-----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, VnO57ouLwgvMaNDI/Ihm+R+qOGD8I3uJImv2sg5zDN1lihzBN5CSuVEhwLAxx055 CN3tHDdTklSBC1afso3/xQ== 0000950129-98-000025.txt : 19980107 0000950129-98-000025.hdr.sgml : 19980107 ACCESSION NUMBER: 0000950129-98-000025 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19980106 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIM INTERNATIONAL FUNDS INC 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: N-30D SEC ACT: SEC FILE NUMBER: 811-06463 FILM NUMBER: 98501433 BUSINESS ADDRESS: STREET 1: 11 GREENWAY PLAZA STE 1919 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7136261919 MAIL ADDRESS: STREET 1: AIM INTERNATIONAL FUNDS INC STREET 2: 11 GREENWAY PLAZA SUITE 1919 CITY: HOUSTON STATE: TX ZIP: 77046 N-30D 1 AIF AIM INTERNATIONAL EQUITY FUND ANNUAL REPORT 1 AIM INTERNATIONAL EQUITY FUND [AIM LOGO APPEARS HERE] ANNUAL REPORT OCTOBER 31, 1997 2 ------------------------------------------------- AIM INTERNATIONAL EQUITY FUND For shareholders who seek long-term growth of capital. The Fund invests in a diversified portfolio of international equity securities of companies with strong earnings momentum. ------------------------------------------------- ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT: o AIM International Equity Fund's performance figures are historical and reflect reinvestment of all distributions and changes in net asset value. Unless otherwise indicated, the Fund's performance is computed without a sales charge. o When sales charges are included in performance figures, Class A share performance reflects the maximum 5.50% sales charge, and Class B share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The performance of the Fund's Class B shares and Class C shares will differ from that of Class A shares due to differences in sales charge structure and Fund expenses. o Class C shares commenced sales on August 4, 1997. o During the year ended October 31, 1997, the Fund paid distributions on Class A and Class B shares of $0.449 and $0.432 per share, respectively. Class C shares did not receive a distribution. o The Fund's investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. o Past performance cannot guarantee comparable future results. o International investing presents certain risks not associated with investing solely in the U.S. These include risks relating to fluctuations in the value of the U.S. dollar relative to the value of other currencies, the custody arrangements made for the Fund's foreign holdings, differences in accounting, political risks, and the lesser degree of public information required to be provided by non-U.S. companies. ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT: o Standard & Poor's Corporation (S&P) is a credit-rating agency. The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group of unmanaged securities widely regarded by investors to be representative of the stock market in general. Results shown assume the reinvestment of dividends. o Lipper Analytical Services, Inc., is an independent mutual fund performance monitor. The unmanaged Lipper International Fund Index represents an average of the performance of the 30 largest international mutual funds. o The Dow Jones Industrial Average is a price-weighted average of 30 actively traded primarily industrial stocks. o The Europe, Australia, and Far East Index (EAFE) is a group of unmanaged foreign securities tracked by Morgan Stanley Capital International. o The NASDAQ (National Association of Securities Dealers Automated Quotation system) Composite Index is a group of more than 4,500 unmanaged over-the-counter securities widely regarded by investors to be representative of the small- and medium-sized company stock universe. o An investment cannot be made in the indexes listed. Unless otherwise indicated, index results include reinvested dividends and do not reflect sales charges. MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. This report may be distributed only to current shareholders or to persons who have received a current prospectus of the Fund. 3 The Chairman's Letter Dear Fellow Shareholder: The fiscal year ended October 31 experienced no let-up in the [PHOTO OF volatility in equity markets, and it closed on an unsettling Charles T. note. In late October, in the wake of a currency crisis in Bauer, Southeast Asia, the stock market experienced its first 10% Chairman of correction since 1991. On Monday, October 27, the New York the Board of Stock Exchange closed to deal with market volatility for the THE FUND first time in its history when the Dow Jones Industrial APPEARS HERE] Average fell 554 points, the index's largest point decline ever. It is important to note that in percentage terms, this was a drop of 7.18%, far smaller than the 22.61% decline that occurred October 19, 1987. Fortunately, this time the market snapped back, and the Dow regained 337 points the next day. As of this writing, markets continue to recover. Many investment managers, including AIM, had cautioned that a correction was inevitable, that the relentless rise in benchmarks like the Dow could not continue. In less than 12 months, the Dow had climbed from 6010 on October 14, 1996, to reach its all-time high of 8259 on August 6, 1997. When markets become overvalued, no one knows what will precipitate a decline. No one foresaw that a currency devaluation by Thailand beginning during the summer would lead to worldwide stock market turmoil. Despite recent activities, the fiscal year ended October 31 brought domestic equity investors excellent returns: The Dow was up almost 26%; the broader S&P 500, more than 32%; the NASDAQ small-cap index, 30.46%. International investments, while positive, weren't as robust; the EAFE Index rose 4.63%. On the following pages, your Fund managers discuss how your Fund performed in this market context and their outlook for the future. REALISTIC EXPECTATIONS The 1100-point decline in the Dow between early August and late October was the latest in a series of market breaks. Between mid-March and mid-April of this year, for example, the Dow dropped almost 10%. Many investors, including professional fund managers, have become accustomed to buying on these market breaks because the market has bounced back quickly. From its 1997 low of 6391 on April 11, the Dow took less than four months to rise almost 2000 points to its all-time high. However, this time could be different. Many investors have developed two unrealistic expectations: first, a belief that stocks can rise more than 20% a year indefinitely; and second, confidence that the market always rebounds swiftly from a decline. Neither notion is historically correct. History tells us that over the long term, average annual total return for stocks is about 10%, not 20%. And those of us who have been in this business for many years remember the bear market of the 1970s, when the market experienced a series of declines and recovery was very slow. Nevertheless, there is reason for optimism, including sound fiscal policy steadily shrinking the federal deficit, stable interest rates, and a strong economy unharmed by inflation. Despite recent events in Asia, it is difficult to be pessimistic about the U.S. economy and, indeed, about most of the developed economies in the world. We are pleased to send you this report on your Fund. Please contact our Client Services department at 800-959-4246 if you have any questions or comments. Don't forget that automated information about your AIM account is available 24 hours a day on the AIM Investor Line, 800-246-5463. Or visit our Web site, at www.aimfunds.com. Sincerely, /s/ CHARLES T. BAUER Charles T. Bauer Chairman ------------------------------------ Despite recent activities, the fiscal year ended October 31 brought domestic equity investors excellent returns. ------------------------------------ 4 The Managers' Overview EUROPEAN GROWTH RETURNS OFFSET "ASIAN FLU" A roundtable discussion with the Fund management team for AIM International Equity Fund about the fiscal year ended October 31, 1997. Q. WORLD EQUITY MARKETS HAD A VOLATILE YEAR IN 1997. HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD? A. The Fund posted another period of solid performance. Total return was 11.43% for Class A shares and 10.61% for Class B shares for the fiscal year ended October 31, 1997 (Class C shares commenced sales on August 4, 1997). Comparatively, the Morgan Stanley Capital International (MSCI) Europe, Australia and Far East Index (EAFE) of foreign stocks gained just 4.63% during the reporting period. The Fund's net assets grew $792 million to $2.27 billion at the end of the reporting period. Q. WHAT WERE THE MAJOR INFLUENCES ON THE FUND'S PORTFOLIO DURING THE PAST 12 MONTHS? A. We continue to see more of a global economy every year. Around the world inflation was relatively tame and interest rates remained low, an attractive combination during the reporting period, which provided an excellent economic environment for equities. European markets had an outstanding year. Six of the 10 best performing markets in the world during the reporting period were in Europe. Latin America also posted solid performance during the fiscal year, although its returns were tempered by global market volatility in the final week of the reporting period. Unfortunately, the same cannot be said for the Far East. Japan and the Asian Tigers had a very difficult time, which was reflected in the poor performance of those markets during the reporting period. Q. WHAT CAUSED THE EXCELLENT MARKET RETURNS IN EUROPE? A. There were two major factors at work in European markets. The first was the ongoing economic restructuring, which we have talked about for quite some time. But during the fiscal year we saw the economic returns caused by the restructuring gain considerable momentum. Europe remains an area with fairly cheap valuations, especially when compared to the United States. More importantly, earnings growth in Europe also continued to be strong. The second major stimulus on European markets was the introduction of real investing for the first time to European households. Individual investors in Europe recently have discovered the benefits of investing in equities. Their investment represents a large pool of retirement savings. Europeans are becoming