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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-6463
---------------------------------------------
AIM International Mutual Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert H. Graham 11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (713) 626-1919
-----------------------------
Date of fiscal year end: 10/31
-------------------
Date of reporting period: 10/31/03
------------------
AIM Asia Pacific Growth Fund
Annual Report to Shareholders o October 31, 2003
[COVER IMAGE]
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
================================================================================
AIM ASIA PACIFIC GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
================================================================================
ABOUT INFORMATION THROUGHOUT THIS REPORT:
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o Unless otherwise stated, information o International investing presents o The MSCI All Country (AC) Asia Pacific
presented is as of 10/31/03 and is based certain risks not associated with Free ex-Japan Index is a group of
on total net assets. investing solely in the United States. developed and emerging Asian and
These include risks relating to Asia-Pacific markets (except Japan)
o AIM Asia Pacific Growth Fund's fluctuations in the value of the U.S. covered by Morgan Stanley Capital
performance figures are historical, and dollar relative to the values of other International. A "free" index represents
they reflect fund expenses, the currencies, the custody arrangements investable opportunities for global
reinvestment of distributions, and made for the fund's foreign holdings, investors, taking into account the local
changes in net asset value. differences in accounting, political market restrictions on share ownership
risks and the lesser degree of public by foreign investors.
o When sales charges are included in information required to be provided by
performance figures, Class A share non-U.S. companies. o The unmanaged Lipper Pacific ex-Japan
performance reflects the maximum 5.50% Fund Index represents an average of the
sales charge, and Class B and Class C o The fund's investment return and largest Pacific ex-Japan funds tracked
share performance reflects the principal value will fluctuate, so an by Lipper, Inc., an independent mutual
applicable contingent deferred sales investor's shares, when redeemed, may be fund performance monitor, and is
charge (CDSC) for the period involved. worth more or less than their original considered representative of Pacific
The CDSC on Class B shares declines from cost. ex-Japan stocks.
5% beginning at the time of purchase to
0% at the beginning of the seventh year. o The fund may participate in the o The unmanaged Standard & Poor's
The CDSC on Class C shares is 1% for the initial public offering (IPO) market in Composite Index of 500 Stocks (the S&P
first year after purchase. The some market cycles. A significant 500--Registered Trademark--) is an index
performance of the fund's share classes portion of the fund's returns during of common stocks frequently used as a
will differ due to different sales certain periods was attributable to its general measure of U.S. stock market
charge structures and class expenses. investments in IPOs. These investments performance.
have a magnified impact when the fund's
o Had the advisor not waived fees and/or asset base is relatively small. As the o A direct investment cannot be made in
reimbursed expenses, returns would have fund's assets grow, the impact of IPO an index. Unless otherwise indicated,
been lower. investments will decline, which may index results include reinvested
reduce the effect of IPO investments on dividends, and they do not reflect sales
o A 2% redemption fee will be imposed on the fund's total return. For additional charges. Performance of an index of
certain redemptions or exchanges out of information regarding the impact of IPO funds reflects fund expenses,
the fund within 30 days of purchase. investments on the fund's performance, performance of a market index does not.
Exceptions to the redemption fee are please see the fund's prospectus.
listed in the fund's prospectus. A description of the policies and
o Industry classifications used in this procedures that the fund uses to
o Effective 9/30/03, Class B shares are report are generally according to the determine how to vote proxies relating
not available as an investment for Global Industry Classification Standard, to portfolio securities is available
retirement plans maintained pursuant to which was developed by and is the without charge, upon request, by calling
Section 401 of the Internal Revenue exclusive property and a service mark of 800-959-4246, or on the AIM Web site,
Code, including 401(k) plans, money Morgan Stanley Capital International AIMinvestments.com.
purchase pension plans and profit Inc. and Standard & Poor's.
sharing plans. Plans that have existing
accounts invested in Class B shares will
continue to be allowed to make
additional purchases.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE This report may be distributed only to shareholders or
to persons who have received a current prospectus of
the fund.
=======================================================
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AIMinvestments.com
TO OUR SHAREHOLDERS
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DEAR FELLOW SHAREHOLDER IN THE AIM new policies and strengthened existing ones--to discourage
FAMILY OF FUNDS harmful short-term trading. These steps include:
--Registered Trademark--:
o Strengthening daily monitoring of trading
[PHOTO OF As you may be aware, there has been a activities.
ROBERT H great deal of media coverage recently
GRAHAM] about the mutual fund industry and o Imposing redemption fees on additional funds we
allegations of improper activities by believe may be vulnerable to harmful short-term
ROBERT H. GRAHAM certain individuals and companies. As trading activity.
part of these widespread investigations,
INVESCO Funds Group (IFG), the former o Implementing an enhanced exchange policy (effective
[PHOTO OF adviser to certain INVESCO Funds, was on or about March 1, 2004) designed to limit
MARK H. recently named as a defendant in exchanges between funds.
WILIAMSON] separate civil enforcement actions by
the U.S. Securities and Exchange o Employing an enhanced fair value pricing policy on
MARK H. WILLIAMSON Commission (SEC), the Office of the New certain foreign securities as well as certain
York Attorney General and the State of illiquid securities.
Colorado over an issue known as "market timing." A number of
private class or derivative actions also were filed in the None of these tools alone, nor all of them taken
wake of the regulators' actions. together, eliminate the possibility of short-term trading
strategies that may be detrimental to a fund. Moreover, each
Investors are understandably concerned and frustrated of these tools involves judgments that are inherently
about these reports, and we would like to take this subjective. We have always sought and continue to seek to
opportunity to assure you that, based on an investigation make these judgments to the best of our abilities and in a
conducted by an outside firm, IFG and its parent company, manner that we believe is consistent with the best interests
AMVESCAP PLC, believe that these civil actions are without of our fund shareholders. And we remain committed to being
merit. IFG is contesting the charges. as vigilant as possible in the future to identify and
address any harmful market timing investors who have the
We encourage you to continue to monitor this situation, potential to harm our long-term fund shareholders.
particularly as IFG has the opportunity to address the
allegations that have been made. Current information will be We sincerely hope these developments and the media
posted on our Web site at AIMinvestments.com. We will coverage surrounding them do not result in you or other
continue to communicate to you on our Web site about our shareholders losing confidence in AIM or INVESCO Funds.
finding, and the actions we are taking to protect and Amidst this storm of controversy in the mutual fund
promote the interests of our shareholders. The independent industry, we believe we can find encouragement in the
trustees of the funds are receiving regular reports from recovering economy and rising equity markets. As we write
their independent counsel and outside counsel hired by this letter, for instance, the S&P 500--Registered
AMVESCAP PLC, the parent of AIM and IFG, to perform an Trademark-- Index is up approximately 23% year-to-date.
ongoing investigation of market timing. Although past performance is no guarantee of future results,
there appear to be indicators that the economy and stock
A COMPLEX ISSUE markets are showing signs of welcomed improvement. We
encourage you to read the enclosed discussion of your fund's
Market timing is an investment technique not defined in any performance during this past reporting period.
regulation that involves frequent short-term trading of
mutual fund shares, sometimes with a goal to exploit OUR UNWAVERING COMMITMENT
inefficiencies in the way mutual funds price their shares.
We recognize that fund management companies have tried to At AIM Investments, we have never wavered in our commitment
deal with this complex issue in various ways and believe to helping you build solutions for your financial goals. Our
that industry-wide guidance is in order. To that end, we company was founded on a core principle of integrity, and we
welcome SEC Chairman William Donaldson's pledge to adopt new have always worked hard to earn the trust of our
rules designed to curb market timing abuses. Comprehensive shareholders. We are committed to doing all we can to
rulemaking is necessary and is the best way to establish new maintain your trust and confidence.
industry responsibilities designed to protect shareholders.
We support practical rule changes and structural Thank you for your continued participation in AIM
modifications that are fair, enforceable and, most Investments. Please call your financial advisor or one of
importantly, beneficial for investors. our Client Service representatives at 800-959-4246 if you
have any further questions or concerns about your AIM
AIM Investments has policies in place designed to Investments account.
identify, prevent and eliminate harmful trading or other
activities deemed to be detrimental to the funds. We have Sincerely,
also recently taken additional steps--implemented
/s/ ROBERT H. GRAHAM /s/ MARK H. WILLIAMSON
Robert H. Graham Mark H. Williamson
Chairman and President President and CEO
The AIM Family of Funds AIM Investments
--Registered Trademark--
December 18, 2003
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
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third quarter, increasing the
city-state's gross domestic product
significantly from the prior quarter.
FUND OUTPERFORMS INDEX, PEER GROUP In the Pacific Rim region, the Bank
of Australia recently reported that the
Amid signs of an improving global some of the strongest economic growth improving international situation has
economic environment, AIM Asia Pacific rates in the world. Indeed, an October been accompanied by a marked
Growth Fund posted double-digit returns 2003 statement by the World Bank strengthening of the domestic economy
for the reporting period ended October suggested that the slowdown in emerging since mid-year. Consumer spending in
31, 2003. For the fiscal year covered by Asian economies early in 2003 was less Australia has increased with strong
this report, the fund's Class A, Class than feared, and the Bank expects growth in retail sales and motor vehicle
B, and Class C shares returned 41.62%, overall Asian growth to reach 5% in sales. Consumer confidence is now close
40.75%, and 40.61%, respectively, at net 2003. to historical highs. One area of the
asset value. Australian economy that did not share in
Of course, there continues to be a this general strength was the export
Over the same period, the fund wide variance in economic growth amid sector, where performance has been held
outperformed its benchmark, the MSCI All Asian economies. China continues to be back by a number of factors including
Country (AC) Asia Pacific Free ex-Japan the growth engine for the region, the weak global environment of the past
Index, which returned 38.75%. The fund's bolstered by the strength of its exports couple of years, the drought and the
Class A shares at NAV posted a slightly and domestic consumption. In fact, there downturn in international tourism
higher return than its peer group, the is evidence that policy makers are now earlier in the year.
Lipper Pacific ex-Japan Fund Index, focusing on means to prevent overheating
which returned 41.34% for the fiscal in the areas of real estate and On the currency front, the U.S.
year. infrastructure. dollar continued to be weak compared to
many foreign currencies during the
MARKET CONDITIONS Beyond China, activity in other fiscal year. Some Asian currencies, such
parts of Asia picked up in the third as the Hong Kong dollar, are pegged to
During the fiscal year, Asia/Pacific Rim quarter of 2003. The slump in tourism the U.S. dollar and, therefore saw
stocks, as represented by the MSCI All appears to be over as international little fluctuation from the U.S.
Country (AC) Asia Pacific Free ex-Japan arrivals to countries most affected by currency. However, several Asian/Pacific
Index, posted strong returns, SARS have almost fully recovered. Along Rim currencies appreciated significantly
significantly outperforming U.S. stocks, with the increase in tourism, industrial against the U.S. dollar including the
as represented by the S&P 500 Index. production and exports began to rise South Korean won, Indian rupee and the
Despite external shocks, such as the across the region in the third quarter, Australian dollar.
outbreak of SARS (severe acute after weakening the prior quarter. For
respiratory syndrome) and weak global instance, in Singapore, exports of
economic conditions earlier in the year, electronics and biomedical products rose
Asian economies continued to post significantly in the
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TOTAL RETURNS TOP 10 EQUITY HOLDINGS*
10/31/02-10/31/03
1. Samsung Electronics Co., Ltd. (South Korea) 3.4%
[BAR CHART]
2. Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) 2.8
AIM ASIA PACIFIC GROWTH FUND
CLASS A SHARES AT NAV 41.62% 3. Hana Bank (South Korea) 2.7
MSCI ALL COUNTRY (AC) 4. Dah Sing Financial Group (Hong Kong) 2.2
ASIA PACIFIC FREE
EX-JAPAN INDEX 38.75% 5. BHP Billiton Ltd. (Australia) 1.9
6. Techtronic Industries Co. Ltd. (Hong Kong) 1.9
7. Li & Fung Ltd. (Bermuda) 1.8
8. ASM Pacific Technology Ltd. (Cayman Islands) 1.8
9. Ranbaxy Laboratories Ltd. (India) 1.7
Source: Lipper, Inc. 10. Esprit Holdings Ltd. (Bermuda) 1.7
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will continue to hold any particular
security.
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2
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YOUR FUND
The fund's investment strategy is to At the close of the reporting period, SHUXIN CAO
focus on stocks with above-average, the fund was overweight in information
long-term growth in earnings and strong technology, industrials, consumer [PHOTO OF Mr. Cao, Chartered
prospects for future growth. To that discretionary and consumer staples SHUXIN CAO] Financial Analyst,
end, Techtronic Industries, a supplier sectors versus its benchmark. is manager of AIM
of home improvement products based in Asia Pacific Growth Fund. He joined AIM
Hong Kong, is a good example of a stock IN CLOSING in 1997. Mr. Cao graduated from Tianjin
that contributed to fund performance Foreign Language Institute with a B.A.
during the fiscal year. The managing director of the in English. He also received an M.B.A.
International Monetary Fund suggested in from Texas A&M University and is a
Techtronic reported that the a recent speech regarding emerging Certified Public Accountant.
company's revenue and net profit for the markets that Asia has become an
six months ended June 2003 were 21.6% increasingly important force in the
and 24.1% higher than the same period in global economy. Indeed, despite BARRETT K. SIDES
the prior year. The company's chief challenges such as the SARS outbreak,
executive officer underscored that these Asian markets posted strong regional [PHOTO OF Mr. Sides is lead
results were achieved at a time when the returns for the fiscal year. Whether BARRETT K. manager of AIM Asia
global business environment was these market rallies are sustainable SIDES] Pacific Growth Fund.
adversely affected by war in Iraq and remains to be seen. Regardless of He joined AIM in
the SARS outbreak, which affected the economic or market trends, we remain 1990. Mr. Sides graduated with a B.S. in
confidence of consumers and retailers. committed to owning stocks that fit the economics from Bucknell University. He
fund's investment objective. also received a master's in
While fund performance was strong international business from the
over the fiscal year, Kookmin Bank, See important fund and index University of St. Thomas.
South Korea's largest lender, proved disclosures inside front cover.
somewhat of a drag on performance as Assisted by Asia Pacific Team
merger-related issues and fears over
liquidity issues in the credit card
sector have hampered bank stocks
recently.
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[GRAPHIC]
For More Information Visit
AIMinvestments.com
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TOP 10 COUNTRIES TOP 10 INDUSTRIES* TOTAL NUMBER OF HOLDINGS* 96
1. South Korea 18.1% 1. Diversified Banks 12.4% TOTAL NET ASSETS $130.6 MILLION
2. Taiwan 15.9 2. Electronic Equipment Manufacturers 6.0
3. Hong Kong 12.6 3. Semiconductors 4.9
4. Australia 11.7 4. Industrial Conglomerates 4.5
5. India 9.4 5. Packaged Foods & Meats 4.1
6. Singapore 6.0 6. Pharmaceuticals 3.2
7. China 4.8 7. Diversified Metals & Mining 2.6
8. Cayman Islands 4.2 8. Construction, Farm Machinery &
Heavy Trucks 2.5
9. Thailand 3.6 9. Construction Materials 2.4
10. Bermuda 3.5 10. Marine 2.3
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3
FUND PERFORMANCE
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
11/3/97-10/31/03*
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<Caption>
DATE AIM ASIA PACIFIC AIM ASIA PACIFIC AIM ASIA PACIFIC MSCI ALL COUNTRY AC
GROWTH FUND GROWTH FUND GROWTH FUND ASIA PACIFIC FREE
CLASS A SHARES CLASS B SHARES CLASS C SHARES EX-JAPAN INDEX
*11/3/979450 $ 10000 $ 10000 $ 10000 $ 10000
1/31/1998 7834 8280 8290 8811
4/30/1998 8713 9199 9200 9367
7/31/1998 6682 7039 7030 7421
10/31/1998 7267 7629 7610 8110
1/31/1999 7305 7668 7640 8905
4/30/1999 9138 9580 9553 11029
7/31/1999 10459 10932 10914 11713
10/31/1999 10232 10662 10642 11340
1/31/2000 12085 12574 12544 13038
4/30/2000 13502 14016 14007 11981
7/31/2000 12456 12915 12906 11335
10/31/2000 10167 10511 10502 9410
1/31/2001 10810 11160 11160 10248
4/30/2001 9685 9985 9985 8948
7/31/2001 9285 9554 9554 8501
10/31/2001 8188 8419 8409 7626
1/31/2002 9407 9653 9645 9298
4/30/2002 9969 10225 10208 9941
7/31/2002 9092 9311 9294 8994
10/31/2002 8130 8307 8289 8601
1/31/2003 8339 8508 8490 8680
4/30/2003 8063 8216 8199 8722
7/31/2003 9712 9883 9847 10275
10/31/2003 $ 11516 $ 11594 $ 11654 $ 12010 Source: Lipper, Inc.
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*Index performance is for the period 10/31/97-10/31/03
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's share classes will differ due to different sales
charge structures and class expenses. For fund performance calculations and
indexes used in this report, please see the inside front cover. Performance
shown in the chart and table does not reflect deduction of taxes a shareholder
would pay on fund distributions or sale of fund shares. Performance of the
indexes does not reflect the effects of taxes.
Results for B shares are calculated as if a hypothetical shareholder had
liquidated his entire investment in the fund at the close of the reporting
period and paid the applicable contingent deferred sales charges.
This chart uses a logarithmic scale, which means the price scale (vertical
axis) is structured so that a given distance always represents the same percent
change in price, rather than the same absolute change in price. For example, the
distance from one to 10 is the same as the distance from 10 to 100 on a
logarithmic chart, but the latter distance is 10 times greater on a linear
chart. A logarithmic scale better illustrates performance in the fund's early
years before reinvested distributions and compounding create the potential for
the original investment to grow to very large numbers.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
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FUND VS. INDEX AVERAGE ANNUAL TOTAL RETURNS In addition to fund returns as of the
Total returns 10/31/02-10/31/03, As of 10/31/03, including sales charges close of the fiscal year, industry
excluding sales charges regulations require us to provide
CLASS A SHARES average annual total returns (including
Class A Shares 41.62% Inception(11/3/97) 2.38% sales charges) for periods ended
9/30/03, the most recent calendar
Class B Shares 40.75 5 Years 8.40 quarter-end, which were as follows.
Class C Shares 40.61 1 Year 33.78
MSCI All Country (AC) Asia Pacific
Free ex-Japan Index 38.75 CLASS B SHARES AVERAGE ANNUAL TOTAL RETURNS
Inception (11/3/97) 2.50% As of 9/30/03, including sales charges
5 Years 8.63
1 Year 35.75 CLASS A SHARES
Inception(11/3/97) 1.07%
CLASS C SHARES 5 Years 9.22
Inception (11/3/97) 2.59% 1 Year 25.08
5 Years 8.90
1 Year 39.61 CLASS B SHARES
Inception (11/3/97) 1.20%
5 Years 9.44
1 Year 26.62
CLASS C SHARES
Inception (11/3/97) 1.29%
5 Years 9.67
1 Year 30.46
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4
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2003
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<Caption>
MARKET
SHARES VALUE
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FOREIGN STOCKS & OTHER EQUITY
INTERESTS-93.00%
AUSTRALIA-11.70%
Amcor Ltd. (Paper Packaging) 174,500 $ 1,049,770
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BHP Billiton Ltd. (Diversified Metals &
Mining) 305,700 2,535,730
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BHP Steel Ltd. (Steel) 286,940 1,100,703
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Boral Ltd. (Construction Materials) 240,200 935,009
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Coca-Cola Amatil Ltd. (Soft Drinks) 80,000 333,492
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Cochlear Ltd. (Health Care Equipment) 29,300 653,218
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Computershare Ltd. (Data Processing Services) 519,200 1,315,520
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Foodland Associated Ltd. (Food Retail) 40,576 549,943
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Promina Group Ltd. (Property & Casualty
Insurance) (Acquired 05/12/03; Cost
$125,108)(a) 107,700 253,066
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Ramsay Health Care Ltd. (Health Care
Facilities) 423,700 1,289,457
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St. George Bank Ltd. (Diversified Banks) 53,100 785,454
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Toll Holdings Ltd. (Trucking) 350,100 2,071,468
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Wesfarmers Ltd. (Industrial Conglomerates) 48,200 989,293
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WMC Resources Ltd. (Diversified Metals &
Mining)(b) 220,000 797,210
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Woolworths Ltd. (Food Retail) 78,500 617,809
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15,277,142
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BERMUDA-3.51%
Esprit Holdings Ltd. (Apparel Retail) 691,000 2,171,165
- ------------------------------------------------------------------------
Li & Fung Ltd. (Distributors) 1,434,000 2,409,820
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4,580,985
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CAYMAN ISLANDS-4.19%
ASM Pacific Technology Ltd. (Semiconductor
Equipment) 634,000 2,371,703
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Global Bio-chem Technology Group Co. Ltd.
(Biotechnology) 3,620,000 1,841,326
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Xinao Gas Holdings Ltd. (Gas Utilities)(b) 2,332,000 1,253,747
========================================================================
5,466,776
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CHINA-4.78%
Anhui Conch Cement Co. Ltd.-Class H
(Construction Materials) 442,000 503,722
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China Petroleum and Chemical Corp. (Sinopec)-
Class H (Integrated Oil & Gas) 4,994,000 1,655,964
- ------------------------------------------------------------------------
China Shipping Development Co. Ltd.-Class H
(Marine) 874,000 573,993
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Lianhua Supermarket Holdings Ltd.-Class H
(Food Retail)(b) 1,027,000 1,005,099
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Tong Ren Tang Technologies Co. Ltd-Class H
(Pharmaceuticals) 274,000 525,729
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</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
CHINA-(CONTINUED)
Travelsky Technology Ltd.-Class H (Data
Processing & Outsourced Services) (Acquired
02/01/01-06/13/03; Cost $464,016)(a) 750,000 $ 705,032
- ------------------------------------------------------------------------
Weiqiao Textile Co. Ltd.-Class H (Textiles)
(Acquired 09/19/03-09/24/03; Cost
$1,259,195)(a)(b) 1,087,100 1,273,902
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6,243,441
========================================================================
HONG KONG-12.57%
Cathay Pacific Airways Ltd. (Airlines) 924,000 1,766,947
- ------------------------------------------------------------------------
Cheung Kong (Holdings) Ltd. (Real Estate
Management & Development) 126,000 1,050,595
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China Merchants Holdings International Co.
Ltd. (Industrial Conglomerates) 1,116,000 1,508,963
- ------------------------------------------------------------------------
CNOOC Ltd.-ADR (Oil & Gas Exploration &
Production) 20,600 775,590
- ------------------------------------------------------------------------
COFCO International Ltd. (Packaged Foods &
Meats) 1,913,000 1,182,446
- ------------------------------------------------------------------------
Dah Sing Financial Group (Diversified Banks) 415,600 2,903,356
- ------------------------------------------------------------------------
Denway Motors Ltd. (Automobile Manufacturers) 796,000 656,021
- ------------------------------------------------------------------------
Hutchison Whampoa Ltd. (Industrial
Conglomerates) 168,000 1,303,441
- ------------------------------------------------------------------------
Lee & Man Paper Manufacturing Ltd. (Metal &
Glass Containers) (Acquired
09/22/03-09/26/03; Cost $738,776)(a)(b) 1,359,800 1,006,857
- ------------------------------------------------------------------------
Sun Hung Kai Properties Ltd. (Real Estate
Management & Development) 99,000 838,216
- ------------------------------------------------------------------------
Techtronic Industries Co. Ltd. (Household
Appliances) (Acquired 07/26/02-08/09/02;
Cost $688,550)(a) 894,000 2,463,635
- ------------------------------------------------------------------------
Wing Hang Bank Ltd. (Diversified Banks)(b) 154,000 949,907
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16,405,974
========================================================================
INDIA-9.38%
Bajaj Auto Ltd. (Motorcycle Manufacturers) 42,000 848,202
- ------------------------------------------------------------------------
Bharat Forge Ltd. (Industrial Machinery) 53,300 696,475
- ------------------------------------------------------------------------
Dr. Reddy's Laboratories Ltd.
(Pharmaceuticals) 55,500 1,463,672
- ------------------------------------------------------------------------
HDFC Bank Ltd. (Diversified Banks) 202,400 1,412,825
- ------------------------------------------------------------------------
HDFC Bank Ltd.-ADR (Diversified Banks) 17,500 453,075
- ------------------------------------------------------------------------
Hindustan Lever Ltd. (Household Products) 179,636 692,066
- ------------------------------------------------------------------------
Housing Development Finance Corp. Ltd.
(Thrifts & Mortgage Finance) 104,300 1,196,504
- ------------------------------------------------------------------------
Infosys Technologies Ltd. (IT Consulting &
Other Services) 20,682 2,163,784
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Ranbaxy Laboratories Ltd. (Pharmaceuticals) 100,560 2,181,500
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</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
INDIA-(CONTINUED)
Tata Motors Ltd. (Construction, Farm
Machinery & Heavy Trucks)(b) 138,000 $ 1,140,357
========================================================================
12,248,460
========================================================================
INDONESIA-0.95%
PT Lippo Bank Tbk (Diversified Banks)(b) 1,181,296 64,650
- ------------------------------------------------------------------------
PT Telekomunikasi Indonesia (Integrated
Telecommunication Services) 1,671,000 1,180,015
========================================================================
1,244,665
========================================================================
NETHERLANDS-0.72%
Hardie (James) Industries N.V. (Construction
Materials) 185,000 938,795
========================================================================
PHILIPPINES-1.57%
Philippine Long Distance Telephone Co.
(Integrated Telecommunication Services)(b) 98,000 1,353,249
- ------------------------------------------------------------------------
SM Prime Holdings (Real Estate Management &
Development) 5,333,900 693,214
========================================================================
2,046,463
========================================================================
SINGAPORE-5.99%
Keppel Corp. Ltd. (Industrial Conglomerates) 604,000 2,065,996
- ------------------------------------------------------------------------
Neptune Orient Lines Ltd. (Marine)(b) 704,000 898,465
- ------------------------------------------------------------------------
SembCorp Logistics Ltd. (Marine Ports &
Services) 1,392,000 1,344,386
- ------------------------------------------------------------------------
Singapore Airlines Ltd. (Airlines)(b) 116,000 806,899
- ------------------------------------------------------------------------
United Overseas Bank Ltd. (Diversified Banks) 178,000 1,391,664
- ------------------------------------------------------------------------
Venture Corp. Ltd. (Electronic Manufacturing
Services) 121,000 1,314,688
========================================================================
7,822,098
========================================================================
SOUTH KOREA-18.14%
Cheil Communications Inc. (Advertising) 11,240 1,377,102
- ------------------------------------------------------------------------
CJ Corp. (Packaged Foods & Meats) 43,090 2,151,769
- ------------------------------------------------------------------------
Daewoo Shipbuilding & Marine Engineering Co.,
Ltd. (Construction, Farm Machinery & Heavy
Trucks)(b) 154,000 2,068,948
- ------------------------------------------------------------------------
Hana Bank (Diversified Banks) 204,600 3,561,267
- ------------------------------------------------------------------------
Hankook Tire Co. Ltd. (Tires & Rubber) 185,400 1,279,863
- ------------------------------------------------------------------------
Hyundai Department Store Co., Ltd.
(Department Stores) 56,000 1,417,153
- ------------------------------------------------------------------------
Hyundai Motor Co. Ltd. (Automobile
Manufacturers) 20,200 673,333
- ------------------------------------------------------------------------
Kook Soon Dang Brewery Co., Ltd. (Packaged
Foods & Meats) 104,872 1,949,458
- ------------------------------------------------------------------------
Kookmin Bank (Diversified Banks) 50,700 1,850,646
- ------------------------------------------------------------------------
LG Chem Ltd. (Commodity Chemicals) 15,830 635,340
- ------------------------------------------------------------------------
POSCO-ADR (Steel) 38,500 1,115,730
- ------------------------------------------------------------------------
Samsung Electronics Co., Ltd. (Electronic
Equipment Manufacturers) 11,320 4,495,480
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
SOUTH KOREA-(CONTINUED)
Shinsegae Co., Ltd. (Department Stores) 5,500 $ 1,103,718
========================================================================
23,679,807
========================================================================
TAIWAN-15.86%
Ambit Microsystems Corp. (Computer Storage &
Peripherals) 567,500 1,555,482
- ------------------------------------------------------------------------
Asia Optical Co., Inc. (Photographic
Products) 316,000 2,086,177
- ------------------------------------------------------------------------
AU Optronics Corp. (Electronic Equipment
Manufacturers) 637,000 859,847
- ------------------------------------------------------------------------
AU Optronics Corp.-ADR (Electronic Equipment
Manufacturers) 31,500 427,770
- ------------------------------------------------------------------------
Chinatrust Financial Holding Co. Ltd.
(Diversified Banks) 548,000 570,127
- ------------------------------------------------------------------------
Compal Electronics Inc. (Computer Hardware) 794,250 1,205,537
- ------------------------------------------------------------------------
Hon Hai Precision Industry Co., Ltd.
(Electronic Equipment Manufacturers) 348,240 1,560,050
- ------------------------------------------------------------------------
Ichia Technologies, Inc. (Computer Storage &
Peripherals)(b) 480,000 877,100
- ------------------------------------------------------------------------
Largan Precision Co., Ltd. (Photographic
Products) 58,100 621,583
- ------------------------------------------------------------------------
MediaTek Inc. (Semiconductors) 166,050 1,712,865
- ------------------------------------------------------------------------
Merry Electronics Co., Ltd. (Electronic
Equipment Manufacturers) 302,000 489,537
- ------------------------------------------------------------------------
Novatek Microelectronics Corp., Ltd.
(Semiconductors) 310,500 979,178
- ------------------------------------------------------------------------
Oriental Union Chemical Corp. (Commodity
Chemicals) 892,000 1,156,734
- ------------------------------------------------------------------------
Quanta Computers Inc. (Computer Hardware) 508,255 1,385,605
- ------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.
(Semiconductors)(b) 1,842,307 3,637,918
- ------------------------------------------------------------------------
Wan Hai Lines Ltd. (Marine) 1,030,000 1,007,840
- ------------------------------------------------------------------------
Yang Ming Marine Transport (Marine) 577,000 578,190
========================================================================
20,711,540
========================================================================
THAILAND-3.64%
Kasikornbank PCL (Diversified Banks)(b) 1,146,000 1,276,521
- ------------------------------------------------------------------------
Land & Houses PCL (Homebuilding) 2,072,000 700,175
- ------------------------------------------------------------------------
Siam Cement PCL (The) (Construction
Materials) 143,000 808,961
- ------------------------------------------------------------------------
Siam Commercial Bank PCL (Diversified
Banks)(b) 927,000 957,165
- ------------------------------------------------------------------------
Thai Olefins PCL (Diversified
Chemicals)(b)(c) 1,330,000 1,008,736
========================================================================
4,751,558
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $84,197,745) 121,417,704
========================================================================
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT
BONDS & NOTES-0.00%
INDIA-0.00%
Hindustan Lever Ltd. (Household Products),
Sec. Deb., 9.00%, 01/01/05 (Cost
$0)(d)(e) INR $ 512,800 727
========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
========================================================================
MONEY MARKET FUNDS-3.10%
STIC Liquid Assets Portfolio(f) 2,018,963 $ 2,018,963
- ------------------------------------------------------------------------
STIC Prime Portfolio(f) 2,018,963 2,018,963
========================================================================
Total Money Market Funds (Cost
$4,037,926) 4,037,926
========================================================================
TOTAL INVESTMENTS-96.10% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $88,235,671) 125,456,357
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-5.33%
STIC Liquid Assets Portfolio(f)(g) 3,479,857 3,479,857
- ------------------------------------------------------------------------
STIC Prime Portfolio(f)(g) 3,479,856 3,479,856
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $6,959,713) 6,959,713
========================================================================
TOTAL INVESTMENTS-101.43% (Cost $95,195,384) 132,416,070
========================================================================
OTHER ASSETS LESS LIABILITIES-(1.43%) (1,862,080)
========================================================================
NET ASSETS-100.00% $130,553,990
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Deb. - Debentures
INR - Indian Rupee
Sec. - Secured
</Table>
Notes to Schedule of Investments:
(a) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction). The security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 10/31/03 was $5,702,492,
which represented 4.37% of the Fund's net assets . Unless otherwise
indicated, these securities are not considered to be illiquid.
(b) Non-income producing security.
(c) Security fair valued in accordance with the procedures established by the
Board of Directors.
(d) Foreign denominated security. Par value is denominated in currency
indicated.
(e) Acquired as part of an arrangement for issue of bonus debentures.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
(g) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2003
<Table>
ASSETS:
Investments, at market value (cost
$84,197,745)* $121,418,431
- -----------------------------------------------------------
Investments in affiliated money market funds
(cost $10,997,639) 10,997,639
- -----------------------------------------------------------
Foreign currencies, at value (cost
$4,994,962) 4,984,405
- -----------------------------------------------------------
Cash 1,200,007
- -----------------------------------------------------------
Receivables for:
Investments sold 1,087,972
- -----------------------------------------------------------
Capital stock sold 1,556,439
- -----------------------------------------------------------
Dividends and interest 45,475
- -----------------------------------------------------------
Investment for deferred compensation plan 26,850
- -----------------------------------------------------------
Other assets 37,282
___________________________________________________________
===========================================================
Total assets 141,354,500
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 2,064,506
- -----------------------------------------------------------
Capital stock reacquired 1,425,110
- -----------------------------------------------------------
Deferred compensation plan 26,850
- -----------------------------------------------------------
Collateral upon return of securities loaned 6,959,713
- -----------------------------------------------------------
Accrued distribution fees 55,145
- -----------------------------------------------------------
Accrued directors' fees 3,072
- -----------------------------------------------------------
Accrued transfer agent fees 69,977
- -----------------------------------------------------------
Accrued operating expenses 196,137
===========================================================
Total liabilities 10,800,510
===========================================================
Net assets applicable to shares outstanding $130,553,990
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $165,932,574
- -----------------------------------------------------------
Undistributed net investment income (loss) (31,403)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and futures contracts (72,581,591)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 37,234,410
===========================================================
$130,553,990
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 97,191,762
___________________________________________________________
===========================================================
Class B $ 24,599,404
___________________________________________________________
===========================================================
Class C $ 8,762,824
___________________________________________________________
===========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 240,000,000
- -----------------------------------------------------------
Outstanding 8,049,332
___________________________________________________________
===========================================================
Class B:
Authorized 240,000,000
- -----------------------------------------------------------
Outstanding 2,113,430
___________________________________________________________
===========================================================
Class C:
Authorized 240,000,000
- -----------------------------------------------------------
Outstanding 755,464
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 12.07
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $12.07 / 94.50%) $ 12.77
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 11.64
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 11.60
___________________________________________________________
===========================================================
</Table>
* At October 31, 2003, securities with an aggregate market value of $5,698,851
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the year ended October 31, 2003
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $218,980) $ 2,180,473
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 69,535
- -------------------------------------------------------------------------
Securities lending 10,836
=========================================================================
Total investment income 2,260,844
=========================================================================
EXPENSES:
Advisory fees 999,693
- -------------------------------------------------------------------------
Administrative services fees 50,000
- -------------------------------------------------------------------------
Custodian fees 228,701
- -------------------------------------------------------------------------
Distribution fees:
Class A 276,977
- -------------------------------------------------------------------------
Class B 199,152
- -------------------------------------------------------------------------
Class C 61,793
- -------------------------------------------------------------------------
Interest 10,506
- -------------------------------------------------------------------------
Transfer agent fees 658,980
- -------------------------------------------------------------------------
Directors' fees 10,428
- -------------------------------------------------------------------------
Other 214,070
=========================================================================
Total expenses 2,710,300
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (164,537)
=========================================================================
Net expenses 2,545,763
=========================================================================
Net investment income (loss) (284,919)
=========================================================================
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
FUTURES CONTRACTS:
Net realized gain from:
Investment securities (net of tax on the sale of foreign
investments of $111,412-Note 1F) 12,454,577
- -------------------------------------------------------------------------
Foreign currencies 79,177
- -------------------------------------------------------------------------
Futures contracts 14,714
=========================================================================
12,548,468
=========================================================================
Change in net unrealized appreciation of:
Investment securities (net of change in estimated tax on
foreign investments held of $88,167-Note 1F) 31,321,936
- -------------------------------------------------------------------------
Foreign currencies 39,026
=========================================================================
31,360,962
=========================================================================
Net gain from investment securities, foreign currencies and
futures contracts 43,909,430
=========================================================================
Net increase in net assets resulting from operations $43,624,511
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2003 and 2002
<Table>
<Caption>
2003 2002
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (284,919) $ (644,688)
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts 12,548,468 (1,874,392)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 31,360,962 6,142,476
=========================================================================================
Net increase in net assets resulting from operations 43,624,511 3,623,396
=========================================================================================
Share transactions-net:
Class A 549,387 (1,562,080)
- -----------------------------------------------------------------------------------------
Class B (2,436,802) (5,905,946)
- -----------------------------------------------------------------------------------------
Class C 75,797 686,025
=========================================================================================
Net increase (decrease) in net assets resulting from
share transactions (1,811,618) (6,782,001)
=========================================================================================
Net increase (decrease) in net assets 41,812,893 (3,158,605)
=========================================================================================
NET ASSETS:
Beginning of year 88,741,097 91,899,702
=========================================================================================
End of year (including undistributed net investment income
(loss) of $(31,403) and $(26,192) for 2003 and 2002,
respectively) $130,553,990 $88,741,097
_________________________________________________________________________________________
=========================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Asia Pacific Growth Fund, (the "Fund") is a series portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of five
separate portfolios. The Fund currently offers multiple classes of shares.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Effective November 25, 2003, the
Fund redomesticated as a series portfolio of a newly formed Delaware statutory
trust, AIM International Mutual Funds.
The Fund's investment objective is long-term growth of capital. Companies
are listed in the Schedule of Investments based on the country in which they are
organized.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued on the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Securities for which market prices
are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Market trends, movement in exchange traded funds
and ADRs, and the bid/ask quotes of brokers and information providers may
be reviewed in the course of making a good faith determination of a
security's fair value. Short-term obligations having 60 days or less to
maturity and commercial paper are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the NYSE. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of the close of the respective
markets. Occasionally, events affecting the values of such foreign
securities may occur between the times at which the particular foreign
market closes and the close of the customary trading session of the NYSE
which would not ordinarily be reflected in the computation of the Fund's
net asset value. If a development/event is so significant that there is a
reasonably high degree of certainty as to both the effect and the degree of
effect that the development/event has actually caused that closing price to
no longer reflect actual value, the closing prices, as determined at the
close of the applicable foreign market, may be adjusted to reflect the fair
value of the affected foreign securities as of the close of the NYSE as
determined in good faith by or under the supervision of the Board of
Directors.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M 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
gain) which is distributed to shareholders. Therefore, no provision for
federal income taxes is recorded in the financial statements. Any capital
loss carryforwards listed are reduced for limitations, if any, to the
extent required by the Internal Revenue Code.
F-7
E. REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements.
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. Eligible securities for collateral
are U.S. Government Securities, U.S. Government Agency Securities and/or
Investment Grade Debt Securities. Collateral consisting of U.S. Government
Securities and U.S. Government Agency Securities is marked to market daily
to ensure its market value is at least 102% of the sales price of the
repurchase agreement. Collateral consisting of Investment Grade Debt
Securities is marked to market daily to ensure its market value is at least
105% of the sales price of the repurchase agreement. The investments in
some repurchase agreements are through participation with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates ("Joint repurchase
agreements"). If the seller of a repurchase agreement fails to repurchase
the security in accordance with the terms of the agreement, the Fund might
incur expenses in enforcing its rights, and could experience losses,
including a decline in the value of the underlying security and loss of
income.
F. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities (net of foreign taxes withheld on disposition) and income items
denominated in foreign currencies are translated into U.S. dollar amounts
on the respective dates of such transactions. The Fund does not separately
account for the portion of the results of operations resulting from changes
in foreign exchange rates on investments and the fluctuations arising from
changes in market prices of securities held. The combined results of
changes in foreign exchange rates and the fluctuation of market prices on
investments (net of estimated foreign tax withholding) are included with
the net realized and unrealized gain or loss from investments in the
Statement of Operations. Reported net realized foreign currency gains or
losses arise from sales of foreign currencies, currency gains or losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
currency gains and losses arise from changes in the fair values of assets
and liabilities, other than investments in securities at fiscal period end,
resulting from changes in exchange rates.
G. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
H. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks also include to
varying degrees, the risk of loss in excess of the variation margin
disclosed in the Statement of Assets and Liabilities.
I. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first
$500 million of the Fund's average daily net assets, plus 0.90% of the Fund's
average daily net assets in excess of $500 million. AIM has voluntarily agreed
to waive fees and/or reimburse expenses (excluding Rule 12b-1 fees, interest,
taxes, fund merger and reorganization, extraordinary items, including other
items designed as such by the Board of Directors and increases in expenses due
to expense offset arrangements, if any) for Class A, Class B and Class C shares
to the extent necessary to limit the total annual fund operating expenses of
Class A shares to 2.25%. Voluntary waivers or reimbursements may be modified or
discontinued at any time without further notice to investors. Further, AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in affiliated money market
funds with cash collateral from securities loaned by the Fund). For the year
ended October 31, 2003, AIM waived fees of $157,515. Under a prior agreement to
limit the aggregate costs of certain shareholder services provided by third
party administrators, AIM reimbursed fees of $4,765 for Class A, Class B and
Class C shares based on the relative net assets of those classes.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2003, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AISI"), formerly known as AIM Fund Services,
Inc., a fee for providing transfer agency and shareholder services to the Fund.
During the year ended October 31, 2003, AISI retained $394,369 for such
services.
F-8
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A,
Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to the
Plans, pays AIM Distributors compensation at the annual rate of 0.35% of the
Fund's average daily net assets of Class A shares and 1.00% of the average daily
net assets of Class B and Class C shares. Of these amounts, AIM Distributors may
pay a service fee up to 0.25% of the average daily net assets of the Class A,
Class B or Class C shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers who purchase
and own shares of such classes. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. NASD Rules also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by any class of shares of the Fund. Pursuant to the Plans, for the year ended
October 31, 2003, the Class A, Class B and Class C shares paid $276,977,
$199,152, and $61,793, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the year
ended October 31, 2003, AIM Distributors retained $9,282 in front-end sales
commissions from the sale of Class A shares and $118,133, $0 and $17,361 from
Class A, Class B shares and Class C shares, respectively, for CDSC imposed upon
redemptions by shareholders.
Certain officers and directors of the Company are officers and directors of
AIM, AISI and/or AIM Distributors.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
For the year ended October 31, 2003, the Fund received reductions in transfer
agency fees from AISI (an affiliate of AIM) of $2,257 under an expense offset
arrangement which resulted in a reduction of the Fund's total expenses of
$2,257.
NOTE 4--DIRECTORS' FEES
Directors' fees represent remuneration paid to each Director of the Company who
is not an "interested person" of AIM. Directors have the option to defer
compensation payable by the Company. The Directors deferring compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested.
Current Directors are eligible to participate in a retirement plan that
provides for benefits to be paid upon retirement to Directors over a period of
time based on the number of years of service. Certain former Directors also
participate in a retirement plan and receive benefits under such plan.
During the year ended October 31, 2003, the Fund paid legal fees of $2,242
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Directors. A member of that firm is a Director of the Company.
NOTE 5--BORROWINGS
The Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund loan will be
made under this facility only if the loan rate (an average of the rate available
on bank loans and the rate available on investments in overnight repurchase
agreements) is favorable to both the lending fund and the borrowing fund. Under
certain circumstances, a loan will be secured by collateral. To the extent that
the loan is required to be secured by collateral, the collateral is marked to
market daily to ensure that the market value is at least 102% of the outstanding
principal value of the loan.
Effective June 26, 2003, the Fund became a participant in an uncommitted
unsecured revolving line of credit facility with State Street Bank and Trust
Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000 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 can borrow on a first
come, first served basis. Principal on each loan outstanding shall bear interest
at the bid rate quoted by SSB at the time of the request for the loan.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could 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 were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the year ended October 31, 2003, the Fund did not borrow or lend
under the interfund lending facility or borrow under either the uncommitted
unsecured revolving line of credit facility or the committed line of credit
facility.
Additionally the Fund is permitted to carry a negative or overdrawn balance
in its account with the custodian bank. To compensate the custodian bank for
such overdrafts, the overdrawn Fund may either (i) leave funds in the account so
the custodian can be compensated by earning the additional interest; or (ii)
compensate by paying the custodian bank. In either case, the custodian bank will
be compensated an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value of the loaned securities determined daily. Such collateral will be
cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, following the
valuation
F-9
date of the securities loaned. Therefore, the value of the collateral held may
be temporarily less than the value of the securities on loan.
At October 31, 2003, securities with an aggregate value of $5,698,851 were
on loan to brokers. The loans were secured by cash collateral of $6,959,713
received by the Fund and subsequently invested in affiliated money market funds.
For the year ended October 31, 2003, the Fund received fees of $10,836 for
securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid
during the years ended October 31, 2003 and 2002.
Tax Components of Net Assets:
As of October 31, 2003, the components of net assets on a tax basis were as
follows:
<Table>
Unrealized appreciation -- investments 36,214,209
- -----------------------------------------------------------
Temporary book/tax differences (31,403)
- -----------------------------------------------------------
Capital loss carryforward (71,561,390)
- -----------------------------------------------------------
Capital (par value and additional paid-in) 165,932,574
===========================================================
Total net assets $130,553,990
___________________________________________________________
===========================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation is due
to differences in the timing of recognition of gains and losses on investments
for tax and book purposes. The Fund's unrealized appreciation difference is
attributable primarily to the tax deferral of losses on wash sales. The
tax-basis unrealized appreciation on investments amount includes appreciation on
foreign currencies of $13,724.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the deferral of director compensation and
director retirement plan expenses.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2005 $42,625,901
- ----------------------------------------------------------
October 31, 2009 27,317,937
- ----------------------------------------------------------
October 31, 2010 1,617,552
==========================================================
Total capital loss carryforward $71,561,390
__________________________________________________________
==========================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
October 31, 2003 was $96,700,298 and $102,655,872, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
- -----------------------------------------------------------
Aggregate unrealized appreciation of
investment securities $36,491,625
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (291,140)
===========================================================
Net unrealized appreciation of investment
securities $36,200,485
___________________________________________________________
===========================================================
Cost of investments for tax purposes is
$96,215,585.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of reclassification of net operating losses and foreign
currency transactions on October 31, 2003, undistributed net investment income
(loss) was increased by $279,708, undistributed net realized gains increased by
$28,917 and capital stock decreased by $308,625. This reclassification had no
effect on net assets of the Fund.
F-10
NOTE 10--CAPITAL STOCK INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with CDSC. Under some
circumstances, Class A shares are subject to CDSC. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
2003 2002
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 52,026,302 $ 482,251,871 36,470,984 $ 349,896,882
- -----------------------------------------------------------------------------------------------------------------------
Class B 1,753,073 15,942,378 2,963,386 28,352,153
- -----------------------------------------------------------------------------------------------------------------------
Class C 8,347,302 74,077,447 10,574,444 98,792,151
=======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 191,930 1,805,340 369,580 3,681,223
- -----------------------------------------------------------------------------------------------------------------------
Class B (198,534) (1,805,340) (381,540) (3,681,223)
=======================================================================================================================
Reacquired:
Class A (51,529,825) (483,507,824) (36,664,943) (355,140,185)
- -----------------------------------------------------------------------------------------------------------------------
Class B (1,848,491) (16,573,840) (3,215,765) (30,576,876)
- -----------------------------------------------------------------------------------------------------------------------
Class C (8,321,179) (74,001,650) (10,405,450) (98,106,126)
=======================================================================================================================
420,578 $ (1,811,618) (289,304) $ (6,782,001)
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.53 $ 8.59 $10.70 $ 10.76 $ 7.69
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.04)(a) (0.01)(a) (0.07)(a) (0.03)(a)
- ----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 3.55 (0.02) (2.06) 0.01 3.14
============================================================================================================================
Total from investment operations 3.54 (0.06) (2.07) (0.06) 3.11
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.04)
- ----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.04) -- --
============================================================================================================================
Net asset value, end of period $ 12.07 $ 8.53 $ 8.59 $ 10.70 $ 10.76
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) 41.50% (0.70)% (19.46)% (0.56)% 40.66%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $97,192 $62,806 $61,729 $93,755 $25,420
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.26%(c) 2.25% 2.02% 1.92% 1.92%
- ----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.41%(c) 2.49% 2.37% 2.06% 2.72%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.11)%(c) (0.41)% (0.06)% (0.57)% (0.50)%
============================================================================================================================
Portfolio turnover rate 100% 114% 73% 64% 142%
____________________________________________________________________________________________________________________________
============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratio are based on average daily net assets of $79,136,415.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.27 $ 8.38 $10.50 $ 10.65 $ 7.63
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.10)(a) (0.07)(a) (0.17)(a) (0.13)(a)
- ----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 3.44 (0.01) (2.01) 0.02 3.16
============================================================================================================================
Total from investment operations 3.37 (0.11) (2.08) (0.15) 3.03
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.01)
- ----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.04) -- --
============================================================================================================================
Net asset value, end of period $ 11.64 $ 8.27 $ 8.38 $ 10.50 $ 10.65
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) 40.75% (1.31)% (19.92)% (1.41)% 39.76%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,599 $19,916 $25,479 $39,852 $12,070
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.91%(c) 2.90% 2.67% 2.67% 2.79%
- ----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.06%(c) 3.14% 3.02% 2.76% 3.59%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.76)%(c) (1.06)% (0.72)% (1.32)% (1.37)%
============================================================================================================================
Portfolio turnover rate 100% 114% 73% 64% 142%
____________________________________________________________________________________________________________________________
============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratio are based on average daily net assets of $19,915,168.
F-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
-------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.25 $ 8.37 $ 10.49 $10.63 $ 7.61
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.10)(a) (0.07)(a) (0.17)(a) (0.13)(a)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 3.42 (0.02) (2.01) 0.03 3.16
===========================================================================================================================
Total from investment operations 3.35 (0.12) (2.08) (0.14) 3.03
===========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.01)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.04) -- --
===========================================================================================================================
Net asset value, end of period $11.60 $ 8.25 $ 8.37 $10.49 $10.63
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 40.61% (1.43)% (19.94)% (1.32)% 39.86%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,763 $6,019 $ 4,692 $6,797 $5,008
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.91%(c) 2.90% 2.67% 2.67% 2.79%
- ---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.06%(c) 3.14% 3.02% 2.76% 3.59%
===========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.76)%(c) (1.06)% (0.72)% (1.32)% (1.37)%
===========================================================================================================================
Portfolio turnover rate 100% 114% 73% 64% 142%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratio are based on average daily net assets of $6,179,255.
NOTE 12--SUBSEQUENT EVENTS
Your Fund's investment advisor, A I M Advisors, Inc. ("AIM") is an indirect
wholly owned subsidiary of AMVESCAP PLC ("AMVESCAP"). Another indirect wholly
owned subsidiary of AMVESCAP, INVESCO Funds Group, Inc. ("INVESCO"), was, until
recently, the investment advisor to the INVESCO Funds.
On December 2, 2003, each of the Securities and Exchange Commission ("SEC")
and the Office of the Attorney General of the State of New York ("NYAG") filed
civil proceedings against INVESCO and Raymond R. Cunningham, in his capacity as
the Chief Executive Officer of INVESCO. Mr. Cunningham currently holds the
positions of Chief Operating Officer and Senior Vice President of A I M
Management Group, Inc., the parent company of AIM, and he also holds the
position of Senior Vice President with AIM. In addition, on December 2, 2003,
the State of Colorado filed civil proceedings against INVESCO. Neither your Fund
nor any of the funds in the AIM Family of Funds(R), which includes the INVESCO
Funds (the "Funds") has been named as a defendant in any of these proceedings.
The SEC proceeding alleges that INVESCO failed to disclose in the INVESCO
Funds' prospectuses and to the INVESCO Funds' independent directors that INVESCO
had entered into certain arrangements permitting market timing of the INVESCO
Funds. The SEC is seeking injunctions, including permanent injunctions from
serving as an investment advisor, officer or director of an investment company;
an accounting of all market timing as well as certain fees and compensation
received; disgorgement; civil monetary penalties; and other relief.
The NYAG proceeding is also based on the circumstances described above. The
NYAG is seeking injunctions, including permanent injunctions from directly or
indirectly selling or distributing shares of mutual funds; disgorgement of all
profits obtained, including fees collected, and payment of all restitution and
damages caused, directly or indirectly from the alleged illegal activities;
civil monetary penalties; and other relief.
The Colorado proceeding is also based on the circumstances described above.
The State of Colorado is seeking injunctions; restitution, disgorgement and
other equitable relief; civil monetary penalties; and other relief.
If INVESCO is unsuccessful in its defense of these proceedings, it could be
barred from serving as an investment advisor for any investment company
registered under the Investment Company Act of 1940, as amended (a "registered
investment company"). Similarly, if Mr. Cunningham is unsuccessful in his
defense of these proceedings, he could be barred from serving as an officer or
director of any registered investment company. Such results could also affect
the ability of AIM, or any other investment advisor directly or indirectly owned
by AMVESCAP, from serving as an investment advisor to any registered investment
company, including your Fund. Your Fund has been informed by AIM that, if either
of these results occurs, AIM will seek exemptive relief from the SEC to permit
it to continue to serve as your Fund's investment advisor. There can be no
assurance that such exemptive relief will be granted.
AIM has received inquiries from the SEC, the NASD, Inc., the NYAG and the
Secretary of the Commonwealth of Massachusetts with respect to market timing,
late trading, fair value pricing and other similar issues and AIM has been
providing full cooperation with respect to these inquiries.
F-13
NOTE 12--SUBSEQUENT EVENTS (CONTINUED)
In addition to the complaints described above, multiple lawsuits, including
purported class action and shareholder derivative suits, have been filed against
certain Funds, INVESCO, AIM, AMVESCAP and certain related parties, primarily
based upon the allegations in the complaints described above, but also regarding
the funds' fair valuation pricing methodology. Such lawsuits allege a variety of
theories for recovery including, but not limited to: (i) violation of various
provisions of the Federal securities laws; (ii) breach of fiduciary duty; and
(iii) breach of contract. The lawsuits have been filed in both Federal and state
courts and seek such remedies as compensatory damages; restitution; rescission;
accounting for wrongfully gotten gains, profits and compensation; injunctive
relief; disgorgement; equitable relief; interest and the payment of attorneys'
and experts' fees. Additional lawsuits arising out of these circumstances and
presenting similar allegations and requests for relief may be filed against the
Funds, INVESCO, AIM, AMVESCAP and related parties in the future.
As a result of these developments, investors in the Funds might react by
redeeming their investments. This might require the Funds to sell investments to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the Funds.
At the present time, management of AIM and the Fund is unable to estimate the
impact, if any, that the outcome of these matters described above may have on
the Fund or AIM's financial condition.
F-14
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors/Trustees and Shareholders of AIM Asia Pacific Growth
Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the AIM Asia Pacific Growth Fund
(one of the funds constituting AIM International Funds, Inc., now known as AIM
International Mutual Funds; hereafter referred to as the "Fund") at October 31,
2003, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the three years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The financial
highlights for each of the periods ended on or before October 31, 2000 were
audited by other independent accountants whose report dated December 6, 2000,
expressed an unqualified opinion on the financial highlights.
PRICEWATERHOUSECOOPERS LLP
December 16, 2003
Houston, Texas
F-15
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM International Funds, Inc., a Maryland
corporation, was held on October 21, 2003. The meeting was adjourned and
reconvened on October 28, 2003, on November 4, 2003, on November 11, 2003, on
November 17, 2003 and reconvened on November 21, 2003. The meeting was held for
the following purposes:
(1)* To elect sixteen individuals to the Board, each of whom will serve until
his or her successor is elected and qualified: Bob R. Baker, Frank S.
Bayley, James T. Bunch, Bruce L. Crockett, Albert R. Dowden, Edward K.
Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Gerald J.
Lewis, Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley, Louis S.
Sklar, Larry Soll, Ph.D. and Mark H. Williamson.
(2)* To approve an Agreement and Plan of Reorganization which provides for the
redomestication of Company as a Delaware statutory trust and, in connection
therewith, the sale of all of Company's assets and the dissolution of
Company as a Maryland corporation.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHOLDING
DIRECTORS/MATTER VOTES FOR AUTHORITY
- ---------------------------------------------------------------------------------
(1)* Bob R. Baker................................. 162,211,196 3,444,279
Frank S. Bayley.............................. 162,236,962 3,418,513
James T. Bunch............................... 162,287,588 3,367,887
Bruce L. Crockett............................ 162,276,496 3,378,979
Albert R. Dowden............................. 162,251,386 3,404,089
Edward K. Dunn, Jr. ......................... 162,221,226 3,434,249
Jack M. Fields............................... 162,278,318 3,377,157
Carl Frischling.............................. 162,182,906 3,472,569
Robert H. Graham............................. 162,243,892 3,411,583
Gerald J. Lewis.............................. 162,147,868 3,507,607
Prema Mathai-Davis........................... 162,219,866 3,435,609
Lewis F. Pennock............................. 162,263,207 3,392,268
Ruth H. Quigley.............................. 162,163,064 3,492,411
Louis S. Sklar............................... 162,243,759 3,411,716
Larry Soll, Ph.D. ........................... 162,236,226 3,419,249
Mark H. Williamson........................... 162,238,962 3,416,513
</Table>
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 76,302,938 2,822,366 86,530,171**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on October 28, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 84,066,011 2,989,031 83,338,957**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 4, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 95,512,525 3,144,748 78,504,573**
</Table>
F-16
PROXY RESULTS (UNAUDITED) -- (CONTINUED)
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 11, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 109,217,698 3,531,752 71,913,039**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 17, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 116,710,545 3,761,148 69,451,190**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 21, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 137,239,949 4,617,039 51,798,672**
</Table>
* Proposal required approval by a combined vote of all the portfolios of AIM
International Funds, Inc.
** Includes Broker Non-Votes
F-17
OTHER INFORMATION
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- ------------------------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1991 Director and Chairman, A I M Management Group Inc. None
Trustee, Chairman and (financial services holding company); and Director and Vice
President Chairman, AMVESCAP PLC and Chairman of AMVESCAP PLC -- AIM
Division (parent of AIM and a global investment management
firm)
Formerly: President and Chief Executive Officer, A I M
Management Group Inc.; Director, Chairman and President,
A I M Advisors, Inc. (registered investment advisor); and
Director and Chairman, A I M Capital Management, Inc.
(registered investment advisor), A I M Distributors, Inc.
(registered broker dealer), AIM Investment Services, Inc.,
(registered transfer agent), and Fund Management Company
(registered broker dealer); and Chief Executive Officer,
AMVESCAP PLC -- Managed Products
- ------------------------------------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, A I M Director and Chairman,
Trustee and Executive Vice Management Group Inc. (financial services holding company); INVESCO Bond Funds,
President Director, Chairman and President, A I M Advisors, Inc. Inc., INVESCO
(registered investment advisor); Director, A I M Capital Combination Stock &
Management, Inc. (registered investment advisor) and A I M Bond Funds, Inc.,
Distributors, Inc. (registered broker dealer); Director and INVESCO Counselor
Chairman, AIM Investment Services, Inc. (registered transfer Series Funds, Inc.,
agent); and Fund Management Company (registered broker INVESCO International
dealer); and Chief Executive Officer, AMVESCAP PLC -- AIM Funds, Inc., INVESCO
Division (parent of AIM and a global investment management Manager Series Funds,
firm) Inc., INVESCO Money
Formerly: Director, Chairman, President and Chief Executive Market Funds, Inc.,
Officer, INVESCO Funds Group, Inc. and INVESCO Distributors, INVESCO Sector Funds,
Inc.; Chief Executive Officer, AMVESCAP PLC -- Managed Inc., INVESCO Stock
Products; Chairman and Chief Executive Officer of Funds, Inc., INVESCO
NationsBanc Advisors, Inc.; and Chairman of NationsBanc Treasurer's Series
Investments, Inc. Funds, Inc. and
INVESCO Variable
Investment Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker(3) -- 1936 2003 Consultant None
Trustee
Formerly: President and Chief Executive Officer, AMC Cancer
Research Center; and Chairman and Chief Executive Officer,
First Columbia Financial Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc.
Trustee (registered investment
company)
- ------------------------------------------------------------------------------------------------------------------------------------
James T. Bunch(3) -- 1942 2003 Co-President and Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director, Policy Studies,
Inc. and Van Gilder Insurance Corporation
Formerly: General Counsel and Director, Boettcher & Co.; and
Chairman and Managing Partner, law firm of Davis, Graham &
Stubbs
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates (technology ACE Limited (insurance
Trustee consulting company) company); and
Captaris, Inc.
(unified messaging
provider)
- ------------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director of a number of public and private business Cortland Trust, Inc.
Trustee corporations, including the Boss Group Ltd. (private (Chairman) (registered
investment and management) and Magellan Insurance Company investment company);
Formerly: Director, President and Chief Executive Officer, Annuity and Life Re
Volvo Group North America, Inc.; Senior Vice President, AB (Holdings), Ltd.
Volvo; and director of various affiliated Volvo Group (insurance company)
companies
- ------------------------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly: Chairman, Mercantile Mortgage Corp.; President and None
Trustee Chief Operating Officer, Mercantile-Safe Deposit & Trust
Co.; and President, Mercantile Bankshares Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Group, Inc. Administaff
Trustee (government affairs company) and Texana Timber LP
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Graham is considered an interested person of the Trust because he is a
director of AMVESCAP PLC, parent of the advisor to the Trust.
(2) Mr. Williamson is considered an interested person of the Trust because he is
an officer and a director of the advisor to, and a director of the principal
underwriter of, the Trust. Mr. Williamson became Executive Vice President of
the Trust on March 4, 2003.
(3) Elected trustee of the Trust on October 21, 2003.
Trustees and Officers (continued)
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
THE TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Cortland Trust, Inc.
Trustee (registered investment
company)
- ------------------------------------------------------------------------------------------------------------------------------------
Gerald J. Lewis(3) -- 1933 2003 Chairman, Lawsuit Resolution Services (San Diego, General Chemical
Trustee California) Group, Inc.,
Formerly: Associate Justice of the California Court of Wheelabrator
Appeals Technologies, Inc.
(waste management
company), Fisher
Scientific, Inc.,
Henley Manufacturing,
Inc. (laboratory
supplies), and
California Coastal
Properties, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly: Chief Executive Officer, YWCA of the USA None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1991 Partner, law firm of Pennock & Cooper None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1991 Executive Vice President, Development and Operations Hines None
Trustee Interests Limited Partnership (real estate development
company)
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Soll, Ph.D.(3) -- 1942 2003 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 2003 Director, Senior Vice President, Secretary and General N/A
Senior Vice President Counsel, A I M Management Group Inc. (financial services
holding company) and A I M Advisors, Inc.; Vice President,
A I M Capital Management, Inc., A I M Distributors, Inc. and
AIM Investment Services, Inc.; and Director, Vice President
and General Counsel, Fund Management Company
Formerly: Senior Vice President and General Counsel, Liberty
Financial Companies, Inc.; and Senior Vice President and
General Counsel, Liberty Funds Group, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 1991 Director, Chairman and Director of Investments, A I M N/A
Senior Vice President Capital Management, Inc.; Director and Executive Vice
President, A I M Management Group Inc.; Director and Senior
Vice President, A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC
Formerly: Chief Executive Officer and President, A I M
Capital Management Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 1994 Managing Director and Chief Fixed Income Officer, A I M N/A
Vice President Capital Management, Inc.; and Vice President, A I M
Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 2002 Managing Director and Chief Research Officer -- Fixed N/A
Vice President Income, A I M Capital Management, Inc.; and Vice President,
A I M Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance Officer, A I M Advisors, N/A
Vice President Inc. and A I M Capital Management, Inc.; and Vice President,
AIM Investment Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 1999 Vice President, A I M Advisors, Inc., and President, Chief N/A
Vice President Executive Officer and Chief Investment Officer, A I M
Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1991 Vice President and Fund Treasurer, A I M Advisors, Inc. N/A
Vice President and Treasurer
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(3) Elected trustee of the Trust on October 21, 2003.
(4) Mr. Carome became Senior Vice President of the Trust on May 13, 2003.
(5) Information is current as of January 10, 2003.
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.347.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, Inc. PricewaterhouseCoopers LLP
Suite 100 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana, Suite 2900
Houston, TX 77046 Suite 100 Suite 100 Houston, TX 777002
Houston, TX 77046 Houston, TX 77046-1173
COUNSEL TO THE FUND COUNSEL TO THE TRUSTEES TRANSFER AGENT CUSTODIAN
Ballard Spahr Kramer, Levin, Naftalis & AIM Investment Services, Inc. State Street Bank and
Andrews & Ingersoll, LLP Frankel LLP P.O. Box 4739 Trust Company
1735 Market Street 919 Third Avenue Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103 New York, NY 10022-3852 Boston, MA 02110
</Table>
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund AIM Floating Rate Fund
AIM Basic Balanced Fund* AIM European Growth Fund AIM High Yield Fund
AIM Basic Value Fund AIM European Small Company Fund AIM Income Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Intermediate Government Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Limited Maturity Treasury Fund
AIM Charter Fund AIM Global Trends Fund AIM Money Market Fund
AIM Constellation Fund AIM Global Value Fund(4) AIM Short Term Bond Fund
AIM Dent Demographic Trends Fund AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Diversified Dividend Fund(1) AIM International Growth Fund INVESCO U.S. Government Money Fund
AIM Emerging Growth Fund AIM Trimark Fund
AIM Large Cap Basic Value Fund INVESCO International Core Equity Fund(5) TAX-FREE
AIM Large Cap Growth Fund
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund
AIM Opportunities I Fund AIM Real Estate Fund
AIM Opportunities II Fund INVESCO Advantage Health Sciences Fund
AIM Opportunities III Fund INVESCO Energy Fund
AIM Premier Equity Fund INVESCO Financial Services Fund
AIM Select Equity Fund INVESCO Gold & Precious Metals Fund
AIM Small Cap Equity Fund(2) INVESCO Health Sciences Fund
AIM Small Cap Growth Fund(3) INVESCO Leisure Fund
AIM Trimark Endeavor Fund INVESCO Multi-Sector Fund
AM Trimark Small Companies Fund INVESCO Technology Fund
AIM Weingarten Fund INVESCO Utilities Fund
INVESCO Core Equity Fund
INVESCO Dynamics Fund
INVESCO Mid-Cap Growth Fund
INVESCO Small Company Growth Fund
INVESCO S&P 500 Index Fund
INVESCO Total Return Fund*
</Table>
* Domestic equity and income fund
(1)Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2)AIM Small Cap Equity Fund was closed to most
investors on December 19, 2003. For information on who may continue to invest in
AIM Small Cap Equity Fund, please contact your financial advisor. (3)AIM Small
Cap Growth Fund was closed to most investors on March 18, 2002. For information
on who may continue to invest in AIM Small Cap Growth Fund, please contact your
financial advisor. (4)Effective April 30, 2003, AIM Worldwide Spectrum Fund was
renamed AIM Global Value Fund. (5)Effective November 24, 2003, INVESCO
International Blue Chip Value Fund was renamed INVESCO International Core Equity
Fund.
For more complete information about any AIM or INVESCO fund, including sales
charges and expenses, ask your financial advisor for a prospectus. Please read
it carefully before investing. If used after January 20, 2004, this brochure
must be accompanied by a fund Performance & Commentary or by an AIM Quarterly
Performance Review for the most recent quarter-end. Mutual funds distributed by
A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $142 billion in assets for approximately 11
million shareholders, including individual investors, corporate clients and
financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $345 billion in assets
under management. Data as of September 30, 2003.
AIMinvestments.com APG-AR-1
<Table>
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
- --------------------------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Alternative Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Investments Management --Servicemark--
Plans Accounts
</Table>
AIM EUROPEAN GROWTH FUND
Annual Report to Shareholders o October 31, 2003
[COVER IMAGE]
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
================================================================================
AIM EUROPEAN GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
================================================================================
ABOUT INFORMATION THROUGHOUT THIS REPORT:
<Table>
o Unless otherwise stated, information o Investing in small and mid-size CLASS B SHARES
presented is as of 10/31/03 and is based companies may involve risks not Inception (11/3/97) 10.46%
on total net assets. associated with investing in more 5 Years 7.46
established companies. Also, small 1 Year 21.48
o AIM European Growth Fund's performance companies may have business risk,
figures are historical, and they reflect significant stock price fluctuations and CLASS C SHARES
fund expenses, the reinvestment of illiquidity. Inception (11/3/97) 10.58%
distributions, and changes in net asset 5 Years 7.77
value. o The fund's investment return and 1 Year 25.47
principal value will fluctuate, so an
o When sales charges are included in investor's shares, when redeemed, may be CLASS R SHARES*
performance figures, Class A share worth more or less than their original Inception 11.17%
performance reflects the maximum 5.50% cost. 5 Years 8.35
sales charge, and Class B and Class C 1 Year 27.11
share performance reflects the o Industry classifications used in this
applicable contingent deferred sales report are generally according to the INVESTOR CLASS SHARES**
charge (CDSC) for the period involved. Global Industry Classification Standard, Inception 11.34%
The CDSC on Class B shares declines from which was developed by and is the 5 Years 8.52
5% beginning at the time of purchase to exclusive property and a service mark of 1 Year 27.30
0% at the beginning of the seventh year. Morgan Stanley Capital International
The CDSC on Class C shares is 1% for the Inc. and Standard & Poor's. *The returns shown for these periods are
first year after purchase. The the blended returns of the historical
performance of the fund's share classes o The unmanaged MSCI Europe Growth Index performance of the fund's Class R shares
will differ due to different sales is a subset of the unmanaged MSCI Europe since their inception and the restated
charge structures and class expenses. Index, which represents the performance historical performance of the fund's
of European stocks tracked by Morgan Class A shares (for the periods prior to
o A 2% redemption fee will be imposed on Stanley Capital International. The inception of the Class R shares) at net
certain redemptions or exchanges out of Growth portion measures performance of asset value, adjusted to reflect the
the fund within 30 days of purchase. companies with higher price/earnings higher Rule 12b-1 fees applicable to the
Exceptions to the redemption fee are ratios and higher forecasted growth Class R shares. The inception date of
listed in the fund's prospectus. values. Class A shares is 11/3/97. The inception
date of the fund's Class R shares is
o Effective 9/30/03, Class B shares are o The unmanaged MSCI Europe, Australasia 6/3/02.
not available as an investment for and the Far East Index (the EAFE(R)) is
retirement plans maintained pursuant to a group of foreign securities tracked by **The returns shown as of 10/31/03 on
Section 401 of the Internal Revenue Morgan Stanley Capital International. page 4 are the blended returns of the
Code, including 401(k) plans, money historical performance of Investor Class
purchase pension plans and profit o The unmanaged Lipper European Fund shares since their inception and the
sharing plans. Plans that have existing Index represents an average of the 30 restated historical performance of the
accounts invested in Class B shares will largest European funds tracked by fund's Class A shares (for periods prior
continue to be allowed to make Lipper, Inc., an independent mutual fund to inception of the Investor Class
additional purchases. performance monitor. shares) at net asset value, adjusted to
reflect the higher Rule 12b-1 fees
o Class R shares are available only to o A direct investment cannot be made in applicable to Class A shares. Investor
certain retirement plans. Please see the an index. Unless otherwise indicated, Class shares would have different
prospectus for more information. They index results include reinvested returns because, although the shares are
are sold at net asset value, that is, dividends, and they do not reflect sales invested in the same portfolio of
without up-front sales charges. charges. Performance of an index of securities, the Investor Class has a
funds reflects fund expenses; different expense structure. The
o Investor Class shares are closed to performance of a market index does not. inception date of the fund's Class A
most investors. For more information on In addition to fund returns as of the shares is 11/3/97. The inception date of
who may continue to invest in the close of the fiscal year, industry the fund's Investor Class shares is
Investor Class shares, please see the regulations require us to provide 9/30/03. Calculation of returns as of
appropriate prospectus. average annual total returns (including 9/30/03 is the restated historical
sales charges) for periods ended performance of the fund's Class A shares
o International investing presents 9/30/03, the most recent calendar as described.
certain risks not associated with quarter-end, which were as follows.
investing solely in the United States. Past performance cannot guarantee
These include risks relating to Average annual total returns comparable future results.
fluctuations in the value of the U.S. As of 9/30/03, including sales charges
dollar relative to the values of other A description of the policies and
currencies, the custody arrangements CLASS A SHARES procedures that the fund uses to
made for the fund's foreign holdings, Inception (11/3/97) 10.28% determine how to vote proxies relating
differences in accounting, political 5 Years 7.30 to portfolio securities is available
risks and the lesser degree of public 1 Year 20.31 without charge, upon request, by calling
information required to be provided by 800-959-4246, or on the AIM Web site,
non-U.S. companies. AIMinvestments.com.
o Investing in a single-sector or
single-region mutual fund may involve
greater risk and potential reward than
investing in a more diversified fund.
</Table>
<Table>
=====================================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE This report may be distributed only to shareholders
or to persons who have received a current prospectus of
===================================================== the fund.
</Table>
AIMinvestments.com
TO OUR SHAREHOLDERS
<Table>
DEAR FELLOW SHAREHOLDER IN new policies and strengthened existing
` THE AIM FAMILY OF FUNDS ones--to discourage harmful short-term
--Registered Trademark--: trading. These steps include:
As you may be aware, there has o Strengthening daily monitoring
[[PHOTO OF been a great deal of media of trading activities.
ROBERT H. coverage recently about the
GRAHAM] mutual fund industry and o Imposing redemption fees on
allegations of improper additional funds we believe may
ROBERT H. GRAHAM activities by certain be vulnerable to harmful
individuals and companies. short-term trading activity.
[PHOTO OF As part of these widespread
MARK H. investigations, INVESCO Funds o Implementing an enhanced
WILLIAMSON] Group (IFG), the former adviser exchange policy (effective on or
to certain INVESCO Funds, was about March 1, 2004) designed to
MARK H. WILLIAMSON recently named as a defendant in limit exchanges between funds.
separate civil enforcement actions
by the U.S. Securities and Exchange Commission (SEC), o Employing an enhanced fair value
the Office of the New York Attorney General and the pricing policy on certain
State of Colorado over an issue known as "market foreign securities as well as
timing." A number of private class or derivative certain illiquid securities.
actions also were filed in the wake of the
regulators' actions. None of these tools alone, nor all
of them taken together, eliminate the
Investors are understandably concerned and possibility of short-term trading
frustrated about these reports, and we would like strategies that may be detrimental to a
to take this opportunity to assure you that, based fund. Moreover, each of these tools
on an investigation conducted by an outside firm, involves judgments that are inherently
IFG and its parent company, AMVESCAP PLC, believe subjective. We have always sought and
that these civil actions are without merit. IFG is continue to seek to make these judgments
contesting the charges. to the best of our abilities and in a
manner that we believe is consistent
We encourage you to continue to monitor this with the best interests of our fund
situation, particularly as IFG has the opportunity shareholders. And we remain committed to
to address the allegations that have been made. being as vigilant as possible in the
Current information will be posted on our Web site future to identify and address any
at AIMinvestments.com. We will continue to harmful market timing investors who have
communicate to you on our Web site about our the potential to harm our long-term fund
finding, and the actions we are taking to protect shareholders.
and promote the interests of our shareholders. The
independent trustees of the funds are receiving We sincerely hope these developments
regular reports from their independent counsel and and the media coverage surrounding them
outside counsel hired by AMVESCAP PLC, the parent do not result in you or other
of AIM and IFG, to perform an ongoing shareholders losing confidence in AIM or
investigation of market timing. INVESCO Funds. Amidst this storm of
controversy in the mutual fund industry,
A COMPLEX ISSUE we believe we can find encouragement in
the recovering economy and rising equity
Market timing is an investment technique not markets. As we write this letter, for
defined in any regulation that involves frequent instance, the S&P 500(R) Index is up
short-term trading of mutual fund shares, approximately 23% year-to-date. Although
sometimes with a goal to exploit inefficiencies in past performance is no guarantee of
the way mutual funds price their shares. We future results, there appear to be
recognize that fund management companies have indicators that the economy and stock
tried to deal with this complex issue in various markets are showing signs of welcomed
ways and believe that industry-wide guidance is in improvement. We encourage you to read
order. To that end, we welcome SEC Chairman the enclosed discussion of your fund's
William Donaldson's pledge to adopt new rules performance during this past reporting
designed to curb market timing abuses. period.
Comprehensive rulemaking is necessary and is the
best way to establish new industry OUR UNWAVERING COMMITMENT
responsibilities designed to protect shareholders.
We support practical rule changes and structural At AIM Investments, we have never
At AIM Investments, we have never modifications wavered in our commitment to helping you
that are fair, enforceable and, most wavered in build solutions for your financial
our commitment to helping you importantly, goals. Our company was founded on a core
beneficial for investors. build solutions for your principle of integrity, and we have
financial always worked hard to earn the trust of
our shareholders. We are committed to
AIM Investments has policies in place designed doing all we can to maintain your trust
principle of integrity, and we have to identify, and confidence.
prevent and eliminate harmful trading always
worked hard to earn the trust of or other Thank you for your continued
activities deemed to be detrimental to our participation in AIM Investments. Please
shareholders. We are committed to the funds. We call your financial advisor or one of
have also recently taken additional doing all we our Client Service representatives at
can to maintain your trust steps--implemented and 800-959-4246 if you have any further
confidence. questions or concerns about your AIM
Investments account.
Sincerely,
/S/ ROBERT H. GRAHAM /S/ MARK H. WILLIAMSON
Robert H. Graham Mark H. Williamson
Chairman and President President and CEO
The AIM Family of Funds AIM Investments
--Registered Trademark--
December 18, 2003
</Table>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
<Table>
EUROPEAN MARKETS REBOUND AMID GLOBAL ECONOMIC RECOVERY
Amid signs of an improving global markets rallied. European equity markets both August and September, and the
economic environment, AIM European led the charge--posting some of the Purchasing Manager's Index--a survey of
Growth Fund posted double-digit returns strongest regional returns in the world. purchasing managers that measures the
for the reporting period ended October European equity markets would continue general health of the manufacturing
31, 2003. For the fiscal year covered by to show strength throughout most of the sector--increased for the fourth
this report, the fund's Class A shares remainder of the reporting period. consecutive month in October.
returned 28.40% at net asset value. Fund
performance for other share classes is While European stock markets posted ========================================
shown in the table on page 3. gains, growth in the euro zone remained ... ECONOMIC GROWTH
weak. According to a recent report by
Over the same period, the fund the Bank of England, there continued to PROSPECTS FOR THE EURO
outperformed its benchmarks, the MSCI be a contrast between weak euro area
Europe Index and MSCI Europe Growth economic data and more promising ZONE BEGAN TO PICK UP
Index, which returned 24.16% and 17.16%, business survey indicators. Indeed,
respectively. The fund also posted a annualized gross domestic product (GDP) IN THE THIRD QUARTER...
higher return than its peer group, the for the euro zone fell by 0.1% in the ========================================
Lipper European Fund Index, which second quarter. (In contrast, it should
returned 24.62% for the fiscal year. be noted that preliminary GDP estimates In monetary affairs, the European
rose 0.7% for the second quarter in Central Bank (ECB) reduced short-term
MARKET CONDITIONS Europe's largest non-euro country, the interest rates at both its March and
United Kingdom.) German retail sales June meetings leaving rates at 2.00% at
In general, European markets began the (excluding car-related sales) and French the end of the fiscal year. The ECB's
fiscal year with a short-lived rally in consumer spending on manufactured goods Governing Council cited subdued euro
November. By December and throughout both declined in August. area growth and the negative impact of
most of the first few months of 2003, SARS (severe acute respiratory syndrome)
European stocks generally declined as However, economic growth prospects on the global economy as the reason for
geopolitical tensions and concern over for the euro zone began to pick up in the rate reductions. The Bank of England
weak global economic conditions mounted. the third quarter as preliminary also reduced rates in February and again
In April, as the uncertainty about the estimates indicate euro area annualized in July leaving the benchmark rate for
outcome of the war in Iraq began to GDP rose 0.4%. And business surveys also the United Kingdom at 3.50% as of
fade, most world began to show promise. Euro-area October 31, 2003.
industrial confidence increased in
YOUR FUND
Strong foreign currency
appreciation--the euro and British pound
appreciated 16% and
</Table>
Total Returns
10/31/02-10/31/03
[BAR Chart]
AIM European Growth Fund
Class A shares at NAV 28.40%
MSCi Europe Index 24.16%
Source: Lipper, Inc.
