________________________________________________________________________ =============================================================================================================== Total return(b) (1.84)% 2.47% 3.39% 2.99% _______________________________________________________________________________________________________________ =============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 1,780 $ 1,884 $ 1,785 $ 242 _______________________________________________________________________________________________________________ =============================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.75%(c) 1.75% 1.73% 1.76%(d) - --------------------------------------------------------------------------------------------------------------- Without fee waivers 2.21%(c) 2.17% 2.22% 2.37%(d) =============================================================================================================== Ratio of net investment income to average net assets 6.47%(c) 6.04% 5.88% 6.03%(d) _______________________________________________________________________________________________________________ =============================================================================================================== Portfolio turnover rate 184% 93% 47% 61% _______________________________________________________________________________________________________________ ===============================================================================================================
(a) Calculated using average shares outstanding. (b) Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $1,752,139. (d) Annualized. FS-58 260 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of AIM International Equity Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and financial highlights for each of the periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM International Equity Fund as of October 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the periods in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP December 6, 2000 Houston, Texas FS-59 261 SCHEDULE OF INVESTMENTS October 31, 2000
MARKET SHARES VALUE FOREIGN STOCKS & OTHER EQUITY INTERESTS-89.68% AUSTRALIA-0.80% AMP Ltd. (Insurance-Life/Health) 1,352,000 $ 12,187,072 - --------------------------------------------------------------- Brambles Industries Ltd. (Air Freight) 383,000 9,930,175 - --------------------------------------------------------------- Cable & Wireless Optus Ltd. (Telephone)(a) 3,103,700 6,573,569 =============================================================== 28,690,816 =============================================================== BRAZIL-1.56% Brasil Telecom Participacoes S.A.-ADR (Telephone) 105,840 5,735,205 - --------------------------------------------------------------- Companhia de Bebidas das Americas-ADR (Beverages-Alcoholic) 902,100 20,353,631 - --------------------------------------------------------------- Embratel Participacoes S.A.-ADR (Telephone) 492,800 7,977,200 - --------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 821,314 21,768,369 - --------------------------------------------------------------- Tele Centro Oeste Celular Participacoes S.A.-ADR (Telecommunication-Cellular/ Wireless) 1 10 =============================================================== 55,834,415 =============================================================== CANADA-8.71% 360networks Inc. (Telecommunications-Long Distance)(a) 811,500 14,708,437 - --------------------------------------------------------------- Bombardier Inc.-Class B (Aerospace/Defense) 3,853,400 60,426,197 - --------------------------------------------------------------- C-MAC Industries, Inc. (Electronics-Component Distributors)(a) 703,600 39,618,673 - --------------------------------------------------------------- Celestica Inc. (Electronics-Semiconductors)(a) 959,500 68,351,732 - --------------------------------------------------------------- Cognos, Inc. (Computer Software & Services)(a) 839,200 34,826,800 - --------------------------------------------------------------- Mitel Corp. (Communications Equipment)(a) 466,000 7,627,840 - --------------------------------------------------------------- Nortel Networks Corp. (Communications Equipment) 921,828 41,943,174 - --------------------------------------------------------------- Rogers Communications, Inc.-Class B (Telecommunications-Cellular/Wireless) 911,200 17,659,608 - --------------------------------------------------------------- Shaw Communications Inc.-Class B (Broadcasting-Television, Radio & Cable) 1,298,700 26,572,628 =============================================================== 311,735,089 =============================================================== DENMARK-4.28% GN Store Nord A.S. (Communications Equipment) 2,018,100 39,122,061 - --------------------------------------------------------------- Novo Nordisk A.S.-Class B (Health Care-Drugs-Generic & Other)(a) 333,500 70,735,740 - --------------------------------------------------------------- Vestas Wind Systems A.S. (Manufacturing-Specialized) 798,300 43,240,416 =============================================================== 153,098,217 =============================================================== FINLAND-1.78% Nokia Oyj (Communications Equipment) 1,550,000 63,784,110 ===============================================================