more educated about the advantages of investing in their stock markets, and we think demand for European equities will continue to grow. Eight of the Fund's 10 largest holdings are in continental Europe or the United Kingdom. Two of the portfolio's top three holdings specialize in household furnishings and appliances: Philips Electronics, a Dutch company that is the Fund's largest holding, and Electrolux B-F, a Swedish company that is the Fund's third-largest holding. The European oil and gas refining sector is represented by two large holdings: the French company Elf Aquitaine, the portfolio's fifth-largest holding, and British Petroleum, the Fund's ninth- largest holding. Q. WHAT CAUSED THE ECONOMIC TURBULENCE IN THE PACIFIC RIM? A. Simply put, the emerging markets in countries like Thailand, Malaysia, Indonesia, and the Philippines grew too quickly for their size. New construction of office buildings and factories far outstripped demand, and the debt used to finance the construction burgeoned. When cash flow became a problem, the markets in that region went into a tailspin. The markets in these countries are very small, and it doesn't take much to move those markets either up or down. The first warning sign came when Thailand devalued its currency in July. Everything came to a head on October 23 when the Hong Kong market plunged 10.4%. The so-called "Asian Flu"--which was how market analysts termed the economic turmoil in the Far East--caused severe drops all over the world during the last five ================================================================================ MORNINGSTAR RATINGS (CLASS A SHARES) As of 11/30/97 - -------------------------------------------------------------------------------- Funds in International Period Rating Category Overall **** N/A 5 Years **** 266 3 Years **** 659 ================================================================================ *Morningstar proprietary ratings reflect risk-adjusted performance through November 30, 1997. The ratings are subject to change every month. Ratings are calculated from the funds' three-, five-, and 10-year returns (with fee adjustments) in excess of 90-day Treasury bill returns, and a risk factor that reflects performance below 90-day T-bills. The top 10% of the funds in a rating category receive five stars, the next 22.5% receive four stars, the middle 35% receive three stars, the next 22.5% receive two stars, and the bottom 10% receive one star. -------------------------------- Around the world inflation was relatively tame and interest rates remained low, an attractive combination for equities. -------------------------------- 2 See important fund and index disclosures inside front cover. 5 PORTFOLIO COMPOSITION As of October 31, 1997, based on net assets
====================================================================================== TOP 10 EQUITY HOLDINGS TOP 10 COUNTRIES - -------------------------------------------------------------------------------------- 1. Philips Electronics N.V. (Netherlands) 1.20% 1. United Kingdom 15.19% 2. Societe Generale (France) 1.04 2. Japan 14.52 3. Electrolux B-F (Sweden) 1.03 3. France 11.74 4. Railtrack Group PLC (UK) 0.99 4. Netherlands 6.57 5. Elf Aquitaine S.A. (France) 0.96 5. Germany 5.81 6. NTT Data Communications Systems Co. (Japan) 0.92 6. Switzerland 4.23 7. Novartis A.G. (Switzerland) 0.92 7. Hong Kong 4.14 8. Portugal Telecom S.A. (Portugal) 0.90 8. Mexico 4.13 9. British Petroleum Co. PLC (UK) 0.89 9. Italy 3.92 10. Rohm Co., Ltd. (Japan) 0.89 10. Canada 2.86 ====================================================================================== TOP 10 INDUSTRIES - -------------------------------------------------------------------------------------- 1. Banks - Major Regional 7.64% 2. Telephone 5.05 3. Electronics - Component Distribution 4.43 4. Oil & Gas - Refining & Marketing 4.25 5. Manufacturing - Diversified 3.46 6. Services - Commercial & Consultation 3.39 7. Computers Software/Services 3.01 8. Healthcare - Drugs 2.82 9. Retail - Food Chains 2.66 10. Office Equipment & Supplies 2.64 Please keep in mind that the Fund's portfolio is subject to change and there is no assurance the Fund will continue to hold any particular security. ======================================================================================
days of the reporting period, including the 554-point drop in the Dow Jones Industrial Average on October 27. Q. HOW DID THE TURMOIL IN THOSE MARKETS AFFECT THE FUND? A. Fortunately, we had lowered the portfolio's weightings in Asia prior to October's troubles. We began 1997 with 17% of the portfolio in Asia, and that figure was around 6% at the end of the reporting period. We got completely out of the Thai market six months ago, Malaysia two months ago, and had extremely small percentages in Indonesia and the Philippines at the end of the fiscal year. We also have reduced the Fund's holdings in Hong Kong from about 10% at the start of the fiscal year to about 4% at the end of the reporting period. Our earnings discipline was very helpful in our exit from those markets in the Pacific Rim. The earnings in most of the companies in that region were on a downward trend prior to the October market drop, and our discipline dictated that it was time to sell those holdings. Q. WHAT WAS THE ECONOMIC SITUATION IN JAPAN? A. Unfortunately, the second-largest economy in the world was still in the grips of a major recession during the reporting period. Japan also was affected by the "Asian Flu" because a number of Japanese banks had investments and outstanding loans to their Asian neighbors. However, because of the size and maturity of the Japanese market, many Japanese companies are global, rather than regional, players. Q. YOU MENTIONED THAT YOU HAVE REDUCED THE FUND'S EXPOSURE IN THE FAR EAST. WHERE HAVE YOU PUT THAT MONEY TO WORK? A. The portfolio's holdings in Latin America increased dramatically so that 9% of the Fund was invested there at the end of the reporting period. The markets in Brazil, Colombia, Mexico, and other countries in the region were enjoying an excellent year until they, too, caught the "Asian Flu" in the last week of the reporting period. Still, in U.S. dollars Brazil was up over 18%, Colombia up 45%, and Mexico up 37% during the reporting period. The Mexican market and economy continue to progress quite nicely, and we've been increasing the portfolio's weighting there in companies such as Coca-Cola FEMSA. We also raised our holdings of European securities as we reduced holdings in Asia; 68% of the Fund's holdings were in European securities at the end of the reporting period. This was the portfolio's largest weighting in Europe in the Fund's five-year existence. Q. WHAT IS YOUR OUTLOOK FOR THE FUND IN THE NEAR TERM? A. We are still very positive on Europe, and very hesitant on the Pacific Rim. Conditions worldwide remain very good for equities, although it is unrealistic to expect continued equity returns of 20% or more. Things may continue to worsen in Asia before those markets experience a recovery, so we do not anticipate our Asian weightings increasing any time soon. In Europe, though, we believe there will be faster earnings growth with better valuations than in the United States, because Europe's cash-to-price earnings, price-to-book, price-to-dividend, and P/E ratios all are lower than in the U.S. The economic outlook in Latin America seems positive as well. It is important to remember that what happened in October in Asia should have little bearing on U.S. markets. The economic indicators in the U.S. remain positive, and that is good for markets around the world because they often take their lead from the U.S. As long as we continue to see the combination of low inflation and low interest rates around the globe, the short-term outlook for global equities will remain promising. See important fund and index disclosures inside front cover. 3 6 Long-Term Performance AIM International Equity Fund vs. Benchmark Indexes The chart below compares your Fund to benchmark indexes. It is intended to give you a general idea of how your Fund performed compared to the stock market over the period 4/7/92 to 10/31/97. It is important to understand the difference between your Fund and an index. Your Fund's total return is shown with a sales charge and includes fund expenses and management fees. An index measures the performance of hypothetical portfolios, in this case the Europe, Australia, and Far East Index and the Lipper International Fund Index. Unlike your Fund, these indexes are not managed; therefore, there are no sales charges, expenses, or fees. You cannot invest in an index. But if you could buy all the securities that make up a particular index, you would incur expenses that would affect the return on your investment. GROWTH OF A $10,000 INVESTMENT ================================================================================ AVERAGE ANNUAL TOTAL RETURN As of 10/31/97. Including sales charges. CLASS A SHARES Inception (4/7/92) 13.12% 5 Years 14.34 3 Years 8.65 1 Year 5.33* *11.43% excluding sales charge. CLASS B SHARES Inception (9/15/94) 8.83% 3 Years 9.03 1 Year 5.61* *10.61% excluding sales charge. CLASS C SHARES Inception (8/4/97) -8.69%* *-7.77% excluding sales charge. ================================================================================
- -------------------------------------------------------------------------------------- AIM INTERNATIONAL EQUITY FUND, LIPPER INTERNATIONAL EUROPE, AUSTRALIA, AND CLASS A SHARES FUND INDEX FAR EAST INDEX - -------------------------------------------------------------------------------------- 4/7/92 $ 9,454 $10,000 $10,000 10/92 9,610 9,600 9,843 10/93 13,200 12,870 13,572 10/94 14,644 14,351 14,981 10/95 15,411 14,284 14,970 10/96 17,844 16,090 16,587 10/97 19,884 18,238 17,403 ======================================================================================
Past performance is no guarantee of comparable future results. Your Fund's total return includes sales charges, expenses, and management fees. For Fund performance calculations and descriptions of indexes cited on this page, please refer to the inside front cover. Source: Towers Data Systems HYPO--Registered Trademark--. 7 SCHEDULE OF INVESTMENTS October 31, 1997