<Table>
=====================================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
1. Anglo Irish Bank Corp. PLC (Ireland) 5.0% 1. Diversified Banks 14.2%
2. Puma A.G. Rudolf Dassler Sport (Germany) 3.6 2. Pharmaceuticals 7.8
3. Grafton Group PLC (Ireland) 2.6 3. Wireless Telecommunication Services 7.6
4. Merloni Elettrodomestici S.p.A. (Italy) 2.1 4. Footwear 3.6
5. Mobistar S.A. (Belgium) 2.1 5. Food Retail 3.5
6. Vodafone Group PLC (United Kingdom) 1.9 6. Integrated Oil & Gas 3.5
7. OTP Bank Rt. (Hungary) 1.7 7. Health Care Equipment 2.9
8. Imperial Tobacco Group PLC (United Kingdom) 1.6 8. Publishing 2.6
9. Colruyt N.V. (Belgium) 1.6 9. Trading Companies & Distributors 2.6
10. ICAP PLC (United Kingdom) 1.6 10. Integrated Telecommunication Services 2.4
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will continue to hold any
particular security.
Performance comparisons for other share classes can be found in the Fund vs. Index table on the opposite page.
=====================================================================================================================
</Table>
2
<Table>
8%, respectively, against the U.S. sales increased by 37.8%. On a currency JASON T. HOLZER
dollar during the fiscal year--proved neutral basis, third quarter sales were Mr. Holzer, Chartered
favorable for the fund as we do not up 43.5%. Financial Analyst, is
hedge currencies. We buy securities in [PHOTO OF co-manager of AIM European
local currency and then translate that Stocks in the utilities and JASON T. Growth Fund. Mr. Holzer
value back into U.S. dollars for the materials sectors contributed the least HOLZER] joined AIM in 1996. He
fund. to fund performance over the reporting received a B.A. in
period, while the information technology quantitative economics and an M.S. in
The fund's ability to invest in all sector detracted from performance. We engineering- economic systems from Stanford
capitalization levels also played a role believe our underweight exposure to University.
in relative performance. Many European information technology stocks compared
sector funds invest primarily in to our benchmark proved a missed
large-cap securities--a disadvantage opportunity as the sector recorded the CLAS G. OLSSON
during the reporting period as European second-highest return in the MSCI Europe Mr. Olsson is co-manager
small-cap stocks generally outperformed Index during the fiscal year. [PHOTO OF of AIM European Growth Fund.
their large-cap counterparts. As of the CLAS G. Mr. Olsson joined AIM in
end of the reporting period, more than IN CLOSING OLSSON] 1994. Mr. Olsson became a
75% of the fund's net assets were in commissioned naval officer
small and mid-cap stocks. After a few challenging years, European at the Royal Swedish Naval Academy in 1988.
markets began to post strong returns He received a B.B.A. from The University of
Stocks in the financials and again in 2003, eclipsing the performance Texas at Austin.
consumer discretionary sectors of U.S. markets during a period when
contributed the most to fund performance most would argue the U.S. economy was Assisted by Europe/Canada Team
during the fiscal year. Anglo Irish Bank stronger. Whether European market
Corp., a long-time holding for the fund, rallies are sustainable and whether euro
is an example of a financial stock that area economic conditions will continue
continued to benefit performance. to improve, remains to be seen. However,
Headquartered in Dublin, this Irish European stocks, in general, continue to
business bank continued to experience trade at a discount to their U.S.
significant growth. counterparts, and therefore perhaps
offer compelling diversification
In the consumer discretionary opportunities beyond American soil.
sector, Puma AG Rudolf Dassler Sport, a
German sporting goods company, also SEE IMPORTANT FUND AND INDEX
contributed to fund performance during DISCLOSURES INSIDE FRONT COVER.
the fiscal year. During the third
quarter of 2003, Puma's consolidated
</Table>
[GRAPHIC]
For More Information Visit
AIMinvestments.com
<Table>
==================================================================================================================================
TOP 10 COUNTRIES * FUND VS. INDEXES **The one-year return shown for Investor
Class shares is the blended return of
1. United Kingdom 25.4% Total returns, 10/31/02-10/31/03, Investor Class shares since their
excluding sales charges inception and the restated one-year
2. Ireland 10.3 performance of the fund's Class A shares
Class A Shares 28.40% at the net asset value, adjusted to
3. Italy 7.6 reflect the higher Rule 12b-1 fees
Class B Shares 27.52 applicable to Class A shares. Investor
4. Germany 7.6 Class shares would have different
Class C Shares 27.57 returns because, although the shares are
5. Switzerland 5.5 invested in the same portfolio of
Class R Shares 28.16 securities, the Investor Class has a
6. Spain 5.1 different expense structure. The
Investor Class Shares** 28.33 inception date of the fund's Class A
7. France 4.6 shares is 11/3/97. The inception date of
MSCI EAFE Index (Broad Market Index) 27.03 the fund's Investor Class shares is
8. Belgium 3.7 9/30/03.
MSCI Europe Index 24.16
9. Netherlands 3.6
MSCI Europe Growth Index
10. Sweden 3.6 (Style-Specific Index) 17.16
Lipper European Fund Index
(Peer Group Index) 24.62
TOTAL NUMBER OF HOLDINGS* 106
TOTAL NET ASSETS $442.0 MILLION
Source: Lipper, Inc.
==================================================================================================================================
</Table>
3
FUND PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
11/3/97-10/31/03*
[MOUNTAIN CHART]
<Table>
<Caption>
Lipper MSCI
Date AIM European AIM European AIM European European MSCI Europe MSCI
Growth Fund Growth Fund Growth Fund Fund EAFE Growth Europe
Class A Shares Class B Shares Class C Shares Index Index Index Index
11/3/1997 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000
1/31/1998 10026 10600 10600 10694 10441 10964 10963
4/30/1998 12910 13609 13609 12738 11544 12652 12907
7/31/1998 14535 15298 15308 13346 11692 13270 13576
10/31/1998 12248 12867 12878 11533 10965 12436 12306
1/31/1999 14322 15025 15038 12985 11946 14004 13440
4/30/1999 13195 13815 13818 13002 12640 13029 13637
7/31/1999 13904 14526 14538 13065 12827 12607 13323
10/31/1999 15530 16196 16209 13468 13490 13456 13846
1/31/2000 23676 24644 24669 15741 14245 15279 14561
4/30/2000 24130 25064 25088 16952 14396 15939 14997
7/31/2000 24375 25284 25308 16872 13982 14788 14951
10/31/2000 22323 23115 23140 15574 13099 13389 13977
1/31/2001 21528 22246 22270 15799 13050 13230 14368
4/30/2001 18001 18577 18600 14070 12050 11602 12991
7/31/2001 16970 17487 17508 12845 10946 10416 11920
10/31/2001 15627 16068 16089 11501 9834 9453 10784
1/31/2002 15958 16377 16400 11717 9712 9665 10903
4/30/2002 17028 17446 17471 12279 10377 9962 11404
7/31/2002 15401 15767 15780 10708 9094 8467 9753
10/31/2002 14759 15076 15091 10032 8534 8263 9287
1/31/2003 14211 14486 14500 9677 8262 7833 8946 *Index performance is for
4/30/2003 15459 15734 15739 10350 8689 8457 9674 the period 10/31/97-10/31/03.
7/31/2003 16842 17115 17129 11415 9667 8938 10613
10/31/2003 $ 18949 $ 19130 $ 19250 $ 12502 $ 10842 $ 9681 $ 11531 Source: Lipper, Inc.
</Table>
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's share classes will differ due to different sales
charge structures and class expenses. For fund performance calculations and
indexes used in this report, please see the inside front cover. Performance
shown in the chart and table does not reflect deduction of taxes a shareholder
would pay on fund distributions or sale of fund shares. Performance of the
indexes does not reflect the effects of taxes. Your fund's total return includes
sales charges, expenses and management fees. Results for B shares are calculated
as if a hypothetical shareholder had liquidated his entire investment in the
fund at the close of the reporting period and paid the applicable contingent
deferred sales charges.
This chart uses a logarithmic scale, which means the price scale (vertical
axis) is structured so that a given distance always represents the same percent
change in price, rather than the same absolute change in price. For example, the
distance from one to 10 is the same as the distance from 10 to 100 on a
logarithmic chart, but the latter distance is 10 times greater on a linear
chart. A logarithmic scale better illustrates performance in the fund's early
years before reinvested distributions and compounding create the potential for
the original investment to grow to very large numbers.
Since the last reporting period, the fund has elected to use the MSCI EAFE
Index as its broad-based market index since the MSCI EAFE Index is such a widely
recognized gauge of international performance. The fund will no longer measure
its performance against the MSCI Europe, the index published in previous reports
to shareholders. Because this is the first reporting period since we have
adopted the new index, SEC guidelines require that we compare the fund's
performance to both the old and the new index. The fund has also included a
style-specific index, MSCI Europe Growth Index. The fund believes this index
more closely reflects the performance of the securities in which the fund
invests. In addition, the unmanaged Lipper European Fund Index, which may or may
not include AIM European Growth Fund, is included for comparison to a peer
group.
<Table>
=================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS CLASS R SHARES** ***The returns shown as of 10/31/03 are
As of 10/31/03, including sales charges Inception 12.13% the blended returns of the historical
5 Years 8.95 performance of Investor Class shares
CLASS A SHARES 1 Year 28.16 since their inception and the restated
Inception (11/3/97) 11.26% historical performance of the fund's
5 Years 7.90 INVESTOR CLASS SHARES*** Class A shares (for periods prior to
1 Year 21.32 Inception 12.30% inception of the Investor Class shares)
5 Years 9.11 at the net asset value and reflect the
CLASS B SHARES 1 Year 28.33 higher Rule 12b-1 fees applicable to
Inception (11/3/97) 11.43% Class A shares. Investor Class shares
5 Years 8.07 **The returns shown for these periods would have different returns because,
1 Year 22.52 are the blended returns of the although the shares are invested in the
historical performance of the fund's same portfolio of securities, the
CLASS C SHARES Class R shares since their inception and Investor Class has a different expense
Inception (11/3/97) 11.55% the restated historical performance of structure. The inception date of the
5 Years 8.37 the fund's Class A shares (for the fund's Class A shares is 11/3/97. The
1 Year 26.57 periods prior to inception of the Class inception date of the fund's Investor
R shares) at net asset value, adjusted Class shares is 9/30/03.
to reflect the higher Rule 12b-1 fees
applicable to the Class R shares. The Past performance cannot guarantee
inception date of Class A shares is comparable future results. DUE TO
11/3/97. The inception date of the SIGNIFICANT MARKET VOLATILITY, RESULTS
fund's Class R shares is 6/3/02. OF AN INVESTMENT MADE TODAY MAY DIFFER
SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN. CALL YOUR FINANCIAL
ADVISOR FOR MORE CURRENT PERFORMANCE.
=================================================================================================================================
</Table>
4
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2003
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
STOCKS & OTHER EQUITY INTERESTS-96.08%
AUSTRIA-0.57%
Erste Bank der oesterreichischen Sparkassen
A.G. (Diversified Banks) 22,865 $ 2,519,270
========================================================================
BELGIUM-3.70%
Colruyt N.V. (Food Retail) 79,100 7,147,405
- ------------------------------------------------------------------------
Mobistar S.A. (Wireless Telecommunication
Services)(a) 184,134 9,214,993
========================================================================
16,362,398
========================================================================
BERMUDA-2.06%
Golar LNG Ltd. (Oil & Gas Refining, Marketing
& Transportation)(a) 185,600 2,153,950
- ------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers) 209,300 6,969,690
========================================================================
9,123,640
========================================================================
CZECH REPUBLIC-0.73%
Komercni Banka A.S. (Diversified Banks) 36,470 3,246,732
========================================================================
DENMARK-2.28%
A P Moller-Maersk A.S. (Marine) 504 3,942,900
- ------------------------------------------------------------------------
GN Store Nord A.S. (Health Care Equipment) 583,900 3,776,314
- ------------------------------------------------------------------------
Topdanmark A.S. (Multi-Line Insurance)(a) 47,300 2,344,066
========================================================================
10,063,280
========================================================================
FRANCE-4.60%
Autoroutes du Sud de la France (Highways &
Railtracks) 56,953 1,748,396
- ------------------------------------------------------------------------
BNP Paribas S.A. (Diversified Banks) 55,127 2,886,557
- ------------------------------------------------------------------------
France Telecom S.A. (Integrated
Telecommunication Services)(a) 86,306 2,081,608
- ------------------------------------------------------------------------
Imerys S.A. (Construction Materials)(a) 14,544 2,780,002
- ------------------------------------------------------------------------
Lagardere S.C.A. (Publishing) 29,088 1,458,069
- ------------------------------------------------------------------------
Neopost S.A. (Office Electronics)(a) 44,000 2,177,006
- ------------------------------------------------------------------------
Pernod-Ricard S.A. (Distillers & Vintners) 19,513 1,876,201
- ------------------------------------------------------------------------
Total S.A. (Integrated Oil & Gas)(a) 34,273 5,308,366
========================================================================
20,316,205
========================================================================
GERMANY-7.55%
Altana A.G. (Pharmaceuticals) 22,280 1,399,175
- ------------------------------------------------------------------------
Continental A.G. (Tires & Rubber) 165,325 5,592,406
- ------------------------------------------------------------------------
Deutsche Boerse A.G. (Specialized Finance) 91,459 5,066,561
- ------------------------------------------------------------------------
KarstadtQuelle A.G. (Department Stores) 83,171 2,059,951
- ------------------------------------------------------------------------
Puma A.G. Rudolf Dassler Sport (Footwear)
(Acquired 01/30/02-10/15/02; Cost
$4,420,997)(b) 108,800 15,815,419
- ------------------------------------------------------------------------
Stada Arzneimittel A.G. (Pharmaceuticals) 66,728 3,446,854
========================================================================
33,380,366
========================================================================
</Table>
<Table>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
GREECE-3.18%
Coca-Cola Hellenic Bottling Co. S.A. (Soft
Drinks) 108,546 $ 2,094,914
- ------------------------------------------------------------------------
Cosmote Mobile Communications S.A. (Wireless
Telecomunication Services) 132,993 1,522,169
- ------------------------------------------------------------------------
Germanos S.A. (Computer & Electronics Retail) 105,000 2,262,453
- ------------------------------------------------------------------------
OPAP S.A. (Casinos & Gaming) (Acquired
07/14/03-08/13/03; Cost $1,926,272)(b) 172,589 2,119,319
- ------------------------------------------------------------------------
Vodafone Panafon S.A. (Wireless
Telecommunication Services) 873,124 6,068,823
========================================================================
14,067,678
========================================================================
HUNGARY-3.03%
Gedeon Richter Rt. (Pharmaceuticals) 57,300 5,861,241
- ------------------------------------------------------------------------
OTP Bank Rt. (Diversified Banks) 618,400 7,535,762
========================================================================
13,397,003
========================================================================
IRELAND-10.33%
Anglo Irish Bank Corp. PLC (Diversified
Banks) 1,848,985 22,126,412
- ------------------------------------------------------------------------
Depfa Bank PLC (Diversified Banks) 54,797 6,113,084
- ------------------------------------------------------------------------
Grafton Group PLC (Trading Companies &
Distributors)(c) 1,828,280 11,331,145
- ------------------------------------------------------------------------
IAWS Group PLC (Agricultural Products) 237,500 2,531,213
- ------------------------------------------------------------------------
Independent News & Media PLC (Publishing) 1,633,800 3,558,230
========================================================================
45,660,084
========================================================================
ISRAEL-1.03%
Taro Pharmaceutical Industries Ltd.
(Pharmaceuticals)(a) 49,300 3,167,525
- ------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 24,300 1,382,427
========================================================================
4,549,952
========================================================================
ITALY-7.62%
Banca Intesa S.p.A. (Diversified Banks) 699,200 2,348,966
- ------------------------------------------------------------------------
Banco Popolare di Verona e Novara Scrl
(Diversified Banks) 356,900 5,498,896
- ------------------------------------------------------------------------
Davide Campari-Milano S.p.A. (Distillers &
Vintners) 104,400 4,474,861
- ------------------------------------------------------------------------
Eni S.p.A. (Integrated Oil & Gas) 342,114 5,413,758
- ------------------------------------------------------------------------
Mediaset S.p.A. (Broadcasting & Cable TV) 342,000 3,442,890
- ------------------------------------------------------------------------
Merloni Elettrodomestici S.p.A. (Household
Appliances) 561,652 9,434,363
- ------------------------------------------------------------------------
UniCredito Italiano S.p.A. (Diversified
Banks) 620,000 3,045,333
========================================================================
33,659,067
========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
NETHERLANDS-3.64%
Aalberts Industries N.V. (Industrial
Conglomerates) 120,200 $ 2,917,197
- ------------------------------------------------------------------------
Koninklijke (Royal) KPN N.V. (Integrated
Telecommunication Services)(a) 416,665 3,156,764
- ------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics N.V.
(Consumer Electronics) 51,100 1,372,774
- ------------------------------------------------------------------------
Koninklijke Numico N.V. (Packaged Foods &
Meats)(a) 120,627 2,712,360
- ------------------------------------------------------------------------
Randstad Holding N.V. (Employment
Services)(a) 123,925 2,347,221
- ------------------------------------------------------------------------
Sligro Food Group N.V. (Food Distributors) 57,800 1,540,043
- ------------------------------------------------------------------------
Versatel Telecom International N.V.
(Integrated Telecommunication Services)(a) 882,000 2,023,071
========================================================================
16,069,430
========================================================================
NORWAY-2.58%
Ekornes A.S.A. (Home Furnishings) 323,151 5,364,030
- ------------------------------------------------------------------------
Schibsted A.S.A. (Publishing) 30,906 541,272
- ------------------------------------------------------------------------
Smedvig A.S.A.-Class A (Oil & Gas Drilling) 289,878 1,998,090
- ------------------------------------------------------------------------
Telenor A.S.A. (Integrated Telecommunication
Services) 641,628 3,474,943
========================================================================
11,378,335
========================================================================
RUSSIA-1.92%
AO VimpelCom-ADR (Wireless Telecommunication
Services)(a) 104,600 6,809,460
- ------------------------------------------------------------------------
Mobile Telesystems-ADR (Wireless
Telecommunication Services) 21,600 1,673,784
========================================================================
8,483,244
========================================================================
SPAIN-5.11%
Banco Popular Espanol S.A. (Diversified
Banks) 66,140 3,427,207
- ------------------------------------------------------------------------
Corporacion Mapfre S.A. (Multi-Line
Insurance) 468,943 5,823,608
- ------------------------------------------------------------------------
Enagas (Gas Utilities) (Acquired 06/25/02-
04/23/03; Cost $2,094,069)(b) 327,760 3,018,564
- ------------------------------------------------------------------------
Gamesa Corporacion Tecnologica, S.A. (Heavy
Electrical Equipment) 88,401 2,384,061
- ------------------------------------------------------------------------
Grupo Ferrovial, S.A. (Construction &
Engineering) 116,048 3,301,743
- ------------------------------------------------------------------------
Repsol YPF, S.A. (Integrated Oil & Gas) 267,692 4,651,617
========================================================================
22,606,800
========================================================================
SWEDEN-3.57%
Alfa Laval A.B. (Industrial Machinery) 189,751 2,494,589
- ------------------------------------------------------------------------
Atlas Copco A.B.-Class A (Industrial
Machinery) 66,300 2,318,685
- ------------------------------------------------------------------------
Elekta A.B.-Class B (Health Care
Equipment)(a) 139,704 2,763,874
- ------------------------------------------------------------------------
Elekta A.B.-Rts. (Health Care Equipment)(d) 139,704 7,133
- ------------------------------------------------------------------------
Swedish Match A.B. (Tobacco) 439,152 3,559,313
- ------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson A.B.
(Communications Equipment)(a) 1,233,874 2,110,344
- ------------------------------------------------------------------------
Volvo A.B.-Class B (Construction, Farm
Machinery & Heavy Trucks) 90,000 2,504,244
========================================================================
15,758,182
========================================================================
</Table>
<Table>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
SWITZERLAND-5.49%
Actelion Ltd. (Biotechnology)(a) 24,100 $ 2,283,423
- ------------------------------------------------------------------------
Credit Suisse Group (Diversified Capital
Markets) 115,277 4,046,391
- ------------------------------------------------------------------------
Micronas Semiconductor Holding A.G.
(Semiconductors)(a) 70,000 2,898,389
- ------------------------------------------------------------------------
Roche Holding A.G. (Pharmaceuticals) 31,850 2,625,653
- ------------------------------------------------------------------------
Schindler Holding A.G. (Industrial
Machinery)(a) 3,591 902,840
- ------------------------------------------------------------------------
Schindler Holding A.G.-Participation Ctfs.
(Industrial Machinery)(a) 2,038 456,132
- ------------------------------------------------------------------------
Straumann A.G. (Health Care Equipment) 16,200 1,918,644
- ------------------------------------------------------------------------
Swiss Life Holding (Life & Health
Insurance)(a) 16,800 2,838,854
- ------------------------------------------------------------------------
Syngenta A.G. (Fertilizers & Agricultural
Chemicals) 45,165 2,410,889
- ------------------------------------------------------------------------
UBS A.G. (Diversified Capital Markets) 63,440 3,880,991
========================================================================
24,262,206
========================================================================
UNITED KINGDOM-25.37%
AstraZeneca PLC (Pharmaceuticals) 96,410 4,522,792
- ------------------------------------------------------------------------
Barclays PLC (Diversified Banks) 456,420 3,844,497
- ------------------------------------------------------------------------
Cattles PLC (Consumer Finance) 1,059,920 5,730,364
- ------------------------------------------------------------------------
Centrica PLC (Gas Utilities) 1,336,960 4,180,548
- ------------------------------------------------------------------------
Enterprise Inns PLC (Restaurants) 465,290 6,667,389
- ------------------------------------------------------------------------
Galen Holdings PLC (Pharmaceuticals) 525,840 6,741,880
- ------------------------------------------------------------------------
ICAP PLC (Investment Banking & Brokerage) 302,860 7,076,279
- ------------------------------------------------------------------------
Imperial Tobacco Group PLC (Tobacco) 432,040 7,153,803
- ------------------------------------------------------------------------
Inchcape PLC (Distributors) 114,530 2,651,480
- ------------------------------------------------------------------------
Johnston Press PLC (Publishing) 743,690 5,840,721
- ------------------------------------------------------------------------
lastminute.com PLC (Internet Software &
Services)(a) 488,300 2,453,747
- ------------------------------------------------------------------------
Man Group PLC (Asset Management & Custody
Banks) 172,590 4,238,405
- ------------------------------------------------------------------------
Morgan Crucible Co. PLC (Industrial
Machinery)(a) 1,120,200 2,468,069
- ------------------------------------------------------------------------
Morrison (William) Supermarkets PLC (Food
Retail) 1,075,420 4,082,673
- ------------------------------------------------------------------------
Next PLC (Department Stores) 217,020 4,340,105
- ------------------------------------------------------------------------
Photo-Me International PLC (Photographic
Products)(a) 1,160,000 2,349,332
- ------------------------------------------------------------------------
PHS Group PLC (Diversified Commercial
Services) 1,485,000 2,137,122
- ------------------------------------------------------------------------
Reckitt Benckiser PLC (Household Products) 192,285 4,040,969
- ------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC
(Pharmaceuticals)(a) 680,810 5,151,881
- ------------------------------------------------------------------------
Smith & Nephew PLC (Health Care Supplies) 510,440 4,050,801
- ------------------------------------------------------------------------
Tesco PLC (Food Retail) 1,105,835 4,427,725
- ------------------------------------------------------------------------
Travis Perkins PLC (Home Improvement Retail) 272,290 5,508,237
- ------------------------------------------------------------------------
Ultra Electronics Holdings PLC (Aerospace &
Defense) 484,810 4,239,745
- ------------------------------------------------------------------------
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
UNITED KINGDOM-(CONTINUED)
Vodafone Group PLC (Wireless
Telecommunication Services) 3,912,340 $ 8,205,409
========================================================================
112,103,973
========================================================================
UNITED STATES OF AMERICA-1.72%
Autoliv, Inc.-SDR (Auto Parts & Equipment) 104,406 3,424,808
- ------------------------------------------------------------------------
Synthes-Stratec, Inc. (Health Care Equipment) 4,563 4,173,558
========================================================================
7,598,366
========================================================================
Total Stocks & Other Equity Interests
(Cost $302,620,322) 424,606,211
========================================================================
MONEY MARKET FUNDS-1.36%
STIC Liquid Assets Portfolio(e) 3,005,612 3,005,612
- ------------------------------------------------------------------------
STIC Prime Portfolio(e) 3,005,612 3,005,612
========================================================================
Total Money Market Funds (Cost
$6,011,224) 6,011,224
========================================================================
TOTAL INVESTMENTS-97.44% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $308,631,546) 430,617,435
========================================================================
</Table>
<Table>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
<Caption>
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-2.74%
STIC Liquid Assets Portfolio(e)(f) 12,113,481 $ 12,113,481
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $12,113,481) 12,113,481
========================================================================
TOTAL INVESTMENTS-100.18% (Cost $320,745,027) 442,730,916
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.18%) (779,974)
========================================================================
NET ASSETS-100.00% $441,950,942
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Ctfs. - Certificates
Rts. - Rights
SDR - Swedish Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction). The security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 10/31/03 was $20,953,302,
which represented 4.74% of the Fund's net assets. Unless otherwise
indicated, these securities are not considered to be illiquid.
(c) Consists of more than one class of securities traded together as a unit.
(d) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
(f) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2003
<Table>
ASSETS:
Investments, at market value (cost
$302,620,322)* $ 424,606,211
- ------------------------------------------------------------
Investments in affiliated money market funds
(cost $18,124,705) 18,124,705
- ------------------------------------------------------------
Foreign currencies, at value (cost
$8,238,403) 8,183,817
- ------------------------------------------------------------
Receivables for:
Investments sold 7,902,204
- ------------------------------------------------------------
Capital stock sold 468,123
- ------------------------------------------------------------
Dividends and interest 499,231
- ------------------------------------------------------------
Investment for deferred compensation plan 33,205
- ------------------------------------------------------------
Other assets 46,794
============================================================
Total assets 459,864,290
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 3,707,615
- ------------------------------------------------------------
Capital stock reacquired 1,502,810
- ------------------------------------------------------------
Deferred compensation plan 33,205
- ------------------------------------------------------------
Collateral upon return of securities loaned 12,113,481
- ------------------------------------------------------------
Accrued distribution fees 206,211
- ------------------------------------------------------------
Accrued directors' fees 10,726
- ------------------------------------------------------------
Accrued transfer agent fees 202,061
- ------------------------------------------------------------
Accrued operating expenses 137,239
============================================================
Total liabilities 17,913,348
============================================================
Net assets applicable to shares outstanding $ 441,950,942
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 464,817,523
- ------------------------------------------------------------
Undistributed net investment income 267,863
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and futures contracts (145,058,846)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 121,924,402
============================================================
$ 441,950,942
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 301,658,752
____________________________________________________________
============================================================
Class B $ 107,959,389
____________________________________________________________
============================================================
Class C $ 31,509,288
____________________________________________________________
============================================================
Class R $ 660,269
____________________________________________________________
============================================================
Investor Class $ 163,244
____________________________________________________________
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 15,064,592
____________________________________________________________
============================================================
Class B:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 5,613,582
____________________________________________________________
============================================================
Class C:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 1,637,499
____________________________________________________________
============================================================
Class R:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 33,046
____________________________________________________________
============================================================
Investor Class:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 8,156
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 20.02
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $20.02 divided by
94.50%) $ 21.19
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 19.23
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 19.24
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 19.98
____________________________________________________________
============================================================
Investor Class:
Net asset value and offering price per
share $ 20.01
____________________________________________________________
============================================================
</Table>
* At October 31, 2003, securities with an aggregate market value of $11,629,769
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the year ended October 31, 2003
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $956,608) $ 7,673,782
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 266,520
- --------------------------------------------------------------------------
Securities lending 304,526
==========================================================================
Total investment income 8,244,828
==========================================================================
EXPENSES:
Advisory fees 3,983,818
- --------------------------------------------------------------------------
Administrative services fees 125,283
- --------------------------------------------------------------------------
Custodian fees 523,726
- --------------------------------------------------------------------------
Distribution fees:
Class A 1,030,346
- --------------------------------------------------------------------------
Class B 965,110
- --------------------------------------------------------------------------
Class C 279,643
- --------------------------------------------------------------------------
Class R 2,429
- --------------------------------------------------------------------------
Investor Class 9
- --------------------------------------------------------------------------
Transfer agent fees 1,965,469
- --------------------------------------------------------------------------
Directors' fees 15,817
- --------------------------------------------------------------------------
Other 376,094
==========================================================================
Total expenses 9,267,744
==========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (46,965)
==========================================================================
Net expenses 9,220,779
==========================================================================
Net investment income (loss) (975,951)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities 19,531,063
- --------------------------------------------------------------------------
Foreign currencies 1,249,813
- --------------------------------------------------------------------------
Futures contracts (283,125)
==========================================================================
20,497,751
==========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 92,348,452
- --------------------------------------------------------------------------
Foreign currencies (116,126)
==========================================================================
92,232,326
==========================================================================
Net gain from investment securities, foreign currencies and
futures contracts 112,730,077
==========================================================================
Net increase in net assets resulting from operations $111,754,126
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2003 and 2002
<Table>
<Caption>
2003 2002
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (975,951) $ (2,138,702)
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts 20,497,751 (58,034,155)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 92,232,326 53,982,841
==========================================================================================
Net increase (decrease) in net assets resulting from
operations 111,754,126 (6,190,016)
==========================================================================================
Share transactions-net:
Class A (62,533,328) 125,417,383
- ------------------------------------------------------------------------------------------
Class B (13,312,226) (2,223,760)
- ------------------------------------------------------------------------------------------
Class C (3,175,123) (4,011,667)
- ------------------------------------------------------------------------------------------
Class R 467,649 16,969
- ------------------------------------------------------------------------------------------
Investor Class 162,286 --
==========================================================================================
Net increase (decrease) in net assets resulting from
share transactions (78,390,742) 119,198,925
==========================================================================================
Net increase in net assets 33,363,384 113,008,909
==========================================================================================
NET ASSETS:
Beginning of year 408,587,558 295,578,649
==========================================================================================
End of year (including undistributed net investment income
(loss) of $267,863 and $(36,848) for 2003 and 2002,
respectively) $441,950,942 $408,587,558
__________________________________________________________________________________________
==========================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM European Growth Fund (the "Fund") is a series portfolio of AIM International
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of five separate
portfolios. The Fund currently offers multiple classes of shares. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Effective November 25, 2003, the
Fund redomesticated as a series portfolio of a newly formed Delaware statutory
trust, AIM International Mutual Funds.
The Fund's investment objective is long-term growth of capital. Companies
are listed in the Schedule of Investments based on the country in which they are
organized.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued on the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Securities for which market prices
are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Market trends, movement in exchange traded funds
and ADRs, and the bid/ask quotes of brokers and information providers may
be reviewed in the course of making a good faith determination of a
security's fair value. Short-term obligations having 60 days or less to
maturity and commercial paper are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the NYSE. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of the close of the respective
markets. Occasionally, events affecting the values of such foreign
securities may occur between the times at which the particular foreign
market closes and the close of the customary trading session of the NYSE
which would not ordinarily be reflected in the computation of the Fund's
net asset value. If a development/event is so significant that there is a
reasonably high degree of certainty as to both the effect and the degree of
effect that the development/event has actually caused that closing price to
no longer reflect actual value, the closing prices, as determined at the
close of the applicable foreign market, may be adjusted to reflect the fair
value of the affected foreign securities as of the close of the NYSE as
determined in good faith by or under the supervision of the Board of
Directors.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M 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
gain) which is distributed to shareholders. Therefore, no provision for
federal income taxes is recorded in the financial statements. Any capital
loss carryforwards listed are reduced for limitations, if any, to the
extent required by the Internal Revenue Code.
F-7
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations. Reported net realized foreign currency gains or losses arise
from sales of foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
currency gains and losses arise from changes in the fair values of assets
and liabilities, other than investments in securities at fiscal period end,
resulting from changes in exchange rates.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks also include to
varying degrees, the risk of loss in excess of the variation margin.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first
$500 million of the Fund's average daily net assets, plus 0.90% of the Fund's
average daily net assets in excess of $500 million. AIM has voluntarily agreed
to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in affiliated money market funds with cash
collateral from securities loaned by the Fund). For the year ended October 31,
2003, AIM waived fees of $4,811 and reimbursed expenses of $34,241.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2003, AIM was
paid $125,283 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AISI"), formerly known as A I M Fund
Services, Inc., a fee for providing transfer agency and shareholder services to
the Fund. During the year ended October 31, 2003, AISI retained $1,087,026 for
such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Investor Class shares of the Fund.
The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A, Class B, Class C, Class R and the Investor Class
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares, 1.00% of the average daily net assets of
Class B and Class C shares, 0.50% of the average daily net assets of Class R
shares and 0.25% of the average daily net assets of the Investor Class shares.
Of these amounts, AIM Distributors may pay a service fee up to 0.25% of the
average daily net assets of the Class A, Class B, Class C or Class R shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own shares of such
classes. Any amounts not paid as a service fee under the Plans would constitute
an asset-based sales charge. NASD Rules also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the year ended October 31, 2003,
the Class A, Class B, Class C, Class R and the Investor Class shares paid
$1,030,346, $965,110, $279,643, $2,429 and $9, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the year
ended October 31, 2003, AIM Distributors retained $46,667 in front-end sales
commissions from the sale of Class A shares and $324,229, $69 and $14,575 from
Class A, Class B and Class C shares, respectively, for CDSC imposed upon
redemptions by shareholders.
F-8
Certain officers and directors of the Company are officers and directors of
AIM, AISI and/or AIM Distributors.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
For the year ended October 31, 2003, the Fund received reductions in transfer
agency fees from AISI (an affiliate of AIM) of $7,666 and reduction in custodian
fees of $247 under expense offset arrangements which resulted in a reduction of
the Fund's total expenses of $7,913.
NOTE 4--DIRECTORS' FEES
Directors' fees represent remuneration paid to each Director of the Company who
is not an "interested person" of AIM. Directors have the option to defer
compensation payable by the Company. The Directors deferring compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested.
Current Directors are eligible to participate in a retirement plan that
provides for benefits to be paid upon retirement to Directors over a period of
time based on the number of years of service. Certain former Directors also
participate in a retirement plan and receive benefits under such plan.
During the year ended October 31, 2003, the Fund paid legal fees of $2,846
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Directors. A member of that firm is a Director of the Company.
NOTE 5--BORROWINGS
The Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund loan will be
made under this facility only if the loan rate (an average of the rate available
on bank loans and the rate available on investments in overnight repurchase
agreements) is favorable to both the lending fund and the borrowing fund. Under
certain circumstances, a loan will be secured by collateral. To the extent that
the loan is required to be secured by collateral, the collateral is marked to
market daily to ensure that the market value is at least 102% of the outstanding
principal value of the loan.
Effective June 26, 2003, the Fund became a participant in an uncommitted
unsecured revolving line of credit facility with State Street Bank and Trust
Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000 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 can borrow on a first
come, first served basis. Principal on each loan outstanding shall bear interest
at the bid rate quoted by SSB at the time of the request for the loan.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could 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 were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the year ended October 31, 2003, the Fund did not borrow or lend
under the interfund lending facility or borrow under either the uncommitted
unsecured revolving line of credit facility or the committed line of credit
facility.
Additionally the Fund is permitted to carry a negative or overdrawn balance
in its account with the custodian bank. To compensate the custodian bank for
such overdrafts, the overdrawn Fund may either (i) leave funds in the account so
the custodian can be compensated by earning the additional interest; or (ii)
compensate by paying the custodian bank. In either case, the custodian bank will
be compensated an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value of the loaned securities determined daily. Such collateral will be
cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, following the
valuation date of the securities loaned. Therefore, the value of the collateral
held may be temporarily less than the value of the securities on loan.
At October 31, 2003, securities with an aggregate value of $11,629,769 were
on loan to brokers. The loans were secured by cash collateral of $12,113,481
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended October 31, 2003, the Fund received fees of $304,526
for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid
during the years ended October 31, 2003 and 2002.
Tax Components of Net Assets:
As of October 31, 2003, the components of net assets on a tax basis were as
follows:
<Table>
Undistributed ordinary income $ 314,297
- ------------------------------------------------------------------------------------------
Unrealized appreciation -- investments 120,966,369
- ------------------------------------------------------------------------------------------
Temporary book/tax differences (46,435)
- ------------------------------------------------------------------------------------------
Capital loss carryforward (144,100,812)
- ------------------------------------------------------------------------------------------
Capital (par value and additional paid-in) 464,817,523
==========================================================================================
Total net assets $ 441,950,942
__________________________________________________________________________________________
==========================================================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation is
due to differences in the timing of recognition of gains and losses on
investments for tax and book purposes. The Fund's unrealized appreciation
difference is attributable primarily to the tax deferral of losses on wash
sales. The tax-basis unrealized appreciation on
F-9
investments amount includes appreciation (depreciation) on foreign currencies of
$(61,487).
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the deferral of director compensation and
director retirement plan expenses.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- --------------------------------------------------------------------------------
October 31, 2009 $ 85,467,686
- --------------------------------------------------------------------------------
October 31, 2010 58,633,126
================================================================================
Total capital loss carryforward $144,100,812
________________________________________________________________________________
================================================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
October 31, 2003 was $316,660,103 and $381,381,472, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT
SECURITIES ON A TAX BASIS
- -------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $121,776,115
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (748,259)
===============================================================================
Net unrealized appreciation of investment securities $121,027,856
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $321,703,060.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of nondeductible
redomestication expenses and foreign currency transactions, on October 31, 2003,
undistributed net investment income (loss) was increased by $1,280,662,
undistributed net realized gain (loss) was decreased by $1,256,104 and paid in
capital decreased by $24,558. This reclassification had no effect on net assets
of the Fund.
F-10
NOTE 10--CAPITAL STOCK INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and Investor Class shares. Class
A shares are sold with a front-end sales charge. Class B shares and Class C
shares are sold with CDSC. Class R shares and Investor Class shares are sold at
net asset value. Under some circumstances, Class A shares and Class R shares are
subject to CDSC. Generally, Class B shares will automatically convert to Class A
shares eight years after the end of the calendar month of purchase.