MARKET SHARES VALUE FRANCE-18.94% Alcatel S.A. (Communications Equipment) 1,011,400 $ 61,713,539 - --------------------------------------------------------------- Altran Technologies S.A. (Services-Commercial & Consumer) 279,600 57,161,364 - --------------------------------------------------------------- Assurances Generales de France (Insurance-Multi-Line) 617,700 33,811,616 - --------------------------------------------------------------- Aventis S.A. (Chemicals-Diversified)(a) 888,700 64,106,597 - --------------------------------------------------------------- BNP Paribas (Banks-Major Regional) 778,250 67,102,925 - --------------------------------------------------------------- Havas Advertising S.A. (Services-Advertising/Marketing) 1,943,450 31,320,375 - --------------------------------------------------------------- M6 Metropole Television (Broadcasting-Television, Radio & Cable) 176,000 7,766,845 - --------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 210,300 37,532,471 - --------------------------------------------------------------- PSA Peugeot Citroen (Automobiles) 150,900 27,789,299 - --------------------------------------------------------------- Publicis Groupe (Services-Advertising/ Marketing)(a) 1,075,600 35,188,746 - --------------------------------------------------------------- Sanofi-Synthelabo S.A. (Health Care-Drugs-Generic & Other) 577,500 30,385,913 - --------------------------------------------------------------- Schneider Electric S.A. (Housewares)(a) 240,100 15,638,646 - --------------------------------------------------------------- Societe Generale-Class A (Banks-Major Regional) 737,050 41,845,782 - --------------------------------------------------------------- Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 617,650 33,704,046 - --------------------------------------------------------------- STMicroelectronics N.V. (Electronics-Semiconductors) 1,303,500 65,764,498 - --------------------------------------------------------------- Total Fina Elf S.A. (Oil-International Integrated) 466,144 66,696,998 =============================================================== 677,529,660 =============================================================== GERMANY-4.19% ADVA A.G. Optical Networking (Communications Equipment)(a) 153,700 11,282,844 - --------------------------------------------------------------- Altana A.G. (Health Care-Drugs-Generic & Other) 261,540 31,739,697 - --------------------------------------------------------------- MLP A.G.-Pfd. (Services-Commercial & Consumer) 216,900 29,267,477 - --------------------------------------------------------------- Porsche A.G.-Pfd. (Automobiles) 15,000 50,282,512 - --------------------------------------------------------------- Siemens A.G. (Manufacturing-Diversified) 213,300 27,152,557 =============================================================== 149,725,087 =============================================================== HONG KONG-3.23% China Mobile Ltd. (Telecommunications- Cellular/Wireless)(a) 9,104,000 58,366,457 - --------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks-Regional) 3,880,000 19,601,487 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 3,018,400 37,541,326 =============================================================== 115,509,270 =============================================================== ITALY-2.17% Gruppo Editoriale L'Espresso (Publishing) 802,600 8,779,720 - ---------------------------------------------------------------
FS-60 262
MARKET SHARES VALUE ITALY-(CONTINUED) Riunione Adriatica di Sicurta S.P.A (Insurance Brokers) 5,257,600 $ 69,025,009 =============================================================== 77,804,729 =============================================================== JAPAN-11.68% Advantest Corp. (Electronics-Instrumentation) 168,000 21,909,362 - --------------------------------------------------------------- Crayfish Co. Ltd.-ADR (Computers-Software & Services)(a) 894,300 1,397,344 - --------------------------------------------------------------- Hirose Electric Co. Ltd. (Electronics-Component Distributors) 153,200 17,690,693 - --------------------------------------------------------------- Hoya Corp. (Manufacturing-Specialized) 270,000 22,319,571 - --------------------------------------------------------------- Matsushita Communication Industrial Co., Ltd. (Telephone) 199,000 26,079,824 - --------------------------------------------------------------- Murata Manufacturing Co., Ltd. (Electronics-Component Distributors) 147,000 17,594,465 - --------------------------------------------------------------- NEC Corp. (Computers-Hardware) 1,446,000 27,564,313 - --------------------------------------------------------------- Nippon Telegraph & Telephone Corp. (Telecommunications-Long Distance) 2,573 23,415,562 - --------------------------------------------------------------- NTT Data Corp. (Computers-Software & Services)(a) 1,984 15,455,254 - --------------------------------------------------------------- NTT DoCoMo, Inc. (Telecommunications- Cellular/Wireless) 903 22,261,559 - --------------------------------------------------------------- Ricoh Co., Ltd. (Office Equipment & Supplies) 1,141,000 17,567,521 - --------------------------------------------------------------- Rohm Co. Ltd. (Electronics-Component Distributors) 63,000 15,883,517 - --------------------------------------------------------------- Sanix Inc. (Services-Commercial & Consumer) 265,200 13,586,290 - --------------------------------------------------------------- Sanyo Electric Co., Ltd. (Electronics-Component Distributors) 7,152,000 54,402,786 - --------------------------------------------------------------- Sharp Corp. (Electrical Equipment) 918,000 11,694,268 - --------------------------------------------------------------- Sony Corp. (Electrical Equipment) 335,800 26,835,687 - --------------------------------------------------------------- Takeda