MARKET SHARES VALUE FOREIGN STOCKS & OTHER EQUITY INTERESTS-91.55% ARGENTINA-2.07% Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 354,880 $ 8,600,295 - --------------------------------------------------------------- Banco Rio de La Plata S.A. (Banks-Money Center)(a) 415,000 4,357,500 - --------------------------------------------------------------- Perez Companc S.A.-Class B (Oil & Gas-Refining & Marketing) 1,763,181 11,044,194 - --------------------------------------------------------------- Telefonica de Argentina S.A.-ADR (Telephone) 240,600 6,766,875 - --------------------------------------------------------------- YPF Sociedad Anonima-ADR (Oil- International Integrated) 508,200 16,262,400 - --------------------------------------------------------------- 47,031,264 - --------------------------------------------------------------- AUSTRALIA-1.22% Boral Ltd. (Engineering & Construction) 4,080,000 10,731,032 - --------------------------------------------------------------- Coca-Cola Amatil Ltd. (Beverages-Non-Alcoholic) 813,536 6,121,675 - --------------------------------------------------------------- QBE Insurance Group Ltd. (Insurance-Property-Casualty) 1,870,277 8,746,561 - --------------------------------------------------------------- QBE Insurance Group Ltd.-Bonus Shares (Insurance-Property-Casualty) 467,569 2,130,741 - --------------------------------------------------------------- 27,730,009 - --------------------------------------------------------------- AUSTRIA-0.77% OMV A.G. (Oil & Gas-Refining & Marketing) 66,000 9,383,113 - --------------------------------------------------------------- VA Technologie A.G. (Engineering & Construction) 45,700 8,109,128 - --------------------------------------------------------------- 17,492,241 - --------------------------------------------------------------- BELGIUM-1.17% Barco Industries (Manufacturing- Diversified) 41,000 7,909,040 - --------------------------------------------------------------- Colruyt S.A. (Retail-Food Chains) 14,600 7,832,442 - --------------------------------------------------------------- UCB S.A. (Manufacturing-Diversified) 3,100 10,711,631 - --------------------------------------------------------------- 26,453,113 - --------------------------------------------------------------- BRAZIL-1.97% Companhia Energetica de Minas Gerais (Electric Companies) 173,000 6,904,622 - --------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras - Preferred (Oil & Gas-Exploration & Production) 30,271 5,628,951 - --------------------------------------------------------------- Telecomunicacoes Brasileiras S.A.-Telebras-ADR (Telephone) 124,500 12,636,750 - --------------------------------------------------------------- Telecomunicacoes de Sao Paulo S.A.-TELESP-Preferred (Telephone) 39,000 10,188,217 - --------------------------------------------------------------- Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional)(a) 343,000 9,346,750 - --------------------------------------------------------------- 44,705,290 - --------------------------------------------------------------- CANADA-2.86% Bank of Montreal (Banks-Money Center) 118,000 5,094,760 - --------------------------------------------------------------- Canadian National Railway Co. (Railroads) 170,000 9,169,375 - --------------------------------------------------------------- Canadian Natural Resources Ltd. (Oil & Gas-Exploration & Production)(a) 335,000 9,745,627 - --------------------------------------------------------------- Canadian Pacific, Ltd. (Railroads) 307,000 9,152,438 - ---------------------------------------------------------------
MARKET SHARES VALUE CANADA-(CONTINUED) Magna International, Inc.-Class A (Machinery-Diversified) 101,900 $ 6,716,933 - --------------------------------------------------------------- Northern Telecom Ltd. (Communications Equipment) 124,700 11,184,031 - --------------------------------------------------------------- Suncor, Inc. (Oil-International Integrated) 380,000 13,683,613 - --------------------------------------------------------------- 64,746,777 - --------------------------------------------------------------- CHILE-0.65% Cia. de Telecomunicaciones de Chile S.A.-ADR (Telephone) 263,925 7,323,919 - --------------------------------------------------------------- Quinenco S.A.-ADR (Financial- Diversified)(a) 513,900 7,515,788 - --------------------------------------------------------------- 14,839,707 - --------------------------------------------------------------- DENMARK-0.84% Novo Nordisk A/S-Class B (Health Care/Drugs-Generic & Other) 176,600 19,113,428 - --------------------------------------------------------------- FINLAND-0.78% Enso Oy (Paper & Forest Products) 560,000 5,315,034 - --------------------------------------------------------------- Nokia Oy A.B.-Class A (Telecommunications- Cellular/Wireless) 141,000 12,319,528 - --------------------------------------------------------------- 17,634,562 - --------------------------------------------------------------- FRANCE-11.74% Accor S.A. (Lodging-Hotels) 63,200 11,767,312 - --------------------------------------------------------------- Alcatel Alsthom (Manufacturing-Diversified) 160,000 19,305,681 - --------------------------------------------------------------- AXA S.A. (Insurance-Multi-Line) 132,000 9,039,137 - --------------------------------------------------------------- Banque Nationale de Paris (Banks-Major Regional) 250,000 11,051,879 - --------------------------------------------------------------- Cap Gemini Sogeti S.A. (Computers-Software & Services) 162,000 12,862,827 - --------------------------------------------------------------- Carrefour Supermarche S.A. (Retail-Food Chains) 7,500 3,913,665 - --------------------------------------------------------------- Compagnie Francaise d'Etudes et de Construction Technip (Oil & Gas-Refining & Marketing) 86,000 9,109,522 - --------------------------------------------------------------- Elf Aquitaine S.A. (Oil & Gas-Refining & Marketing) 180,500 22,342,477 - --------------------------------------------------------------- Essilor International (Manufacturing-Specialized) 24,940 6,658,449 - --------------------------------------------------------------- Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) 195,000 10,817,839 - --------------------------------------------------------------- Lafarge S.A. (Engineering & Construction) 138,500 8,653,474 - --------------------------------------------------------------- Legrand S.A. (Housewares) 30,500 5,678,845 - --------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 34,800 15,915,122 - --------------------------------------------------------------- Promodes (Retail-Food Chains) 28,000 9,116,110 - --------------------------------------------------------------- Renault S.A. (Automobiles)(a) 465,000 12,938,500 - --------------------------------------------------------------- Renault S.A. (Automobiles) (Acquired 07/31/97; cost $5,810,539)(a)(b) 210,000 5,843,193 - --------------------------------------------------------------- Rexel S.A. (Distributors-Food & Health) 23,200 6,153,686 - --------------------------------------------------------------- Rhone-Poulenc-Class A (Chemicals-Diversified) 270,000 11,772,201 - --------------------------------------------------------------- Schneider S.A. (Housewares) 160,000 8,543,319 - ---------------------------------------------------------------
5 8
MARKET SHARES VALUE FRANCE-(CONTINUED) Societe BIC S.A. (Office Equipment & Supplies) 222,000 $ 15,186,790 - --------------------------------------------------------------- Societe Generale (Banks-Major Regional) 177,000 24,241,321 - --------------------------------------------------------------- Sodexho S.A. (Services-Commercial & Consumer) 9,200 4,588,636 - --------------------------------------------------------------- Total S.A.-Class B (Oil & Gas-Refining & Marketing) 111,000 12,315,694 - --------------------------------------------------------------- Valeo S.A. (Automobile Parts & Equipment) 128,500 8,570,008 - --------------------------------------------------------------- 266,385,687 - --------------------------------------------------------------- GERMANY-5.81% Adidas A.G. (Footwear) 42,000 6,084,129 - --------------------------------------------------------------- Adidas A.G. (Footwear) (Acquired 04/11/97; cost $8,533,263)(b) 81,000 11,733,678 - --------------------------------------------------------------- Allianz A.G. (Insurance-Multi-Line) 23,500 5,239,353 - --------------------------------------------------------------- Bayerische Vereinsbank A.G. (Banks-Major Regional) 187,000 10,857,259 - --------------------------------------------------------------- Commerzbank A.G. (Banks-Major Regional) 295,000 10,019,740 - --------------------------------------------------------------- Continental A.G. (Automobile Parts & Equipment) 285,000 6,800,883 - --------------------------------------------------------------- Deutsche Bank A.G. (Banks-Major Regional) 170,500 11,166,372 - --------------------------------------------------------------- Dresdner Bank A.G. (Banks-Major Regional) 240,000 9,823,787 - --------------------------------------------------------------- Henkel KGaA (Chemicals-Diversified) 105,000 5,456,208 - --------------------------------------------------------------- Mannesmann A.G. (Machinery-Diversified) 24,250 10,249,949 - --------------------------------------------------------------- Merck KGaA (Health Care/Drugs-Generic & Other) 290,000 10,759,137 - --------------------------------------------------------------- SAP A.G. (Computers-Software & Services) 27,000 7,751,909 - --------------------------------------------------------------- SAP A.G.-Preferred (Computers-Software & Services) 27,000 8,049,758 - --------------------------------------------------------------- Schering A.G. (Health Care/Drugs-Generic & Other) 94,000 9,119,749 - --------------------------------------------------------------- VEBA A.G. (Manufacturing-Diversified) 155,000 8,648,358 - --------------------------------------------------------------- 131,760,269 - --------------------------------------------------------------- HONG KONG-4.14% Asia Satellite Telecommunications Holdings Ltd. (Telecommunications- Cellular/Wireless) 1,000,000 2,405,743 - --------------------------------------------------------------- Asia Satellite Telecommunications Holdings Ltd.-ADR (Telecommunications- Cellular/Wireless) 174,500 4,078,938 - --------------------------------------------------------------- Cheung Kong (Holdings) Ltd. (Land Development) 904,000 6,284,680 - --------------------------------------------------------------- China Telecom Ltd.-ADR (Telecommunications-Cellular & Wireless)(a) 179,700 5,817,788 - --------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 9,772,000 11,375,283 - --------------------------------------------------------------- First Pacific Co. Ltd. (Distributors-Food & Health) 11,493,908 7,247,339 - --------------------------------------------------------------- Hong Kong & China Gas Co. Ltd. (Natural Gas) 9,280,960 17,525,967 - --------------------------------------------------------------- HSBC Holdings PLC (Banks-Major Regional) 490,000 11,090,991 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 2,552,000 17,659,186 - --------------------------------------------------------------- New World Infrastructure Ltd. (Services-Commercial & Consumer)(a) 2,968,400 5,874,218 - ---------------------------------------------------------------