<Table>
<Caption>
CHANGES IN CAPITAL STOCK OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2003 2002
------------------------------ ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 82,916,233 $ 1,366,427,023 37,092,178 $ 609,947,178
- ----------------------------------------------------------------------------------------------------------------------------
Class B 734,581 11,741,120 889,627 14,708,041
- ----------------------------------------------------------------------------------------------------------------------------
Class C 4,899,091 77,913,071 2,584,399 41,058,289
- ----------------------------------------------------------------------------------------------------------------------------
Class R* 439,162 7,228,264 992 17,020
- ----------------------------------------------------------------------------------------------------------------------------
Investor Class** 8,159 162,338 -- --
============================================================================================================================
Issued in connection with acquisitions:***
Class A -- -- 9,495,949 145,720,423
- ----------------------------------------------------------------------------------------------------------------------------
Class B -- -- 867,993 12,890,199
- ----------------------------------------------------------------------------------------------------------------------------
Class C -- -- 104,957 1,559,763
============================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 236,630 3,953,498 130,942 2,186,186
- ----------------------------------------------------------------------------------------------------------------------------
Class B (245,600) (3,953,498) (137,878) (2,186,186)
============================================================================================================================
Reacquired:
Class A (86,282,624) (1,432,913,849) (38,067,728) (632,436,404)
- ----------------------------------------------------------------------------------------------------------------------------
Class B (1,338,030) (21,099,848) (1,710,546) (27,635,814)
- ----------------------------------------------------------------------------------------------------------------------------
Class C (5,072,535) (81,088,194) (2,905,211) (46,629,719)
- ----------------------------------------------------------------------------------------------------------------------------
Class R* (407,105) (6,760,615) (3) (51)
- ----------------------------------------------------------------------------------------------------------------------------
Investor Class** (3) (52) -- --
============================================================================================================================
(4,112,041) $ (78,390,742) 8,345,671 $ 119,198,925
____________________________________________________________________________________________________________________________
============================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
** Investor Class shares commenced sales on September 30, 2003.
*** As of the close of business on September 20, 2002, the Fund acquired all the
net assets of AIM Euroland Growth Fund pursuant to a plan of reorganization
approved by AIM Euroland Growth Fund shareholders on September 4, 2002. The
acquisition was accomplished by a tax-free exchange of 10,468,899 shares of
the Fund for 22,408,695 shares of AIM Euroland Growth Fund outstanding as of
the close of business on September 20, 2002. AIM Euroland Growth Fund's net
assets at that date of $160,170,385 including $(26,495,326) of unrealized
appreciation (depreciation), were combined with those of the Fund. The
aggregate net assets of the Fund immediately before the acquisition were
$244,433,808.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.60 $ 16.52 $ 23.59 $ 16.42 $ 12.96
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.07)(a) (0.06)(a) (0.21)(a) (0.11)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.43 (0.85) (7.01) 7.38 3.58
================================================================================================================================
Total from investment operations 4.42 (0.92) (7.07) 7.17 3.47
================================================================================================================================
Less dividends from net investment income -- -- -- -- (0.01)
================================================================================================================================
Net asset value, end of period $ 20.02 $ 15.60 $ 16.52 $ 23.59 $ 16.42
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) 28.33% (5.57)% (29.97)% 43.67% 26.81%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $301,659 $283,812 $157,651 $273,605 $99,148
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets 2.01%(c)(d) 1.93% 1.83% 1.69% 1.88%
================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.04)%(c) (0.42)% (0.32)% (0.82)% (0.69)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 81% 94% 99% 112% 122%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $294,384,443.
(d) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.02%.
<Table>
<Caption>
CLASS B
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.08 $ 16.07 $ 23.11 $ 16.20 $ 12.87
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11)(a) (0.18)(a) (0.19)(a) (0.38)(a) (0.22)
- -------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.26 (0.81) (6.85) 7.29 3.55
===============================================================================================================================
Total from investment operations 4.15 (0.99) (7.04) 6.91 3.33
===============================================================================================================================
Net asset value, end of period $ 19.23 $ 15.08 $ 16.07 $ 23.11 $ 16.20
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) 27.52% (6.16)% (30.46)% 42.65% 25.87%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $107,959 $97,436 $105,324 $169,614 $67,074
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 2.66%(c)(d) 2.58% 2.50% 2.39% 2.63%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.69)%(c) (1.07)% (0.98)% (1.52)% (1.44)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 81% 94% 99% 112% 122%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $96,511,040.
(d) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.67%.
F-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.09 $ 16.09 $ 23.13 $ 16.21 $ 12.88
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11)(a) (0.18)(a) (0.19)(a) (0.38)(a) (0.23)
- ----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.26 (0.82) (6.85) 7.30 3.56
============================================================================================================================
Total from investment operations 4.15 (1.00) (7.04) 6.92 3.33
============================================================================================================================
Net asset value, end of period $ 19.24 $ 15.09 $ 16.09 $ 23.13 $ 16.21
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) 27.50% (6.22)% (30.44)% 42.69% 25.85%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $31,509 $27,323 $32,604 $54,164 $11,938
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 2.66%(c)(d) 2.58% 2.50% 2.39% 2.63%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.69)%(c) (1.07)% (0.98)% (1.52)% (1.44)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 81% 94% 99% 112% 122%
____________________________________________________________________________________________________________________________
============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $27,964,290.
(d) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.67%.
<Table>
<Caption>
CLASS R
-------------------------------
JUNE 3, 2002
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2003 2002
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.59 $ 18.35
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.04)(a)
- ---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.42 (2.72)
=============================================================================================
Total from investment operations 4.39 (2.76)
=============================================================================================
Net asset value, end of period $19.98 $ 15.59
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 28.16% (15.04)%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 660 $ 15
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets 2.16%(c)(d) 2.08%(e)
=============================================================================================
Ratio of net investment income (loss) to average net assets (0.19)%(c) (0.57)%(e)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(f) 81% 94%
_____________________________________________________________________________________________
=============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $485,853.
(d) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.17%.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-13
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
INVESTOR CLASS
------------------
SEPTEMBER 30, 2003
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2003
- ----------------------------------------------------------------------------------
Net asset value, beginning of period $18.84
- ----------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.00(a)
==================================================================================
Net gains on securities (both realized and unrealized) 1.17
==================================================================================
Total from investment operations 1.17
==================================================================================
Net asset value, end of period $20.01
__________________________________________________________________________________
==================================================================================
Total return(b) 6.21%
__________________________________________________________________________________
==================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 163
__________________________________________________________________________________
==================================================================================
Ratio of expenses to average net assets 1.79%(c)(d)
==================================================================================
Ratio of net investment income to average net assets 0.18%(c)
__________________________________________________________________________________
==================================================================================
Portfolio turnover rate(e) 81%
__________________________________________________________________________________
==================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $42,611.
(d) After fee waivers and/or reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 1.79%.
(e) Not annualized for periods less than one year.
NOTE 12--SUBSEQUENT EVENTS
On November 24, 2003, INVESCO European Fund ("Selling Fund") transferred
substantially all of its assets to the Fund in exchange for shares of the
Selling Fund in a tax-free reorganization.
The results of the reorganization are as follows: The acquisition was
accomplished by a tax-free exchange of 8,080,669 shares of the Fund for
18,162,024 shares of INVESCO European Fund outstanding as of the open of
business on November 24, 2003. INVESCO European Fund's net assets at that date
of $162,973,764 including $27,261,043 of unrealized appreciation, were combined
with those of the Fund. The aggregate net assets of the Fund immediately before
the acquisition were $444,879,513. Included in net assets of the acquired fund
is undistributed net investment income (loss) of $(289,707) and undistributed
net realized gain (loss) of $(298,154,211).
Your Fund's investment advisor, A I M Advisors, Inc. ("AIM") is an indirect
wholly owned subsidiary of AMVESCAP PLC ("AMVESCAP"). Another indirect wholly
owned subsidiary of AMVESCAP, INVESCO Funds Group, Inc. ("INVESCO"), was, until
recently, the investment advisor to the INVESCO Funds.
On December 2, 2003, each of the Securities and Exchange Commission ("SEC")
and the Office of the Attorney General of the State of New York ("NYAG") filed
civil proceedings against INVESCO and Raymond R. Cunningham, in his capacity as
the Chief Executive Officer of INVESCO. Mr. Cunningham currently holds the
positions of Chief Operating Officer and Senior Vice President of A I M
Management Group, Inc., the parent company of AIM, and he also holds the
position of Senior Vice President with AIM. In addition, on December 2, 2003,
the State of Colorado filed civil proceedings against INVESCO. Neither your Fund
nor any of the funds in the AIM Family of Funds(R), which includes the INVESCO
Funds (the "Funds") has been named as a defendant in any of these proceedings.
The SEC proceeding alleges that INVESCO failed to disclose in the INVESCO
Funds' prospectuses and to the INVESCO Funds' independent directors that INVESCO
had entered into certain arrangements permitting market timing of the INVESCO
Funds. The SEC is seeking injunctions, including permanent injunctions from
serving as an investment advisor, officer or director of an investment company;
an accounting of all market timing as well as certain fees and compensation
received; disgorgement; civil monetary penalties; and other relief.
The NYAG proceeding is also based on the circumstances described above. The
NYAG is seeking injunctions, including permanent injunctions from directly or
indirectly selling or distributing shares of mutual funds; disgorgement of all
profits obtained, including fees collected, and payment of all restitution and
damages caused, directly or indirectly from the alleged illegal activities;
civil monetary penalties; and other relief.
The Colorado proceeding is also based on the circumstances described above.
The State of Colorado is seeking injunctions; restitution, disgorgement and
other equitable relief; civil monetary penalties; and other relief.
If INVESCO is unsuccessful in its defense of these proceedings, it could be
barred from serving as an investment advisor for any investment company
registered under the Investment Company Act of 1940, as amended (a "registered
investment company"). Similarly, if Mr. Cunningham is unsuccessful in his
defense of these proceedings, he could be barred from serving as an officer or
director of any registered investment company. Such results could also affect
the ability of AIM, or any other investment advisor directly or indirectly owned
by AMVESCAP, from serving as an investment advisor to any
F-14
NOTE 12--SUBSEQUENT EVENTS (CONTINUED)
registered investment company, including your Fund. Your Fund has been informed
by AIM that, if either of these results occurs, AIM will seek exemptive relief
from the SEC to permit it to continue to serve as your Fund's investment
advisor. There can be no assurance that such exemptive relief will be granted.
AIM has received inquiries from the SEC, the NASD, Inc., the NYAG and the
Secretary of the Commonwealth of Massachusetts with respect to market timing,
late trading, fair value pricing and other similar issues and AIM has been
providing full cooperation with respect to these inquiries.
In addition to the complaints described above, multiple lawsuits, including
purported class action and shareholder derivative suits, have been filed against
certain Funds, INVESCO, AIM, AMVESCAP and certain related parties, primarily
based upon the allegations in the complaints described above, but also regarding
the funds' fair valuation pricing methodology. Such lawsuits allege a variety of
theories for recovery including, but not limited to: (i) violation of various
provisions of the Federal securities laws; (ii) breach of fiduciary duty; and
(iii) breach of contract. The lawsuits have been filed in both Federal and state
courts and seek such remedies as compensatory damages; restitution; rescission;
accounting for wrongfully gotten gains, profits and compensation; injunctive
relief; disgorgement; equitable relief; interest and the payment of attorneys'
and experts' fees. Additional lawsuits arising out of these circumstances and
presenting similar allegations and requests for relief may be filed against the
Funds, INVESCO, AIM, AMVESCAP and related parties in the future.
As a result of these developments, investors in the Funds might react by
redeeming their investments. This might require the Funds to sell investments to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the Funds.
At the present time, management of AIM and the Fund is unable to estimate the
impact, if any, that the outcome of these matters described above may have on
the Fund or AIM's financial condition.
F-15
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors/Trustees and Shareholders of AIM European Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the AIM European Growth Fund (one
of the funds constituting AIM International Funds, Inc., now known as AIM
International Mutual Funds; hereafter referred to as the "Fund") at October 31,
2003, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the three years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The financial
highlights for each of the periods ended on or before October 31, 2000 were
audited by other independent accountants whose report dated December 6, 2000,
expressed an unqualified opinion on the financial highlights.
PRICEWATERHOUSECOOPERS LLP
December 16, 2003
Houston, Texas
F-16
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM International Funds, Inc., a Maryland
corporation, was held on October 21, 2003. The meeting was adjourned and
reconvened on October 28, 2003, on November 4, 2003, on November 11, 2003, on
November 17, 2003 and reconvened on November 21, 2003. The meeting was held for
the following purposes:
(1)* To elect sixteen individuals to the Board, each of whom will serve until
his or her successor is elected and qualified: Bob R. Baker, Frank S.
Bayley, James T. Bunch, Bruce L. Crockett, Albert R. Dowden, Edward K.
Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Gerald J.
Lewis, Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley, Louis S.
Sklar, Larry Soll, Ph.D. and Mark H. Williamson.
(2)* To approve an Agreement and Plan of Reorganization which provides for the
redomestication of Company as a Delaware statutory trust and, in connection
therewith, the sale of all of Company's assets and the dissolution of
Company as a Maryland corporation.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHOLDING
DIRECTORS/MATTER VOTES FOR AUTHORITY
- ---------------------------------------------------------------------------------
(1)* Bob R. Baker................................. 162,211,196 3,444,279
Frank S. Bayley.............................. 162,236,962 3,418,513
James T. Bunch............................... 162,287,588 3,367,887
Bruce L. Crockett............................ 162,276,496 3,378,979
Albert R. Dowden............................. 162,251,386 3,404,089
Edward K. Dunn, Jr. ......................... 162,221,226 3,434,249
Jack M. Fields............................... 162,278,318 3,377,157
Carl Frischling.............................. 162,182,906 3,472,569
Robert H. Graham............................. 162,243,892 3,411,583
Gerald J. Lewis.............................. 162,147,868 3,507,607
Prema Mathai-Davis........................... 162,219,866 3,435,609
Lewis F. Pennock............................. 162,263,207 3,392,268
Ruth H. Quigley.............................. 162,163,064 3,492,411
Louis S. Sklar............................... 162,243,759 3,411,716
Larry Soll, Ph.D. ........................... 162,236,226 3,419,249
Mark H. Williamson........................... 162,238,962 3,416,513
</Table>
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 76,302,938 2,822,366 86,530,171**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on October 28, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 84,066,011 2,989,031 83,338,957**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 4, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 95,512,525 3,144,748 78,504,573**
</Table>
F-17
PROXY RESULTS (UNAUDITED) (CONTINUED)
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 11, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 109,217,698 3,531,752 71,913,039**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 17, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 116,710,545 3,761,148 69,451,190**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 21, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 137,239,949 4,617,039 51,798,672**
</Table>
* Proposal required approval by a combined vote of all the portfolios of AIM
International Funds, Inc.
** Includes Broker Non-Votes
F-18
OTHER INFORMATION
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S)
TRUST SINCE DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- ------------------------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1991 Director and Chairman, A I M Management Group Inc. None
Trustee, Chairman and (financial services holding company); and Director and Vice
President Chairman, AMVESCAP PLC and Chairman of AMVESCAP PLC -- AIM
Division (parent of AIM and a global investment management
firm)
Formerly: President and Chief Executive Officer, A I M
Management Group Inc.; Director, Chairman and President,
A I M Advisors, Inc. (registered investment advisor); and
Director and Chairman, A I M Capital Management, Inc.
(registered investment advisor), A I M Distributors, Inc.
(registered broker dealer), AIM Investment Services, Inc.,
(registered transfer agent), and Fund Management Company
(registered broker dealer); and Chief Executive Officer,
AMVESCAP PLC -- Managed Products
- ------------------------------------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, A I M Director and Chairman,
Trustee and Executive Vice Management Group Inc. (financial services holding company); INVESCO Bond Funds,
President Director, Chairman and President, A I M Advisors, Inc. Inc., INVESCO
(registered investment advisor); Director, A I M Capital Combination Stock &
Management, Inc. (registered investment advisor) and A I M Bond Funds, Inc.,
Distributors, Inc. (registered broker dealer); Director and INVESCO Counselor
Chairman, AIM Investment Services, Inc. (registered transfer Series Funds, Inc.,
agent); and Fund Management Company (registered broker INVESCO International
dealer); and Chief Executive Officer, AMVESCAP PLC -- AIM Funds, Inc., INVESCO
Division (parent of AIM and a global investment management Manager Series Funds,
firm) Inc., INVESCO Money
Formerly: Director, Chairman, President and Chief Executive Market Funds, Inc.,
Officer, INVESCO Funds Group, Inc. and INVESCO Distributors, INVESCO Sector Funds,
Inc.; Chief Executive Officer, AMVESCAP PLC -- Managed Inc., INVESCO Stock
Products; Chairman and Chief Executive Officer of Funds, Inc., INVESCO
NationsBanc Advisors, Inc.; and Chairman of NationsBanc Treasurer's Series
Investments, Inc. Funds, Inc. and
INVESCO Variable
Investment Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker(3) -- 1936 2003 Consultant None
Trustee
Formerly: President and Chief Executive Officer, AMC
Cancer Research Center; and Chairman and Chief Executive
Officer, First Columbia Financial Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc.
Trustee (registered investment
company)
- ------------------------------------------------------------------------------------------------------------------------------------
James T. Bunch(3) -- 1942 2003 Co-President and Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director, Policy Studies,
Inc. and Van Gilder Insurance Corporation
Formerly: General Counsel and Director, Boettcher & Co.; and
Chairman and Managing Partner, law firm of Davis, Graham &
Stubbs
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates (technology ACE Limited (insurance
Trustee consulting company) company); and
Captaris, Inc.
(unified messaging
provider)
- ------------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director of a number of public and private business Cortland Trust, Inc.
Trustee corporations, including the Boss Group Ltd. (private (Chairman) (registered
investment and management) and Magellan Insurance Company investment company);
Formerly: Director, President and Chief Executive Officer, Annuity and Life Re
Volvo Group North America, Inc.; Senior Vice President, AB (Holdings), Ltd.
Volvo; and director of various affiliated Volvo Group (insurance company)
companies
- ------------------------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly: Chairman, Mercantile Mortgage Corp.; President and None
Trustee Chief Operating Officer, Mercantile-Safe Deposit & Trust
Co.; and President, Mercantile Bankshares Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Group, Inc. Administaff
Trustee (government affairs company) and Texana Timber LP
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Graham is considered an interested person of the Trust because he is a
director of AMVESCAP PLC, parent of the advisor to the Trust.
(2) Mr. Williamson is considered an interested person of the Trust because he is
an officer and a director of the advisor to, and a director of the principal
underwriter of, the Trust. Mr. Williamson became Executive Vice President of
the Trust on March 4, 2003.
(3) Elected trustee of the Trust on October 21, 2003.
Trustees and Officers (continued)
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ PRINCIPAL OCCUPATION(S)
POSITION(S) HELD WITH THE TRUST OR OFFICER SINCE DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Naftalis and Frankel LLP
Trustee
- -------------------------------------------------------------------------------------------------------------------
Gerald J. Lewis(3) -- 1933 2003 Chairman, Lawsuit Resolution Services (San Diego,
Trustee California)
Formerly: Associate Justice of the California Court of
Appeals
- -------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly: Chief Executive Officer, YWCA of the USA
Trustee
- -------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1991 Partner, law firm of Pennock & Cooper
Trustee
- -------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired
Trustee
- -------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1991 Executive Vice President, Development and Operations Hines
Trustee Interests Limited Partnership (real estate development
company)
- -------------------------------------------------------------------------------------------------------------------
Larry Soll, Ph.D.(3) -- 1942 2003 Retired
Trustee
- -------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- -------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 2003 Director, Senior Vice President, Secretary and General
Senior Vice President Counsel, A I M Management Group Inc. (financial services
holding company) and A I M Advisors, Inc.; Vice President,
A I M Capital Management, Inc., A I M Distributors, Inc. and
AIM Investment Services, Inc.; and Director, Vice President
and General Counsel, Fund Management Company
Formerly: Senior Vice President and General Counsel, Liberty
Financial Companies, Inc.; and Senior Vice President and
General Counsel, Liberty Funds Group, LLC
- -------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 1991 Director, Chairman and Director of Investments, A I M
Senior Vice President Capital Management, Inc.; Director and Executive Vice
President, A I M Management Group Inc.; Director and Senior
Vice President, A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC
Formerly: Chief Executive Officer and President, A I M
Capital Management Inc.
- -------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 1994 Managing Director and Chief Fixed Income Officer, A I M
Vice President Capital Management, Inc., and Vice President, A I M
Advisors, Inc.
- -------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 2002 Managing Director and Chief Research Officer -- Fixed
Vice President Income, A I M Capital Management, Inc.; and Vice President,
A I M Advisors, Inc.
- -------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance Officer, A I M Advisors,
Vice President Inc. and A I M Capital Management, Inc.; and Vice President,
AIM Investment Services, Inc.
- -------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 1999 Vice President, A I M Advisors, Inc., and President, Chief
Vice President Executive Officer and Chief Investment Officer, A I M
Capital Management, Inc.
- -------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1991 Vice President and Fund Treasurer, A I M Advisors, Inc.
Vice President and Treasurer
- -------------------------------------------------------------------------------------------------------------------
<Caption>
NAME, YEAR OF BIRTH AND OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST HELD BY TRUSTEE
- --------------------------------- ----------------------
Carl Frischling -- 1937 Cortland Trust, Inc.
Trustee (registered investment
company)
- -------------------------------------------------------------------------------------------------------------------
Gerald J. Lewis(3) -- 1933 General Chemical
Trustee Group, Inc.,
Wheelabrator
Technologies, Inc.
(waste management
company), Fisher
Scientific, Inc.,
Henley Manufacturing,
Inc. (laboratory
supplies), and
California Coastal
Properties, Inc.
- -------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 None
Trustee
- -------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 None
Trustee
- -------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 None
Trustee
- -------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 None
Trustee
- -------------------------------------------------------------------------------------------------------------------
Larry Soll, Ph.D.(3) -- 1942 None
Trustee
- -------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- -------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 N/A
Senior Vice President
- -------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 N/A
Senior Vice President
- -------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 N/A
Vice President
- -------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 N/A
Vice President
- -------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 N/A
Vice President
- -------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 N/A
Vice President
- -------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 N/A
Vice President and Treasurer
- -------------------------------------------------------------------------------------------------------------------
</Table>
(3) Elected trustee of the Trust on October 21, 2003.
(4) Mr. Carome became Senior Vice President of the Trust on May 13, 2003.
(5) Information is current as of January 10, 2003.
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.347.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, Inc. PricewaterhouseCoopers LLP
Suite 100 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana, Suite 2900
Houston, TX 77046 Suite 100 Suite 100 Houston, TX 77002
Houston, TX 77046 Houston, TX 77046-1173
COUNSEL TO THE FUND COUNSEL TO THE TRUSTEES TRANSFER AGENT CUSTODIAN
Ballard Spahr Kramer, Levin, Naftalis & AIM Investment Services, Inc. State Street Bank and
Andrews & Ingersoll, LLP Frankel LLP P.O. Box 4739 Trust Company
1735 Market Street 919 Third Avenue Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103 New York, NY 10022-3852 Boston, MA 02110
</Table>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the tax year November 1, 2003
through November 23, 2003, 3.96% is eligible for the dividends received
deduction for corporations.
For the tax year November 1, 2003 through November 23, 2003, the Fund designates
100%, or the maximum amount allowable, of its dividend distributions as
qualified dividend income. The actual amount for the calendar year will be
designated in the Fund's year end tax statement.
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund
AIM Constellation Fund AIM Global Value Fund(4) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Emerging Growth Fund AIM Short Term Bond Fund
AIM Diversified Dividend Fund1 AIM International Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM Trimark Fund INVESCO U.S. Government Money Fund
AIM Large Cap Basic Value Fund INVESCO International Core Equity Fund(5)
AIM Large Cap Growth Fund
AIM Libra Fund
AIM Mid Cap Basic Value Fund
AIM Mid Cap Core Equity Fund SECTOR EQUITY TAX-FREE
AIM Mid Cap Growth Fund
AIM Opportunities I Fund AIM Global Health Care Fund AIM High Income Municipal Fund
AIM Opportunities II Fund AIM Real Estate Fund AIM Municipal Bond Fund
AIM Opportunities III Fund INVESCO Advantage Health Sciences Fund AIM Tax-Exempt Cash Fund
AIM Premier Equity Fund INVESCO Energy Fund AIM Tax-Free Intermediate Fund
AIM Select Equity Fund INVESCO Financial Services Fund
AIM Small Cap Equity Fund(2) INVESCO Gold & Precious Metals Fund
AIM Small Cap Growth Fund(3) INVESCO Health Sciences Fund
AIM Trimark Endeavor Fund INVESCO Leisure Fund
AM Trimark Small Companies Fund INVESCO Multi-Sector Fund
AIM Weingarten Fund INVESCO Technology Fund
INVESCO Core Equity Fund INVESCO Utilities Fund
INVESCO Dynamics Fund
INVESCO Mid-Cap Growth Fund
INVESCO Small Company Growth Fund
INVESCO S&P 500 Index Fund
INVESCO Total Return Fund*
</Table>
* Domestic equity and income fund
(1)Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2)AIM Small Cap Equity Fund was closed to most
investors on December 19, 2003. For information on who may continue to invest in
AIM Small Cap Equity Fund, please contact your financial advisor. (3)AIM Small
Cap Growth Fund was closed to most investors on March 18, 2002. For information
on who may continue to invest in AIM Small Cap Growth Fund, please contact your
financial advisor. (4)Effective April 30, 2003, AIM Worldwide Spectrum Fund was
renamed AIM Global Value Fund. (5)Effective November 24, 2003, INVESCO
International Blue Chip Value Fund was renamed INVESCO International Core Equity
Fund. For more complete information about any AIM or INVESCO fund, including
sales charges and expenses, ask your financial advisor for a prospectus. Please
read it carefully before investing. If used after January 20, 2004, this
brochure must be accompanied by a fund Performance & Commentary or by an AIM
Quarterly Performance Review for the most recent quarter-end. Mutual funds
distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $142 billion in assets for approximately 11
million shareholders, including individual investors, corporate clients and
financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $345 billion in assets
under management. Data as of September 30, 2003.
AIMinvestments.com EGR-AR-1
<Table>
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
- ------------------------------------------------------------------------------------------
MUTUAL RETIREMENT ANNUITIES COLLEGE SEPARATELY OFFSHORE ALTERNATIVE CASH [AIM INVESTMENTS LOGO APPEARS HERE]
FUNDS PRODUCTS SAVINGS MANAGED PRODUCTS INVESTMENTS MANAGEMENT --Servicemark--
PLANS ACCOUNTS
</Table>
AIM GLOBAL AGGRESSIVE GROWTH FUND
Annual Report to Shareholders o October 31, 2003
[COVER IMAGE]
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
================================================================================
AIM GLOBAL AGGRESSIVE GROWTH FUND SEEKS TO PROVIDE ABOVE-AVERAGE LONG-TERM
GROWTH OF CAPITAL.
================================================================================
ABOUT INFORMATION THROUGHOUT THIS REPORT:
<Table>
o Unless otherwise stated, information sharing plans. Plans that have existing o The unmanaged MSCI All Country (AC)
presented is as of 10/31/03 and is based accounts invested in Class B shares will World Free Index tracks the performance
on total net assets. continue to be allowed to make additional of approximately 50 developed and
purchases. emerging countries covered by Morgan
o AIM Global Aggressive Growth Fund's Stanley Capital International. A "free"
performance figures are historical, and o International investing presents index represents investable opportunities
they reflect fund expenses, the certain risks not associated with for global investors, taking into account
reinvestment of distributions, and investing solely in the United States. the local market restrictions on share
changes in net asset value. These include risks relating to ownership by foreign investors.
fluctuations in the value of the U.S.
o When sales charges are included in dollar relative to the values of other o The unmanaged Standard & Poor's
performance figures, Class A share currencies, the custody arrangements made Composite Index of 500 Stocks (the S&P
performance reflects the maximum 4.75% for the fund's foreign holdings, 500--Registered Trademark--) is an index
sales charge, and Class B and Class C differences in accounting, political of common stocks frequently used as a
share performance reflects the applicable risks and the lesser degree of public general measure of U.S. stock market
contingent deferred sales charge (CDSC) information required to be provided by performance.
for the period involved. The CDSC on non-U.S. companies.
Class B shares declines from 5% beginning o The unmanaged MSCI Japan Index is a
at the time of purchase to 0% at the o The fund's investment return and market-value-weighted average of the
beginning of the seventh year. The CDSC principal value will fluctuate, so an performance of more than 300 securities
on Class C shares is 1% for the first investor's shares, when redeemed, may be on the Japanese stock exchanges tracked
year after purchase. The performance of worth more or less than their original by Morgan Stanley Capital International.
the fund's share classes will differ due cost.
to different sales charge structures and o A direct investment cannot be made in
class expenses. o Investing in small and mid-size an index. Unless otherwise indicated,
companies may involve risks not index results include reinvested
o A 2% redemption fee will be imposed on associated with investing in more dividends, and they do not reflect sales
certain redemptions or exchanges out of established companies. Also, small charges or fund expenses.
the fund within 30 days of purchase. companies may have business risk,
Exceptions to the redemption fee are significant stock price fluctuations and A description of the policies and
listed in the fund's prospectus. illiquidity. procedures that the fund uses to
determine how to vote proxies relating to
o Effective 9/30/03, Class B shares are o Industry classifications used in this portfolio securities is available without
not available as an investment for report are generally according to the charge, upon request, by calling
retirement plans maintained pursuant to Global Industry Classification Standard, 800-959-4246, or on the AIM Web site,
Section 401 of the Internal Revenue Code, which was developed by and is the AIMinvestments.com.
including 401(k) plans, money purchase exclusive property and a service mark of
pension plans and profit Morgan Stanley Capital International Inc.
and Standard & Poor's.
</Table>
<Table>
=======================================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE This report may be distributed only to shareholders or
to persons who have received a current prospectus of
the fund.
=======================================================
</Table>
AIMinvestments.com
TO OUR SHAREHOLDERS
<Table>
DEAR FELLOW SHAREHOLDER IN new policies and strengthened existing ones--to discourage
THE AIM FAMILY OF FUNDS harmful short-term trading. These steps include:
--Registered Trademark--:
o Strengthening daily monitoring of trading activities.
[PHOTO OF As you may be aware, there has been a
ROBERT H. great deal of media coverage recently o Imposing redemption fees on additional funds we
GRAHAM] about the mutual fund industry and believe may be vulnerable to harmful short-term
allegations of improper activities by trading activity.
ROBERT H. GRAHAM certain individuals and companies. As
part of these widespread investigations, o Implementing an enhanced exchange policy (effective on
INVESCO Funds Group (IFG), the former or about March 1, 2004) designed to limit exchanges
[PHOTO OF adviser to certain INVESCO Funds, was between funds.
MARK H. recently named as a defendant in
WILLIAMSON] separate civil enforcement actions by o Employing an enhanced fair value pricing policy on
the U.S. Securities and Exchange certain foreign securities as well as certain illiquid
MARK H. WILLIAMSON Commission (SEC), the Office of the New securities.
York Attorney General and the State of
Colorado over an issue known as "market timing." A number of None of these tools alone, nor all of them taken
private class or derivative actions also were filed in the together, eliminate the possibility of short-term trading
wake of the regulators' actions. strategies that may be detrimental to a fund. Moreover, each
of these tools involves judgments that are inherently
Investors are understandably concerned and frustrated subjective. We have always sought and continue to seek to
about these reports, and we would like to take this make these judgments to the best of our abilities and in a
opportunity to assure you that, based on an investigation manner that we believe is consistent with the best interests
conducted by an outside firm, IFG and its parent company, of our fund shareholders. And we remain committed to being
AMVESCAP PLC, believe that these civil actions are without as vigilant as possible in the future to identify and
merit. IFG is contesting the charges. address any harmful market timing investors who have the
potential to harm our long-term fund shareholders.
We encourage you to continue to monitor this situation,
particularly as IFG has the opportunity to address the We sincerely hope these developments and the media
allegations that have been made. Current information will be coverage surrounding them do not result in you or other
posted on our Web site at AIMinvestments.com. We will shareholders losing confidence in AIM or INVESCO Funds.
continue to communicate to you on our Web site about our Amidst this storm of controversy in the mutual fund
finding, and the actions we are taking to protect and industry, we believe we can find encouragement in the
promote the interests of our shareholders. The independent recovering economy and rising equity markets. As we write
trustees of the funds are receiving regular reports from this letter, for instance, the S&P 500--Registered
their independent counsel and outside counsel hired by Trademark-- Index is up approximately 23% year-to-date.
AMVESCAP PLC, the parent of AIM and IFG, to perform an Although past performance is no guarantee of future results,
ongoing investigation of market timing. there appear to be indicators that the economy and stock
markets are showing signs of welcomed improvement. We
A COMPLEX ISSUE encourage you to read the enclosed discussion of your fund's
performance during this past reporting period.
Market timing is an investment technique not defined in any
regulation that involves frequent short-term trading of OUR UNWAVERING COMMITMENT
mutual fund shares, sometimes with a goal to exploit
inefficiencies in the way mutual funds price their shares. At AIM Investments, we have never wavered in our commitment
We recognize that fund management companies have tried to to helping you build solutions for your financial goals. Our
deal with this complex issue in various ways and believe company was founded on a core principle of integrity, and we
that industry-wide guidance is in order. To that end, we have always worked hard to earn the trust of our
welcome SEC Chairman William Donaldson's pledge to adopt new shareholders. We are committed to doing all we can to
rules designed to curb market timing abuses. Comprehensive maintain your trust and confidence.
rulemaking is necessary and is the best way to establish new
industry responsibilities designed to protect shareholders. Thank you for your continued participation in AIM
We support practical rule changes and structural Investments. Please call your financial advisor or one of
modifications that are fair, enforceable and, most our Client Service representatives at 800-959-4246 if you
importantly, beneficial for investors. have any further questions or concerns about your AIM
Investments account.
AIM Investments has policies in place designed to
identify, prevent and eliminate harmful trading or other Sincerely,
activities deemed to be detrimental to the funds. We have
also recently taken additional steps--implemented /s/ ROBERT H. GRAHAM /s/ MARK H. WILLIAMSON
Robert H. Graham Mark H. Williamson
Chairman and President President and CEO
The AIM Family of Funds AIM Investments
--Registered Trademark--
December 18, 2003
</Table>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
<Table>
ECONOMIC RECOVERY BENEFITS spending on manufactured goods declined
GLOBAL MARKETS AND FUND in August. However, preliminary
estimates indicates euro zone annualized
Amid signs of an improving global year ended October 31, 2003. The U.S. GDP rose 0.4% in the third quarter and
economic environment, AIM Global economy also appeared to rally in 2003 recent business surveys offer promise.
Aggressive Growth Fund, along with many as the nation's gross domestic product Euro-area industrial confidence
global equity markets, posted positive (GDP) expanded at an annualized rate of increased in both August and September,
returns for the reporting period ended 3.3% in the second quarter and 8.2% in and the Purchasing Manager's Index--a
October 31, 2003. For the fiscal year the third quarter of 2003. The job survey of purchasing managers that
covered by this report, the fund's Class market remained weak, however, as the measures the general health of the
A, Class B and Class C shares returned nation's unemployment rate stood at 6.0% manufacturing sector--increased for the
29.82%, 29.08% and 29.17%, respectively, at the close of the reporting period. fourth consecutive month in October.
at net asset value. Over the same
period, the fund significantly In Asia, Japan's economy finally In monetary affairs, policy settings
outperformed its benchmark, the MSCI All appeared to be showing signs of a for many major economies became more
Country (AC) World Free Index, which cyclical upswing. While deflationary expansionary during the reporting
returned 24.86%. pressures still persist, industrial period. The Federal Reserve, Bank of
production rose strongly in September. England and the European Central Bank
MARKET CONDITIONS Amid this backdrop, Japanese equities all reduced short-term interest rates in
rose sharply through the summer but sold 2003; leaving their benchmark rates at
As the global economic recovery appeared off in late October. Despite the fall, 1.00%, 3.50% and 2.00%, respectively, as
to gain momentum in 2003, equity markets however, the MSCI Japan Index returned of October 31, 2003. Monetary
in the U.S. and abroad generally posted 32.94% for the fiscal year. authorities in many Asian countries also
positive returns for the fiscal year, adopted expansionary policies during the
with emerging market stocks generally While European stock markets posted reporting period.
outperforming those in developed some of the best regional returns for
countries. Market returns and economic the fiscal year, growth in the euro zone On the currency front, although the
growth, however, varied considerably by remains weak. According to a recent U.S. dollar showed a few pockets of
region. report by the Bank of England, there strength during the fiscal year, for the
continues to be a contrast between weak most part, foreign currencies proved
In the United States, the S&P 500, euro area economic data and more stronger. During the reporting period,
frequently cited as a measure of the promising business survey indicators. the British pound, Canadian dollar,
performance of the U.S. stock market, Euro zone annualized GDP fell by 0.1% in euro, Swiss franc, and Japanese yen
returned 20.79% for the the second quarter and French consumer appreciated significantly against the
U.S. dollar.
</Table>
<Table>
==================================================================================================================================
TOTAL RETURNS TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
10/31/02-10/31/03
1. Anglo Irish Bank Corp. PLC 1. Diversified Banks 10.4%
(Ireland) 5.0%
2. AO VimpelCom-ADR (Russia) 1.8 2. Pharmaceuticals 6.8
3. Taro Pharmaceutical Industries 3. Semiconductors 3.8
Ltd. (Israel) 1.8
4. Willis Group Holdings Ltd. 4. Data Processing & Outsourced
(Bermuda) 1.6 Services 3.4
5. Enterprise Inns PLC (United 5. Wireless Telecommunication
BAR CHART Kingdom) 1.4 Services 3.4
AIM GLOBAL AGGRESSIVE 6. ICAP PLC (United Kingdom) 1.3 6. Industrial Machinery 3.2
GROWTH FUND
CLASS A SHARES AT NAV 29.82% 7. Travis Perkins PLC (United 7. Electronic Equipment
MSCI AC WORLD Kingdom) 1.3 Manufacturers 2.9
FREE INDEX 24.86%
8. OTP Bank Rt. (Hungary) 1.2 8. Health Care Equipment 2.9
9. Samsung Electronics Co., Ltd. 9. Auto Parts & Equipment 2.7
(South Korea) 1.2
10. Banco Popolare di Verona e 10. Asset Management &
Novara Scrl (Italy) 1.1 Custody Banks 2.4
Source: Lipper, Inc. *Excludes money market fund holdings.
Performance comparisons for other share The fund's holdings are subject to
classes can be found in the Fund vs. change, and there is no assurance that
Index table on the opposite page. the fund will continue to hold any
particular security.
==================================================================================================================================
</Table>
2
<Table>
YOUR FUND fund's holdings. On a regional basis, JASON T. HOLZER
roughly one-third of the portfolio's [PHOTO OF Mr. Holzer, Chartered
Stocks in the financials and health care assets were in European equities, JASON T. Financial Analyst, is
sectors contributed the most to fund one-third in U.S. stocks, with the HOLZER] co-manager of AIM Global
performance during the fiscal year. remainder divided among stocks in Asia, Aggressive Growth Fund.
Anglo Irish Bank Corp. is an example of Latin America and the South Pacific Mr. Holzer joined AIM in 1996. He
a financial stock that benefited the (Australia). received a B.A. in quantitative
fund. Headquartered in Dublin, we economics and an M.S. in
believe this Irish business bank At the end of the fiscal year, more engineering-economic systems from
continued to experience significant than 80% of the fund's holdings were in Stanford University.
growth. small- and mid-cap stocks. This proved
positive for the fund as global ROBERT M. KIPPES
Taro Pharmaceutical Industries, a small-cap stocks significantly [PHOTO OF Mr. Kippes is co-manager
multi-national, science-based outperformed their larger-cap ROBERT M. of AIM Global Aggressive
pharmaceutical company headquartered in counterparts during the fiscal year. KIPPES] Growth Fund. He joined
Israel, also contributed to performance AIM in 1989. Mr. Kippes
in the health care sector. Taro reported IN CLOSING received a B.B.A. in finance from
a 50% increase in sales for the third Stephen F. Austin State University.
quarter of 2003 from a year prior. The After a few challenging years, global
company attributes increased sales to markets began to post strong returns BARRETT K. SIDES
growth in their core U.S. generics again in 2003. Whether world-wide market [PHOTO OF Mr. Sides is co-manager
business and sales of proprietary rallies are sustainable remains to be BARRETT K. of AIM Global Aggressive
prescription products. seen. Regardless, we will continue to SIDES] Growth Fund. He joined
focus on stocks with above-average, AIM in 1990. Mr. Sides
A stock that proved a drag on long-term growth in earnings and strong graduated with a B.S. in economics from
performance during the fiscal year was prospects for future growth to achieve Bucknell University. He also received a
U.S.-based CDW Corp., a provider of the fund's investment objective. master's in international business from
technology solutions for businesses, the University of St. Thomas.
government agencies and educational See important fund and index
institutions. Despite record third disclosures inside front cover. Assisted by Asia Pacific Team,
quarter sales, sharply rising Europe/Canada Team and Mid Cap Growth
advertising costs and other expenses Team
caused third quarter 2003 earnings to
fall below year-ago levels.