Chemical Industries Ltd. (Health Care-Drugs-Generic & Other) 642,000 42,303,808 - --------------------------------------------------------------- Tokyo Electron Ltd. (Electronics- Semiconductors) 272,000 21,288,365 - --------------------------------------------------------------- Trend Micro Inc. (Computers-Software & Services)(a) 196,700 18,567,658 =============================================================== 417,817,847 =============================================================== MEXICO-3.40% Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 796,800 15,288,600 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-ADR (Beverages-Alcoholic) 669,970 25,584,479 - --------------------------------------------------------------- Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 4,538,900 12,104,366 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 536,200 29,021,825 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 1,979,000 5,060,296 - --------------------------------------------------------------- Telefonos de Mexico S.A. de C.V.-Class L-ADR (Telephone) 269,900 14,557,731 - ---------------------------------------------------------------
MARKET SHARES VALUE MEXICO-(CONTINUED) Wal-Mart de Mexico S.A. de C.V.-Series C (Retail-General Merchandise)(a) 8,782,000 $ 20,021,711 =============================================================== 121,639,008 =============================================================== NETHERLANDS-3.76% Koninklijke (Royal) Philips Electronics N.V. (Electrical Equipment) 1,363,700 53,594,748 - --------------------------------------------------------------- Koninklijke Numico N.V. (Foods) 743,400 34,761,841 - --------------------------------------------------------------- VNU N.V. (Publishing) 978,600 46,092,133 =============================================================== 134,448,722 =============================================================== NORWAY-0.22% Tomra Systems A.S.A. (Manufacturing-Specialized) 194,650 7,825,526 =============================================================== SINGAPORE-1.27% Chartered Semiconductor Manufacturing Ltd.-ADR (Electronics-Semiconductors)(a) 117,900 5,482,350 - --------------------------------------------------------------- Datacraft Asia Ltd. (Communications Equipment) 1,475,136 10,104,682 - --------------------------------------------------------------- DBS Group Holdings Ltd. (Banks-Money Center) 1,393,274 16,421,324 - --------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 3,901,900 7,775,807 - --------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing-Newspapers) 386,000 5,516,484 =============================================================== 45,300,647 =============================================================== SOUTH KOREA-0.91% Korea Telecom Corp.-ADR (Telephone) 464,000 17,110,000 - --------------------------------------------------------------- Pohang Iron & Steel Co. Ltd.-ADR (Iron & Steel) 387,800 6,132,088 - --------------------------------------------------------------- Samsung Electronics N.V. (Electronics-Component Distributors) 74,600 9,345,495 =============================================================== 32,587,583 =============================================================== SPAIN-1.63% Telefonica S.A. (Telephone)(a) 2,684,827 51,197,410 - --------------------------------------------------------------- Telefonica S.A.-ADR (Telephone)(a) 123,805 7,172,952 =============================================================== 58,370,362 =============================================================== SWEDEN-0.11% Assa Abloy A.B.-Class B (Metal Fabricators) 104,150 1,917,952 - --------------------------------------------------------------- OM Grupppen A.B. (Investment Banking/Brokerage) 57,050 2,038,377 =============================================================== 3,956,329 =============================================================== SWITZERLAND-5.91% Adecco S.A. (Services-Commercial & Consumer) 28,391 19,635,015 - --------------------------------------------------------------- Compagnie Financiere Richemont A.G.-Units (Tobacco)(b) 20,000 55,639,014 - --------------------------------------------------------------- Julius Baer Holding Ltd.-Class B (Banks-Major Regional) 1,835 9,086,686 - ---------------------------------------------------------------
FS-61 263
MARKET SHARES VALUE SWITZERLAND-(CONTINUED) Kudelski S.A. (Electronics-Component Distributors)(a) 10,000 $ 13,464,641 - --------------------------------------------------------------- Nestle S.A. (Foods)(a) 18,000 37,305,959 - --------------------------------------------------------------- Serono S.A.-Class B (Health Care-Drugs-Generic & Other) 45,720 41,133,500 - --------------------------------------------------------------- Swatch Group A.G. (The)-Class B (Consumer-Jewelry, Novelties & Gifts) 26,600 35,223,947 =============================================================== 211,488,762 =============================================================== TAIWAN-0.51% Far Eastern Textile Ltd. (Textiles-Apparel) 1,120,246 921,842 - --------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. Ltd. (Electronics-Semiconductors)(a) 5,706,240 17,299,660 =============================================================== 18,221,502 =============================================================== UNITED KINGDOM-14.62% ARM Holdings PLC (Electronics- Semiconductors)(a) 4,900,850 48,369,037 - --------------------------------------------------------------- Bookham Technology PLC (Communications Equipment)(a) 166,300 5,476,636 - --------------------------------------------------------------- BP Amoco PLC (Oil-International Integrated) 5,686,300 48,239,345 - --------------------------------------------------------------- Capita Group PLC (Services-Commercial & Consumer) 4,869,600 37,105,622 - --------------------------------------------------------------- CMG PLC (Computers-Software & Services) 959,400 15,998,928 - --------------------------------------------------------------- Logica PLC (Computers-Software & Services) 997,900 29,531,899 - --------------------------------------------------------------- Marconi PLC (Communications Equipment) 4,286,300 54,123,882 - ---------------------------------------------------------------