MARKET SHARES VALUE HONG KONG-(CONTINUED) Sun Hung Kai Properties Ltd. (Land Development) 628,100 $ 4,630,628 - --------------------------------------------------------------- 93,990,761 - --------------------------------------------------------------- INDONESIA-0.39% Gulf Indonesia Resources Ltd. (Oil-International Integrated)(a) 250,000 5,250,000 - --------------------------------------------------------------- PT Indosat (Telephone) 933,000 2,102,809 - --------------------------------------------------------------- PT Indosat-ADR (Telephone) 63,500 1,504,156 - --------------------------------------------------------------- 8,856,965 - --------------------------------------------------------------- IRELAND-0.35% Elan Corp. PLC-ADR (Health Care/Drugs-Generic & Other)(a) 158,800 7,920,150 - --------------------------------------------------------------- ISRAEL-0.38% Teva Pharmaceutical Industries Ltd.-ADR (Health Care/Drugs-Generic & Other) 186,800 8,732,900 - --------------------------------------------------------------- ITALY-3.92% Assicurazioni Generali (Insurance-Multi-Line) 508,500 11,353,396 - --------------------------------------------------------------- Credito Italiano S.p.A. (Banks-Major Regional) 6,200,000 16,596,810 - --------------------------------------------------------------- Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing) 2,050,000 11,586,799 - --------------------------------------------------------------- Fiat S.p.A. (Automobiles) 3,300,000 10,469,167 - --------------------------------------------------------------- Istituto Mobiliare Italiano S.p.A. (Banks-Major Regional) 825,000 7,467,395 - --------------------------------------------------------------- Telecom Italia Mobile S.p.A. (Telecommunications- Cellular/Wireless) 3,800,000 14,028,352 - --------------------------------------------------------------- Telecom Italia S.p.A. (Telephone) 2,777,777 17,375,463 - --------------------------------------------------------------- 88,877,382 - --------------------------------------------------------------- JAPAN-14.52% Advantest Corp. (Electronics- Instrumentation) 249,700 20,644,080 - --------------------------------------------------------------- Bridgestone Corp. (Automobile Parts & Equipment) 477,000 10,304,944 - --------------------------------------------------------------- Canon, Inc. (Office Equipment & Supplies) 797,000 19,337,266 - --------------------------------------------------------------- Denso Corp. (Automobile Parts & Equipment) 370,000 7,993,353 - --------------------------------------------------------------- Fuji Photo Film Co. (Leisure Time-Products) 530,000 19,200,665 - --------------------------------------------------------------- Hitachi Cable, Ltd. (Metal Fabricators) 1,254,000 8,335,688 - --------------------------------------------------------------- Honda Motor Co., Ltd. (Automobiles) 610,000 20,527,628 - --------------------------------------------------------------- Hoya Corp.(Manufacturing-Specialized) 236,000 8,196,759 - --------------------------------------------------------------- Ibiden Co., Ltd. (Electronics-Component Distributors) 1,205,000 20,024,927 - --------------------------------------------------------------- Kyocera Corp.(Electronics-Component Distributors) 71,000 4,064,728 - --------------------------------------------------------------- Matsushita Electric Industrial Co. Ltd. (Electrical Equipment) 569,000 9,550,312 - --------------------------------------------------------------- Minebea Co. Ltd. (Electronics-Component Distributors) 1,614,000 16,093,062 - --------------------------------------------------------------- Murata Manufacturing Co., Ltd. (Electronics-Component Distributors) 326,000 13,218,779 - --------------------------------------------------------------- Nippon Telegraph & Telephone Corp. (Telephone) 23,200 19,662,651 - --------------------------------------------------------------- Nippon Television Network (Broadcasting-Television, Radio & Cable) 26,530 9,434,848 - ---------------------------------------------------------------
6 9
MARKET SHARES VALUE JAPAN-(CONTINUED) NTT Data Communications Systems Co. (Computers-Software & Services) 4,500 $ 21,499,792 - --------------------------------------------------------------- Ricoh Corp. Ltd. (Office Equipment & Supplies) 1,095,000 14,102,617 - --------------------------------------------------------------- Rohm Co. (Electronics-Component Distributors) 209,000 20,665,559 - --------------------------------------------------------------- SMC Corp.(Machinery-Diversified) 100,000 8,641,462 - --------------------------------------------------------------- Sony Corp. (Electronics-Component Distributors) 234,000 19,423,847 - --------------------------------------------------------------- TDK Corp. (Electrical Equipment) 244,000 20,233,652 - --------------------------------------------------------------- Tokyo Electron Ltd. (Electronics-Semiconductors) 367,100 18,301,620 - --------------------------------------------------------------- 329,458,239 - --------------------------------------------------------------- MEXICO-4.13% Cifra S.A. de C.V. (Retail-General Merchandise) 5,637,000 9,747,943 - --------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 320,500 13,841,594 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-Class B (Beverages-Alcoholic) 2,350,050 16,535,832 - --------------------------------------------------------------- Grupo Industrial Maseca S.A. de CV- Class B (Foods) 6,469,600 6,249,703 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 374,200 11,600,200 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 3,260,000 14,288,014 - --------------------------------------------------------------- Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 609,200 18,885,200 - --------------------------------------------------------------- TV Azteca, S.A. de C.V.-ADR (Broadcasting-Television, Radio & Cable)(a) 136,200 2,604,825 - --------------------------------------------------------------- 93,753,311 - --------------------------------------------------------------- NETHERLANDS-6.57% Akzo Nobel N.V. (Chemicals-Diversified) 75,000 13,215,297 - --------------------------------------------------------------- ASM Lithography Holding N.V. (Machinery-Diversified)(a) 65,000 4,720,577 - --------------------------------------------------------------- CMG PLC (Computers-Software & Services) 357,800 8,422,076 - --------------------------------------------------------------- Getronics N.V. (Computers-Software & Services) 292,000 9,640,587 - --------------------------------------------------------------- Koninklijke Ahold N.V. (Retail-Food Chains) 426,000 10,905,073 - --------------------------------------------------------------- Koninklijke Nutricia Verenigde Bedrijven N.V. (Foods) 153,000 4,373,680 - --------------------------------------------------------------- Koninklijke Pakhoed N.V. (Shipping) 323,000 10,580,891 - --------------------------------------------------------------- Oce-Van Der Grinten N.V. (Office Equipment & Supplies) 60,000 6,845,223 - --------------------------------------------------------------- Philips Electronics N.V. (Household Furniture & Appliances) 358,000 28,027,814 - --------------------------------------------------------------- Randstad Holdings N.V. (Services-Commercial & Consumer) 257,500 10,278,779 - --------------------------------------------------------------- Royal Dutch Petroleum Co. (Oil- International Integrated) 178,000 9,415,710 - --------------------------------------------------------------- Stork N.V. (Manufacturing-Diversified) 135,000 5,840,845 - --------------------------------------------------------------- Vendex International N.V. (Retail-General Merchandise) 215,000 11,738,347 - --------------------------------------------------------------- VNU-Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 332,000 7,866,083 - --------------------------------------------------------------- Wolters Kluwer N.V. (Specialty Printing) 58,000 7,121,916 - --------------------------------------------------------------- 148,992,898 - ---------------------------------------------------------------