Since the beginning of the fiscal
year, we increased the number of stocks
in the fund's portfolio from 133 to 164.
We feel this gives us an even greater
opportunity to diversify the
</Table>
<Table>
=====================================================================================
TOP 10 COUNTRIES* FUND VS. INDEX
Total returns 10/31/02-10/31/03,
1. United States 33.5% excluding sales charges
2. United Kingdom 9.2 Class A Shares 29.82%
3. Japan 7.1 Class B Shares 29.08
4. Ireland 5.7 Class C Shares 29.17
5. Bermuda 3.2 MSCI All Country (AC) World Free
Index 24.86
6. Germany 3.2
TOTAL NUMBER OF HOLDINGS* 164
7. Switzerland 3.0
TOTAL NET ASSETS $860 million
8. Mexico 2.7
9. Taiwan 2.7
10. South Korea 2.6
=====================================================================================
</Table>
[GRAPHIC]
For More Information Visit
AIMinvestments.com
3
FUND PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
9/15/94-10/31/03*
[MOUNTAIN CHART]
<Table>
<Caption>
DATE AIM GLOBAL AGGRESSIVE AIM GLOBAL AGGRESSIVE MSCI AC
GROWTH FUND GROWTH FUND WORLD
CLASS A SHARES CLASS B SHARES FREE INDEX
9/15/1994 $ 9525 $ 10000 $ 10000
10/31/94 9735 10210 10016
1/31/95 9258 9710 9418
4/30/95 10305 10789 10317
7/31/95 12514 13079 10938
10/31/95 12467 13020 10809
1/31/96 12856 13407 11740
4/30/96 14700 15304 12263
7/31/96 14012 14571 11882
10/31/96 15062 15635 12522
1/31/97 16019 16609 13219
4/30/97 14833 15363 13553
7/31/97 17911 18515 15779
10/31/97 16516 17059 14534
1/31/98 15837 16336 15279
4/30/98 18722 19286 17181
7/31/98 17785 18292 17164
10/31/98 15166 15574 16428
1/31/99 17353 17791 18607
4/30/99 17431 17852 19774
7/31/99 18624 19045 19943
10/31/99 20975 21424 20703
1/31/00 29482 30065 21877
4/30/00 29824 30374 22345
7/31/00 28493 28985 21842
10/31/00 26064 26474 20867
1/31/01 24040 24386 20405
4/30/01 19733 20002 18699
7/31/01 18516 18738 17642
10/31/01 15933 16102 15619
1/31/02 16491 16640 16276
4/30/02 16882 17016 16351
7/31/02 14592 14689 14086
10/31/02 13933 14016 13499
1/31/03 13692 13747 13163
4/30/03 14287 14339 14034
7/31/03 16123 16154 15472
10/31/03 $ 18093 $ 18187 $ 16907 Source: Lipper, Inc.
</Table>
*Index performance is for the period 8/31/94-10/31/03
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's share classes will differ due to different sales
charge structures and class expenses. For fund performance calculations and
indexes used in this report, please see the inside front cover. Performance
shown in the chart and table does not reflect deduction of taxes a shareholder
would pay on fund distributions or sale of fund shares. Performance of the
indexes does not reflect the effects of taxes. Your fund's total return includes
sales charges, expenses and management fees. Results for B shares are calculated
as if a hypothetical shareholder had liquidated his entire investment in the
fund at the close of the reporting period and paid the applicable contingent
deferred sales charges.
This chart uses a logarithmic scale, which means the price scale (vertical
axis) is structured so that a given distance always represents the same percent
change in price, rather than the same absolute change in price. For example, the
distance from one to 10 is the same as the distance from 10 to 100 on a
logarithmic chart, but the latter distance is 10 times greater on a linear
chart. A logarithmic scale better illustrates performance in the fund's early
years before reinvested distributions and compounding create the potential for
the original investment to grow to very large numbers.
<Table>
==================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS In addition to fund returns as of the CLASS C SHARES
As of 10/31/03, including sales charges close of the fiscal year, industry Inception (8/4/97) -1.39%
regulations require us to provide 5 Years 2.82
CLASS A SHARES average annual total returns (including 1 Year 22.67
Inception (9/15/94) 6.71% sales charges) for periods ended
5 Years 2.59 9/30/03, the most recent calendar Past performance cannot guarantee
1 Year 23.64 quarter-end, which were as follows. comparable future results. DUE TO
SIGNIFICANT MARKET VOLATILITY, RESULTS
CLASS B SHARES AVERAGE ANNUAL TOTAL RETURNS OF AN INVESTMENT MADE TODAY MAY DIFFER
Inception (9/15/94) 6.77% As of 9/30/03, including sales charges SUBSTANTIALLY FROM THE HISTORICAL
5 Years 2.73 PERFORMANCE SHOWN. CALL YOUR FINANCIAL
1 Year 24.08 CLASS A SHARES ADVISOR FOR MORE CURRENT PERFORMANCE.
Inception (9/15/94) 5.99%
CLASS C SHARES 5 Years 2.36
Inception (8/4/97) -0.31% 1 Year 18.35
5 Years 3.05
1 Year 28.17 CLASS B SHARES
Inception (9/15/94) 6.05%
5 Years 2.50
1 Year 18.70
==================================================================================================================================
</Table>
4
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2003
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-61.97%
AUSTRALIA-1.33%
Boral Ltd. (Construction Materials) 1,045,900 $ 4,071,296
- -------------------------------------------------------------------------
Computershare Ltd. (Data Processing &
Outsourced Services) 1,432,900 3,630,603
- -------------------------------------------------------------------------
Wesfarmers Ltd. (Industrial Conglomerates) 182,400 3,743,714
=========================================================================
11,445,613
=========================================================================
AUSTRIA-1.05%
Erste Bank der oesterreichischen Sparkassen
A.G. (Diversified Banks) 82,000 9,034,775
=========================================================================
BELGIUM-0.39%
Delhaize Group (Food Retail)(a) 70,600 3,340,981
=========================================================================
BERMUDA-3.18%
Esprit Holdings Ltd. (Apparel Retail) 1,825,500 5,735,835
- -------------------------------------------------------------------------
Li & Fung Ltd. (Distributors) 3,188,000 5,357,397
- -------------------------------------------------------------------------
Marvell Technology Group Ltd.
(Semiconductors)(a) 65,000 2,851,550
- -------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers) 403,300 13,429,890
=========================================================================
27,374,672
=========================================================================
BRAZIL-0.37%
Petroleo Brasileiro S.A.-ADR (Integrated Oil
& Gas) 135,600 3,186,600
=========================================================================
CANADA-1.60%
Cognos, Inc. (Application Software)(a) 95,700 3,298,779
- -------------------------------------------------------------------------
Power Financial Corp. (Other Diversified
Financial Services) 72,600 2,499,290
- -------------------------------------------------------------------------
Research In Motion Ltd. (Communications
Equipment)(a) 52,100 2,301,330
- -------------------------------------------------------------------------
Shoppers Drug Mart Corp. (Drug Retail)
(Acquired 05/16/03; Cost
$4,266,652)(a)(b)(c)(d) 256,500 5,631,911
=========================================================================
13,731,310
=========================================================================
CHINA-0.20%
Weiqiao Textile Co. Ltd.-Series H (Textiles)
(Acquired 09/24/03; Cost $1,774,426)(a)(c) 1,478,000 1,731,972
=========================================================================
FRANCE-1.15%
Autoroutes du Sud de la France (Highways &
Railtracks) 103,000 3,161,989
- -------------------------------------------------------------------------
Imerys S.A. (Construction Materials)(a) 24,900 4,759,492
- -------------------------------------------------------------------------
Pernod Ricard S.A. (Distillers & Vintners) 20,500 1,971,103
=========================================================================
9,892,584
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
GERMANY-3.17%
Continental A.G. (Tires & Rubber) 273,340 $ 9,246,201
- -------------------------------------------------------------------------
Deutsche Boerse A.G. (Specialized Finance) 99,510 5,512,563
- -------------------------------------------------------------------------
KarstadtQuelle A.G. (Department Stores) 161,600 4,002,454
- -------------------------------------------------------------------------
Puma A.G. Rudolf Dassler Sport (Footwear)
(Acquired 10/29/02-10/30/03; Cost
$4,715,039)(c) 58,662 8,527,244
=========================================================================
27,288,462
=========================================================================
GREECE-1.40%
Coca-Cola Hellenic Bottling Co. S.A. (Soft
Drinks) 248,100 4,788,275
- -------------------------------------------------------------------------
Cosmote Mobile Communications S.A. (Wireless
Telecommunication Services) 298,925 3,421,342
- -------------------------------------------------------------------------
Greek Organisation of Football Prognostics
S.A. (Casinos & Gaming) (Acquired 07/14/03-
08/13/03; Cost $3,507,653)(c) 315,000 3,868,065
=========================================================================
12,077,682
=========================================================================
HONG KONG-0.84%
Cathay Pacific Airways Ltd. (Airlines) 2,590,000 4,952,805
- -------------------------------------------------------------------------
China Merchants Holdings International Co.
Ltd. (Industrial Conglomerates) 1,662,000 2,247,218
=========================================================================
7,200,023
=========================================================================
HUNGARY-1.19%
OTP Bank Rt. (Diversified Banks) 843,300 10,276,371
=========================================================================
INDIA-1.74%
Dr. Reddy's Laboratories Ltd.-ADR
(Pharmaceuticals) 242,400 6,462,384
- -------------------------------------------------------------------------
Ranbaxy Laboratories Ltd. (Pharmaceuticals) 392,500 8,514,704
=========================================================================
14,977,088
=========================================================================
INDONESIA-0.42%
PT Telekomunikasi Indonesia (Integrated
Telecommunication Services) 5,100,000 3,601,483
=========================================================================
IRELAND-5.74%
Anglo Irish Bank Corp. PLC (Diversified
Banks) 3,566,315 42,677,337
- -------------------------------------------------------------------------
Depfa Bank PLC (Diversified Banks) 21,300 2,376,201
- -------------------------------------------------------------------------
Independent News & Media PLC (Publishing) 1,970,400 4,291,307
=========================================================================
49,344,845
=========================================================================
ISRAEL-1.82%
Taro Pharmaceutical Industries Ltd.
(Pharmaceuticals)(a) 243,260 15,629,455
=========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
ITALY-1.11%
Banco Popolare di Verona e Novara Scrl
(Diversified Banks) 618,000 $ 9,521,764
=========================================================================
JAPAN-7.13%
Daiwa House Industry Co., Ltd. (Homebuilding) 240,000 2,590,462
- -------------------------------------------------------------------------
Fanuc Ltd. (Industrial Machinery) 136,700 8,223,398
- -------------------------------------------------------------------------
Hosiden Corp. (Electronic Equipment
Manufacturers) 304,000 4,205,315
- -------------------------------------------------------------------------
Ibiden Co., Ltd. (Electronic Equipment
Manufacturers) 213,000 2,965,872
- -------------------------------------------------------------------------
JSR Corp. (Specialty Chemicals) 289,000 6,128,231
- -------------------------------------------------------------------------
Nidec Corp. (Electronic Equipment
Manufacturers) 81,700 7,918,684
- -------------------------------------------------------------------------
NOK Corp. (Auto Parts & Equipment) 186,000 7,329,632
- -------------------------------------------------------------------------
Stanley Electric Co., Ltd. (Auto Parts &
Equipment) 344,000 7,325,810
- -------------------------------------------------------------------------
Suzuki Motor Corp. (Automobile Manufacturers) 428,000 6,193,302
- -------------------------------------------------------------------------
THK CO., Ltd. (Industrial Machinery) 135,900 2,758,072
- -------------------------------------------------------------------------
Trend Micro Inc. (Application Software)(a) 205,100 5,655,743
=========================================================================
61,294,521
=========================================================================
MEXICO-2.69%
Alfa, S.A.-Class A (Industrial Conglomerates) 1,970,100 5,622,727
- -------------------------------------------------------------------------
Americal Movil S.A. de C.V.-ADR (Wireless
Telecommunication Services) 295,200 7,025,760
- -------------------------------------------------------------------------
Cemex S.A. de C.V.-ADR Wts., expiring
12/21/04 (Construction Materials)(e) 16,212 34,856
- -------------------------------------------------------------------------
Grupo Financiero BBVA Bancomer, S.A. de C.V.-
Class B (Diversified Banks)(a) 4,663,800 3,974,144
- -------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V.-Series C
(Hypermarkets & Super Centers) 2,478,400 6,477,419
=========================================================================
23,134,906
=========================================================================
NETHERLANDS-1.16%
Euronext N.V. (Specialized Finance) 96,200 2,345,873
- -------------------------------------------------------------------------
James Hardie Industries N.V. (Construction
Materials) 485,800 2,465,225
- -------------------------------------------------------------------------
Koninklijke Numico N.V.-Dutch Ctfs. (Packaged
Foods & Meats) 228,900 5,146,934
=========================================================================
9,958,032
=========================================================================
NORWAY-0.79%
Telenor A.S.A. (Integrated Telecommunication
Services) 1,248,900 6,763,821
=========================================================================
RUSSIA-2.22%
AO VimpelCom-ADR (Wireless Telecommunication
Services)(a) 241,890 15,747,039
- -------------------------------------------------------------------------
Mobile Telesystems-ADR (Wireless
Telecommunication Services) 43,100 3,339,819
=========================================================================
19,086,858
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
SINGAPORE-0.43%
Venture Corp. Ltd. (Electronic Manufacturing
Services) 345,000 $ 3,748,491
=========================================================================
SOUTH KOREA-2.60%
Daewoo Shipbuilding & Marine Engineering Co.,
Ltd. (Construction, Farm Machinery & Heavy
Trucks)(a) 244,000 3,278,074
- -------------------------------------------------------------------------
Hankook Tire Co. Ltd. (Tires & Rubber) 462,000 3,189,303
- -------------------------------------------------------------------------
Kookmin Bank (Diversified Banks) 155,180 5,664,365
- -------------------------------------------------------------------------
Samsung Electronics Co., Ltd. (Electronic
Equipment Manufacturers) 25,800 10,245,881
=========================================================================
22,377,623
=========================================================================
SPAIN-0.95%
Corporacion Mapfre S.A. (Multi-Line
Insurance) 347,000 4,309,249
- -------------------------------------------------------------------------
Grupo Ferrovial, S.A. (Construction &
Engineering) 136,600 3,886,479
=========================================================================
8,195,728
=========================================================================
SWEDEN-1.69%
Atlas Copco A.B.-Class A (Industrial
Machinery) 128,000 4,476,496
- -------------------------------------------------------------------------
Swedish Match A.B. (Tobacco) 844,300 6,843,025
- -------------------------------------------------------------------------
Tele2 A.B.-Class B (Integrated
Telecommunication Services)(a) 64,100 3,211,259
=========================================================================
14,530,780
=========================================================================
SWITZERLAND-3.02%
Geberit A.G. (Building Products) 15,630 6,413,384
- -------------------------------------------------------------------------
Nobel Biocare Holding A.G. (Health Care
Supplies) 40,700 3,598,142
- -------------------------------------------------------------------------
Schindler Holding A.G. (Industrial
Machinery)(a) 6,400 1,609,072
- -------------------------------------------------------------------------
Schindler Holding A.G.-COP (Industrial
Machinery)(a) 3,800 850,492
- -------------------------------------------------------------------------
Straumann A.G. (Health Care Equipment) 31,100 3,683,322
- -------------------------------------------------------------------------
Swiss Life Holding (Life & Health
Insurance)(a) 30,600 5,170,770
- -------------------------------------------------------------------------
Syngenta A.G. (Fertilizers & Agricultural
Chemicals) 87,300 4,660,038
=========================================================================
25,985,220
=========================================================================
TAIWAN-2.68%
Ambit Microsystems Corp. (Computer Storage &
Peripherals) 840,700 2,304,306
- -------------------------------------------------------------------------
Compal Electronics Inc. (Computer Hardware) 3,287,160 4,989,353
- -------------------------------------------------------------------------
MediaTek Inc. (Semiconductors) 379,350 3,913,130
- -------------------------------------------------------------------------
Novatek Microelectronics Corp., Ltd.
(Semiconductors) 779,900 2,459,455
- -------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.
(Semiconductors)(a) 4,741,579 9,362,977
=========================================================================
23,029,221
=========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
THAILAND-0.69%
Kasikornbank PLC (Diversified Banks)(a) 2,342,000 $ 2,608,736
- -------------------------------------------------------------------------
Siam Commercial Bank PCL (Diversified
Banks)(a) 3,213,000 3,317,553
=========================================================================
5,926,289
=========================================================================
UNITED KINGDOM-9.22%
Cattles PLC (Consumer Finance) 614,500 3,322,240
- -------------------------------------------------------------------------
Enterprise Inns PLC (Restaurants) 829,800 11,890,647
- -------------------------------------------------------------------------
Galen Holdings PLC (Pharmaceuticals) 548,885 7,037,344
- -------------------------------------------------------------------------
ICAP PLC (Investment Banking & Brokerage) 488,150 11,405,552
- -------------------------------------------------------------------------
Inchcape PLC (Distributors) 162,100 3,752,772
- -------------------------------------------------------------------------
Man Group PLC (Asset Management & Custody
Banks) 331,600 8,143,317
- -------------------------------------------------------------------------
Morrison (William) Supermarkets PLC (Food
Retail) 1,865,700 7,082,854
- -------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC
(Pharmaceuticals)(a) 1,151,400 8,712,968
- -------------------------------------------------------------------------
Smith & Nephew PLC (Health Care Supplies) 885,275 7,025,455
- -------------------------------------------------------------------------
Travis Perkins PLC (Home Improvement Retail) 539,740 10,918,564
=========================================================================
79,291,713
=========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $365,083,367) 532,978,883
=========================================================================
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-33.50%
AIR FREIGHT & LOGISTICS-0.48%
Expeditors International of Washington, Inc. 110,000 4,129,400
=========================================================================
APPAREL RETAIL-0.67%
Chico's FAS, Inc.(a) 75,000 2,815,500
- -------------------------------------------------------------------------
Pacific Sunwear of California, Inc.(a) 127,500 2,943,975
=========================================================================
5,759,475
=========================================================================
APPLICATION SOFTWARE-1.09%
Fair Isaac Corp. 57,000 3,635,460
- -------------------------------------------------------------------------
Mercury Interactive Corp.(a) 49,400 2,294,136
- -------------------------------------------------------------------------
PeopleSoft, Inc.(a) 165,000 3,425,400
=========================================================================
9,354,996
=========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.47%
Investors Financial Services Corp. 89,300 3,154,969
- -------------------------------------------------------------------------
Legg Mason, Inc. 88,000 7,326,000
- -------------------------------------------------------------------------
T. Rowe Price Group Inc. 52,000 2,139,800
=========================================================================
12,620,769
=========================================================================
AUTO PARTS & EQUIPMENT-0.95%
Autoliv, Inc.-SDR 131,300 4,307,006
- -------------------------------------------------------------------------
Gentex Corp. 100,000 3,905,000
=========================================================================
8,212,006
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
BIOTECHNOLOGY-0.48%
Celgene Corp.(a) 100,000 $ 4,169,000
=========================================================================
BROADCASTING & CABLE TV-0.39%
Univision Communications Inc.-Class A(a) 97,920 3,324,384
=========================================================================
COMMUNICATIONS EQUIPMENT-1.48%
Comverse Technology, Inc.(a) 230,800 4,163,632
- -------------------------------------------------------------------------
QLogic Corp.(a) 40,400 2,264,420
- -------------------------------------------------------------------------
UTStarcom, Inc.(a) 200,000 6,300,000
=========================================================================
12,728,052
=========================================================================
COMPUTER & ELECTRONICS RETAIL-0.41%
Best Buy Co., Inc. 60,000 3,498,600
=========================================================================
CONSTRUCTION & ENGINEERING-0.57%
Jacobs Engineering Group Inc.(a) 105,000 4,863,600
=========================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-0.47%
AGCO Corp.(a) 224,700 4,044,600
=========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.02%
Affiliated Computer Services, Inc.-Class A(a) 150,000 7,339,500
- -------------------------------------------------------------------------
CheckFree Corp.(a) 102,600 2,824,578
- -------------------------------------------------------------------------
Fiserv, Inc.(a) 141,500 4,997,780
- -------------------------------------------------------------------------
Iron Mountain Inc.(a) 118,000 4,512,320
- -------------------------------------------------------------------------
Paychex, Inc. 90,000 3,502,800
- -------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 100,000 2,805,000
=========================================================================
25,981,978
=========================================================================
DEPARTMENT STORES-0.26%
Kohl's Corp.(a) 40,000 2,242,800
=========================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.62%
Apollo Group, Inc.-Class A(a) 70,000 4,447,100
- -------------------------------------------------------------------------
Bright Horizons Family Solutions, Inc.(a) 20,000 859,200
=========================================================================
5,306,300
=========================================================================
EMPLOYMENT SERVICES-1.09%
Monster Worldwide Inc.(a) 160,000 4,075,200
- -------------------------------------------------------------------------
Robert Half International Inc.(a) 225,000 5,312,250
=========================================================================
9,387,450
=========================================================================
ENVIRONMENTAL SERVICES-0.27%
Stericycle, Inc.(a) 50,000 2,309,000
=========================================================================
GENERAL MERCHANDISE STORES-0.40%
Dollar Tree Stores, Inc.(a) 89,800 3,428,564
=========================================================================
</Table>
F-3
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
HEALTH CARE DISTRIBUTORS-0.49%
Omnicare, Inc. 110,600 $ 4,240,404
=========================================================================
HEALTH CARE EQUIPMENT-2.47%
ResMed Inc.(a) 74,600 3,116,042
- -------------------------------------------------------------------------
Synthes-Stratec, Inc. 7,590 6,942,211
- -------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 109,400 6,995,036
- -------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 65,600 4,185,936
=========================================================================
21,239,225
=========================================================================
HEALTH CARE SERVICES-1.18%
Express Scripts, Inc.(a) 100,000 5,492,000
- -------------------------------------------------------------------------
Lincare Holdings Inc.(a) 119,700 4,661,118
=========================================================================
10,153,118
=========================================================================
HEALTH CARE SUPPLIES-0.81%
Fisher Scientific International Inc.(a) 173,000 6,963,250
=========================================================================
INDUSTRIAL MACHINERY-1.15%
Danaher Corp. 90,000 7,456,500
- -------------------------------------------------------------------------
Eaton Corp. 24,200 2,425,808
=========================================================================
9,882,308
=========================================================================
INVESTMENT BANKING & BROKERAGE-1.04%
Bear Stearns Cos. Inc. (The) 65,000 4,956,250
- -------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 55,800 4,017,600
=========================================================================
8,973,850
=========================================================================
LEISURE PRODUCTS-0.26%
Marvel Enterprises, Inc.(a) 75,000 2,208,750
=========================================================================
MANAGED HEALTH CARE-0.25%
Aetna Inc. 38,000 2,181,580
=========================================================================
MULTI-LINE INSURANCE-0.28%
HCC Insurance Holdings, Inc. 83,800 2,441,932
=========================================================================
OIL & GAS DRILLING-0.95%
Patterson-UTI Energy, Inc.(a) 202,400 5,786,616
- -------------------------------------------------------------------------
Pride International, Inc.(a) 147,700 2,419,326
=========================================================================
8,205,942
=========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.88%
National-Oilwell, Inc.(a) 250,000 4,767,500
- -------------------------------------------------------------------------
Varco International, Inc.(a) 160,000 2,814,400
=========================================================================
7,581,900
=========================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.36%
Newfield Exploration Co.(a) 78,900 3,134,697
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
PHARMACEUTICALS-1.45%
Eon Labs, Inc.(a) 70,000 $ 2,947,700
- -------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A 150,000 9,502,500
=========================================================================
12,450,200
=========================================================================
REGIONAL BANKS-0.34%
Southwest Bancorp. of Texas, Inc. 81,500 2,926,665
=========================================================================
RESTAURANTS-0.97%
Brinker International, Inc.(a) 125,000 3,978,750
- -------------------------------------------------------------------------
Starbucks Corp.(a) 137,300 4,338,680
=========================================================================
8,317,430
=========================================================================
SEMICONDUCTORS-1.61%
Altera Corp.(a) 110,300 2,231,369
- -------------------------------------------------------------------------
Linear Technology Corp. 100,000 4,261,000
- -------------------------------------------------------------------------
LSI Logic Corp.(a) 350,000 3,234,000
- -------------------------------------------------------------------------
Microchip Technology Inc. 125,000 4,088,750
=========================================================================
13,815,119
=========================================================================
SPECIALTY CHEMICALS-0.28%
Valspar Corp. (The) 50,000 2,385,000
=========================================================================
SPECIALTY STORES-2.39%
Bed Bath & Beyond Inc.(a) 103,900 4,388,736
- -------------------------------------------------------------------------
Staples, Inc.(a) 275,000 7,375,500
- -------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 250,000 8,832,500
=========================================================================
20,596,736
=========================================================================
TECHNOLOGY DISTRIBUTORS-1.05%
CDW Corp. 150,000 9,007,500
=========================================================================
THRIFTS & MORTGAGE FINANCE-0.39%
Radian Group Inc. 63,700 3,369,730
=========================================================================
TRADING COMPANIES & DISTRIBUTORS-0.78%
Fastenal Co. 150,000 6,670,500
=========================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $233,070,596) 288,106,810
=========================================================================
MONEY MARKET FUNDS-3.07%
STIC Liquid Assets Portfolio(f) 13,178,755 13,178,755
- -------------------------------------------------------------------------
STIC Prime Portfolio(f) 13,178,755 13,178,755
=========================================================================
Total Money Market Funds (Cost
$26,357,510) 26,357,510
=========================================================================
TOTAL INVESTMENTS-98.54% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $624,511,473) 847,443,203
=========================================================================
</Table>
F-4
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-15.81%
STIC Liquid Assets Portfolio(f)(g) 67,998,953 $ 67,998,953
- -------------------------------------------------------------------------
STIC Prime Portfolio(f)(g) 67,998,954 67,998,954
=========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $135,997,907) 135,997,907
=========================================================================
TOTAL INVESTMENTS-114.35% (Cost $760,509,380) 983,441,110
=========================================================================
OTHER ASSETS LESS LIABILITIES-(14.35%) (123,406,254)
=========================================================================
NET ASSETS-100.00% $ 860,034,856
_________________________________________________________________________
=========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
COP - Certificates of Participation
Ctfs. - Certificates
SDR - Swedish Depositary Receipt
Wts. - Warrants
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security fair valued in accordance with the procedures established by the
Board of Directors.
(c) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction). The security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 10/31/03 was $19,759,192,
which represented 2.30% of the Fund's net assets. Unless otherwise
indicated, these securities are not considered to be illiquid.
(d) Security considered to be illiquid. The aggregate market value of this
security considered illiquid at 10/31/03 represented 0.65% of the Fund's net
assets.
(e) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
(g) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-5
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2003
<Table>
ASSETS:
Investments, at market value (cost
$598,153,963)* $ 821,085,693
- ------------------------------------------------------------
Investments in affiliated money market funds
(cost $162,355,417) 162,355,417
- ------------------------------------------------------------
Foreign currencies, at value (cost
$11,425,538) 11,401,398
- ------------------------------------------------------------
Cash 2,999,997
- ------------------------------------------------------------
Receivables for:
Investments sold 15,486,944
- ------------------------------------------------------------
Capital stock sold 227,603
- ------------------------------------------------------------
Dividends 328,265
- ------------------------------------------------------------
Investment for deferred compensation plan 67,025
- ------------------------------------------------------------
Other assets 61,675
============================================================
Total assets 1,014,014,017
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 13,654,608
- ------------------------------------------------------------
Capital stock reacquired 2,605,753
- ------------------------------------------------------------
Deferred compensation plan 67,025
- ------------------------------------------------------------
Collateral upon return of securities
loaned 135,997,907
- ------------------------------------------------------------
Accrued distribution fees 512,942
- ------------------------------------------------------------
Accrued directors' fees 71,699
- ------------------------------------------------------------
Accrued transfer agent fees 629,578
- ------------------------------------------------------------
Accrued operating expenses 439,649
============================================================
Total liabilities 153,979,161
============================================================
Net assets applicable to shares outstanding $ 860,034,856
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 908,474,206
- ------------------------------------------------------------
Undistributed net investment income (loss) (140,210)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and futures contracts (271,234,706)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 222,935,566
============================================================
$ 860,034,856
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 465,854,702
____________________________________________________________
============================================================
Class B $ 374,026,747
____________________________________________________________
============================================================
Class C $ 20,153,407
____________________________________________________________
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 32,628,984
____________________________________________________________
============================================================
Class B:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 27,808,914
____________________________________________________________
============================================================
Class C:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 1,497,810
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 14.28
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $14.28 divided by
95.25%) $ 14.99
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 13.45
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 13.46
____________________________________________________________
============================================================
</Table>
* At October 31, 2003, securities with an aggregate market value of $130,595,645
were on loan to brokers.
See Notes to Financial Statements.
F-6
STATEMENT OF OPERATIONS
For the year ended October 31, 2003
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $915,292) $ 8,280,348
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 231,459
- --------------------------------------------------------------------------
Interest 45,579
- --------------------------------------------------------------------------
Securities lending 420,504
==========================================================================
Total investment income 8,977,890
==========================================================================
EXPENSES:
Advisory fees 7,183,961
- --------------------------------------------------------------------------
Administrative services fees 199,512
- --------------------------------------------------------------------------
Custodian fees 715,743
- --------------------------------------------------------------------------
Distribution fees:
Class A 2,093,225
- --------------------------------------------------------------------------
Class B 3,607,240
- --------------------------------------------------------------------------
Class C 188,488
- --------------------------------------------------------------------------
Transfer agent fees 4,116,449
- --------------------------------------------------------------------------
Directors' fees 23,207
- --------------------------------------------------------------------------
Other 583,336
==========================================================================
Total expenses 18,711,161
==========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (61,104)
==========================================================================
Net expenses 18,650,057
==========================================================================
Net investment income (loss) (9,672,167)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (net of tax on sale of foreign
investments of $150,326 -- Note 1E) 27,799,873
- --------------------------------------------------------------------------
Foreign currencies 220,851
- --------------------------------------------------------------------------
Futures contracts (182,984)
==========================================================================
27,837,740
==========================================================================
Change in net unrealized appreciation of:
Investment securities (net of change in estimated tax on
foreign investments held of $25,766 -- Note 1E) 192,846,597
- --------------------------------------------------------------------------
Foreign currencies 388,741
==========================================================================
193,235,338
==========================================================================
Net gain from investment securities, foreign currencies and
futures contracts 221,073,078
==========================================================================
Net increase in net assets resulting from operations $211,400,911
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-7
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2003 and 2002
<Table>
<Caption>
2003 2002
- ---------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (9,672,167) $ (15,311,459)
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts 27,837,740 (155,410,958)
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 193,235,338 54,124,434
=============================================================================================
Net increase (decrease) in net assets resulting from
operations 211,400,911 (116,597,983)
=============================================================================================
Share transactions-net:
Class A (55,232,478) (104,866,509)
- ---------------------------------------------------------------------------------------------
Class B (104,788,041) (135,727,235)
- ---------------------------------------------------------------------------------------------
Class C (3,906,281) (6,268,941)
=============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (163,926,800) (246,862,685)
=============================================================================================
Net increase (decrease) in net assets 47,474,111 (363,460,668)
=============================================================================================
NET ASSETS:
Beginning of year 812,560,745 1,176,021,413
=============================================================================================
End of year (including undistributed investment income
(loss) of $(140,210) and $(128,848) for 2003 and 2002,
respectively) $ 860,034,856 $ 812,560,745
_____________________________________________________________________________________________
=============================================================================================
</Table>
See Notes to Financial Statements.
F-8
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Aggressive Growth Fund (the "Fund") is a series portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of five
separate portfolios. The Fund currently offers multiple classes of shares.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Effective November 25, 2003, the
Fund redomesticated as a series portfolio of a newly formed Delaware statutory
trust, AIM International Mutual Funds.
The Fund's investment objective is above-average long-term growth of
capital. Companies are listed in the Schedule of Investments based on the
country in which they are organized.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued on the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Securities for which market prices
are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Market trends, movement in exchange traded funds
and ADRs, and the bid/ask quotes of brokers and information providers may
be reviewed in the course of making a good faith determination of a
security's fair value. Short-term obligations having 60 days or less to
maturity and commercial paper are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the NYSE. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of the close of the respective
markets. Occasionally, events affecting the values of such foreign
securities may occur between the times at which the particular foreign
market closes and the close of the customary trading session of the NYSE
which would not ordinarily be reflected in the computation of the Fund's
net asset value. If a development/event is so significant that there is a
reasonably high degree of certainty as to both the effect and the degree of
effect that the development/event has actually caused that closing price to
no longer reflect actual value, the closing prices, as determined at the
close of the applicable foreign market, may be adjusted to reflect the fair
value of the affected foreign securities as of the close of the NYSE as
determined in good faith by or under the supervision of the Board of
Directors.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. The Fund
allocates income and realized and unrealized capital gains and losses to a
class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M 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
gain) which is distributed to shareholders. Therefore, no provision for
federal income taxes is recorded in the financial statements. Any capital
loss carryforwards listed are reduced for limitations, if any, to the
extent required by the Internal Revenue Code.
F-9
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities (net of foreign taxes withheld on disposition) and income items
denominated in foreign currencies are translated into U.S. dollar amounts
on the respective dates of such transactions. The Fund does not separately
account for the portion of the results of operations resulting from changes
in foreign exchange rates on investments and the fluctuations arising from
changes in market prices of securities held. The combined results of
changes in foreign exchange rates and the fluctuation of market prices on
investments (net of estimated foreign tax withholding) are included with
the net realized and unrealized gain or loss from investments in the
Statement of Operations. Reported net realized foreign currency gains or
losses arise from sales of foreign currencies, currency gains or losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
currency gains and losses arise from changes in the fair values of assets
and liabilities, other than investments in securities at fiscal period end,
resulting from changes in exchange rates.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.90% of the first $1
billion of the Fund's average daily net assets, plus 0.85% of the Fund's average
daily net assets in excess of $1 billion. AIM has voluntarily agreed to waive
advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives
from the affiliated money market funds in which the Fund has invested (excluding
investments made in affiliated money market funds with cash collateral from
securities loaned by the Fund). For the year ended October 31, 2003, AIM waived
fees of $5,105. Under a prior agreement to limit the aggregate costs of certain
shareholder services provided by third party administrators, AIM reimbursed fees
of $40,620 for Class A, Class B and Class C shares based on the relative net
assets of those classes.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2003, AIM was
paid $199,512 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AISI"), formerly known as A I M Fund
Services, Inc., a fee for providing transfer agency and shareholder services to
the Fund. During the year ended October 31, 2003, AISI retained $2,246,108 for
such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A,
Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to the
Plans, pays AIM Distributors compensation at the annual rate of 0.50% of the
Fund's average daily net assets of Class A shares and 1.00% of the average daily
net assets of Class B and Class C shares. Of these amounts, AIM Distributors may
pay a service fee up to 0.25% of the average daily net assets of the Class A,
Class B or Class C shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers who purchase
and own shares of such classes. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. NASD Rules also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by any class of shares of the Fund. Pursuant to the Plans, for the year ended
October 31, 2003, the Class A, Class B and Class C shares paid $2,093,225,
$3,607,240 and $188,488, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the year
ended October 31, 2003, AIM Distributors retained $65,241 in front-end sales
commissions from the sale of Class A shares and $244,404 ,$8 and $17,014 from
Class A, Class B and Class C shares, respectively, for CDSC imposed upon
redemptions by shareholders.
Certain officers and directors of the Company are officers and directors of
AIM, AISI and/or AIM Distributors.
F-10
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
For the year ended October 31, 2003, the Fund received reductions in transfer
agency fees from AISI (an affiliate of AIM) of $15,295 and reductions in
custodian fees of $84 under an expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $15,379.
NOTE 4--DIRECTORS' FEES
Directors' fees represent remuneration paid to each Director of the Company who
is not an "interested person" of AIM. Directors have the option to defer
compensation payable by the Company. The Directors deferring compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested.
Current Directors are eligible to participate in a retirement plan that
provides for benefits to be paid upon retirement to Directors over a period of
time based on the number of years of service. Certain former Directors also
participate in a retirement plan and receive benefits under such plan.
During the year ended October 31, 2003, the Fund paid legal fees of $3,535
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Directors. A member of that firm is a Director of the Company.
NOTE 5--BORROWINGS
The Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund loan will be
made under this facility only if the loan rate (an average of the rate available
on bank loans and the rate available on investments in overnight repurchase
agreements) is favorable to both the lending fund and the borrowing fund. Under
certain circumstances, a loan will be secured by collateral. To the extent that
the loan is required to be secured by collateral, the collateral is marked to
market daily to ensure that the market value is at least 102% of the outstanding
principal value of the loan.
Effective June 26, 2003, the Fund became a participant in an uncommitted
unsecured revolving line of credit facility with State Street Bank and Trust
Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000 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 can borrow on a first
come, first served basis. Principal on each loan outstanding shall bear interest
at the bid rate quoted by SSB at the time of the request for the loan.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could 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 were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the year ended October 31, 2003, the Fund did not borrow or lend
under the interfund lending facility or borrow under either the uncommitted
unsecured revolving line of credit facility or the committed line of credit
facility.
Additionally the Fund is permitted to carry a negative or overdrawn balance
in its account with the custodian bank. To compensate the custodian bank for
such overdrafts, the overdrawn Fund may either (i) leave funds in the account so
the custodian can be compensated by earning the additional interest; or (ii)
compensate by paying the custodian bank. In either case, the custodian bank will
be compensated an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value of the loaned securities determined daily. Such collateral will be
cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, following the
valuation date of the securities loaned. Therefore, the value of the collateral
held may be temporarily less than the value of the securities on loan.
At October 31, 2003, securities with an aggregate value of $130,595,645 were
on loan to brokers. The loans were secured by cash collateral of $135,997,907
received by the Fund and subsequently invested in affiliated money market funds.
For the year ended October 31, 2003, the Fund received fees of $420,504 for
securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid
during the years ended October 31, 2003 and 2002.
Tax Components of Net Assets:
As of October 31, 2003, the components of net assets on a tax basis were as
follows:
<Table>
Unrealized appreciation -- investments $ 221,150,075
- ------------------------------------------------------------
Temporary book/tax differences (140,210)
- ------------------------------------------------------------
Capital loss carryforward (269,449,215)
- ------------------------------------------------------------
Capital (par value and additional paid-in) 908,474,206
============================================================
Total net assets $ 860,034,856
____________________________________________________________
============================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation is
due to differences in the timing of recognition of gains and losses on
investments for tax and book purposes. The Fund's unrealized appreciation
difference is attributable primarily to the tax deferral of losses on wash
sales. The tax-basis unrealized appreciation on investments amount includes
appreciation on foreign currencies written of $3,837.
F-11
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of director deferral of compensation and
director retirement plan expenses.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2009 $112,245,103
- ----------------------------------------------------------
October 31, 2010 157,204,112
==========================================================
Total capital loss carryforward $269,449,215
__________________________________________________________
==========================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
October 31, 2003 was $486,452,638 and $629,598,992, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT
SECURITIES ON A TAX BASIS
- -----------------------------------------------------------
Aggregate unrealized appreciation of
investment securities $229,787,088
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (8,640,850)
===========================================================
Net unrealized appreciation of investment
securities $221,146,238
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $762,294,872.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions and net operating losses, on October 31, 2003, undistributed net
investment income (loss) was increased by $9,660,805, undistributed net realized
gains (losses) decreased by $71,616 and paid in capital decreased by $9,589,189.