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Pace Micro Technology PLC (Communications Equipment) 1,618,300 $ 11,556,099 - --------------------------------------------------------------- Royal Bank of Scotland Group PLC (Banks-Major Regional) 2,568,300 57,666,446 - --------------------------------------------------------------- Shell Transport & Trading Co. (Oil- International Integrated) 7,119,800 57,300,243 - --------------------------------------------------------------- Spirent PLC (Communications Equipment) 6,011,250 55,751,014 - --------------------------------------------------------------- Vodafone Group PLC (Telecommunications- Cellular/Wireless) 15,651,928 65,141,595 - --------------------------------------------------------------- WPP Group PLC (Services-Advertising/Marketing) 2,725,550 36,591,735 =============================================================== 522,852,481 =============================================================== Total Foreign Stocks & Other Equity Interests (Cost $2,588,322,261) 3,208,220,162 =============================================================== MONEY MARKET FUNDS-13.31% STIC Liquid Assets Portfolio(c) 238,167,382 238,167,382 - --------------------------------------------------------------- STIC Prime Portfolio(c) 238,167,382 238,167,382 =============================================================== Total Money Market Funds (Cost $476,334,764) 476,334,764 =============================================================== TOTAL INVESTMENTS-102.99% (Cost $3,064,657,025) 3,684,554,926 =============================================================== LIABILITIES LESS OTHER ASSETS-(2.99%) (107,078,104) =============================================================== NET ASSETS-100.00% $3,577,476,822 _______________________________________________________________ ===============================================================
Investment Abbreviations: ADR - American Depositary Receipt GDR - Global Depositary Receipt Ltd. - Limited Pfd. - Preferred Notes to Schedule of Investments: (a) Non-income producing security. (b) Consists of more than one class of securities traded together as a unit. In addition to the security listed, each unit includes common or preferred shares of the issuer. (c) The money market fund and the Fund are affiliated by having the same investment advisor. See Notes to Financial Statements. FS-62 264 STATEMENT OF ASSETS AND LIABILITIES October 31, 2000 ASSETS: Investments, at market value (cost $3,064,657,025) $3,684,554,926 - ------------------------------------------------------------- Foreign currencies, at value (cost $50,104,560) 50,273,027 - ------------------------------------------------------------- Receivables for: Investments sold 7,861,206 - ------------------------------------------------------------- Capital stock sold 35,370,022 - ------------------------------------------------------------- Dividends and interest 6,355,882 - ------------------------------------------------------------- Collateral for securities loaned 181,195,014 - ------------------------------------------------------------- Investment for deferred compensation plan 65,629 - ------------------------------------------------------------- Other assets 428,891 ============================================================= Total assets $3,966,104,597 ============================================================= LIABILITIES: Payables for: Investments purchased 185,702,331 - ------------------------------------------------------------- Capital stock reacquired 14,641,659 - ------------------------------------------------------------- Collateral upon return of securities loaned 181,195,014 - ------------------------------------------------------------- Deferred compensation plan 65,629 - ------------------------------------------------------------- Accrued advisory fees 2,611,826 - ------------------------------------------------------------- Accrued administrative services fees 18,490 - ------------------------------------------------------------- Accrued distribution fees 2,562,271 - ------------------------------------------------------------- Accrued directors' fees 741 - ------------------------------------------------------------- Accrued transfer agent fees 1,024,349 - ------------------------------------------------------------- Accrued operating expenses 805,465 ============================================================= Total liabilities 388,627,775 ============================================================= Net assets applicable to shares outstanding $3,577,476,822 _____________________________________________________________ ============================================================= NET ASSETS: Class A $2,325,635,811 _____________________________________________________________ ============================================================= Class B $ 997,842,582 _____________________________________________________________ ============================================================= Class C $ 253,998,429 _____________________________________________________________ ============================================================= CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 400,000,000 - ------------------------------------------------------------- Outstanding 107,655,983 _____________________________________________________________ ============================================================= Class B: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 47,952,089 _____________________________________________________________ ============================================================= Class C: Authorized 200,000,000 - ------------------------------------------------------------- Outstanding 12,196,926 _____________________________________________________________ ============================================================= Class A: Net asset value and redemption price per share $ 21.60 - ------------------------------------------------------------- Offering price per share: (Net asset value of $21.60 divided by 94.50%) $ 22.86 _____________________________________________________________ ============================================================= Class B: Net asset value and offering price per share $ 20.81 _____________________________________________________________ ============================================================= Class C: Net asset value and offering price per share $ 20.82 _____________________________________________________________ =============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 2000 INVESTMENT INCOME: Dividends (net of foreign withholding tax of $3,540,954) $ 51,813,671 - ------------------------------------------------------------ Dividends from affiliated money market funds 15,111,834 - ------------------------------------------------------------ Interest 412,303 - ------------------------------------------------------------ Security lending income 391,360 ============================================================ Total investment income 67,729,168 ============================================================ EXPENSES: Advisory fees 35,553,208 - ------------------------------------------------------------ Administrative services fees 222,616 - ------------------------------------------------------------ Custodian fees 2,535,839 - ------------------------------------------------------------ Distribution fees -- Class A 7,664,862 - ------------------------------------------------------------ Distribution fees -- Class B 11,204,523 - ------------------------------------------------------------ Distribution fees -- Class C 2,193,948 - ------------------------------------------------------------ Transfer agent fees -- Class A 4,136,260 - ------------------------------------------------------------ Transfer agent fees -- Class B 2,203,596 - ------------------------------------------------------------ Transfer agent fees -- Class C 431,484 - ------------------------------------------------------------ Directors' fees 13,946 - ------------------------------------------------------------ Other 1,505,292 ============================================================ Total expenses 67,665,574 ============================================================ Less: Fees waived (1,697,400) - ------------------------------------------------------------ Expenses paid indirectly (57,572) ============================================================ Net expenses 65,910,602 ============================================================ Net investment income 1,818,566 ============================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 307,049,154 - ------------------------------------------------------------ Foreign currencies (16,252,477) ============================================================ 290,796,677 ============================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (272,160,867) - ------------------------------------------------------------ Foreign currencies (2,268,302) ============================================================ (274,429,169) ============================================================ Net gain on investment securities and foreign currencies 16,367,508 ============================================================ Net increase in net assets resulting from operations $ 18,186,074 ____________________________________________________________ ============================================================
See Notes to Financial Statements. FS-63 265 STATEMENTS OF CHANGES IN NET ASSETS For the years ended October 31, 2000 and 1999
2000 1999 -------------- -------------- OPERATIONS: Net investment income (loss) $ 1,818,566 $ (10,949,841) - ---------------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 290,796,677 182,790,856 - ---------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies (274,429,169) 474,142,542 ============================================================================================== Net increase in net assets resulting from operations 18,186,074 645,983,557 ============================================================================================== Distributions to shareholders from net investment income: Class A -- (10,410,630) - ---------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A (86,520,783) (20,381,375) - ---------------------------------------------------------------------------------------------- Class B (38,910,409) (9,045,542) - ---------------------------------------------------------------------------------------------- Class C (5,375,907) (756,877) - ---------------------------------------------------------------------------------------------- Share transactions-net: Class A 313,494,138 (80,693,853) - ---------------------------------------------------------------------------------------------- Class B 148,996,045 (28,456,976) - ---------------------------------------------------------------------------------------------- Class C 163,874,554 39,293,753 ============================================================================================== Net increase in net assets 513,743,712 535,532,057 ============================================================================================== NET ASSETS: Beginning of year 3,063,733,110 2,528,201,053 ============================================================================================== End of year $3,577,476,822 $3,063,733,110 ______________________________________________________________________________________________ ============================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $2,727,015,413 $2,002,598,882 - ---------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (137,143) (8,098,861) - ---------------------------------------------------------------------------------------------- Undistributed net realized gain from investment securities and foreign currencies 233,356,824 177,562,192 - ---------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 617,241,728 891,670,897 ============================================================================================== $3,577,476,822 $3,063,733,110 ______________________________________________________________________________________________ ==============================================================================================
See Notes to Financial Statements. FS-64 266 NOTES TO FINANCIAL STATEMENTS October 31, 2000 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM International Equity Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is long-term growth of capital. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2000, undistributed net investment income was increased by $6,143,152, undistributed net realized gains decreased by $104,194,946 and paid in capital increased by $98,051,794 as a result of book/tax differences due to utilization of a portion of the proceeds from redemptions as distributions for federal income tax purposes, foreign currency transactions and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above. C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in FS-65 267 foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. G. Bond Premiums -- It has been the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. In November 2000, a revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was issued and is effective for fiscal years beginning after December 15, 2000. The revised Guide will require the Fund to amortize premium and discount on all fixed-income securities. Upon initial adoption, the Fund will be required to adjust the cost of its fixed-income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding. Adopting this accounting principle will not effect the Fund's net asset value, but will change the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. The Fund expects that the impact of the adoption of this principle will not be material to the financial statements. H. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $1 billion of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $1 billion. AIM has agreed to waive advisory fees payable by the Fund to AIM at the annual rate of 0.05% on net assets in excess of $500 million. During the year ended October 31, 2000, AIM waived fees of $1,697,400. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the year ended October 31, 2000, AIM was paid $222,616 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. For the year ended October 31, 2000, AFS was paid $2,661,410 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.30% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 2000, the Class A, Class B and Class C shares paid AIM Distributors $7,664,862, $11,204,523 and $2,193,948, respectively, as compensation under the Plans. AIM Distributors received commissions of $735,919 from sales of the Class A shares of the Fund during the year ended October 31, 2000. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 2000, AIM Distributors received $263,758 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 2000, the Fund paid legal fees of $10,103 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $52,626 and reductions in custodian fees of $4,946 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $57,572. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. FS-66 268 NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 2000, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly and failed to return the securities. At October 31, 2000, securities with an aggregate value of $172,157,948 were on loan to brokers. The loans were secured by cash collateral of $181,195,014 received by the Fund. For the year ended October 31, 2000, the Fund received fees of $391,360 for securities lending. NOTE 7-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2000 was $3,388,830,409 and $3,103,179,568, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2000 is as follows: Aggregate unrealized appreciation of investment securities $ 773,072,876 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (165,458,341) - --------------------------------------------------------- Net unrealized appreciation of investment securities $ 607,614,535 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $3,076,940,391.
NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the years October 31, 2000 and 1999 were as follows:
2000 1999 ------------------------------ ------------------------------- SHARES AMOUNT SHARES AMOUNT ----------- --------------- ------------ --------------- Sold: Class A 74,959,702 $ 1,884,430,622 144,897,083 $ 2,695,101,630 - ----------------------------------------------------------------------------------------------------------------------------- Class B 10,706,006 266,318,794 11,600,846 212,065,890 - ----------------------------------------------------------------------------------------------------------------------------- Class C 11,663,828 288,872,717 9,254,771 168,733,197 ============================================================================================================================= Issued as reinvestment of dividends: Class A 3,304,133 80,984,287 1,596,985 28,282,611 - ----------------------------------------------------------------------------------------------------------------------------- Class B 1,485,236 35,304,035 482,230 8,356,948 - ----------------------------------------------------------------------------------------------------------------------------- Class C 214,163 5,094,930 39,786 689,883 ============================================================================================================================= Issued in connection with acquisitions:* Class A -- -- 5,974,789 108,110,501 - ----------------------------------------------------------------------------------------------------------------------------- Class B -- -- 2,061,255 36,453,921 ============================================================================================================================= Reacquired: Class A (65,335,468) (1,651,920,771) (155,781,747) (2,912,188,595) - ----------------------------------------------------------------------------------------------------------------------------- Class B (6,258,901) (152,626,784) (15,614,562) (285,333,735) - ----------------------------------------------------------------------------------------------------------------------------- Class C (5,276,103) (130,093,093) (7,117,246) (130,129,327) ============================================================================================================================= 25,462,596 $ 626,364,737 (2,605,810) $ (69,857,076) _____________________________________________________________________________________________________________________________ =============================================================================================================================
* The Fund acquired AIM International Growth Fund on February 12, 1999. The acquired fund's net assets as of the closing date were $144,564,422. The net assets of the Fund immediately prior to acquisition were $2,655,808,540. FS-67 269 NOTE 9-FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ------------------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------------------ 2000(a) 1999 1998(a) 1997(a) 1996(a) ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 21.73 $ 17.59 $ 16.64 $ 15.37 $ 13.65 - -------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.08 (0.03) 0.05 0.04 0.04 - -------------------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 0.72 4.49 0.96 1.68 2.07 ================================================================================================================================ Total from investment operations 0.80 4.46 1.01 1.72 2.11 ================================================================================================================================ Less distributions: Dividends from net investment income -- (0.11) (0.06) (0.02) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.93) (0.21) -- (0.43) (0.38) ================================================================================================================================ Total distributions (0.93) (0.32) (0.06) (0.45) (0.39) ================================================================================================================================ Net asset value, end of period $ 21.60 $ 21.73 $ 17.59 $ 16.64 $ 15.37 ________________________________________________________________________________________________________________________________ ================================================================================================================================ Total return(b) 3.16% 25.73% 6.11% 11.43% 15.79% ________________________________________________________________________________________________________________________________ ================================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $2,325,636 $2,058,419 $1,724,635 $1,577,390 $1,108,395 ________________________________________________________________________________________________________________________________ ================================================================================================================================ Ratio of expenses to average net assets: With fee waivers 1.44%(c) 1.48% 1.45% 1.47% 1.58% - -------------------------------------------------------------------------------------------------------------------------------- Without fee waivers 1.48%(c) 1.52% 1.49% 1.51% 1.60% ================================================================================================================================ Ratio of net investment income to average net assets 0.30%(c) (0.14)% 0.28% 0.24% 0.25% ________________________________________________________________________________________________________________________________ ================================================================================================================================ Portfolio turnover rate 87% 86% 78% 50% 66% ________________________________________________________________________________________________________________________________ ================================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include sales charges. (c)Ratios are based on average daily net assets of $2,554,953,820.