MARKET SHARES VALUE NORWAY-0.65% Petroleum Geo-Services A.S.A. (Oil-International Integrated)(a) 215,000 $ 14,821,423 - --------------------------------------------------------------- PHILIPPINES-0.44% Metro Pacific Corp. (Manufacturing-Diversified) 45,013,850 2,996,691 - --------------------------------------------------------------- Philippine Long Distance Telephone Co. (Telephone) 168,960 4,170,381 - --------------------------------------------------------------- Philippine Long Distance Telephone Co.- ADR (Telephone) 119,200 2,890,600 - --------------------------------------------------------------- 10,057,672 - --------------------------------------------------------------- PORTUGAL-1.14% Electricidade de Portugal, S.A.-ADR (Electric Companies)(a) 140,800 4,919,200 - --------------------------------------------------------------- Portugal Telecom S.A. (Telephone) 510,000 20,924,936 - --------------------------------------------------------------- 25,844,136 - --------------------------------------------------------------- SINGAPORE-0.87% City Developments Ltd. (Land Development) 1,600,000 6,704,762 - --------------------------------------------------------------- DBS Land Ltd. (Land Development) 4,096,000 6,969,702 - --------------------------------------------------------------- Overseas Union Bank Ltd. (Banks-Major Regional) 1,846,800 6,156,000 - --------------------------------------------------------------- 19,830,464 - --------------------------------------------------------------- SPAIN-2.00% Banco Bilbao Vizcaya, S.A. (Banks-Major Regional) 432,000 11,552,073 - --------------------------------------------------------------- Endesa S.A. (Electric Companies) 501,000 9,436,585 - --------------------------------------------------------------- Iberdrola S.A. (Electric Companies) 745,000 8,911,116 - --------------------------------------------------------------- Telefonica de Espana (Telephone) 565,000 15,419,330 - --------------------------------------------------------------- 45,319,104 - --------------------------------------------------------------- SWEDEN-2.75% Electrolux A.B. (Household Furniture & Appliances) 290,900 24,080,161 - --------------------------------------------------------------- Hennes & Mauritz A.B.-Class B (Retail/Specialty-Apparel) 370,000 15,141,057 - --------------------------------------------------------------- Sparbanken Sverige A.B.-Class A (Banks-Major Regional) 530,000 12,029,533 - --------------------------------------------------------------- Telefonaktiebolaget LM Ericsson-ADR (Communications Equipment) 250,000 11,062,500 - --------------------------------------------------------------- 62,313,251 - --------------------------------------------------------------- SWITZERLAND-4.23% Adecco S.A. (Services-Commercial & Consumer) 30,000 9,534,012 - --------------------------------------------------------------- Ciba Specialty Chemicals A.G. (Chemicals-Specialty)(a) 122,000 11,980,004 - --------------------------------------------------------------- Clariant A.G. (Chemicals-Specialty) 19,200 14,767,649 - --------------------------------------------------------------- Credit Suisse Group (Banks-Major Regional) 82,300 11,593,412 - --------------------------------------------------------------- Holderbank Financiere Glarus A.G.-Class B (Construction-Cement & Aggregates) 12,100 9,738,761 - --------------------------------------------------------------- Nestle S.A. (Foods) 7,800 10,990,466 - --------------------------------------------------------------- Novartis A.G. (Health Care-Diversified) 13,696 21,449,975 - --------------------------------------------------------------- Zurich Versicherungs-Gesellschaft (Insurance-Multi-Line) 14,500 5,985,360 - --------------------------------------------------------------- 96,039,639 - ---------------------------------------------------------------
7 10
MARKET SHARES VALUE UNITED KINGDOM-15.19% Airtours PLC (Services-Commercial & Consumer) 466,450 $ 9,234,521 - ------------------------------------------------------------------- Amersham International PLC (Health Care/Drugs-Generic & Other) 215,000 8,269,420 - ------------------------------------------------------------------- Barclays PLC (Banks-Major Regional) 500,000 12,524,404 - ------------------------------------------------------------------- Blue Circle Industries PLC (Construction-Cement & Aggregates) 1,570,000 9,219,236 - ------------------------------------------------------------------- Bodycote International PLC (Chemicals-Specialty) 410,000 7,105,775 - ------------------------------------------------------------------- British Aerospace PLC (Aerospace/Defense) 425,000 11,280,352 - ------------------------------------------------------------------- British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 1,410,000 20,722,897 - ------------------------------------------------------------------- Compass Group PLC (Services-Commercial & Consumer) 970,000 10,342,238 - ------------------------------------------------------------------- Dixons Group PLC (Retail-Specialty) 1,110,000 12,980,248 - ------------------------------------------------------------------- EMAP PLC (Publishing) 625,000 8,970,720 - ------------------------------------------------------------------- General Electric Co. PLC (Manufacturing-Diversified) 1,769,800 11,305,541 - ------------------------------------------------------------------- GKN PLC (Manufacturing-Diversified) 530,000 11,888,704 - ------------------------------------------------------------------- Granada Group PLC (Leisure Time- Products) 435,000 5,999,130 - ------------------------------------------------------------------- Hays PLC (Services-Commercial & Consumer) 1,050,050 12,332,050 - ------------------------------------------------------------------- Kingfisher PLC (Retail-Department Stores) 825,000 11,875,953 - ------------------------------------------------------------------- Ladbroke Group PLC (Leisure Time-Products) 4,325,000 19,374,238 - ------------------------------------------------------------------- Lloyds TSB Group PLC (Banks-Major Regional) 570,000 7,124,565 - ------------------------------------------------------------------- Misys PLC (Services-Commercial & Consumer) 250,000 6,302,048 - ------------------------------------------------------------------- Next PLC (Retail-General Merchandise) 1,010,000 12,031,145 - ------------------------------------------------------------------- Pearson PLC (Specialty Printing) 950,000 12,432,128 - ------------------------------------------------------------------- Provident Financial PLC (Consumer Finance) 942,400 10,909,670 - ------------------------------------------------------------------- Railtrack Group PLC (Shipping) 1,450,000 23,183,987 - ------------------------------------------------------------------- Rentokil Initial PLC (Services-Commercial & Consumer) 2,760,000 11,113,416 - ------------------------------------------------------------------- Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 1,350,000 12,944,261 - ------------------------------------------------------------------- Siebe PLC (Electronics-Component Distributors) 370,000 7,107,788 - ------------------------------------------------------------------- Smiths Industries PLC (Machinery-Diversified) 256,000 3,715,210 - ------------------------------------------------------------------- Tarmac PLC (Engineering & Construction) 8,709,800 16,950,926 - ------------------------------------------------------------------- Unilever PLC (Foods) 2,064,000 15,375,169 - ------------------------------------------------------------------- Vodafone Group PLC (Telecommunications- Cellular/Wireless) 1,865,000 10,169,262 - -------------------------------------------------------------------
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) WPP Group PLC (Services- Advertising/Marketing) 2,575,000 $ 11,772,562 - --------------------------------------------------------------- 344,557,564 - --------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests 2,077,258,206 - --------------------------------------------------------------- PRINCIPAL AMOUNT FOREIGN CONVERTIBLE BONDS-1.55% FRANCE-0.40% AXA-UAP (Insurance-Multi-Line), Conv. Sr. Deb., 4.50%, 01/01/99(c) FRF 33,885,000 8,973,144 - ------------------------------------------------------------------- GERMANY-0.41% Volkswagen International Finance N.V. (Automobiles), Conv. Gtd. Notes, 3.00%, 01/24/02 $ 7,880,000 9,278,700 - ------------------------------------------------------------------- HONG KONG-0.12% New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds, 5.00%, 07/15/01 (Acquired 04/10/97-04/11/97; cost $2,056,313)(b) $ 1,750,000 1,653,750 - ------------------------------------------------------------------- New World Infrastructure Ltd. (Services-Commercial & Consumer), Conv. Bonds, 5.00%, 07/15/01 $ 1,150,000 1,086,750 - ------------------------------------------------------------------- 2,740,500 - ------------------------------------------------------------------- ITALY-0.43% Pirelli S.p.A. (Electrical Equipment), Conv. Bonds, 5.00%, 12/31/98(c) ITL 10,062,964,600 9,658,782 - ------------------------------------------------------------------- JAPAN-0.19% Ricoh Co., Ltd. (Office Equipment & Supplies), Conv. Bonds, 0.35%, 03/31/03(c) JPY 395,000,000 4,348,774 - ------------------------------------------------------------------- Total Foreign Convertible Bonds 34,999,900 - ------------------------------------------------------------------- REPURCHASE AGREEMENT-4.92%(d) SBC Warburg Inc., 5.40%, 11/03/1997(e) 111,732,336 111,732,336 - ------------------------------------------------------------------- TOTAL INVESTMENTS-98.02% 2,223,990,442 - ------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-1.98% 45,037,322 - ------------------------------------------------------------------- NET ASSETS-100.00% $ 2,269,027,764 ===================================================================