This reclassification had no effect on net assets of the Fund.
NOTE 10--CAPITAL STOCK INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with CDSC. Under some
circumstances, Class A shares are subject to CDSC. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase.
<Table>
<Caption>
CHANGES IN CAPITAL STOCK OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2003 2002
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 68,284,222 $ 794,508,847 60,670,511 $ 751,546,029
- --------------------------------------------------------------------------------------------------------------------------
Class B 1,029,386 11,457,035 1,348,844 16,159,835
- --------------------------------------------------------------------------------------------------------------------------
Class C 2,302,210 25,526,168 1,454,890 17,014,301
==========================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 2,977,413 35,471,200 265,149 3,136,806
- --------------------------------------------------------------------------------------------------------------------------
Class B (3,153,173) (35,471,200) (281,263) (3,136,806)
==========================================================================================================================
Reacquired:
Class A (75,474,194) (885,212,525) (68,922,876) (859,549,344)
- --------------------------------------------------------------------------------------------------------------------------
Class B (7,319,506) (80,773,876) (12,604,513) (148,750,264)
- --------------------------------------------------------------------------------------------------------------------------
Class C (2,636,776) (29,432,449) (1,982,324) (23,283,242)
==========================================================================================================================
(13,990,418) $(163,926,800) (20,051,582) $(246,862,685)
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
F-12
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
---------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.00 $ 12.58 $ 25.87 $ 21.95 $ 15.87
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.15)(a) (0.13) (0.28)(a) (0.17)(a)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 3.41 (1.43) (8.42) 5.56 6.25
===========================================================================================================================
Total from investment operations 3.28 (1.58) (8.55) 5.28 6.08
===========================================================================================================================
Less distributions from net realized
gains -- -- (4.74) (1.36) --
===========================================================================================================================
Net asset value, end of period $ 14.28 $ 11.00 $ 12.58 $ 25.87 $ 21.95
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 29.82% (12.56)% (38.87)% 24.27% 38.31%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $465,855 $405,360 $563,828 $1,103,740 $852,198
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 2.10%(c)(d) 2.00% 1.87% 1.65% 1.80%
===========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.97)%(c) (1.19)% (0.75)% (0.96)% (0.95)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate 64% 73% 87% 62% 60%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $418,645,092.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers and expense reimbursements was 2.11%.
<Table>
<Caption>
CLASS B
------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.42 $ 11.97 $ 24.98 $ 21.35 $ 15.52
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19) (0.20)(a) (0.21) (0.42)(a) (0.27)(a)
- ------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 3.22 (1.35) (8.06) 5.41 6.10
========================================================================================================================
Total from investment operations 3.03 (1.55) (8.27) 4.99 5.83
========================================================================================================================
Less distributions from net realized
gains -- -- (4.74) (1.36) --
========================================================================================================================
Net asset value, end of period $ 13.45 $ 10.42 $ 11.97 $ 24.98 $ 21.35
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) 29.08% (12.95)% (39.19)% 23.56% 37.56%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $374,027 $388,101 $583,933 $1,158,979 $926,972
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 2.60%(c)(d) 2.51% 2.39% 2.19% 2.37%
========================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.47)%(c) (1.70)% (1.27)% (1.50)% (1.52)%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 64% 73% 87% 62% 60%
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $360,723,958.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers and expense reimbursements was 2.61%.
F-13
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
-----------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.42 $ 11.98 $ 24.99 $ 21.35 $ 15.52
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19) (0.20)(a) (0.21) (0.42)(a) (0.27)(a)
- -----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 3.23 (1.36) (8.06) 5.42 6.10
=================================================================================================================
Total from investment operations 3.04 (1.56) (8.27) 5.00 5.83
=================================================================================================================
Less distributions from net realized
gains -- -- (4.74) (1.36) --
=================================================================================================================
Net asset value, end of period $ 13.46 $ 10.42 $ 11.98 $ 24.99 $ 21.35
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(b) 29.17% (13.02)% (39.17)% 23.61% 37.56%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,153 $19,099 $28,260 $50,908 $16,325
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets 2.60%(c)(d) 2.51% 2.39% 2.19% 2.37%
=================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.47)%(c) (1.70)% (1.28)% (1.50)% (1.52)%
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 64% 73% 87% 62% 60%
_________________________________________________________________________________________________________________
=================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $18,848,844.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers and expense reimbursements was 2.61%.
NOTE 12--SUBSEQUENT EVENTS
Your Fund's investment advisor, A I M Advisors, Inc. ("AIM") is an indirect
wholly owned subsidiary of AMVESCAP PLC ("AMVESCAP"). Another indirect wholly
owned subsidiary of AMVESCAP, INVESCO Funds Group, Inc. ("INVESCO"), was, until
recently, the investment advisor to the INVESCO Funds.
On December 2, 2003, each of the Securities and Exchange Commission ("SEC")
and the Office of the Attorney General of the State of New York ("NYAG") filed
civil proceedings against INVESCO and Raymond R. Cunningham, in his capacity as
the Chief Executive Officer of INVESCO. Mr. Cunningham currently holds the
positions of Chief Operating Officer and Senior Vice President of A I M
Management Group, Inc., the parent company of AIM, and he also holds the
position of Senior Vice President with AIM. In addition, on December 2, 2003,
the State of Colorado filed civil proceedings against INVESCO. Neither your Fund
nor any of the funds in the AIM Family of Funds(R), which includes the INVESCO
Funds (the "Funds") has been named as a defendant in any of these proceedings.
The SEC proceeding alleges that INVESCO failed to disclose in the INVESCO
Funds' prospectuses and to the INVESCO Funds' independent directors that INVESCO
had entered into certain arrangements permitting market timing of the INVESCO
Funds. The SEC is seeking injunctions, including permanent injunctions from
serving as an investment advisor, officer or director of an investment company;
an accounting of all market timing as well as certain fees and compensation
received; disgorgement; civil monetary penalties; and other relief.
The NYAG proceeding is also based on the circumstances described above. The
NYAG is seeking injunctions, including permanent injunctions from directly or
indirectly selling or distributing shares of mutual funds; disgorgement of all
profits obtained, including fees collected, and payment of all restitution and
damages caused, directly or indirectly from the alleged illegal activities;
civil monetary penalties; and other relief.
The Colorado proceeding is also based on the circumstances described above.
The State of Colorado is seeking injunctions; restitution, disgorgement and
other equitable relief; civil monetary penalties; and other relief.
If INVESCO is unsuccessful in its defense of these proceedings, it could be
barred from serving as an investment advisor for any investment company
registered under the Investment Company Act of 1940, as amended (a "registered
investment company"). Similarly, if Mr. Cunningham is unsuccessful in his
defense of these proceedings, he could be barred from serving as an officer or
director of any registered investment company. Such results could also affect
the ability of AIM, or any other investment advisor directly or indirectly owned
by AMVESCAP, from serving as an investment advisor to any registered investment
company, including your Fund. Your Fund has been informed by AIM that, if either
of these results occurs, AIM will seek exemptive relief from the SEC to permit
it to continue to serve as your Fund's investment advisor. There can be no
assurance that such exemptive relief will be granted.
AIM has received inquiries from the SEC, the NASD, Inc., the NYAG and the
Secretary of the Commonwealth of Massachusetts with respect to market timing,
late trading, fair value pricing and other similar issues and AIM has been
providing full cooperation with respect to these inquiries.
In addition to the complaints described above, multiple lawsuits, including
purported class action and shareholder derivative suits, have been filed against
certain Funds, INVESCO, AIM, AMVESCAP and certain related parties, primarily
based upon the allegations in the complaints described above, but also regarding
the funds' fair valuation pricing methodology. Such lawsuits allege a variety of
theories for recovery including, but not limited to:
F-14
NOTE 12--SUBSEQUENT EVENTS (CONTINUED)
(i) violation of various provisions of the Federal securities laws; (ii) breach
of fiduciary duty; and (iii) breach of contract. The lawsuits have been filed in
both Federal and state courts and seek such remedies as compensatory damages;
restitution; rescission; accounting for wrongfully gotten gains, profits and
compensation; injunctive relief; disgorgement; equitable relief; interest and
the payment of attorneys' and experts' fees. Additional lawsuits arising out of
these circumstances and presenting similar allegations and requests for relief
may be filed against the Funds, INVESCO, AIM, AMVESCAP and related parties in
the future.
As a result of these developments, investors in the Funds might react by
redeeming their investments. This might require the Funds to sell investments to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the Funds.
At the present time, management of AIM and the Fund is unable to estimate the
impact, if any, that the outcome of these matters described above may have on
the Fund or AIM's financial condition.
F-15
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors/Trustees and Shareholders of AIM Global Aggressive
Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the AIM Global Aggressive Growth
Fund (one of the funds constituting AIM International Funds, Inc. now known as
AIM International Mutual Funds; hereafter referred to as the "Fund") at October
31, 2003, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the three years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion. The financial highlights for each of the periods ended on or before
October 31, 2000 were audited by other independent accountants whose report
dated December 6, 2000, expressed an unqualified opinion on the financial
highlights.
PRICEWATERHOUSECOOPERS LLP
December 16, 2003
Houston, Texas
F-16
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM International Funds, Inc., a Maryland
corporation, was held on October 21, 2003. The meeting was adjourned and
reconvened on October 28, 2003, on November 4, 2003, on November 11, 2003, on
November 17, 2003 and reconvened on November 21, 2003. The meeting was held for
the following purposes:
(1)* To elect sixteen individuals to the Board, each of whom will serve until
his or her successor is elected and qualified: Bob R. Baker, Frank S.
Bayley, James T. Bunch, Bruce L. Crockett, Albert R. Dowden, Edward K.
Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Gerald J.
Lewis, Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley, Louis S.
Sklar, Larry Soll, Ph.D. and Mark H. Williamson.
(2)* To approve an Agreement and Plan of Reorganization which provides for the
redomestication of Company as a Delaware statutory trust and, in connection
therewith, the sale of all of Company's assets and the dissolution of
Company as a Maryland corporation.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHOLDING
DIRECTORS/MATTER VOTES FOR AUTHORITY
- ---------------------------------------------------------------------------------
(1)* Bob R. Baker................................. 162,211,196 3,444,279
Frank S. Bayley.............................. 162,236,962 3,418,513
James T. Bunch............................... 162,287,588 3,367,887
Bruce L. Crockett............................ 162,276,496 3,378,979
Albert R. Dowden............................. 162,251,386 3,404,089
Edward K. Dunn, Jr. ......................... 162,221,226 3,434,249
Jack M. Fields............................... 162,278,318 3,377,157
Carl Frischling.............................. 162,182,906 3,472,569
Robert H. Graham............................. 162,243,892 3,411,583
Gerald J. Lewis.............................. 162,147,868 3,507,607
Prema Mathai-Davis........................... 162,219,866 3,435,609
Lewis F. Pennock............................. 162,263,207 3,392,268
Ruth H. Quigley.............................. 162,163,064 3,492,411
Louis S. Sklar............................... 162,243,759 3,411,716
Larry Soll, Ph.D. ........................... 162,236,226 3,419,249
Mark H. Williamson........................... 162,238,962 3,416,513
</Table>
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 76,302,938 2,822,366 86,530,171**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on October 28, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 84,066,011 2,989,031 83,338,957**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 4, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 95,512,525 3,144,748 78,504,573**
</Table>
F-17
PROXY RESULTS (UNAUDITED) (CONTINUED)
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 11, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 109,217,698 3,531,752 71,913,039**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 17, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 116,710,545 3,761,148 69,451,190**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 21, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 137,239,949 4,617,039 51,798,672**
</Table>
* Proposal required approval by a combined vote of all the portfolios of AIM
International Funds, Inc.
** Includes Broker Non-Votes
F-18
OTHER INFORMATION
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- ---------------------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1991 Director and Chairman, A I M Management Group Inc. None
Trustee, Chairman and (financial services holding company); and Director
President and Vice Chairman, AMVESCAP PLC and Chairman of
AMVESCAP PLC -- AIM Division (parent of AIM and a
global investment management firm)
Formerly: President and Chief Executive Officer, A I M
Management Group Inc.; Director, Chairman and
President, A I M Advisors, Inc. (registered
investment advisor); and Director and Chairman, A I M
Capital Management, Inc. (registered investment
advisor), A I M Distributors, Inc. (registered broker
dealer), AIM Investment Services, Inc., (registered
transfer agent), and Fund Management Company
(registered broker dealer); and Chief Executive
Officer, AMVESCAP PLC -- Managed Products
- ---------------------------------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, A I M Director and Chairman,
Trustee and Executive Vice Management Group Inc. (financial services holding INVESCO Bond Funds,
President company); Director, Chairman and President, A I M Inc., INVESCO
Advisors, Inc. (registered investment advisor); Combination Stock &
Director, A I M Capital Management, Inc. (registered Bond Funds, Inc.,
investment advisor) and A I M Distributors, Inc. INVESCO Counselor
(registered broker dealer); Director and Chairman, Series Funds, Inc.,
AIM Investment Services, Inc. (registered transfer INVESCO International
agent); and Fund Management Company (registered Funds, Inc., INVESCO
broker dealer); and Chief Executive Officer, AMVESCAP Manager Series Funds,
PLC -- AIM Division (parent of AIM and a global Inc., INVESCO Money
investment management firm) Market Funds, Inc.,
Formerly: Director, Chairman, President and Chief INVESCO Sector Funds,
Executive Officer, INVESCO Funds Group, Inc. and Inc., INVESCO Stock
INVESCO Distributors, Inc.; Chief Executive Officer, Funds, Inc., INVESCO
AMVESCAP PLC -- Managed Products; Chairman and Chief Treasurer's Series
Executive Officer of NationsBanc Advisors, Inc.; and Funds, Inc. and
Chairman of NationsBanc Investments, Inc. INVESCO Variable
Investment Funds, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ---------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker(3) -- 1936 2003 Consultant None
Trustee
Formerly: President and Chief Executive Officer, AMC
Cancer Research Center; and Chairman and Chief
Executive Officer, First Columbia Financial
Corporation
- ---------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc.
Trustee (registered investment
company)
- ---------------------------------------------------------------------------------------------------------------------------------
James T. Bunch(3) -- 1942 2003 Co-President and Founder, Green, Manning & Bunch None
Trustee Ltd., (investment banking firm); and Director, Policy
Studies, Inc. and Van Gilder Insurance Corporation
Formerly: General Counsel and Director, Boettcher &
Co.; and Chairman and Managing Partner, law firm of
Davis, Graham & Stubbs
- ---------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates (technology ACE Limited (insurance
Trustee consulting company) company); and
Captaris, Inc.
(unified messaging
provider)
- ---------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director of a number of public and private business Cortland Trust, Inc.
Trustee corporations, including the Boss Group Ltd. (private (Chairman) (registered
investment and management) and Magellan Insurance investment company);
Company Formerly: Director, President and Chief Annuity and Life Re
Executive Officer, Volvo Group North America, Inc.; (Holdings), Ltd.
Senior Vice President, AB Volvo; and director of (insurance company)
various affiliated Volvo Group companies
- ---------------------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly: Chairman, Mercantile Mortgage Corp.; None
Trustee President and Chief Operating Officer,
Mercantile-Safe Deposit & Trust Co.; and President,
Mercantile Bankshares Corp.
- ---------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Group, Administaff
Trustee Inc. (government affairs company) and Texana
Timber LP
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Graham is considered an interested person of the Trust because he is a
director of AMVESCAP PLC, parent of the advisor to the Trust.
(2) Mr. Williamson is considered an interested person of the Trust because he is
an officer and a director of the advisor to, and a director of the principal
underwriter of, the Trust. Mr. Williamson became Executive Vice President of
the Trust on March 4, 2003.
(3) Elected trustee of the Trust on October 21, 2003.
Trustees and Officers (continued)
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST OR OFFICER SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc.
Trustee Naftalis and Frankel LLP (registered investment
company)
- ---------------------------------------------------------------------------------------------------------------------------
Gerald J. Lewis(3) -- 1933 2003 Chairman, Lawsuit Resolution General Chemical
Trustee Services (San Diego, California) Group, Inc.,
Formerly: Associate Justice of the Wheelabrator
California Court of Appeals Technologies, Inc.
(waste management
company), Fisher
Scientific, Inc.,
Henley Manufacturing,
Inc. (laboratory
supplies), and
California Coastal
Properties, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly: Chief Executive Officer, None
Trustee YWCA of the USA
- ---------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1991 Partner, law firm of Pennock & None
Trustee Cooper
- ---------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
- ---------------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1991 Executive Vice President, None
Trustee Development and Operations Hines
Interests Limited Partnership (real
estate development company)
- ---------------------------------------------------------------------------------------------------------------------------
Larry Soll, Ph.D.(3) -- 1942 2003 Retired None
Trustee
- ---------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ---------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 2003 Director, Senior Vice President, N/A
Senior Vice President Secretary and General Counsel, A I
M Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Vice President,
A I M Capital Management, Inc.,
A I M Distributors, Inc. and AIM
Investment Services, Inc.; and
Director, Vice President and
General Counsel, Fund Management
Company
Formerly: Senior Vice President and
General Counsel, Liberty Financial
Companies, Inc.; and Senior Vice
President and General Counsel,
Liberty Funds Group, LLC
- ---------------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 1991 Director, Chairman and Director of N/A
Senior Vice President Investments, A I M Capital
Management, Inc.; Director and
Executive Vice President, A I M
Management Group Inc.; Director and
Senior Vice President, A I M
Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC
Formerly: Chief Executive Officer
and President, A I M Capital
Management Inc.
- ---------------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 1994 Managing Director and Chief Fixed N/A
Vice President Income Officer, A I M Capital
Management, Inc.; and Vice
President, A I M Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 2002 Managing Director and Chief N/A
Vice President Research Officer -- Fixed Income,
A I M Capital Management, Inc.; and
Vice President, A I M Advisors,
Inc.
- ---------------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance N/A
Vice President Officer, A I M Advisors, Inc. and
A I M Capital Management, Inc.; and
Vice President, AIM Investment
Services, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 1999 Vice President, A I M Advisors, N/A
Vice President Inc., and President, Chief
Executive Officer and Chief
Investment Officer, A I M Capital
Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1991 Vice President and Fund Treasurer, N/A
Vice President and Treasurer A I M Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
(3) Elected trustee of the Trust on October 21, 2003.
(4) Mr. Carome became Senior Vice President of the Trust on May 13, 2003.
(5) Information is current as of January 10, 2003.
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.347.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, Inc. PricewaterhouseCoopers LLP
Suite 100 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana, Suite 2900
Houston, TX 77046 Suite 100 Suite 100 Houston, TX 77002
Houston, TX 77046 Houston, TX 77046-1173
COUNSEL TO THE FUND COUNSEL TO THE TRUSTEES TRANSFER AGENT CUSTODIAN
Ballard Spahr Kramer, Levin, Naftalis & AIM Investment Services, Inc. State Street Bank and
Andrews & Ingersoll, LLP Frankel LLP P.O. Box 4739 Trust Company
1735 Market Street 919 Third Avenue Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103 New York, NY 10022-3852 Boston, MA 02110
</Table>
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund
AIM Constellation Fund AIM Global Value Fund(4) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Emerging Growth Fund AIM Short Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM Trimark Fund INVESCO U.S. Government Money Fund
AIM Large Cap Basic Value Fund INVESCO International Core Equity Fund(5)
AIM Large Cap Growth Fund TAX-FREE
AIM Libra Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM High Income Municipal Fund
AIM Mid Cap Core Equity Fund AIM Municipal Bond Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Exempt Cash Fund
AIM Opportunities I Fund AIM Real Estate Fund AIM Tax-Free Intermediate Fund
AIM Opportunities II Fund INVESCO Advantage Health Sciences Fund
AIM Opportunities III Fund INVESCO Energy Fund
AIM Premier Equity Fund INVESCO Financial Services Fund
AIM Select Equity Fund INVESCO Gold & Precious Metals Fund
AIM Small Cap Equity Fund(2) INVESCO Health Sciences Fund
AIM Small Cap Growth Fund(3) INVESCO Leisure Fund
AIM Trimark Endeavor Fund INVESCO Multi-Sector Fund
AM Trimark Small Companies Fund INVESCO Technology Fund
AIM Weingarten Fund INVESCO Utilities Fund
INVESCO Core Equity Fund
INVESCO Dynamics Fund
INVESCO Mid-Cap Growth Fund
INVESCO Small Company Growth Fund
INVESCO S&P 500 Index Fund
INVESCO Total Return Fund*
</Table>
* Domestic equity and income fund
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) AIM Small Cap Equity Fund was closed to most
investors on December 19, 2003. For information on who may continue to invest in
AIM Small Cap Equity Fund, please contact your financial advisor. (3) AIM Small
Cap Growth Fund was closed to most investors on March 18, 2002. For information
on who may continue to invest in AIM Small Cap Growth Fund, please contact your
financial advisor. (4) Effective April 30, 2003, AIM Worldwide Spectrum Fund was
renamed AIM Global Value Fund. (5) Effective November 24, 2003, INVESCO
International Blue Chip Value Fund was renamed INVESCO International Core Equity
Fund.
For more complete information about any AIM or INVESCO fund, including sales
charges and expenses, ask your financial advisor for a prospectus. Please read
it carefully before investing. If used after January 20, 2004, this brochure
must be accompanied by a fund Performance & Commentary or by an AIM Quarterly
Performance Review for the most recent quarter-end. Mutual funds distributed by
A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $142 billion in assets for approximately 11
million shareholders, including individual investors, corporate clients and
financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $345 billion in assets
under management. Data as of September 30, 2003.
AIMinvestments.com GLA-AR-1
<Table>
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
- -------------------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Alternative Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Investments Management --Servicemark--
Plans Accounts
</Table>
AIM Global Growth Fund
Annual Report to Shareholders o October 31, 2003
[COVER IMAGE]
YOUR GOALS. OUR SOLUTIONS. [AIM LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
================================================================================
AIM GLOBAL GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
================================================================================
ABOUT INFORMATION THROUGHOUT THIS REPORT:
<Table>
o Unless otherwise stated, information o International investing presents o The unmanaged MSCI Japan Index is a
presented is as of 10/31/03 and is based certain risks not associated with market-value-weighted average of the
on total net assets. investing solely in the United States. performance of more than 300 securities
These include risks relating to on the Japanese stock exchanges tracked
o AIM Global Growth Fund's performance fluctuations in the value of the U.S. by Morgan Stanley Capital International.
figures are historical, and they reflect dollar relative to the values of other
fund expenses, the reinvestment of currencies, the custody arrangements o A direct investment cannot be made in
distributions, and changes in net asset made for the fund's foreign holdings, an index. Unless otherwise indicated,
differences in accounting, political index results include reinvested
value. risks and the lesser degree of public dividends, and they do not reflect sales
information required to be provided by charges or fund expenses.
o When sales charges are included in non-U.S. companies.
performance figures, Class A share A description of the policies and
performance reflects the maximum 4.75% o The fund's investment return and procedures that the fund uses to
sales charge, and Class B and Class C principal value will fluctuate, so an determine how to vote proxies relating
share performance reflects the investor's shares, when redeemed, may be to portfolio securities is available
applicable contingent deferred sales worth more or less than their original without charge, upon request, by calling
charge (CDSC) for the period involved. cost. 800-959-4246, or on the AIM Web site,
The CDSC on Class B shares declines from AIMinvestments.com.
5% beginning at the time of purchase to o Industry classifications used in this
0% at the beginning of the seventh year. report are generally according to the
The CDSC on Class C shares is 1% for the Global Industry Classification Standard,
first year after purchase. The which was developed by and is the
performance of the fund's share classes exclusive property and a service mark of
will differ due to different sales Morgan Stanley Capital International
charge structures and class expenses. Inc. and Standard & Poor's.
o A 2% redemption fee will be imposed on o The unmanaged MSCI World Index is a
certain redemptions or exchanges out of group of global securities tracked by
the fund within 30 days of purchase. Morgan Stanley Capital International.
Exceptions to the redemption fee are
listed in the fund's prospectus. o The unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P
o Effective 9/30/03, Class B shares are 500--Registered Trademark--) is an index
not available as an investment for of common stocks frequently used as a
retirement plans maintained pursuant to general measure of U.S. stock market
Section 401 of the Internal Revenue performance.
Code, including 401(k) plans, money
purchase pension plans and profit
sharing plans. Plans that have existing
accounts invested in Class B shares will
continue to be allowed to make
additional purchases.
</Table>
<Table>
=====================================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE This report may be distributed only to shareholders or
to persons who have received a current prospectus of
the fund.
=====================================================
</Table>
AIMinvestments.com
TO OUR SHAREHOLDERS
<Table>
DEAR FELLOW SHAREHOLDER IN new policies and strengthened existing ones--to discourage
THE AIM FAMILY OF FUNDS harmful short-term trading. These steps include:
--Registered Trademark--:
o Strengthening daily monitoring of trading activities.
[PHOTO OF As you may be aware, there has been a
ROBERT H. great deal of media coverage recently o Imposing redemption fees on additional funds we
GRAHAM] about the mutual fund industry and believe may be vulnerable to harmful short-term
allegations of improper activities by trading activity.
ROBERT H. GRAHAM certain individuals and companies. As
part of these widespread investigations, o Implementing an enhanced exchange policy (effective on
INVESCO Funds Group (IFG), the former or about March 1, 2004) designed to limit exchanges
[PHOTO OF adviser to certain INVESCO Funds, was between funds.
MARK H. recently named as a defendant in
WILLIAMSON] separate civil enforcement actions by o Employing an enhanced fair value pricing policy on
the U.S. Securities and Exchange certain foreign securities as well as certain illiquid
MARK H. WILLIAMSON Commission (SEC), the Office of the New securities.
York Attorney General and the State of
Colorado over an issue known as "market timing." A number of None of these tools alone, nor all of them taken
private class or derivative actions also were filed in the together, eliminate the possibility of short-term trading
wake of the regulators' actions. strategies that may be detrimental to a fund. Moreover, each
of these tools involves judgments that are inherently
Investors are understandably concerned and frustrated subjective. We have always sought and continue to seek to
about these reports, and we would like to take this make these judgments to the best of our abilities and in a
opportunity to assure you that, based on an investigation manner that we believe is consistent with the best interests
conducted by an outside firm, IFG and its parent company, of our fund shareholders. And we remain committed to being
AMVESCAP PLC, believe that these civil actions are without as vigilant as possible in the future to identify and
merit. IFG is contesting the charges. address any harmful market timing investors who have the
potential to harm our long-term fund shareholders.
We encourage you to continue to monitor this situation,
particularly as IFG has the opportunity to address the We sincerely hope these developments and the media
allegations that have been made. Current information will be coverage surrounding them do not result in you or other
posted on our Web site at AIMinvestments.com. We will shareholders losing confidence in AIM or INVESCO Funds.
continue to communicate to you on our Web site about our Amidst this storm of controversy in the mutual fund
finding, and the actions we are taking to protect and industry, we believe we can find encouragement in the
promote the interests of our shareholders. The independent recovering economy and rising equity markets. As we write
trustees of the funds are receiving regular reports from this letter, for instance, the S&P 500--Registered
their independent counsel and outside counsel hired by Trademark-- Index is up approximately 23% year-to-date.
AMVESCAP PLC, the parent of AIM and IFG, to perform an Although past performance is no guarantee of future results,
ongoing investigation of market timing. there appear to be indicators that the economy and stock
markets are showing signs of welcomed improvement. We
A COMPLEX ISSUE encourage you to read the enclosed discussion of your fund's
performance during this past reporting period.
Market timing is an investment technique not defined in any
regulation that involves frequent short-term trading of OUR UNWAVERING COMMITMENT
mutual fund shares, sometimes with a goal to exploit
inefficiencies in the way mutual funds price their shares. At AIM Investments, we have never wavered in our commitment
We recognize that fund management companies have tried to to helping you build solutions for your financial goals. Our
deal with this complex issue in various ways and believe company was founded on a core principle of integrity, and we
that industry-wide guidance is in order. To that end, we have always worked hard to earn the trust of our
welcome SEC Chairman William Donaldson's pledge to adopt new shareholders. We are committed to doing all we can to
rules designed to curb market timing abuses. Comprehensive maintain your trust and confidence.
rulemaking is necessary and is the best way to establish new
industry responsibilities designed to protect shareholders. Thank you for your continued participation in AIM
We support practical rule changes and structural Investments. Please call your financial advisor or one of
modifications that are fair, enforceable and, most our Client Service representatives at 800-959-4246 if you
importantly, beneficial for investors. have any further questions or concerns about your AIM
Investments account.
AIM Investments has policies in place designed to
identify, prevent and eliminate harmful trading or other Sincerely,
activities deemed to be detrimental to the funds. We have
also recently taken additional steps--implemented
/s/ ROBERT H. GRAHAM /s/ MARK H. WILLIAMSON
Robert H. Graham Mark H. Williamson
Chairman and President President and CEO
The AIM Family of Funds AIM Investments
--Registered Trademark--
December 18, 2003
</Table>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
<Table>
August. However, preliminary
estimates indicate euro zone annualized
MARKETS AROUND THE WORLD REBOUND AMIDST GDP rose 0.4% in the third quarter, and
GLOBAL ECONOMIC RECOVERY recent business surveys also offered
promise. Euro-area industrial confidence
Amid signs of an improving global appeared to rally in 2003 as the increased in both August and September
economic environment, AIM Global Growth nation's gross domestic product (GDP) and the
Fund posted positive returns for the expanded at an annualized rate of 3.3%
reporting period ended October 31, 2003. in the second quarter and 8.2% in the ========================================
For the fiscal year covered by this third quarter of 2003. The job market
report, the fund's Class A, Class B and remained weak, however, as the nation's DURING THE REPORTING PERIOD, THE BRITISH
Class C shares returned 17.77%, 17.19%, unemployment rate stood at 6.0% at the
and 17.19%, respectively, at net asset close of the reporting period. POUND, CANADIAN DOLLAR, EURO, SWISS
value. The fund's benchmark, the MSCI
World Index, posted a higher return of In Asia, Japan's economy finally FRANC, AND JAPANESE YEN APPRECIATED
23.71% due in part, we believe, to the appeared to be showing signs of a
fact the market appeared to reward cyclical upswing. While deflationary SIGNIFICANTLY AGAINST THE U.S. DOLLAR.
high-beta stocks, which we were not pressures persisted, industrial
invested in. production rose strongly in September. ========================================
Amid this backdrop, Japanese equities
MARKET CONDITIONS rose sharply through the summer but sold Purchasing Managers Index--a
off in late October. Despite the fall, survey of purchasing managers that
As global economic recovery appeared to however, the MSCI Japan Index returned measures the general health of the
gain momentum in 2003, equity markets in 32.94% for the fiscal year. manufacturing sector--increased for the
the U.S. and abroad generally posted fourth consecutive month in October.
positive returns for the fiscal year, While European stock markets posted
with emerging market stocks generally some of the best regional returns for In monetary affairs, policy settings
outperforming those in developed the fiscal year, growth in the euro zone for many major economies became more
countries. Market returns and economic remained weak. According to a recent expansionary during the reporting
growth, however, varied considerably by report by the Bank of England, there period. The Federal Reserve, the Bank of
region. continues to be a contrast between weak England and the European Central Bank
euro area economic data and more all reduced short-term interest rates in
In the United States, the S&P 500, promising business survey indicators. 2003, leaving their benchmark rates at
frequently cited as a measure of the Annualized GDP in the euro zone fell by 1.00%, 3.50% and 2.00%, respectively,
performance of the U.S. stock market, 0.1% in the second quarter, and French
returned 20.79% for the year ended consumer spending on manufactured goods
October 31, 2003. The U.S. economy also declined in
</Table>
<Table>
==================================================================================================================================
TOP 10 equity holdings* TOP 10 INDUSTRIES*
1. Teva Pharmaceutical Industries Ltd.-ADR (Israel) 3.2% 1. Pharmaceuticals 8.7%
2. Samsung Electronics Co., Ltd. (South Korea) 1.8 2. Electronic Equipment Manufacturers 6.0
3. Nitto Denko Corp. (Japan) 1.7 3. Integrated Oil & Gas 5.2
4. Microsoft Corp. 1.7 4. Semiconductors 4.1
5. Hoya Corp. (Japan) 1.7 5. Diversified Banks 4.1
6. Vodafone Group PLC (United Kingdom) 1.5 6. Systems Software 3.9
7. Canon Inc. (Japan) 1.5 7. Health Care Equipment 3.0
8. VERITAS Software Corp. 1.5 8. Diversified Capital Markets 2.7
9. Citigroup Inc. 1.5 9. Wireless Telecommunication Services 2.7
10. Intel Corp. 1.5 10. Household Products 2.6
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will continue to hold any particular
security.
==================================================================================================================================
</Table>
2
<Table>
as of October 31, 2003. Monetary pharmaceutical company based in Israel. KIRK L. ANDERSON
authorities in many Asian countries also Teva reported net income of $157 million [PHOTO OF Mr. Anderson is
adopted expansionary policies during the for the third quarter, up 63% from a KIRK L. co-manager of the
reporting period. year ago, while diluted ANDERSON] AIM Global Growth
earnings-per-share reached $0.53, up 47% Fund. He joined AIM
During the reporting period, the from the prior year. in 1994. Mr. Anderson earned a B.A. in
British pound, Canadian dollar, euro, political science from Texas A&M
Swiss franc, and Japanese yen Sega Corporation, however, detracted University. He also received an M.S. in
appreciated significantly against the from fund performance as the company finance from the University of Houston.
U.S. dollar. faced delays in bringing new game titles
to market. As of the end of the
YOUR FUND reporting period, we longer owned the MATTHEW W. DENNIS
stock. [PHOTO OF Mr. Dennis,
The fund's investment strategy is to MATTHEW W. Chartered Financial
focus on stocks which are thought to Although all sectors appeared to DENNIS] Analyst, is a
have above-average, long-term growth in contribute positively to fund co-manager of AIM
earnings and strong prospects for future performance for the fiscal year, Global Growth Fund. He has been in the
growth. To that end, stocks in the utility, telecommunications services and investment business since 1994. Mr.
information technology and health care industrial stocks contributed the least. Dennis received a B.A. in economics from
sectors contributed most positively to The University of Texas at Austin. He
fund performance during the fiscal year. On a regional basis, given the also earned an M.S. in finance from
improving economic climate in the United Texas A&M University.
Online retailer Amazon.com is a good States, we found more investment
example of a stock that benefited fund opportunities in U.S. stocks and
performance during the fiscal year. By therefore increased our exposure there.
aggressively cutting prices and offering CLAS G. OLSSON Mr.
customers free shipping, Amazon has IN CLOSING [PHOTO OF Olsson is co-manager
sharply increased its sales and CLAS G. of AIM Global Growth
profitability. For the third quarter, After a few challenging years, global OLSSON] Fund. Mr. Olsson
sales rose from $851 million in 2002 to markets began to post strong returns joined AIM in 1994.
$1.13 billion in 2003, transforming a again in 2003. Whether world-wide market Mr. Olsson became a commissioned naval
$10 million third-quarter loss in 2002 rallies are sustainable remains to be officer at the Royal Swedish Naval
into a $52 million third-quarter profit seen. Regardless of economic or market Academy in 1988. He also received a
in 2003 and boosting the company's share trends, we remain committed to owning B.B.A. from The University of Texas at
price. stocks that fit the fund's investment Austin.
objective.
A strong performer for the fund in
the health care sector was Teva See important fund and index BARRETT K. SIDES Mr.
Pharmaceuticals, a global disclosures inside front cover. [PHOTO OF Sides is co-manager
BARRETT K. of AIM Global Growth
SIDES] Fund. He joined AIM
in 1990. Mr. Sides
graduated with a B.S. in economics from
Bucknell University. He also received a
master's in international business from
the University of St. Thomas.
Assisted by Large Cap Growth Team, Asia
Pacific Team and Europe/Canada Team
</Table>
[GRAPHIC]
For More Information Visit
AIMinvestments.com
<Table>
===============================================================================================
TOP 10 COUNTRIES*
1. United States 40.8% TOTAL NUMBER OF HOLDINGS* 118
2. United Kingdom 12.4 TOTAL NET ASSETS $544.5 BILLION
3. Japan 10.4
4. France 4.6
5. Canada 3.6
6. Switzerland 3.4
7. Israel 3.2
8. Italy 2.2
9. Germany 2.0
10. Netherlands 1.9
===============================================================================================
</Table>
3
FUND PERFORMANCE
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
9/15/94-10/31/03*
<Table>
<Caption>
DATE AIM GLOBAL AIM GLOBAL
GROWTH FUND GROWTH FUND MSCI
CLASS A SHARES CLASS B SHARES WORLD INDEX
9/15/1994 $ 9525 $ 10000 $ 10000
10/31/1994 9744 10220 10010
1/31/1995 9062 9490 9516
4/30/1995 10092 10549 10466
7/31/1995 11578 12109 11073
10/31/1995 11741 12260 10959
1/31/1996 12314 12840 11875
4/30/1996 13245 13796 12424
7/31/1996 12847 13359 12049
10/31/1996 13768 14296 12745
1/31/1997 14797 15343 13396
4/30/1997 14632 15149 13708
7/31/1997 17327 17918 15976
10/31/1997 16143 16676 14883
1/31/1998 16712 17232 15750
4/30/1998 19180 19760 17689
7/31/1998 19686 20249 17845
10/31/1998 17826 18306 17153
1/31/1999 20969 21509 19470
4/30/1999 21073 21575 20511
7/31/1999 21761 22252 20612
10/31/1999 23970 24476 21427
1/31/2000 29077 29657 22441
4/30/2000 29357 29894 23031
7/31/2000 28626 29100 22543
10/31/2000 26721 27142 21661
1/31/2001 23603 23931 21068
4/30/2001 19032 19282 19343
7/31/2001 17986 18193 18243
10/31/2001 15722 15880 16134
1/31/2002 16239 16380 16670
4/30/2002 16510 16628 16664
7/31/2002 14246 14339 14354
10/31/2002 13653 13727 13738
1/31/2003 12996 13046 13354
4/30/2003 13631 13669 14235
7/31/2003 14818 14838 15613
10/31/2003 $ 16069 $ 16163 $ 16995 Source: Lipper, Inc.
</Table>
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's share classes will differ due to different sales
charge structures and class expenses. For fund performance calculations and
indexes used in this report, please see the inside front cover. Performance
shown in the chart and table does not reflect deduction of taxes a shareholder
would pay on fund distributions or sale of fund shares. Performance of the
indexes does not reflect the effects of taxes.
Your fund's total return includes sales charges, expenses and management
fees. Results for B shares are calculated as if a hypothetical shareholder had
liquidated his entire investment in the fund at the close of the reporting
period and paid the applicable contingent deferred sales charges.
This chart uses a logarithmic scale, which means the price scale (vertical
axis) is structured so that a given distance always represents the same percent
change in price, rather than the same absolute change in price. For example, the
distance from one to 10 is the same as the distance from 10 to 100 on a
logarithmic chart, but the latter distance is 10 times greater on a linear
chart. A logarithmic scale better illustrates performance in the fund's early
years before reinvested distributions and compounding create the potential for
the original investment to grow to very large numbers.
*Index performance is for the period 8/31/94-10/31/03
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
<Table>
===================================================================================================================================
FUND VS. INDEXES AVERAGE ANNUAL TOTAL RETURNS In addition to fund returns as of the
TOTAL RETURNS 10/31/02-10/31/03, As of 10/31/03, including sales charges close of the fiscal year, industry
excluding sales charges regulations require us to provide
CLASS A SHARES average annual total returns (including
CLASS A SHARES 17.77% Inception (9/15/94) 5.33% sales charges) for periods ended
5 Years -3.00 9/30/03, the most recent calendar
CLASS B SHARES 17.19 1 Year 12.19 quarter-end, which were as follows.