CLASS B -------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2000(a) 1999(a) 1998(a) 1997(a) 1996(a) -------- -------- -------- -------- -------- Net asset value, beginning of period $ 21.11 $ 17.13 $ 16.27 $ 15.13 $ 13.54 - ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.11) (0.17) (0.09) (0.09) (0.07) - ---------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 0.74 4.36 0.95 1.66 2.04 ====================================================================================================================== Total from investment operations 0.63 4.19 0.86 1.57 1.97 ====================================================================================================================== Less distributions from net realized gains (0.93) (0.21) -- (0.43) (0.38) ====================================================================================================================== Net asset value, end of period $ 20.81 $ 21.11 $ 17.13 $ 16.27 $ 15.13 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) 2.42% 24.72% 5.29% 10.61% 14.88% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $997,843 $887,106 $744,987 $678,809 $368,355 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.18%(c) 2.27% 2.22% 2.25% 2.35% - ---------------------------------------------------------------------------------------------------------------------- Without fee waivers 2.22%(c) 2.31% 2.26% 2.28% 2.37% ====================================================================================================================== Ratio of net investment income (loss) to average net assets (0.44)%(c) (0.93)% (0.49)% (0.53)% (0.53)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate 87% 86% 78% 50% 66% ______________________________________________________________________________________________________________________ ======================================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges. (c)Ratios are based on average daily net assets of $1,120,452,259. FS-68 270 NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C --------------------------------------------------- AUGUST 4, 1997 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ---------------------------------- OCTOBER 31, 2000(a) 1999(a) 1998(a) 1997(a) ------------------------------------------------ Net asset value, beginning of period $ 21.13 $ 17.14 $ 16.27 $ 17.64 - -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.11) (0.17) (0.09) (0.02) - -------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.73 4.37 0.96 (1.35) ============================================================================================================== Total from investment operations 0.62 4.20 0.87 (1.37) ============================================================================================================== Less distributions from net realized gains (0.93) (0.21) -- -- ============================================================================================================== Net asset value, end of period $ 20.82 $ 21.13 $ 17.14 $ 16.27 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) 2.37% 24.76% 5.35% 7.77% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $253,998 $118,208 $ 58,579 $ 12,829 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets: With fee waivers 2.18%(c) 2.27% 2.22% 2.27%(d) - -------------------------------------------------------------------------------------------------------------- Without fee waivers 2.22%(c) 2.31% 2.26% 2.30%(d) ============================================================================================================== Ratio of net investment income (loss) to average net assets (0.44)%(c) (0.93)% (0.49)% (0.55)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate 87% 86% 78% 50% ______________________________________________________________________________________________________________ ==============================================================================================================
(a)Calculated using average shares outstanding. (b)Does not include contingent deferred sales charges and is not annualized for periods less than one year. (c)Ratios are based on average daily net assets of $219,394,811. (d)Annualized. FS-69 -----END PRIVACY-ENHANCED MESSAGE-----