Investment Abbreviations: ADR - American Depository Receipt Conv. - Convertible Deb. - Debenture FRF - French Franc GDR - Global Depository Receipt Gtd. - Guaranteed ITL - Italian Lira JPY - Japanese Yen Sr. - Senior Notes to Schedule of Investments: (a) Non-income producing security. (b) Restricted security. May be resold to qualified institutional buyers in accordance with provisions of Rule 144A under the Securities Act of 1933, as amended. The valuation of these securities has been determined in accordance with procedures established by the Board of Directors. The aggregate market value of these securities at 10/31/97 was $19,230,621 which represented 0.85% of the Fund's net assets. (c) Foreign denominated security. Par value and coupon are denominated in currency indicated. (d) Collateral on repurchase agreements, including the Fund's pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (e) Joint repurchase agreement entered into 10/31/97 with a maturing value of $300,135,000. Collateralized by $295,632,000 U.S. Government obligations, 5.25% to 8.875% due 12/31/97 to 08/15/02 with an aggregate market value at 10/31/97 of $306,259,515. See Notes to Financial Statements. 8 11 STATEMENT OF ASSETS AND LIABILITIES October 31, 1997 ASSETS: Investments, at market value (cost $1,836,302,147) $2,223,990,442 - ------------------------------------------------------------ Foreign currencies, at market value (cost $42,794,789) 43,045,352 - ------------------------------------------------------------ Receivables for: Investments sold 14,136,654 - ------------------------------------------------------------ Capital stock sold 44,111,370 - ------------------------------------------------------------ Dividends and interest 4,967,585 - ------------------------------------------------------------ Investment for deferred compensation plan 26,785 - ------------------------------------------------------------ Other assets 75,088 - ------------------------------------------------------------ Total assets 2,330,353,276 - ------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 49,044,157 - ------------------------------------------------------------ Capital stock reacquired 8,290,939 - ------------------------------------------------------------ Deferred compensation 26,785 - ------------------------------------------------------------ Accrued advisory fees 1,796,123 - ------------------------------------------------------------ Accrued administrative services fees 7,878 - ------------------------------------------------------------ Accrued directors' fees 6,184 - ------------------------------------------------------------ Accrued distribution fees 1,044,063 - ------------------------------------------------------------ Accrued transfer agent fees 367,018 - ------------------------------------------------------------ Accrued operating expenses 742,365 - ------------------------------------------------------------ Total liabilities 61,325,512 - ------------------------------------------------------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING $2,269,027,764 ============================================================ NET ASSETS: Class A $1,577,389,921 ============================================================ Class B $ 678,808,929 ============================================================ Class C $ 12,828,914 ============================================================ CAPITAL STOCK, $.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 94,802,921 ============================================================ Class B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 41,731,824 ============================================================ Class C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 788,620 ============================================================ Class A: NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 16.64 ============================================================ OFFERING PRICE PER SHARE: (Net asset value of $16.64 divided by 94.50%) $ 17.61 ============================================================ Class B: NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 16.27 ============================================================ Class C: NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 16.27 ============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 1997 INVESTMENT INCOME: Dividends (net of $4,176,776 foreign withholding tax) $ 29,139,495 - ----------------------------------------------------------- Interest 4,617,214 - ----------------------------------------------------------- Total investment income 33,756,709 - ----------------------------------------------------------- EXPENSES: Advisory fees 18,284,107 - ----------------------------------------------------------- Administrative services fees 105,163 - ----------------------------------------------------------- Directors' fees 20,121 - ----------------------------------------------------------- Distribution fees-Class A 4,249,575 - ----------------------------------------------------------- Distribution fees-Class B 5,581,303 - ----------------------------------------------------------- Distribution fees-Class C 13,568 - ----------------------------------------------------------- Custodian fees 1,521,866 - ----------------------------------------------------------- Transfer agent fees-Class A 2,237,953 - ----------------------------------------------------------- Transfer agent fees-Class B 1,303,468 - ----------------------------------------------------------- Transfer agent fees-Class C 5,037 - ----------------------------------------------------------- Other 882,828 - ----------------------------------------------------------- Total expenses 34,204,989 - ----------------------------------------------------------- Less: Advisory fees waived (738,005) - ----------------------------------------------------------- Expenses paid indirectly (38,529) - ----------------------------------------------------------- Net expenses 33,428,455 - ----------------------------------------------------------- Net investment income 328,254 - ----------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on sales of: Investment securities (14,679,896) - ----------------------------------------------------------- Foreign currencies (1,876,119) - ----------------------------------------------------------- (16,556,015) - ----------------------------------------------------------- Net unrealized appreciation of: Investment securities 192,756,147 - ----------------------------------------------------------- Foreign currencies 438,913 - ----------------------------------------------------------- 193,195,060 - ----------------------------------------------------------- Net gain on investment securities and foreign currencies 176,639,045 - ----------------------------------------------------------- Net increase in net assets resulting from operations $176,967,299 ===========================================================
See Notes to Financial Statements. 9 12 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1997 and 1996
1997 1996 OPERATIONS: Net investment income $ 328,254 $ 1,130,094 - ----------------------------------------------------------------------------------------------- Net realized gain (loss) on sales of investment securities and foreign currencies (16,556,015) 43,829,404 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities and foreign currencies 193,195,060 98,461,748 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 176,967,299 143,421,246 - ----------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income: Class A (1,250,230) (295,965) - ----------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A (31,812,536) (18,468,041) - ----------------------------------------------------------------------------------------------- Class B (11,361,858) (1,875,276) - ----------------------------------------------------------------------------------------------- Share transactions-net: Class A 363,888,653 350,398,961 - ----------------------------------------------------------------------------------------------- Class B 282,384,176 296,841,074 - ----------------------------------------------------------------------------------------------- Class C 13,462,792 -- - ----------------------------------------------------------------------------------------------- Net increase in net assets 792,278,296 770,021,999 - ----------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 1,476,749,468 706,727,469 - ----------------------------------------------------------------------------------------------- End of period $2,269,027,764 $1,476,749,468 - ----------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $1,897,861,942 $1,238,126,321 - ----------------------------------------------------------------------------------------------- Undistributed net investment income 5,863,515 1,113,111 - ----------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) on sales of investment securities and foreign currencies (22,453,519) 42,949,270 - ----------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 387,755,826 194,560,766 - ----------------------------------------------------------------------------------------------- $2,269,027,764 $1,476,749,468 ===============================================================================================
NOTES TO FINANCIAL STATEMENTS October 31, 1997 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 management investment company consisting of four operating series portfolios: AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund. 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 and Class C shares are sold with a contingent deferred sales charge. Class C shares commenced sales August 4, 1997. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is to provide long-term growth of capital. The Fund seeks to achieve its objective by investing in a diversified portfolio of international equity securities, the issuers of which are considered by AIM to have strong earnings momentum. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations-A security listed or traded on an exchange (except convertible bonds) is valued at the last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, at the mean between the closing bid and asked prices on that day. If a mean is not available, as is the case in some foreign markets, the closing bid will be used absent a last sales price. Securities traded in the over-the- counter market (but not including securities reported on the NASDAQ National Market System) are valued at the mean between the last bid and asked prices based upon quotes furnished by market makers for such securities. Securities reported on the NASDAQ National Market System are valued at 10 13 the last sales price on the valuation date or absent a last sales price, at the mean of the closing bid and asked prices. 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 quotations are either 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. Investments with maturities of 60 days or less are valued on the basis of amortized cost which approximates market value. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock Exchange 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. Foreign Currency Translations--Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the 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. C. Foreign Currency Contracts--A forward 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 forward 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 forward 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. D. Securities Transactions, Investment Income and Distributions--Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on an accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. On October 31, 1997, undistributed net investment income was increased by $5,672,380 and undistributed net realized gains decreased by $5,672,380 in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassifications discussed above. E. 