CLASS C SHARES 17.19 CLASS B SHARES AVERAGE ANNUAL TOTAL RETURNS
As of 9/30/03, including sales charges
MSCI World Index 23.71 Inception (9/15/94) 5.40% CLASS A SHARES
5 Years -2.92 Inception (9/15/94) 4.70%
1 Year 12.19 5 Years -3.26
1 Year 11.77
CLASS C SHARES
CLASS B SHARES
Inception (8/4/97) -1.52%
5 Years -2.56 Inception (9/15/94) 4.76%
1 Year 16.19 5 Years -3.19
1 Year 11.87
CLASS C SHARES
Inception (8/4/97) -2.46%
5 Years -2.81
1 Year 15.86
===================================================================================================================================
</Table>
4
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2003
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-55.18%
AUSTRALIA-0.82%
BHP Billiton Ltd. (Diversified Metals &
Mining) 538,700 $ 4,468,425
==========================================================================
BERMUDA-1.18%
Ingersoll-Rand Co.-Class A (Industrial
Machinery) 50,000 3,020,000
- --------------------------------------------------------------------------
Nabors Industries, Ltd. (Oil & Gas
Drilling)(a) 90,000 3,402,000
==========================================================================
6,422,000
==========================================================================
BRAZIL-0.81%
Companhia de Bebidas das Americas-ADR
(Brewers) 111,600 2,365,920
- --------------------------------------------------------------------------
Petroleo Brasileiro S.A.-ADR (Integrated Oil
& Gas) 86,300 2,028,050
==========================================================================
4,393,970
==========================================================================
CANADA-3.59%
Bombardier Inc.-Class B (Aerospace & Defense) 418,000 1,876,799
- --------------------------------------------------------------------------
Loblaw Cos. Ltd. (Food Retail) (Acquired
11/13/02-11/14/02; Cost $2,455,102)(b) 67,500 3,268,771
- --------------------------------------------------------------------------
Manulife Financial Corp. (Life & Health
Insurance) 96,300 2,921,502
- --------------------------------------------------------------------------
Petro-Canada (Integrated Oil & Gas) 73,000 2,941,593
- --------------------------------------------------------------------------
Royal Bank of Canada (Diversified Banks) 40,150 1,933,047
- --------------------------------------------------------------------------
Suncor Energy, Inc. (Integrated Oil & Gas) 313,600 6,585,957
==========================================================================
19,527,669
==========================================================================
CAYMAN ISLANDS-0.63%
Noble Corp. (Oil & Gas Drilling)(a) 100,000 3,433,000
==========================================================================
FRANCE-4.64%
BNP Paribas S.A. (Diversified Banks) 84,910 4,446,052
- --------------------------------------------------------------------------
Carrefour S.A. (Hypermarkets & Supercenters) 58,300 3,050,000
- --------------------------------------------------------------------------
France Telecom S.A. (Integrated
Telecommunication Services)(a) 67,700 1,632,851
- --------------------------------------------------------------------------
Pernod Ricard S.A. (Distillers & Vintners) 35,170 3,381,643
- --------------------------------------------------------------------------
Renault S.A. (Automobile Manufacturers) 69,160 4,558,737
- --------------------------------------------------------------------------
Societe Generale (Diversified Banks) 23,160 1,714,418
- --------------------------------------------------------------------------
Total S.A. (Integrated Oil & Gas) 41,759 6,467,833
==========================================================================
25,251,534
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
GERMANY-2.02%
Altana A.G. (Pharmaceuticals) 52,855 $ 3,319,271
- --------------------------------------------------------------------------
Deutsche Telekom A.G. (Integrated
Telecommunication Services)(a) 182,500 2,864,702
- --------------------------------------------------------------------------
Metro A.G. (Hypermarkets & Supercenters)(a) 74,200 3,023,967
- --------------------------------------------------------------------------
Siemens A.G. (Industrial Conglomerates)(a) 26,400 1,773,819
==========================================================================
10,981,759
==========================================================================
HONG KONG-1.01%
Cheung Kong (Holdings) Ltd. (Real Estate
Management & Development) 457,000 3,810,491
- --------------------------------------------------------------------------
Sun Hung Kai Properties Ltd. (Real Estate
Management & Development) 203,000 1,718,766
==========================================================================
5,529,257
==========================================================================
INDIA-0.83%
Infosys Technologies Ltd.-ADR (IT Consulting
& Services) 53,500 4,526,635
==========================================================================
ISRAEL-3.20%
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 306,200 17,419,718
==========================================================================
ITALY-2.23%
Banca Intesa S.p.A. (Diversified Banks) 547,400 1,838,993
- --------------------------------------------------------------------------
Eni S.p.A. (Integrated Oil & Gas) 284,800 4,506,797
- --------------------------------------------------------------------------
Mediaset S.p.A. (Broadcasting & Cable TV)(a) 285,000 2,869,075
- --------------------------------------------------------------------------
UniCredito Italiano S.p.A. (Diversified
Banks) 602,700 2,960,359
==========================================================================
12,175,224
==========================================================================
JAPAN-10.37%
Canon Inc. (Office Electronics) 170,000 8,230,797
- --------------------------------------------------------------------------
Fuji Photo Film Co., Ltd. (Photographic
Products) 56,000 1,651,256
- --------------------------------------------------------------------------
Hirose Electric Co., Ltd. (Electronic
Equipment Manufacturers) 54,200 6,664,015
- --------------------------------------------------------------------------
Hoya Corp. (Electronic Equipment
Manufacturers) 100,200 9,073,444
- --------------------------------------------------------------------------
KDDI Corp. (Wireless Telecommunication
Services) 740 4,020,568
- --------------------------------------------------------------------------
Keyence Corp. (Electronic Equipment
Manufacturers) 33,300 7,327,940
- --------------------------------------------------------------------------
Nitto Denko Corp. (Specialty Chemicals) 176,800 9,284,092
- --------------------------------------------------------------------------
Ricoh Co., Ltd. (Office Electronics) 180,000 3,415,544
- --------------------------------------------------------------------------
Toyota Motor Corp. (Automobile Manufacturers) 98,100 2,794,439
- --------------------------------------------------------------------------
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
JAPAN-(CONTINUED)
Trend Micro Inc. (Application Software)(a) 144,600 $ 3,987,423
==========================================================================
56,449,518
==========================================================================
MEXICO-0.86%
Telefonos de Mexico S.A. de C.V.-ADR
(Integrated Telecommunication Services) 35,500 1,141,325
- --------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V.-Series C
(Hypermarkets & Super Centers) 1,350,600 3,529,859
==========================================================================
4,671,184
==========================================================================
NETHERLANDS-1.86%
ABN AMRO Holding N.V. (Diversified Banks) 135,830 2,840,208
- --------------------------------------------------------------------------
Aegon N.V. (Life & Health Insurance) 132,800 1,735,340
- --------------------------------------------------------------------------
Koninklijke (Royal) KPN N.V. (Integrated
Telecommunication Services)(a) 506,600 3,838,135
- --------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics N.V.
(Consumer Electronics) 63,700 1,711,266
==========================================================================
10,124,949
==========================================================================
NORWAY-0.52%
Telenor A.S.A (Integrated Telecommunication
Services) 527,400 2,856,305
==========================================================================
SINGAPORE-0.41%
Singapore Airlines Ltd. (Airlines)(a) 324,000 2,253,751
==========================================================================
SOUTH KOREA-1.79%
Samsung Electronics Co., Ltd. (Electronic
Equipment Manufacturers) 24,500 9,729,615
==========================================================================
SPAIN-1.05%
Banco Popular Espanol S.A. (Diversified
Banks) 53,310 2,762,389
- --------------------------------------------------------------------------
Repsol YPF, S.A. (Integrated Oil & Gas) 170,000 2,954,047
==========================================================================
5,716,436
==========================================================================
SWEDEN-1.58%
Atlas Copco A.B.-Class A (Industrial
Machinery) 82,000 2,867,755
- --------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson A.B.-Class B
(Communications Equipment) 1,551,500 2,653,592
- --------------------------------------------------------------------------
Volvo A.B.-Class B (Construction, Farm
Machinery & Heavy Trucks) 110,000 3,060,743
==========================================================================
8,582,090
==========================================================================
SWITZERLAND-3.42%
Alcon, Inc. (Health Care Supplies) 79,000 4,353,690
- --------------------------------------------------------------------------
Credit Suisse Group (Diversified Capital
Markets)(a) 137,339 4,820,800
- --------------------------------------------------------------------------
Nestle S.A. (Packaged Foods & Meats) 10,200 2,237,243
- --------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
SWITZERLAND-(CONTINUED)
Roche Holding A.G. (Pharmaceuticals) 39,800 $ 3,281,035
- --------------------------------------------------------------------------
UBS A.G. (Diversified Capital Markets) 64,330 3,935,437
==========================================================================
18,628,205
==========================================================================
UNITED KINGDOM-12.36%
AstraZeneca PLC (Pharmaceuticals) 155,375 7,288,962
- --------------------------------------------------------------------------
Barclays PLC (Diversified Banks) 445,000 3,748,304
- --------------------------------------------------------------------------
Centrica PLC (Gas Utilities) 1,100,750 3,441,942
- --------------------------------------------------------------------------
GlaxoSmithKline PLC (Pharmaceuticals) 191,200 4,089,457
- --------------------------------------------------------------------------
GUS PLC (Catalog Retail)(a) 386,500 4,716,289
- --------------------------------------------------------------------------
Imperial Tobacco Group PLC (Tobacco) 422,700 6,999,149
- --------------------------------------------------------------------------
Kingfisher PLC (Home Improvement Retail) 627,760 3,005,596
- --------------------------------------------------------------------------
mm02 PLC (Wireless Telecommunication
Services)(a) 1,934,000 2,097,756
- --------------------------------------------------------------------------
Next PLC (Department Stores) 242,500 4,849,670
- --------------------------------------------------------------------------
Reckitt Benckiser PLC (Household Products) 317,950 6,681,885
- --------------------------------------------------------------------------
Smith & Nephew PLC (Health Care Supplies) 735,025 5,833,086
- --------------------------------------------------------------------------
Tesco PLC (Food Retail) 1,556,019 6,230,246
- --------------------------------------------------------------------------
Vodafone Group PLC (Wireless
Telecommunication Services) 3,969,810 8,325,942
==========================================================================
67,308,284
==========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $234,948,732) 300,449,528
==========================================================================
DOMESTIC COMMON STOCKS-40.38%
APPAREL RETAIL-0.60%
Gap, Inc. (The) 170,000 3,243,600
==========================================================================
BIOTECHNOLOGY-1.37%
Amgen Inc.(a) 121,000 7,472,960
==========================================================================
CASINOS & GAMING-0.87%
International Game Technology 144,000 4,716,000
==========================================================================
COMMUNICATIONS EQUIPMENT-1.06%
Cisco Systems, Inc.(a) 275,000 5,769,500
==========================================================================
COMPUTER & ELECTRONICS RETAIL-1.07%
Best Buy Co., Inc. 100,000 5,831,000
==========================================================================
COMPUTER HARDWARE-1.35%
Dell Inc.(a) 120,000 4,334,400
- --------------------------------------------------------------------------
International Business Machines Corp. 34,000 3,042,320
==========================================================================
7,376,720
==========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
COMPUTER STORAGE & PERIPHERALS-1.21%
EMC Corp.(a) 475,000 $ 6,574,000
==========================================================================
CONSUMER FINANCE-0.84%
SLM Corp. 117,000 4,581,720
==========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.92%
First Data Corp. 140,000 4,998,000
==========================================================================
DIVERSIFIED CAPITAL MARKETS-1.05%
J.P. Morgan Chase & Co. 160,000 5,744,000
==========================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.11%
Apollo Group, Inc.-Class A(a) 95,000 6,035,350
==========================================================================
FOOTWEAR-0.65%
NIKE, Inc.-Class B 55,000 3,514,500
==========================================================================
HEALTH CARE EQUIPMENT-3.01%
Boston Scientific Corp.(a) 85,000 5,756,200
- --------------------------------------------------------------------------
Guidant Corp. 82,500 4,208,325
- --------------------------------------------------------------------------
Medtronic, Inc. 57,000 2,597,490
- --------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 60,000 3,828,600
==========================================================================
16,390,615
==========================================================================
HOME IMPROVEMENT RETAIL-0.88%
Home Depot, Inc. (The) 130,000 4,819,100
==========================================================================
HOUSEHOLD PRODUCTS-1.35%
Procter & Gamble Co. (The) 75,000 7,371,750
==========================================================================
HYPERMARKETS & SUPER CENTERS-1.03%
Wal-Mart Stores, Inc. 95,000 5,600,250
==========================================================================
INDUSTRIAL CONGLOMERATES-0.51%
3M Co. 35,000 2,760,450
==========================================================================
INTEGRATED OIL & GAS-0.54%
Exxon Mobil Corp. 80,000 2,926,400
==========================================================================
INTERNET RETAIL-2.13%
Amazon.com, Inc.(a) 100,000 5,442,000
- --------------------------------------------------------------------------
eBay Inc.(a) 110,000 6,153,400
==========================================================================
11,595,400
==========================================================================
INTERNET SOFTWARE & SERVICES-1.32%
Yahoo! Inc.(a) 165,000 7,210,500
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
INVESTMENT BANKING & BROKERAGE-1.00%
Goldman Sachs Group, Inc. (The) 58,000 $ 5,446,200
==========================================================================
MANAGED HEALTH CARE-1.57%
Aetna Inc. 47,000 2,698,270
- --------------------------------------------------------------------------
UnitedHealth Group Inc. 115,000 5,851,200
==========================================================================
8,549,470
==========================================================================
MOVIES & ENTERTAINMENT-0.48%
Viacom Inc.-Class B 65,000 2,591,550
==========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-1.48%
Citigroup Inc. 170,000 8,058,000
==========================================================================
PERSONAL PRODUCTS-0.69%
Avon Products, Inc. 55,000 3,737,800
==========================================================================
PHARMACEUTICALS-2.18%
Allergan, Inc. 33,000 2,495,460
- --------------------------------------------------------------------------
Pfizer Inc. 165,000 5,214,000
- --------------------------------------------------------------------------
Wyeth 94,000 4,149,160
==========================================================================
11,858,620
==========================================================================
SEMICONDUCTOR EQUIPMENT-0.87%
Novellus Systems, Inc.(a) 115,000 4,748,350
==========================================================================
SEMICONDUCTORS-4.11%
Analog Devices, Inc.(a) 110,000 4,876,300
- --------------------------------------------------------------------------
Intel Corp. 240,000 7,932,000
- --------------------------------------------------------------------------
Linear Technology Corp. 110,000 4,687,100
- --------------------------------------------------------------------------
Microchip Technology Inc. 150,000 4,906,500
==========================================================================
22,401,900
==========================================================================
SOFT DRINKS-0.53%
PepsiCo, Inc. 60,000 2,869,200
==========================================================================
SPECIALTY STORES-0.66%
Bed Bath & Beyond Inc.(a) 85,000 3,590,400
==========================================================================
SYSTEMS SOFTWARE-3.94%
Microsoft Corp. 350,000 9,152,500
- --------------------------------------------------------------------------
Oracle Corp.(a) 350,000 4,186,000
- --------------------------------------------------------------------------
VERITAS Software Corp.(a) 225,000 8,133,750
==========================================================================
21,472,250
==========================================================================
Total Domestic Common Stocks (Cost
$171,643,319) 219,855,555
==========================================================================
</Table>
F-3
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------
U.S. TREASURY BILLS-0.37%
0.85%, 12/18/03 (Cost $1,997,781)(c) $2,000,000(d) $ 1,997,781
==========================================================================
</Table>
<Table>
<Caption>
SHARES
MONEY MARKET FUNDS-3.47%
STIC Liquid Assets Portfolio(e) 9,455,693 9,455,693
- --------------------------------------------------------------------------
STIC Prime Portfolio(e) 9,455,693 9,455,693
==========================================================================
Total Money Market Funds (Cost
$18,911,386) 18,911,386
==========================================================================
TOTAL INVESTMENTS-99.40% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $427,501,218) 541,214,250
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-5.96%
STIC Liquid Assets Portfolio(e)(f) 32,430,653 $ 32,430,653
==========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $32,430,653) 32,430,653
==========================================================================
TOTAL INVESTMENTS-105.36% (Cost $459,931,871) 573,644,903
==========================================================================
OTHER ASSETS LESS LIABILITIES-(5.36%) (29,171,009)
==========================================================================
NET ASSETS-100.00% $544,473,894
__________________________________________________________________________
==========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction). The security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The market value of this security at 10/31/03 represented 0.60% of the
Fund's net assets. Unless otherwise indicated, this security is not
considered to be illiquid.
(c) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(d) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1 section H and Note 8.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
(f) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-4
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2003
<Table>
ASSETS:
Investments, at market value (cost
$408,589,832)* $ 522,302,864
- ------------------------------------------------------------
Investments in affiliated money market funds
(cost $51,342,039) 51,342,039
- ------------------------------------------------------------
Foreign currencies, at value (cost
$1,823,326) 1,805,635
- ------------------------------------------------------------
Receivables for:
Investments sold 7,090,052
- ------------------------------------------------------------
Variation margin 5,139
- ------------------------------------------------------------
Capital stock sold 201,009
- ------------------------------------------------------------
Dividends and interest 593,849
- ------------------------------------------------------------
Investment for deferred compensation plan 49,371
- ------------------------------------------------------------
Other assets 36,512
============================================================
Total assets 583,426,470
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 2,994,078
- ------------------------------------------------------------
Capital stock reacquired 2,449,725
- ------------------------------------------------------------
Deferred compensation plan 49,371
- ------------------------------------------------------------
Collateral upon return of securities loaned 32,430,653
- ------------------------------------------------------------
Accrued distribution fees 315,504
- ------------------------------------------------------------
Accrued directors' fees 28,659
- ------------------------------------------------------------
Accrued transfer agent fees 383,358
- ------------------------------------------------------------
Accrued operating expenses 301,228
============================================================
Total liabilities 38,952,576
============================================================
Net assets applicable to shares outstanding $ 544,473,894
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 883,610,818
- ------------------------------------------------------------
Undistributed net investment income (loss) (79,013)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign
currencies, futures contracts and option
contracts (453,018,495)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and
futures contracts 113,960,584
============================================================
$ 544,473,894
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 329,738,979
____________________________________________________________
============================================================
Class B $ 181,890,932
____________________________________________________________
============================================================
Class C $ 32,843,983
____________________________________________________________
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 22,116,661
____________________________________________________________
============================================================
Class B:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 12,830,760
____________________________________________________________
============================================================
Class C:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 2,315,729
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 14.91
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $14.91 divided
by 95.25%) $ 15.65
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 14.18
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 14.18
____________________________________________________________
============================================================
</Table>
* At October 31, 2003, securities with an aggregate market value of $30,924,556
were on loan to brokers.
See Notes to Financial Statements.
F-5
STATEMENT OF OPERATIONS
For the year ended October 31, 2003
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $694,061) $ 7,364,117
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 288,908
- -------------------------------------------------------------------------
Interest 15,263
- -------------------------------------------------------------------------
Securities lending 283,347
=========================================================================
Total investment income 7,951,635
=========================================================================
EXPENSES:
Advisory fees 4,616,269
- -------------------------------------------------------------------------
Administrative services fees 142,045
- -------------------------------------------------------------------------
Custodian fees 318,974
- -------------------------------------------------------------------------
Distribution fees:
Class A 1,639,781
- -------------------------------------------------------------------------
Class B 1,832,533
- -------------------------------------------------------------------------
Class C 318,810
- -------------------------------------------------------------------------
Transfer agent fees 2,792,448
- -------------------------------------------------------------------------
Directors' fees 18,746
- -------------------------------------------------------------------------
Other 490,651
=========================================================================
Total expenses 12,170,257
=========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangements (40,680)
=========================================================================
Net expenses 12,129,577
=========================================================================
Net investment income (loss) (4,177,942)
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (9,250,227)
- -------------------------------------------------------------------------
Foreign currencies 873,544
- -------------------------------------------------------------------------
Futures contracts 997,479
- -------------------------------------------------------------------------
Option contracts written 313,095
=========================================================================
(7,066,109)
=========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 99,287,098
- -------------------------------------------------------------------------
Foreign currencies (35,074)
- -------------------------------------------------------------------------
Futures contracts 255,322
- -------------------------------------------------------------------------
Option contracts written (7,821)
=========================================================================
99,499,525
=========================================================================
Net gain from investment securities, foreign currencies,
futures contracts and option contracts 92,433,416
=========================================================================
Net increase in net assets resulting from operations $88,255,474
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-6
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2003 and 2002
<Table>
<Caption>
2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (4,177,942) $ (7,462,645)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (7,066,109) (100,653,432)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, futures contracts and
option contracts 99,499,525 18,740,463
============================================================================================
Net increase (decrease) in net assets resulting from
operations 88,255,474 (89,375,614)
============================================================================================
Share transactions-net:
Class A (61,964,974) (52,935,575)
- --------------------------------------------------------------------------------------------
Class B (51,840,921) (129,582,901)
- --------------------------------------------------------------------------------------------
Class C (6,896,642) (11,592,089)
============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (120,702,537) (194,110,565)
============================================================================================
Net increase (decrease) in net assets (32,447,063) (283,486,179)
============================================================================================
NET ASSETS:
Beginning of year 576,920,957 860,407,136
============================================================================================
End of year (including undistributed investment income
(loss) of $(79,013) and $(68,156) for 2003 and 2002,
respectively) $ 544,473,894 $ 576,920,957
____________________________________________________________________________________________
============================================================================================
</Table>
See Notes to Financial Statements.
F-7
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Growth Fund (the "Fund") is a series portfolio of AIM International
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of five separate
portfolios. The Fund currently offers multiple classes of shares. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Effective November 25, 2003, the
Fund redomesticated as a series portfolio of a newly formed Delaware statutory
trust, AIM International Mutual Funds.
The Fund's investment objective is long-term growth of capital. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued on the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Securities for which market prices
are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Market trends, movement in exchange traded funds
and ADRs, and the bid/ask quotes of brokers and information providers may
be reviewed in the course of making a good faith determination of a
security's fair value. Short-term obligations having 60 days or less to
maturity and commercial paper are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the NYSE. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of the close of the respective
markets. Occasionally, events affecting the values of such foreign
securities may occur between the times at which the particular foreign
market closes and the close of the customary trading session of the NYSE
which would not ordinarily be reflected in the computation of the Fund's
net asset value. If a development/event is so significant that there is a
reasonably high degree of certainty as to both the effect and the degree of
effect that the development/event has actually caused that closing price to
no longer reflect actual value, the closing prices, as determined at the
close of the applicable foreign market, may be adjusted to reflect the fair
value of the affected foreign securities as of the close of the NYSE as
determined in good faith by or under the supervision of the Board of
Directors.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M 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
gain) which is distributed to shareholders. Therefore, no provision for
federal income taxes is recorded in the financial statements. Any capital
loss carryforwards listed are reduced for limitations, if any, to the
extent required by the Internal Revenue Code.
F-8
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations. Reported net realized foreign currency gains or losses arise
from sales of foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
currency gains and losses arise from changes in the fair values of assets
and liabilities, other than investments in securities at fiscal period end,
resulting from changes in exchange rates.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. COVERED CALL OPTIONS -- The Fund may write call options, on a covered
basis; that is, the Fund will own the underlying security. When the Fund
writes a covered call option, an amount equal to the premium received by
the Fund is recorded as an asset and an equivalent liability. The amount of
the liability is subsequently "marked-to-market" to reflect the current
market value of the option written. The current market value of a written
option is the mean between the last bid and asked prices on that day. If a
written call option expires on the stipulated expiration date, or if the
Fund enters into a closing purchase transaction, the Fund realizes a gain
(or a loss if the closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss
on the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received. A risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks also include to
varying degrees, the risk of loss in excess of the variation margin
disclosed in the Statement of Assets and Liabilities.
I. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. All other expenses are allocated
among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $1
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily net assets in excess of $1 billion. AIM has voluntarily agreed to waive
advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives
from the affiliated money market funds in which the Fund has invested (excluding
investments made in affiliated money market funds with cash collateral from
securities loaned by the Fund). For the year ended October 31, 2003, AIM waived
fees of $5,828. Under a prior agreement to limit the aggregate costs of certain
shareholder services provided by third party administrators, AIM reimbursed fees
of $24,370 for Class A, Class B and Class C shares based on the relative net
assets of those classes.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2003, AIM was
paid $142,045 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AISI"), formerly known as A I M Fund
Services, Inc., a fee for providing transfer agency and shareholder services to
the Fund. During the year ended October 31, 2003, AISI retained $1,536,624 for
such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A,
Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to the
Plans, pays AIM Distributors compensation at the annual rate of 0.50% of the
Fund's average daily net assets of Class A shares and 1.00% of the average daily
net assets of Class B and Class C shares. Of these amounts, AIM Distributors may
pay a service fee up to 0.25% of the average daily net assets of the Class A,
Class B or Class C shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers
F-9
who purchase and own shares of such classes. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. NASD Rules
also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the year ended October 31, 2003, the Class A, Class B and Class C
shares paid $1,639,781, $1,832,533 and $318,810, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During year ended
October 31, 2003, AIM Distributors retained $44,111 in front-end sales
commissions from the sale of Class A shares and $43,611, $374 and $72,935 from
Class A, Class B and Class C shares, respectively, for CDSC imposed upon
redemptions by shareholders.
Certain officers and directors of the Company are officers and directors of
AIM, AISI and/or AIM Distributors.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
For the year ended October 31, 2003, the Fund received reductions in transfer
agency fees from AISI (an affiliate of AIM) of $10,482 under an expense offset
arrangement which resulted in a reduction of the Fund's total expenses of
$10,482.
NOTE 4--DIRECTORS' FEES
Directors' fees represent remuneration paid to each Director of the Company who
is not an "interested person" of AIM. Directors have the option to defer
compensation payable by the Company. The Directors deferring compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested.
Current Directors are eligible to participate in a retirement plan that
provides for benefits to be paid upon retirement to Directors over a period of
time based on the number of years of service. Certain former Directors also
participate in a retirement plan and receive benefits under such plan.
During the year ended October 31, 2003, the Fund paid legal fees of $3,154
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Directors. A member of that firm is a Director of the Company.
NOTE 5--BORROWINGS
The Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund loan will be
made under this facility only if the loan rate (an average of the rate available
on bank loans and the rate available on investments in overnight repurchase
agreements) is favorable to both the lending fund and the borrowing fund. Under
certain circumstances, a loan will be secured by collateral. To the extent that
the loan is required to be secured by collateral, the collateral is marked to
market daily to ensure that the market value is at least 102% of the outstanding
principal value of the loan.
Effective June 26, 2003, the Fund became a participant in an uncommitted
unsecured revolving line of credit facility with State Street Bank and Trust
Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000 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 can borrow on a first
come, first served basis. Principal on each loan outstanding shall bear interest
at the bid rate quoted by SSB at the time of the request for the loan.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could 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 were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the year ended October 31, 2003, the Fund did not borrow or lend
under the interfund lending facility or borrow under either the uncommitted
unsecured revolving line of credit facility or the committed line of credit
facility.
Additionally the Fund is permitted to carry a negative or overdrawn balance
in its account with the custodian bank. To compensate the custodian bank for
such overdrafts, the overdrawn Fund may either (i) leave funds in the account so
the custodian can be compensated by earning the additional interest; or (ii)
compensate by paying the custodian bank. In either case, the custodian bank will
be compensated an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value of the loaned securities determined daily. Such collateral will be
cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, following the
valuation date of the securities loaned. Therefore, the value of the collateral
held may be temporarily less than the value of the securities on loan.
At October 31, 2003, securities with an aggregate value of $30,924,556 were
on loan to brokers. The loans were secured by cash collateral of $32,430,653
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended October 31, 2003, the Fund received fees of $283,347
for securities lending.
F-10
NOTE 7--OPTION CONTRACTS WRITTEN
<Table>
<Caption>
TRANSACTIONS DURING THE PERIOD
- ----------------------------------------------------------
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- ----------------------------------------------------------
Beginning of period 260 $ 65,671
- ----------------------------------------------------------
Written 4,190 870,709
- ----------------------------------------------------------
Closed (2,080) (541,172)
- ----------------------------------------------------------
Exercised (2,370) (395,208)
==========================================================
End of period -- $ --
__________________________________________________________
==========================================================
</Table>
NOTE 8--FUTURES CONTRACTS
On October 31, 2003, $1,250,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts.
OPEN FUTURES CONTRACTS
- ---------------------------------------------------------------------------
<Table>
<Caption>
NO. OF MONTH/ MARKET UNREALIZED
CONTRACT CONTRACTS COMMITMENT VALUE APPRECIATION
- ---------------------------------------------------------------------------
Dow Jones Eurostoxx
50 35 Dec.-03/Long $1,048,108 $ 56,896
- ---------------------------------------------------------------------------
FTSE 100 Index 8 Dec.-03/Long 582,604 14,729
- ---------------------------------------------------------------------------
S&P 500 Index 21 Dec.-03/Long 5,509,875 175,728
- ---------------------------------------------------------------------------
S&P 500/ TSE 60 Index 4 Dec.-03/Long 264,786 7,969
===========================================================================
$7,405,373 $255,322
___________________________________________________________________________
===========================================================================
</Table>
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid
during the years ended October 31, 2003 and 2002.
Tax Components of Net Assets:
As of October 31, 2003, the components of net assets on a tax basis were as
follows:
<Table>
Unrealized appreciation -- investments $ 112,776,515
- ------------------------------------------------------------
Temporary book/tax differences (79,013)
- ------------------------------------------------------------
Capital loss carryforward (451,834,426)
- ------------------------------------------------------------
Capital (par value and additional paid-in) 883,610,818
============================================================
Total net assets $ 544,473,894
____________________________________________________________
============================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation is
due to differences in the timing of recognition of gains and losses on
investments for tax and book purposes. The Fund's unrealized appreciation
difference is attributable primarily to the tax deferral of losses on wash sales
and the realization for tax purposes of unrealized gains on certain futures
contracts. The tax-basis unrealized appreciation on investments amount includes
appreciation (depreciation) on foreign currencies of $(7,770) and $79,594 on
futures contracts.
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the deferral of director compensation and
director retirement plan expenses.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2009 $339,470,549
- ----------------------------------------------------------
October 31, 2010 101,042,257
- ----------------------------------------------------------
October 31, 2011 11,321,620
==========================================================
Total capital loss carryforward $451,834,426
__________________________________________________________
==========================================================
</Table>
NOTE 10--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
October 31, 2003 was $385,167,710 and $505,155,230, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
- -----------------------------------------------------------
Aggregate unrealized appreciation of
investment securities $116,412,403
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (3,707,712)
===========================================================
Net unrealized appreciation of investment
securities $112,704,691
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $460,940,212.
</Table>
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of disallowance of
redomestication expenses, net operating losses and foreign currencies
transactions on October 31, 2003, undistributed net investment income (loss) was
increased by $4,167,085, undistributed net realized gains (losses) decreased by
$875,168 and paid in capital decreased by $3,291,917. This reclassification had
no effect on net assets of the Fund.
F-11
NOTE 12--CAPITAL STOCK INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with CDSC. Under some
circumstances, Class A shares are subject to CDSC. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2003 2002
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 51,726,502 $ 670,164,581 34,069,111 $ 487,124,735
- --------------------------------------------------------------------------------------------------------------------------
Class B 752,382 9,376,506 1,053,636 14,789,675
- --------------------------------------------------------------------------------------------------------------------------
Class C 1,419,606 17,656,486 1,832,747 23,276,761
==========================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 1,238,115 16,013,175 2,493,588 36,815,557
- --------------------------------------------------------------------------------------------------------------------------
Class B (1,298,734) (16,013,175) (2,576,415) (36,815,557)
==========================================================================================================================
Reacquired:
Class A (57,392,873) (748,142,730) (40,176,531) (576,875,867)
- --------------------------------------------------------------------------------------------------------------------------
Class B (3,671,639) (45,204,252) (7,795,399) (107,557,019)
- --------------------------------------------------------------------------------------------------------------------------
Class C (1,977,996) (24,553,128) (2,644,180) (34,868,850)
==========================================================================================================================
(9,204,637) $(120,702,537) (13,743,443) $(194,110,565)
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
NOTE 13--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.66 $ 14.58 $ 24.83 $ 23.43 $ 17.91
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.11)(a) (0.13) (0.03)(a) (0.10)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.33 (1.81) (10.08) 2.77 6.12
=================================================================================================================================
Total from investment operations 2.25 (1.92) (10.21) 2.74 6.02
=================================================================================================================================
Less distributions from net realized gains -- -- (0.04) (1.34) (0.50)
=================================================================================================================================
Net asset value, end of period $ 14.91 $ 12.66 $ 14.58 $ 24.83 $ 23.43
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 17.77% (13.17)% (41.17)% 11.52% 34.43%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $329,739 $335,954 $439,612 $796,992 $388,549
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.04%(c) 1.95% 1.68%(d) 1.62%(d) 1.67%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.58)%(c) (0.75)% (0.66)% (0.10)% (0.57)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 75% 98% 134% 110% 93%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustment in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $327,956,190.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers were 1.79% and 1.63% for the year ended 2001 and 2000,
respectively.
F-12
NOTE 13--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.09 $ 14.00 $ 23.98 $ 22.78 $ 17.52
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) (0.17)(a) (0.24) (0.17)(a) (0.23)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.24 (1.74) (9.70) 2.71 5.99
=================================================================================================================================
Total from investment operations 2.09 (1.91) (9.94) 2.54 5.76
=================================================================================================================================
Less distributions from net realized gains -- -- (0.04) (1.34) (0.50)
=================================================================================================================================
Net asset value, end of period $ 14.18 $ 12.09 $ 14.00 $ 23.98 $ 22.78
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 17.29% (13.64)% (41.50)% 10.95% 33.69%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $181,891 $206,189 $369,171 $806,409 $425,345
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.54%(c) 2.45% 2.19%(d) 2.16%(d) 2.23%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (1.08)%(c) (1.25)% (1.16)% (0.64)% (1.13)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 75% 98% 134% 110% 93%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustment in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $183,253,282.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers were 2.30% and 2.17% for the year ended 2001 and 2000,
respectively.
<Table>
<Caption>
CLASS C
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.10 $ 14.01 $ 23.98 $ 22.79 $ 17.52
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) (0.17)(a) (0.22) (0.17)(a) (0.23)(a)
- -------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.23 (1.74) (9.71) 2.70 6.00
===============================================================================================================================
Total from investment operations 2.08 (1.91) (9.93) 2.53 5.77
===============================================================================================================================
Less distributions from net realized gains -- -- (0.04) (1.34) (0.50)
===============================================================================================================================
Net asset value, end of period $ 14.18 $ 12.10 $ 14.01 $ 23.98 $ 22.79
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) 17.19% (13.63)% (41.46)% 10.90% 33.69%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 32,844 $ 34,778 $ 51,624 $ 88,810 $ 31,356
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 2.54%(c) 2.45% 2.19%(d) 2.16%(d) 2.23%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.08)%(c) (1.25)% (1.16)% (0.64)% (1.13)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 75% 98% 134% 110% 93%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustment in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $31,880,974.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers were 2.30% and 2.17% for the year ended 2001 and 2000,
respectively.
F-13
NOTE 14--SUBSEQUENT EVENTS
Your Fund's investment advisor, A I M Advisors, Inc. ("AIM") is an indirect
wholly owned subsidiary of AMVESCAP PLC ("AMVESCAP"). Another indirect wholly
owned subsidiary of AMVESCAP, INVESCO Funds Group, Inc. ("INVESCO"), was, until
recently, the investment advisor to the INVESCO Funds.
On December 2, 2003, each of the Securities and Exchange Commission ("SEC")
and the Office of the Attorney General of the State of New York ("NYAG") filed
civil proceedings against INVESCO and Raymond R. Cunningham, in his capacity as
the Chief Executive Officer of INVESCO. Mr. Cunningham currently holds the
positions of Chief Operating Officer and Senior Vice President of A I M
Management Group, Inc., the parent company of AIM, and he also holds the
position of Senior Vice President with AIM. In addition, on December 2, 2003,
the State of Colorado filed civil proceedings against INVESCO. Neither your Fund
nor any of the funds in the AIM Family of Funds(R), which includes the INVESCO
Funds (the "Funds") has been named as a defendant in any of these proceedings.
The SEC proceeding alleges that INVESCO failed to disclose in the INVESCO
Funds' prospectuses and to the INVESCO Funds' independent directors that INVESCO
had entered into certain arrangements permitting market timing of the INVESCO
Funds. The SEC is seeking injunctions, including permanent injunctions from
serving as an investment advisor, officer or director of an investment company;
an accounting of all market timing as well as certain fees and compensation
received; disgorgement; civil monetary penalties; and other relief.
The NYAG proceeding is also based on the circumstances described above. The
NYAG is seeking injunctions, including permanent injunctions from directly or
indirectly selling or distributing shares of mutual funds; disgorgement of all
profits obtained, including fees collected, and payment of all restitution and
damages caused, directly or indirectly from the alleged illegal activities;
civil monetary penalties; and other relief.
The Colorado proceeding is also based on the circumstances described above.
The State of Colorado is seeking injunctions; restitution, disgorgement and
other equitable relief; civil monetary penalties; and other relief.
If INVESCO is unsuccessful in its defense of these proceedings, it could be
barred from serving as an investment advisor for any investment company
registered under the Investment Company Act of 1940, as amended (a "registered
investment company"). Similarly, if Mr. Cunningham is unsuccessful in his
defense of these proceedings, he could be barred from serving as an officer or
director of any registered investment company. Such results could also affect
the ability of AIM, or any other investment advisor directly or indirectly owned
by AMVESCAP, from serving as an investment advisor to any registered investment
company, including your Fund. Your Fund has been informed by AIM that, if either
of these results occurs, AIM will seek exemptive relief from the SEC to permit
it to continue to serve as your Fund's investment advisor. There can be no
assurance that such exemptive relief will be granted.
AIM has received inquiries from the SEC, the NASD, Inc., the NYAG and the
Secretary of the Commonwealth of Massachusetts with respect to market timing,
late trading, fair value pricing and other similar issues and AIM has been
providing full cooperation with respect to these inquiries.
In addition to the complaints described above, multiple lawsuits, including
purported class action and shareholder derivative suits, have been filed against
certain Funds, INVESCO, AIM, AMVESCAP and certain related parties, primarily
based upon the allegations in the complaints described above, but also regarding
the funds' fair valuation pricing methodology. Such lawsuits allege a variety of
theories for recovery including, but not limited to: (i) violation of various
provisions of the Federal securities laws; (ii) breach of fiduciary duty; and
(iii) breach of contract. The lawsuits have been filed in both Federal and state
courts and seek such remedies as compensatory damages; restitution; rescission;
accounting for wrongfully gotten gains, profits and compensation; injunctive
relief; disgorgement; equitable relief; interest and the payment of attorneys'
and experts' fees. Additional lawsuits arising out of these circumstances and
presenting similar allegations and requests for relief may be filed against the
Funds, INVESCO, AIM, AMVESCAP and related parties in the future.
As a result of these developments, investors in the Funds might react by
redeeming their investments. This might require the Funds to sell investments to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the Funds.
At the present time, management of AIM and the Fund is unable to estimate the
impact, if any, that the outcome of these matters described above may have on
the Fund or AIM's financial condition.
F-14
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors/Trustees and Shareholders of AIM Global Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the AIM Global Growth Fund (one of
the funds constituting AIM International Funds, Inc., now known as AIM
International Mutual Funds; hereafter referred to as the "Fund") at October 31,
2003, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the three years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The financial
highlights for each of the periods ended on or before October 31, 2000 were
audited by other independent accountants whose report dated December 6, 2000,
expressed an unqualified opinion on the financial highlights.
PRICEWATERHOUSECOOPERS LLP
December 16, 2003
Houston, Texas
F-15
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM International Funds, Inc., a Maryland
corporation, was held on October 21, 2003. The meeting was adjourned and
reconvened on October 28, 2003, on November 4, 2003, on November 11, 2003, on
November 17, 2003 and reconvened on November 21, 2003. The meeting was held for
the following purposes:
(1)* To elect sixteen individuals to the Board, each of whom will serve until
his or her successor is elected and qualified: Bob R. Baker, Frank S.