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 $14,969,471 (which may be carried forward to offset future capital gains, if any) which expires, if not previously utilized, through the year 2005. F. Expenses--Distribution and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated between 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 master 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 is currently voluntarily waiving a portion of its advisory fees paid by the Fund to AIM to the extent necessary to reduce the fees paid by the Fund at net asset levels higher than those currently incorporated in the present advisory fee schedule. Under the voluntary waiver, AIM will receive a fee calculated at the annual rate of 0.95% of the first $500 million of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $500 million to and including $1 billion, plus 0.85% of the Fund's average daily net assets in excess of $1 billion. The waiver of fees is voluntary and the Board of Directors of the Company would be advised of any decision by AIM to discontinue the waiver. During the year ended October 31, 1997, AIM waived fees of $738,005. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1997, AIM was reimbursed $105,163 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing transfer agency services to the Fund. During the year ended October 31, 1997, AFS was paid $1,774,819 for such services. The Company has entered into a master distribution agreement with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class A, Class B and Class C shares of the Fund. The Company has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares and Class C shares (the "Class A and Class C Plan"), and the Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The Fund, pursuant to the Class A Plan and Class C Plan, pays AIM Distributors compensation at the annual rate of 0.30% of the average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Class A Plan and the Class C Plan are designed to compensate AIM Distributors for certain promotional and other sales related costs, and to 11 14 implement a dealer incentive program which provides 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 the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors an annual rate of 1.00% of the average daily net assets attributable to the Class B shares. Of this amount, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class B shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class B shares of the Fund. Any amounts not paid as a service fee under such 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. AIM Distributors may, from time to time, assign, transfer or pledge to one or more designees, its rights to all or a designated portion of (a) compensation received by AIM Distributors from the Fund pursuant to the Class B Plan (but not AIM Distributors' duties and obligations pursuant to the Class B Plan) and (b) any contingent deferred sales charges received by AIM Distributors related to the Class B shares. During the year ended October 31, 1997, the Class A shares and Class B shares, and the period August 4, 1997 through October 31, 1997 the Class C shares paid AIM Distributors $4,249,575, $5,581,303 and $13,568, respectively, as compensation under the Plans. AIM Distributors received commissions of $1,172,508 from sales of the Class A shares of the Fund during the year ended October 31, 1997. 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, 1997, AIM Distributors received commissions of $91,984 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, 1997, the Fund incurred legal fees of $9,514 for services rendered by the law firm of Kramer, Levin, Naftalis & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES AIM has directed certain portfolio trades to brokers who paid a portion of the Fund's expenses related to pricing services used by the Fund. For the year ended October 31, 1997, the Fund's expenses were reduced by $7,691. The Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $25,598 and $5,240, respectively, under expense offset arrangements. The effect of the above arrangements resulted in reductions of the Fund's total expenses of $38,529 during the year ended October 31, 1997. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid or accrued to each director who is not an "interested person" of AIM. The Company may invest directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $500,000,000 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. Interest on borrowings under the line of credit is payable on maturity or prepayment date. Prior to an amendment of the line of credit on July 15, 1997, the Fund was limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by its prospectus for borrowings. During the year ended October 31, 1997, 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 0.05% 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-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, 1997 was $1,525,690,965 and $943,814,904, respectively. The amount of unrealized appreciation (depreciation) of investment securities, on a tax basis, as of October 31, 1997 is as follows: Aggregate unrealized appreciation of investment securities $463,067,699 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (82,747,088) - --------------------------------------------------------- Net unrealized appreciation of investment securities $380,320,611 ========================================================= Cost of investments for tax purposes is $1,843,669,831.
NOTE 7-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the years ended October 31, 1997 and 1996 were as follows:
1997 1996 ------------------------------ --------------------------- SHARES AMOUNT SHARES AMOUNT ------------ --------------- ----------- ------------- Sold: Class A 105,291,824 $ 1,764,668,535 41,055,911 $ 601,559,902 - ----------------------------------------------------------------------------------- Class B 21,599,075 352,871,134 21,641,528 313,690,762 - ----------------------------------------------------------------------------------- Class C* 1,372,281 23,795,456 -- -- - ----------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 2,035,986 31,231,975 1,305,811 17,576,215 - ----------------------------------------------------------------------------------- Class B 707,879 10,688,975 130,593 1,741,975 - ----------------------------------------------------------------------------------- Class C* -- -- -- -- - ----------------------------------------------------------------------------------- Reacquired: Class A (84,633,652) (1,432,011,857) (18,205,834) (268,737,156) - ----------------------------------------------------------------------------------- Class B (4,913,096) (81,175,933) (1,270,776) (18,591,663) - ----------------------------------------------------------------------------------- Class C* (583,661) (10,332,664) -- -- - ----------------------------------------------------------------------------------- 40,876,636 $ 659,735,621 44,657,233 $ 647,240,035 ===================================================================================
* Class C commenced sales on August 4, 1997. 12 15 NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a Class A share outstanding during each of the years in the five-year period ended October 31, 1997, for a Class B share outstanding during each of the years in the three-year period ended October 31, 1997 and the period September 15, 1994 (date sales commenced) through October 31, 1994, and for a Class C share outstanding for the period August 4, 1997 (date sales commenced) through October 31, 1997.
1997 1996 1995 1994 1993 ----------- ----------- --------- --------- --------- CLASS A: Net asset value, beginning of period $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88 - -------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.04(a) 0.04(a) 0.01 0.02 0.02 - -------------------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 1.68 2.07 0.62 1.31 3.29 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.72 2.11 0.63 1.33 3.31 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.02) (0.01) (0.04) (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.43) (0.38) (0.44) -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (0.45) (0.39) (0.48) (0.01) (0.01) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 16.64 $ 15.37 $ 13.65 $ 13.50 $ 12.18 ================================================================================================================================ Total return(b) 11.43% 15.79% 5.24% 10.94% 37.36% ================================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $ 1,577,390 $ 1,108,395 $ 654,764 $ 708,159 $ 372,282 ================================================================================================================================ Ratio of expenses to average net assets(c) 1.47%(d)(e) 1.58% 1.67% 1.64% 1.78% ================================================================================================================================ Ratio of net investment income to average net assets(f) 0.24%(d) 0.25% 0.10% 0.22% 0.28% ================================================================================================================================ Portfolio turnover rate 50% 66% 68% 67% 62% ================================================================================================================================ Average brokerage commission rate(g) $ 0.0168 $ 0.0192 N/A N/A N/A ================================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements are 1.51%, 1.60% and 1.68, respectively for 1997-1995. (d) Ratios are based on average net assets of $1,416,524,861. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been the same. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements are 0.20%, 0.22% and 0.09%, respectively for 1997-1995. (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter.
1997 1996 1995 1994 --------- --------- --------- --------- CLASS B: Net asset value, beginning of period $ 15.13 $ 13.54 $ 13.49 $ 13.42 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.09)(a) (0.07)(a) (0.09) (0.01) - -------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 1.66 2.04 0.61 0.08 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.57 1.97 0.52 0.07 - -------------------------------------------------------------------------------------------------------------------- Less distributions: Dividends from net investment income -- -- (0.03) -- - -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.43) (0.38) (0.44) -- - -------------------------------------------------------------------------------------------------------------------- Total distributions (0.43) (0.38) (0.47) -- - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 16.27 $ 15.13 $ 13.54 $ 13.49 ==================================================================================================================== Total return(b) 10.61% 14.88% 4.35% 0.52% ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 678,809 $ 368,355 $ 51,964 $ 4,833 ==================================================================================================================== Ratio of expenses to average net assets(c) 2.25%(d)(e) 2.35% 2.55% 2.53%(f) ==================================================================================================================== Ratio of net investment income (loss) to average net assets(g) (0.53)%(d) (0.53)% (0.78)% (0.67)%(f) ==================================================================================================================== Portfolio turnover rate 50% 66% 68% 67% ==================================================================================================================== Average brokerage commission rate(h) $ 0.0168 $ 0.0192 N/A N/A ====================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements are 2.28%, 2.37% and 2.56%, respectively for 1997-1995. (d) Ratios are based on average net assets of $558,130,289. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been 2.24%. (f) Annualized. (g) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements are (0.57)%, (0.55)% and (0.79)%, respectively for 1997-1995. (h) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 13 16
1997 -------- CLASS C: Net asset value, beginning of period $ 17.64 - ---------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.02)(a) - ---------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.35) - ---------------------------------------------------------------------- Total from investment operations (1.37) - ---------------------------------------------------------------------- Less distributions: Dividends from net investment income -- - ---------------------------------------------------------------------- Distributions from net realized gains -- - ---------------------------------------------------------------------- Total distributions -- - ---------------------------------------------------------------------- Net asset value, end of period $ 16.27 ====================================================================== Total return(b) (7.77)% ====================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 12,829 ====================================================================== Ratio of expenses to average net assets(c) 2.27%(d)(e) ====================================================================== Ratio of net investment income (loss) to average net assets(f) (0.55)%(d) ====================================================================== Portfolio turnover rate 50% ====================================================================== Average brokerage commission rate(g) $ 0.0168 ======================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and for periods less than one year, total return is not annualized. (c) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements is 2.30% (annualized). (d) Ratio is annualized and based on average net assets of $5,564,501. (e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses, the ratio of expenses to average net assets would have been 2.26%. (f) After fee waivers and/or expense reimbursements. Ratio of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements is (0.59)% (annualized). (g) The average commission rate paid is the total brokerage commissions paid on applicable purchases and sales of securities for the period divided by the total number of related shares purchased and sold, which is required to be disclosed for fiscal years beginning September 1, 1995 and thereafter. 14 17 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, 1997, the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and financial highlights for each of the years and 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 1997, 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, 1997, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years and periods in the five-year period then ended, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Houston, Texas December 5, 1997 15 18 SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING - -------------------------------------------------------------------------------- The Annual Meeting of Shareholders of the Company was held on February 7, 1997. The meeting was held for the following purposes: (1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson, and Louis S. Sklar. (2) To approve a new Investment Advisory Agreement between the Company and AIM. (3) To approve the elimination of the fundamental investment policy prohibiting or restricting investments in other investment companies and/or the amendment of certain related fundamental investment policies. (4) To approve the elimination of the fundamental investment policy prohibiting investments in companies with less than three years of continuous operation. (5) Ratification of KPMG Peat Marwick LLP as independent accountants for the Company's fiscal year ending October 31, 1997. The following votes were cast with respect to each item:
Votes Withheld/ Director/Matter Votes For Against Abstentions --------------- --------- ------------- ----------- (1) Charles T. Bauer............................................ 130,433,380 N/A 3,798,959 Bruce L. Crockett........................................... 130,563,964 N/A 3,668,375 Owen Daly II................................................ 130,421,284 N/A 3,811,055 Carl Frischling............................................. 130,515,713 N/A 3,716,626 Robert H. Graham............................................ 130,587,498 N/A 3,644,841 John F. Kroeger............................................. 130,446,846 N/A 3,785,493 Lewis F. Pennock............................................ 130,506,142 N/A 3,726,197 Ian W. Robinson............................................. 130,446,093 N/A 3,786,246 Louis S. Sklar.............................................. 130,573,480 N/A 3,658,859 (2) Approval of new Investment Advisory Agreement............... 54,370,676 742,775 2,283,704 (3) Elimination of policy restricting investments in other investment companies........................................ 39,608,624 1,920,390 2,447,220 (4) Elimination of policy prohibiting investments in companies with less than three years of operations.................... 39,192,652 2,454,024 2,329,557 (5) KPMG Peat Marwick LLP....................................... 128,509,801 995,829 4,726,709
16 19 Directors & Officers BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND Charles T. Bauer Charles T. Bauer 11 Greenway Plaza Chairman Chairman Suite 100 A I M Management Group Inc. Houston, TX 77046 Robert H. Graham Bruce L. Crockett President INVESTMENT ADVISOR Director ACE Limited; John J. Arthur A I M Advisors, Inc. Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza Chief Executive Officer Suite 100 COMSAT Corporation Carol F. Relihan Houston, TX 77046 Senior Vice President Owen Daly II and Secretary TRANSFER AGENT Director Cortland Trust Inc. Gary T. Crum A I M Fund Services, Inc. Senior Vice President P.O. Box 4739 Jack Fields Houston, TX 77210-4739 Formerly Member of the Dana R. Sutton U.S. House of Representatives Vice President and Assistant Treasurer CUSTODIAN Carl Frischling Robert G. Alley State Street Bank & Trust Company Partner Vice President 225 Franklin Street Kramer, Levin, Naftalis & Frankel Boston, MA 02110 Melville B. Cox Robert H. Graham Vice President COUNSEL TO THE FUND President and Chief Executive Officer A I M Management Group Inc. Jonathan C. Schoolar Ballard Spahr Vice President Andrews & Ingersoll John F. Kroeger 1735 Market Street Formerly Consultant P. Michelle Grace Philadelphia, PA 19103 Wendell & Stockel Associates, Inc. Assistant Secretary COUNSEL TO THE DIRECTORS Lewis F. Pennock Nancy L. Martin Attorney Assistant Secretary Kramer, Levin, Naftalis & Frankel 919 Third Avenue Ian W. Robinson Ofelia M. Mayo New York, NY 10022 Consultant; Formerly Executive Assistant Secretary Vice President and DISTRIBUTOR Chief Financial Officer Kathleen J. Pflueger Bell Atlantic Management Assistant Secretary A I M Distributors, Inc. Services, Inc. 11 Greenway Plaza Samuel D. Sirko Suite 100 Louis S. Sklar Assistant Secretary Houston, TX 77046 Executive Vice President Hines Interests Stephen I. Winer AUDITORS Limited Partnership Assistant Secretary KPMG Peat Marwick LLP Mary J. Benson 700 Louisiana Assistant Treasurer Houston, TX 77002
REQUIRED FEDERAL INCOME TAX INFORMATION AIM International Equity Fund paid ordinary dividends in the amount of $0.017 per share to shareholders of Class A shares during its tax year ended October 31, 1997. Of this amount 0% is eligible for the dividends received deduction for corporations. The Fund also distributed long-term capital gains of $0.432 per share for Class A and Class B shares during its tax year ended October 31, 1997. 20 THE AIM FAMILY OF FUNDS--Registered Trademark-- AGGRESSIVE GROWTH AIM Aggressive Growth Fund* AIM Capital Development Fund AIM Constellation Fund AIM Global Aggressive Growth Fund GROWTH OF CAPITAL AIM Advisor International Value Fund [PHOTO OF AIM Blue Chip Fund 11 GREENWAY PLAZA AIM Global Growth Fund APPEARS HERE] AIM Growth Fund AIM International Equity Fund AIM Value Fund AIM Weingarten Fund GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH AIM Advisor Flex Fund AIM Advisor Large Cap Value Fund AIM Advisor MultiFlex Fund AIM Advisor Real Estate Fund AIM Balanced Fund AIM Charter Fund AIM Global Utilities Fund HIGH CURRENT INCOME OR CURRENT INCOME AIM High Yield Fund AIM Global Income Fund AIM Income Fund CURRENT TAX-FREE INCOME AIM Municipal Bond Fund AIM Tax-Exempt Bond Fund of Connecticut AIM Tax-Free Intermediate Shares CURRENT INCOME AND HIGH DEGREE OF SAFETY AIM Intermediate Government Fund AIM Limited Maturity Treasury Shares AIM Money Market Fund AIM Tax-Exempt Cash Fund A I M Management Group Inc. has provided leadership in the *AIM Aggressive Growth Fund was closed to new investors on mutual fund industry since 1976 and managed approximately June 5, 1997. For more complete information about any AIM $82 billion in assets for more than 3.6 million shareholders, Fund(s), including sales charges and expenses, ask your including individual investors, corporate clients, and financial financial consultant or securities dealer for a free institutions as of September 30, 1997. The AIM Family of prospectus(es). Please read the prospectus(es) carefully Funds--Registered Trademark-- is distributed nationwide, and before you invest or send money. AIM today ranks among the nation's top 15 mutual fund companies in assets under management, according to Lipper INVEST WITH DISCIPLINE-SM- Analytical Services, Inc. [AIM LOGO APPEARS HERE] ----------------- BULK RATE A I M Distributors, Inc. U.S. POSTAGE 11 Greenway Plaza, Suite 100 PAID Houston, TX 77046 HOUSTON, TX Permit No. 1919 -----------------
-----END PRIVACY-ENHANCED MESSAGE-----