Bayley, James T. Bunch, Bruce L. Crockett, Albert R. Dowden, Edward K.
Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Gerald J.
Lewis, Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley, Louis S.
Sklar, Larry Soll, Ph.D. and Mark H. Williamson.
(2)* To approve an Agreement and Plan of Reorganization which provides for the
redomestication of Company as a Delaware statutory trust and, in connection
therewith, the sale of all of Company's assets and the dissolution of
Company as a Maryland corporation.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHOLDING
DIRECTORS/MATTER VOTES FOR AUTHORITY
- ---------------------------------------------------------------------------------
(1)* Bob R. Baker................................. 162,211,196 3,444,279
Frank S. Bayley.............................. 162,236,962 3,418,513
James T. Bunch............................... 162,287,588 3,367,887
Bruce L. Crockett............................ 162,276,496 3,378,979
Albert R. Dowden............................. 162,251,386 3,404,089
Edward K. Dunn, Jr. ......................... 162,221,226 3,434,249
Jack M. Fields............................... 162,278,318 3,377,157
Carl Frischling.............................. 162,182,906 3,472,569
Robert H. Graham............................. 162,243,892 3,411,583
Gerald J. Lewis.............................. 162,147,868 3,507,607
Prema Mathai-Davis........................... 162,219,866 3,435,609
Lewis F. Pennock............................. 162,263,207 3,392,268
Ruth H. Quigley.............................. 162,163,064 3,492,411
Louis S. Sklar............................... 162,243,759 3,411,716
Larry Soll, Ph.D. ........................... 162,236,226 3,419,249
Mark H. Williamson........................... 162,238,962 3,416,513
</Table>
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 76,302,938 2,822,366 86,530,171**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on October 28, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 84,066,011 2,989,031 83,338,957**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 4, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 95,512,525 3,144,748 78,504,573**
</Table>
F-16
PROXY RESULTS (UNAUDITED) (CONTINUED)
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 11, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 109,217,698 3,531,752 71,913,039**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 17, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 116,710,545 3,761,148 69,451,190**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 21, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 137,239,949 4,617,039 51,798,672**
</Table>
* Proposal required approval by a combined vote of all the portfolios of AIM
International Funds, Inc.
** Includes Broker Non-Votes
F-17
OTHER INFORMATION
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- -------------------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1991 Director and Chairman, A I M Management None
Group Inc. Trustee, Chairman and (financial
services holding company); and Director and
Vice President Chairman, AMVESCAP PLC and
Chairman of AMVESCAP PLC -- AIM Division
(parent of AIM and a global investment
management firm)
Formerly: President and Chief Executive
Officer, A I M Management Group Inc.;
Director, Chairman and President, A I M
Advisors, Inc. (registered investment
advisor); and Director and Chairman, A I M
Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), AIM
Investment Services, Inc., (registered
transfer agent), and Fund Management
Company (registered broker dealer); and
Chief Executive Officer, AMVESCAP PLC --
Managed Products
- -------------------------------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Director and Chairman,
Officer, A I M Trustee and Executive Vice INVESCO Bond Funds,
Management Group Inc. (financial services Inc., INVESCO
holding company); President Director, Combination Stock &
Chairman and President, A I M Advisors, Bond Funds, Inc.,
Inc. (registered investment advisor); INVESCO Counselor
Director, A I M Capital Management, Inc. Series Funds, Inc.,
(registered investment advisor) and A I M INVESCO International
Distributors, Inc. (registered broker Funds, Inc., INVESCO
dealer); Director and Chairman, AIM Manager Series Funds,
Investment Services, Inc. (registered Inc., INVESCO Money
transfer agent); and Fund Management Market Funds, Inc.,
Company (registered broker dealer); and INVESCO Sector Funds,
Chief Executive Officer, AMVESCAP PLC -- Inc., INVESCO Stock
AIM Division (parent of AIM and a global Funds, Inc., INVESCO
investment management firm) Treasurer's Series
Formerly: Director, Chairman, President and Funds, Inc. and
Chief Executive Officer, INVESCO Funds INVESCO Variable
Group, Inc. and INVESCO Distributors, Inc.; Investment Funds, Inc.
Chief Executive Officer, AMVESCAP PLC --
Managed Products; Chairman and Chief
Executive Officer of NationsBanc Advisors,
Inc.; and Chairman of NationsBanc
Investments, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker(3) -- 1936 2003 Consultant None
Trustee
Formerly: President and Chief Executive
Officer, AMC Cancer Research Center; and
Chairman and Chief Executive Officer, First
Columbia Financial Corporation
- -------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc.
Trustee (registered investment
company)
- -------------------------------------------------------------------------------------------------------------------------------
James T. Bunch(3) -- 1942 2003 Co-President and Founder, Green, Manning & None
Bunch Ltd., Trustee (investment banking
firm); and Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
Formerly: General Counsel and Director,
Boettcher & Co.; and Chairman and Managing
Partner, law firm of Davis, Graham & Stubbs
- -------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates ACE Limited (insurance
(technology Trustee consulting company) company); and
Captaris, Inc.
(unified messaging
provider)
- -------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director of a number of public and private Cortland Trust, Inc.
business Trustee corporations, including (Chairman) (registered
the Boss Group Ltd. (private investment and investment company);
management) and Magellan Insurance Company Annuity and Life Re
Formerly: Director, President and Chief (Holdings), Ltd.
Executive Officer, Volvo Group North (insurance company)
America, Inc.; Senior Vice President, AB
Volvo; and director of various affiliated
Volvo Group companies
- -------------------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly: Chairman, Mercantile Mortgage None
Corp.; President and Trustee Chief
Operating Officer, Mercantile-Safe Deposit
& Trust Co.; and President, Mercantile
Bankshares Corp.
- -------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff
Century Group, Inc. Trustee (government
affairs company) and Texana Timber LP
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Graham is considered an interested person of the Trust because he is a
director of AMVESCAP PLC, parent of the advisor to the Trust.
(2) Mr. Williamson is considered an interested person of the Trust because he is
an officer and a director of the advisor to, and a director of the principal
underwriter of, the Trust. Mr. Williamson became Executive Vice President of
the Trust on March 4, 2003.
(3) Elected trustee of the Trust on October 21, 2003.
Trustees and Officers (continued)
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST OR OFFICER SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc.
Trustee Naftalis and Frankel LLP (registered investment
company)
- -------------------------------------------------------------------------------------------------------------------------------
Gerald J. Lewis(3) -- 1933 2003 Chairman, Lawsuit Resolution Services General Chemical
Trustee (San Diego, California) Group, Inc.,
Formerly: Associate Justice of the Wheelabrator
California Court of Appeals Technologies, Inc.
(waste management
company), Fisher
Scientific, Inc.,
Henley Manufacturing,
Inc. (laboratory
supplies), and
California Coastal
Properties, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1991 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1991 Executive Vice President, Development None
Trustee and Operations Hines Interests Limited
Partnership (real estate development
company)
- -------------------------------------------------------------------------------------------------------------------------------
Larry Soll, Ph.D.(3) -- 1942 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- -------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 2003 Director, Senior Vice President, N/A
Senior Vice President Secretary and General Counsel, A I M
Management Group Inc. (financial
services holding company) and A I M
Advisors, Inc.; Vice President, A I M
Capital Management, Inc., A I M
Distributors, Inc. and AIM Investment
Services, Inc.; and Director, Vice
President and General Counsel, Fund
Management Company Formerly: Senior Vice
President and General Counsel, Liberty
Financial Companies, Inc.; and Senior
Vice President and General Counsel,
Liberty Funds Group, LLC
- -------------------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 1991 Director, Chairman and Director of N/A
Senior Vice President Investments, A I M Capital Management,
Inc.; Director and Executive Vice
President, A I M Management Group Inc.;
Director and Senior Vice President, A I
M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC
Formerly: Chief Executive Officer and
President, A I M Capital Management Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Robert G. Alley -- 1948 1994 Managing Director and Chief Fixed Income N/A
Vice President Officer, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 2002 Managing Director and Chief Research N/A
Vice President Officer -- Fixed Income, A I M Capital
Management, Inc.; and Vice President, A
I M Advisors, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance N/A
Vice President Officer, A I M Advisors, Inc. and A I M
Capital Management, Inc.; and Vice
President, AIM Investment Services, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 1999 Vice President, A I M Advisors, Inc., N/A
Vice President and President, Chief Executive Officer
and Chief Investment Officer, A I M
Capital Management, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1991 Vice President and Fund Treasurer, N/A
Vice President and Treasurer A I M Advisors, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
(3) Elected trustee of the Trust on October 21, 2003.
(4) Mr. Carome became Senior Vice President of the Trust on May 13, 2003.
(5) Information is current as of January 10, 2003.
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.347.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, Inc. PricewaterhouseCoopers LLP
Suite 100 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana, Suite 2900
Houston, TX 77046 Suite 100 Suite 100 Houston, TX 77002
Houston, TX 77046 Houston, TX 77046-1173
COUNSEL TO THE FUND COUNSEL TO THE TRUSTEES TRANSFER AGENT CUSTODIAN
Ballard Spahr Kramer, Levin, Naftalis & AIM Investment Services, Inc. State Street Bank and
Andrews & Ingersoll, LLP Frankel LLP P.O. Box 4739 Trust Company
1735 Market Street 919 Third Avenue Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103 New York, NY 10022-3852 Boston, MA 02110
</Table>
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund
AIM Constellation Fund AIM Global Value Fund(4) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Emerging Growth Fund AIM Short Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM Trimark Fund INVESCO U.S. Government Money Fund
AIM Large Cap Basic Value Fund INVESCO International Core Equity Fund(5)
AIM Large Cap Growth Fund TAX-FREE
AIM Libra Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM High Income Municipal Fund
AIM Mid Cap Core Equity Fund AIM Municipal Bond Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Exempt Cash Fund
AIM Opportunities I Fund AIM Real Estate Fund AIM Tax-Free Intermediate Fund
AIM Opportunities II Fund INVESCO Advantage Health Sciences Fund
AIM Opportunities III Fund INVESCO Energy Fund
AIM Premier Equity Fund INVESCO Financial Services Fund
AIM Select Equity Fund INVESCO Gold & Precious Metals Fund
AIM Small Cap Equity Fund(2) INVESCO Health Sciences Fund
AIM Small Cap Growth Fund(3) INVESCO Leisure Fund
AIM Trimark Endeavor Fund INVESCO Multi-Sector Fund
AM Trimark Small Companies Fund INVESCO Technology Fund
AIM Weingarten Fund INVESCO Utilities Fund
INVESCO Core Equity Fund
INVESCO Dynamics Fund
INVESCO Mid-Cap Growth Fund
INVESCO Small Company Growth Fund
INVESCO S&P 500 Index Fund
INVESCO Total Return Fund*
</Table>
* Domestic equity and income fund
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) AIM Small Cap Equity Fund was closed to most
investors on December 19, 2003. For information on who may continue to invest in
AIM Small Cap Equity Fund, please contact your financial advisor. (3) AIM Small
Cap Growth Fund was closed to most investors on March 18, 2002. For information
on who may continue to invest in AIM Small Cap Growth Fund, please contact your
financial advisor. (4) Effective April 30, 2003, AIM Worldwide Spectrum Fund was
renamed AIM Global Value Fund. (5) Effective November 24, 2003, INVESCO
International Blue Chip Value Fund was renamed INVESCO International Core Equity
Fund.
For more complete information about any AIM or INVESCO fund, including sales
charges and expenses, ask your financial advisor for a prospectus. Please read
it carefully before investing. If used after January 20, 2004, this brochure
must be accompanied by a fund Performance & Commentary or by an AIM Quarterly
Performance Review for the most recent quarter-end. Mutual funds distributed by
A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $142 billion in assets for approximately 11
million shareholders, including individual investors, corporate clients and
financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $345 billion in assets
under management. Data as of September 30, 2003.
AIMinvestments.com GLG-AR-1
<Table>
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
- --------------------------------------------------------------------------------------------
Mutual Retirement Annuities College Separately Offshore Alternative Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Investments Management --Servicemark--
Plans Accounts
</Table>
AIM INTERNATIONAL GROWTH FUND
Annual Report to Shareholders o October 31, 2003
[COVER IMAGE]
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
================================================================================
AIM INTERNATIONAL GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
================================================================================
ABOUT INFORMATION THROUGHOUT THIS REPORT:
<Table>
o Unless otherwise stated, information o Class R shares are available only to o The unmanaged MSCI Japan Index is a
presented is as of 10/31/03 and is based certain retirement plans. Please see the market-value-weighted average of the
on total net assets. prospectus for more information. They are performance of more than 300 securities
sold at net asset value, that is, without on the Japanese stock exchanges tracked
o AIM International Growth Fund's up-front sales charges. by Morgan Stanley Capital International.
performance figures are historical, and
they reflect fund expenses, the o International investing presents o A direct investment cannot be made in
reinvestment of distributions, and certain risks not associated with an index. Unless otherwise indicated,
changes in net asset value. investing solely in the United States. index results include reinvested
These include risks relating to dividends, and they do not reflect sales
o When sales charges are included in fluctuations in the value of the U.S. charges or fund expenses
performance figures, Class A share dollar relative to the values of other
performance reflects the maximum 5.50% currencies, the custody arrangements made A DESCRIPTION OF THE POLICIES AND
sales charge, and Class B and Class C for the fund's foreign holdings, PROCEDURES THAT THE FUND USES TO
share performance reflects the applicable differences in accounting, political DETERMINE HOW TO VOTE PROXIES RELATING TO
contingent deferred sales charge (CDSC) risks and the lesser degree of public PORTFOLIO SECURITIES IS AVAILABLE WITHOUT
for the period involved. The CDSC on information required to be provided by CHARGE, UPON REQUEST, BY CALLING
Class B shares declines from 5% beginning non-U.S. companies. 800-959-4246, OR ON THE AIM WEB SITE,
at the time of purchase to 0% at the AIMINVESTMENTS.COM.
beginning of the seventh year. The CDSC o The fund's investment return and
on Class C shares is 1% for the first principal value will fluctuate, so an
year after purchase. The performance of investor's shares, when redeemed, may be
the fund's share classes will differ due worth more or less than their original
to different sales charge structures and cost.
class expenses.
o Industry classifications used in this
o A 2% redemption fee will be imposed on report are generally according to the
certain redemptions or exchanges out of Global Industry Classification Standard,
the fund within 30 days of purchase. which was developed by and is the
Exceptions to the redemption fee are exclusive property and a service mark of
listed in the fund's prospectus. Morgan Stanley Capital International Inc.
and Standard & Poor's.
o Effective 9/30/03, Class B shares are
not available as an investment for o The unmanaged MSCI Europe, Australasia
retirement plans maintained pursuant to and the Far East (the EAFE--Registered
Section 401 of the Internal Revenue Code, Trademark--) Growth Index is a subset of
including 401(k) plans, money purchase the unmanaged MSCI EAFE--Registered
pension plans and profit sharing plans. Trademark-- Index, which represents the
Plans that have existing accounts performance of foreign stocks tracked by
invested in Class B shares will continue Morgan Stanley Capital International. The
to be allowed to make additional Growth portion measures performance of
purchases. companies with higher price/earnings
ratios and higher forecasted growth
values.
</Table>
<Table>
=======================================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE This report may be distributed only to shareholders or
to persons who have received a current prospectus of
the fund.
=======================================================
</Table>
AIMinvestments.com
TO OUR SHAREHOLDERS
<Table>
Dear Fellow Shareholder in new policies and strengthened existing ones-- to discourage
The AIM Family of Funds harmful short-term trading. These steps include:
--Registered Trademark--
o Strengthening daily monitoring of trading activities.
[PHOTO OF As you may be aware, there has been a
ROBERT H. great deal of media coverage recently o Imposing redemption fees on additional funds we believe
GRAHAM] about the mutual fund industry and may be vulnerable to harmful short-term trading
allegations of improper activities by activity.
ROBERT H. GRAHAM certain individuals and companies. As
part of these widespread investigations, o Implementing an enhanced exchange policy (effective on
INVESCO Funds Group (IFG), the former or about March 1, 2004) designed to limit exchanges
[PHOTO OF adviser to certain INVESCO Funds, was between funds.
MARK H. recently named as a defendant in
WILLIAMSON] separate civil enforcement actions by o Employing an enhanced fair value pricing policy on
the U.S. Securities and Exchange certain foreign securities as well as certain illiquid
MARK H. WILLIAMSON Commission (SEC), the Office of the New securities.
York Attorney General and the State of
Colorado over an issue known as "market timing." A number of None of these tools alone, nor all of them taken together,
private class or derivative actions also were filed in the eliminate the possibility of short-term trading strategies
wake of the regulators' actions. that may be detrimental to a fund. Moreover, each of these
tools involves judgments that are inherently subjective. We
Investors are understandably concerned and frustrated have always sought and continue to seek to make these
about these reports, and we would like to take this judgments to the best of our abilities and in a manner that
opportunity to assure you that, based on an investigation we believe is consistent with the best interests of our fund
conducted by an outside firm, IFG and its parent company, shareholders. And we remain committed to being as vigilant as
AMVESCAP PLC, believe that these civil actions are without possible in the future to identify and address any harmful
merit. IFG is contesting the charges. market timing investors who have the potential to harm our
long-term fund shareholders.
We encourage you to continue to monitor this situation,
particularly as IFG has the opportunity to address the We sincerely hope these developments and the media
allegations that have been made. Current information will be coverage surrounding them do not result in you or other
posted on our Web site at AIMinvestments.com. We will shareholders losing confidence in AIM or INVESCO Funds.
continue to communicate to you on our Web site about our Amidst this storm of controversy in the mutual fund
finding, and the actions we are taking to protect and industry, we believe we can find encouragement in the
promote the interests of our shareholders. The independent recovering economy and rising equity markets. As we write
trustees of the funds are receiving regular reports from this letter, for instance, the S&P 500--Registered
their independent counsel and outside counsel hired by Trademark-- Index is up approximately 23% year-to-date.
AMVESCAP PLC, the parent of AIM and IFG, to perform an Although past performance is no guarantee of future results,
ongoing investigation of market timing. there appear to be indicators that the economy and stock
markets are showing signs of welcomed improvement. We
A COMPLEX ISSUE encourage you to read the enclosed discussion of your fund's
performance during this past reporting period.
Market timing is an investment technique not defined in any
regulation that involves frequent short-term trading of OUR UNWAVERING COMMITMENT
mutual fund shares, sometimes with a goal to exploit
inefficiencies in the way mutual funds price their shares. We At AIM Investments, we have never wavered in our commitment
recognize that fund management companies have tried to deal to helping you build solutions for your financial goals. Our
with this complex issue in various ways and believe that company was founded on a core principle of integrity, and we
industry-wide guidance is in order. To that end, we welcome have always worked hard to earn the trust of our
SEC Chairman William Donaldson's pledge to adopt new rules shareholders. We are committed to doing all we can to
designed to curb market timing abuses. Comprehensive maintain your trust and confidence.
rulemaking is necessary and is the best way to establish new
industry responsibilities designed to protect shareholders. Thank you for your continued participation in AIM
We support practical rule changes and structural Investments. Please call your financial advisor or one of our
modifications that are fair, enforceable and, most Client Service representatives at 800-959-4246 if you have
importantly, beneficial for investors. any further questions or concerns about your AIM Investments
account.
AIM Investments has policies in place designed to
identify, prevent and eliminate harmful trading or other Sincerely,
activities deemed to be detrimental to the funds. We have
also recently taken additional steps --implemented
/s/ ROBERT H. GRAHAM /s/ MARK H. WILLIAMSON
Robert H. Graham Mark H. Williamson
Chairman and President President and CEO
The AIM Family of Funds AIM Investments
--Registered Trademark--
December 18, 2003
</Table>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
<Table>
FUND BENEFITS FROM STRENGTH OF statement by the International Monetary
INTERNATIONAL EQUITIES Fund (IMF), the SARS threat has now
abated.
Amid signs of an improving global conditions. In April, however,
economic environment, AIM International international markets rallied strongly While European stock markets posted
Growth Fund posted double-digit returns and continued to gain momentum throughout some of the best returns for the fiscal
for the reporting period ended October much of the rest of the reporting period. year, growth in the euro zone remains
31, 2003. For the fiscal year covered by Given this environment, most markets in weak. According to a recent report by the
this report, the fund's Class A, Class B, Asia and Europe posted positive returns Bank of England, there continues to be a
Class C and Class R shares returned for the fiscal year, with emerging market contrast between weak euro area economic
20.02%, 19.14%, 19.12%, and 19.31% stocks generally outperforming those in data and more promising business survey
respectively, at net asset value. developed countries. Market returns and indicators.
economic growth, however, varied
The fund's benchmark, the MSCI EAFE considerably by region. Indeed, euro zone annualized GDP fell
Index, posted a higher return of 27.03% by 0.1% in the second quarter. German
due in part, we believe, to the fact the In Asia, Japan's economy finally retail sales (excluding car-related
market appeared to reward high-beta appeared to be showing signs of a sales) and French consumer spending on
stocks, which we were not invested in. cyclical upswing. While structural manufactured goods both fell in August.
Over the longer-term, however, the fund difficulties and deflationary pressures However, preliminary estimates indicate
continues to outperform the index. For persisted, industrial production rose annualized euro zone GDP rose 0.4% in the
example, as the chart below indicates, strongly in September and exports have third quarter and recent business surveys
since the fund's inception Class A shares shown healthy gains for nearly a year. offered promise. Euro-area industrial
at NAV returned 7.04%, while the MSCI Amid this backdrop, Japanese equities confidence increased in both August and
EAFE Index returned 5.48% over the same rose sharply through the summer but sold September, and the Purchasing Managers
period. off late in October. Despite the decline, Index--a survey of purchasing managers
however, the MSCI Japan Index returned that measures the general health of the
MARKET CONDITIONS 32.94% for the fiscal year. Many emerging manufacturing sector--increased for the
Asian markets also produced positive fourth consecutive month in October.
After a short-lived rally at the end of returns for the reporting period after
2002, international markets largely struggling earlier in the year with the In monetary affairs, policy settings
declined at the beginning of 2003 amidst SARS (severe acute respiratory syndrome) for many major economies became more
concern over the war in Iraq and weak epidemic. According to a September 2003 expansionary during the reporting period.
global economic The Bank of England and the European
Central Bank reduced short-term interest
rates in 2003 leaving their benchmark
rates at
</Table>
<Table>
===================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS TOTAL NUMBER OF HOLDINGS** 121 TOP 10 EQUITY HOLDINGS**
SINCE INCEPTION
4/7/92-10/31/03 TOTAL NET ASSETS $1.6 billion 1. Teva Pharmaceutical Industries 3.1%
Ltd.-ADR (Israel)
[BAR CHART]
2. Vodafone Group PLC 2.4
AIM INTERNATIONAL (United Kingdom)
GROWTH FUND
CLASS A SHARES AT NAV 7.04% 3. Loblaw Cos. Ltd. (Canada) 2.3
MSCI EAFE INDEX 5.48%* 4. Nitto Denko Corp. (Japan) 2.0
5. Suncor Energy, Inc. (Canada) 1.8
6. Total S.A.-Class B (France) 1.7
7. Imperial Tobacco Group PLC 1.7
(United Kingdom)
*Index performance from 3/31/92-10/31/03 8. Taiwan Semiconductor 1.7
Manufacturing Co. Ltd. (Taiwan)
The performance of the fund's Class A,
Class B, Class C and Class R shares will 9. Samsung Electronics Co. Ltd. 1.6
differ due to different sales charge (South Korea)
structures and class expenses.
10. Hoya Corp. (Japan) 1.6
===================================================================================================================================
</Table>
Source: Lipper, Inc.
2
<Table>
3.50% and 2.00%, respectively as of while diluted earnings-per-share reached SHUXIN CAO
October 31, 2003. Monetary authorities in $0.53, up 47%. In its most recent [PHOTO OF Mr. Cao, Chartered
many Asian countries also adopted earnings announcement, Loblaw reported SHUXIN Financial Analyst, is
expansionary policies during the basic net earnings for the third quarter CAO] manager of AIM
reporting period. of 2003, a 16.2% increase from a year International Growth Fund.
earlier. He joined AIM in 1997. Mr. Cao graduated
On the currency front, although the from Tianjin Foreign Language Institute
U.S. dollar showed a few pockets of Sega Corporation, however, detracted with a B.A. in English. He also received
strength during the fiscal year, for the from fund performance as the company an M.B.A. from Texas A&M University and
most part, foreign currencies proved faced delays in bringing new game titles is a Certified Public Accountant.
stronger. In particular, the Australian to market. As of the end of the reporting
dollar, Canadian dollar and euro showed period, we no longer owned the stock. JASON T. HOLZER
strength against the dollar during the [PHOTO OF Mr. Holzer, Chartered
reporting period appreciating 26%, 18% Sectors that contributed most to fund JASON T. Financial Analyst, is
and 16%, respectively. Other notable performance over the fiscal year included HOLZER] manager of AIM
currencies that gained ground on the financials, information technology and International Growth Fund.
dollar included the Swiss franc, British energy. Sectors that contributed the Mr. Holzer joined AIM in 1996. He
pound, Japanese yen and South Korean won. least included consumer discretionary and received a B.A. in quantitative economics
utilities. and an M.S. in engineering-economic
YOUR FUND systems from Stanford University.
IN CLOSING
As noted above, foreign currency CLAS G. OLSSON
appreciation versus the U.S. dollar was After a few challenging years, [PHOTO OF Mr. Olsson is co-lead
quite strong during the fiscal year. This international markets began to post CLAS G. manager of AIM
proved favorable for the fund as we did strong returns again in 2003. Whether OLSSON] International Growth Fund.
not hedge currencies. We bought these market rallies are sustainable Mr. Olsson joined AIM in
securities in local currency but then remains to be seen. However, 1994. Mr. Olsson became a commissioned
translated that value back into U.S. international stocks, in general, naval officer at the Royal Swedish Naval
dollars for the fund. continue to trade at a discount to their Academy in 1988. He also received a
U.S. counterparts, and therefore offer B.B.A. from The University of Texas at
Two stocks that contributed to fund potential diversification opportunities Austin.
performance during the fiscal year were beyond America soil.
Teva Pharmaceuticals, a global BARRETT K. SIDES
pharmaceutical company based in Israel, [PHOTO OF Mr. Sides is co-lead
and Loblaw Cos. Ltd., one of Canada's See important fund and index BARRETT K. manager of AIM
largest food distributors. Teva reported disclosures inside front cover. SIDES] International Growth Fund.
net income of $157 million for the third He joined AIM in 1990. Mr.
quarter, up 63% from a year ago, Sides graduated with a B.S. in economics
from Bucknell University. He also
received a master's in international
business from the University of St.
Thomas.
Assisted by Asia Pacific Team and
Europe/Canada Team
</Table>
<Table>
===================================================================================================================================
TOP 10 COUNTRIES** TOP 10 INDUSTRIES** FUND VS. INDEXES
Total returns 10/31/02-10/31/03,
1. United Kingdom 19.4% 1. Diversified Banks 11.1% excluding sales charges
2. Japan 18.1% 2. Pharmaceuticals 9.2 Class A Shares 20.02%
3. Canada 8.7% 3. Electronic Equipment Class B Shares 19.14
Manufacturers 7.7
4. France 6.5% Class C Shares 19.12
4. Integrated Oil & Gas 6.8
5. Italy 4.3% Class R Shares 19.31
5. Wireless Telecommunication 5.0
6. Germany 4.3% Services MSCI EAFE Index 27.03
7. Switzerland 4.0% 6. Food Retail 4.7 Source: Lipper, Inc.
8. Taiwan 4.0% 7. Specialty Chemicals 3.5 [GRAPHIC]
9. Israel 3.1% 8. Integrated Telecommunication 3.2 For More Information Visit
Services AIMinvestments.com
10. Sweden 2.7%
9. Automobile Manufacturers 3.1
**Excludes money market fund holdings. 10. Diversified Capital Markets 2.3
The fund's holdings are subject to
change, and there is no assurance that
the fund will continue to hold any
particular security.
===================================================================================================================================
</Table>
3
FUND PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
4/7/92-10/31/03*
[MOUNTAIN CHART]
<Table>
<Caption>
DATE AIM INTERNATIONAL MSCI
GROWTH FUND EAFE
CLASS A SHARES INDEX
4/7/92 $ 9450 $ 10000
10/31/92 9602 9822
10/31/93 13189 13501
10/31/94 14630 14863
10/31/95 15396 14808
10/31/96 17825 16359
10/31/97 19864 17116
10/31/98 21078 18767
10/31/99 26502 23090
10/31/00 27338 22421
10/31/01 19691 16831
10/31/02 17290 14608
10/31/03 $ 20756 $ 18557
</Table>
Source: Lipper, Inc.
*Performance for MSCI EAFE Index measured from 3/31/92
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's share classes will differ due to different sales
charge structures and class expenses. For fund performance calculations and
indexes used in this report, please see the inside front cover. Performance
shown in the chart and table does not reflect deduction of taxes a shareholder
would pay on fund distributions or sale of fund shares. Performance of the
indexes does not reflect the effects of taxes.
This chart uses a logarithmic scale, which means the price scale (vertical axis)
is structured so that a given distance always represents the same percent change
in price, rather than the same absolute change in price. For example, the
distance from one to 10 is the same as the distance from 10 to 100 on a
logarithmic chart, but the latter distance is 10 times greater on a linear
chart. A logarithmic scale better illustrates performance in the fund's early
years before reinvested distributions and compounding create the potential for
the original investment to grow to very large numbers.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
<Table>
===================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS In addition to fund returns as of the CLASS R SHARES*
As of 10/31/03, including sales charges close of the fiscal year, industry 10 Years 4.38%
regulations require us to provide average 5 Years -1.02
CLASS A SHARES annual total returns (including sales 1 Year 17.70
Inception (4/7/92) 6.52% charges) for periods ended 9/30/03, the
10 Years 4.05 most recent calendar quarter-end, which *The returns shown for these periods are
5 Years -1.42 were as follows. the blended returns of the historical
1 Year 13.40 performance of the fund's Class R shares
AVERAGE ANNUAL TOTAL RETURNS since their inception and the restated
CLASS B SHARES As of 9/30/03, including sales charges historical performance of the fund's
Inception (9/15/94) 3.29% Class A shares (for the periods prior to
5 Years -1.39 CLASS A SHARES inception of the Class R shares) at net
1 Year 14.14 Inception (4/7/92) 5.98% asset value, adjusted to reflect the
10 Years 4.02 higher Rule 12b-1 fees applicable to the
CLASS C SHARES 5 Years -1.89 Class R shares. The inception date of
Inception (8/4/97) -1.28% 1 Year 11.81 Class A shares is 4/7/92. The inception
5 Years -1.03 date of the fund's Class R shares is
1 Year 18.12 CLASS B SHARES 6/3/02. Calculation of blended returns as
Inception (9/15/94) 2.60% of 10/31/03 is from 10/31/93. Calculation
CLASS R SHARES* 5 Years -1.86 of blended returns as of 9/30/03 is from
10 Years 4.40% 1 Year 12.36 9/30/93.
5 Years -0.57
1 Year 19.31 CLASS C SHARES
Inception (8/4/97) -2.30%
5 Years -1.49
1 Year 16.35
===================================================================================================================================
</Table>
4
SUPPLEMENT TO ANNUAL REPORT DATED 10/31/03
AIM INTERNATIONAL GROWTH FUND
<Table>
INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is not
For periods ended 10/31/03 indicative of future results. More
The following information has been recent returns may be more or less than
prepared to provide Institutional Class INCEPTION (3/15/02) 1.13% those shown. All returns assume
shareholders with a performance overview 1 Year 20.64 reinvestment of distributions at net
specific to their holdings. asset value. Investment return and
Institutional Class shares are offered AVERAGE ANNUAL TOTAL RETURNS principal value will fluctuate so your
exclusively to institutional investors, For periods ended 9/30/03 shares, when redeemed, may be worth more
including defined contribution plans (most recent calendar quarter-end) or less than their original cost. See
that meet certain criteria. Performance full report for information on
of Institutional Class shares will INCEPTION (3/15/02) -2.90% comparative benchmarks. If you have
differ from performance of Class A 1 Year 18.88 questions, please consult your fund
shares due to differing sales charges prospectus or call 800-451-4246. A I M
and class expenses. Distributors, Inc.
</Table>
FOR INSTITUTIONAL INVESTOR USE ONLY
This material is prepared for institutional investor use only and may not be
quoted, reproduced or shown to members of the public, nor used in written form
as sales literature for public use.
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
AIMinvestments.com IGR-INS-1 10/03
FINANCIALS
SCHEDULE OF INVESTMENTS
October 31, 2003
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
STOCKS & OTHER EQUITY INTERESTS-96.61%
AUSTRALIA-1.54%
Amcor Ltd. (Paper Packaging) 1,037,900 $ 6,243,877
- --------------------------------------------------------------------------
BHP Billiton Ltd. (Diversified Metals &
Mining) 1,814,700 15,052,628
- --------------------------------------------------------------------------
Promina Group Ltd. (Property & Casualty
Insurance) (Acquired 05/12/03; Cost
$1,630,929)(a) 1,404,000 3,299,021
==========================================================================
24,595,526
==========================================================================
AUSTRIA-0.58%
Erste Bank der oesterreichischen Sparkassen
A.G. (Diversified Banks) 84,231 9,280,587
==========================================================================
BRAZIL-0.51%
Companhia de Bebidas das Americas-ADR
(Brewers) 386,300 8,189,560
==========================================================================
CANADA-8.70%
Bombardier Inc.-Class B (Aerospace & Defense) 1,193,200 5,357,409
- --------------------------------------------------------------------------
Canadian National Railway Co. (Railroads) 232,300 13,962,666
- --------------------------------------------------------------------------
CP Railway Ltd. (Railroads) 616,100 17,265,753
- --------------------------------------------------------------------------
Loblaw Cos. Ltd. (Food Retail) (Acquired
11/10/00-10/10/01; Cost $24,025,835)(a) 751,300 36,382,636
- --------------------------------------------------------------------------
Manulife Financial Corp. (Life & Health
Insurance) 458,700 13,915,813
- --------------------------------------------------------------------------
Petro-Canada (Integrated Oil & Gas) 357,500 14,405,745
- --------------------------------------------------------------------------
Royal Bank of Canada (Diversified Banks) 182,090 8,766,836
- --------------------------------------------------------------------------
Suncor Energy, Inc. (Integrated Oil & Gas) 1,362,800 28,620,350
==========================================================================
138,677,208
==========================================================================
DENMARK-0.84%
A P Moller-Maersk A.S.-Class B (Marine) 1,709 13,369,873
==========================================================================
FRANCE-6.54%
BNP Paribas S.A. (Diversified Banks) 277,988 14,555,991
- --------------------------------------------------------------------------
Carrefour S.A. (Hypermarkets & Super Centers) 164,335 8,597,284
- --------------------------------------------------------------------------
France Telecom S.A. (Integrated
Telecommunication Services)(b) 314,138 7,576,672
- --------------------------------------------------------------------------
Lagardere S.C.A. (Publishing) 104,014 5,213,819
- --------------------------------------------------------------------------
Pernod Ricard S.A. (Distillers & Vintners) 147,478 14,180,209
- --------------------------------------------------------------------------
Renault S.A. (Automobile Manufacturers) 288,067 18,988,168
- --------------------------------------------------------------------------
Societe Generale (Diversified Banks) 103,072 7,629,900
- --------------------------------------------------------------------------
Total S.A.-Class B (Integrated Oil & Gas) 177,249 27,453,170
==========================================================================
104,195,213
==========================================================================
GERMANY-4.31%
Altana A.G. (Pharmaceuticals) 220,684 13,858,861
- --------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
GERMANY-(CONTINUED)
Continental A.G. (Tires & Rubber) 253,900 $ 8,588,609
- --------------------------------------------------------------------------
Deutsche Boerse A.G. (Specialized Finance) 148,168 8,208,074
- --------------------------------------------------------------------------
Deutsche Telekom A.G. (Integrated
Telecommunication Services)(b) 754,304 11,840,308
- --------------------------------------------------------------------------
Metro A.G. (Hypermarkets & Super Centers) 213,683 8,708,495
- --------------------------------------------------------------------------
Puma A.G. Rudolf Dassler Sport (Footwear)
(Acquired 10/08/03-10/30/03; Cost
$8,769,073)(a) 63,102 9,172,652
- --------------------------------------------------------------------------
Siemens A.G. (Industrial Conglomerates)(b) 122,689 8,243,486
==========================================================================
68,620,485
==========================================================================
HONG KONG-2.38%
Cathay Pacific Airways Ltd. (Airlines) 5,189,000 9,922,820
- --------------------------------------------------------------------------
Cheung Kong (Holdings) Ltd. (Real Estate
Management & Development) 801,000 6,678,782
- --------------------------------------------------------------------------
China Merchants Holdings International Co.
Ltd. (Industrial Conglomerates) 1,818,000 2,458,149
- --------------------------------------------------------------------------
CNOOC Ltd.-ADR (Oil & Gas Exploration &
Production) 152,800 5,752,920
- --------------------------------------------------------------------------
Hutchison Whampoa Ltd. (Industrial
Conglomerates) 933,000 7,238,752
- --------------------------------------------------------------------------
Sun Hung Kai Properties Ltd. (Real Estate
Management & Development) 688,000 5,825,178
==========================================================================
37,876,601
==========================================================================
HUNGARY-0.57%
OTP Bank Rt. (Diversified Banks)(b) 748,200 9,117,492
==========================================================================
INDIA-1.42%
Housing Development Finance Corp. Ltd.
(Thrifts & Mortgage Finance) 228,736 2,624,004
- --------------------------------------------------------------------------
Infosys Technologies Ltd. (IT Consulting &
Other Services) 191,172 20,000,717
==========================================================================
22,624,721
==========================================================================
IRELAND-0.91%
Angloz Irish Bank Corp. PLC (Diversified
Banks) 1,208,700 14,464,257
==========================================================================
ISRAEL-3.07%
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 859,100 48,874,199
==========================================================================
ITALY-4.34%
Banca Intesa S.p.A. (Diversified Banks) 2,656,700 8,925,197
- --------------------------------------------------------------------------
Banco Popolare di Verona e Novara Scrl
(Diversified Banks) 1,119,180 17,243,637
- --------------------------------------------------------------------------
Eni S.p.A. (Integrated Oil & Gas) 1,143,649 18,097,590
- --------------------------------------------------------------------------
Mediaset S.p.A. (Broadcasting & Cable TV) 1,188,600 11,965,554
- --------------------------------------------------------------------------
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
ITALY-(CONTINUED)
UniCredito Italiano S.p.A. (Diversified
Banks) 2,616,100 $ 12,849,833
==========================================================================
69,081,811
==========================================================================
JAPAN-18.10%
Canon Inc. (Office Electronics) 410,000 19,850,746
- --------------------------------------------------------------------------
Daiwa House Industry Co., Ltd. (Homebuilding) 593,000 6,400,601
- --------------------------------------------------------------------------
Fanuc Ltd. (Industrial Machinery) 252,200 15,171,478
- --------------------------------------------------------------------------
Fuji Photo Film Co., Ltd. (Photographic
Products) 170,000 5,012,741
- --------------------------------------------------------------------------
Hirose Electric Co., Ltd. (Electronic
Equipment Manufacturers) 173,700 21,356,816
- --------------------------------------------------------------------------
Hoya Corp. (Electronic Equipment
Manufacturers) 276,600 25,047,051
- --------------------------------------------------------------------------
JSR Corp. (Specialty Chemicals) 724,000 15,352,384
- --------------------------------------------------------------------------
KDDI Corp. (Wireless Telecommunication
Services) 2,210 12,007,372
- --------------------------------------------------------------------------
Keyence Corp. (Electronic Equipment
Manufacturers) 95,200 20,949,545
- --------------------------------------------------------------------------
Nidec Corp. (Electronic Equipment
Manufacturers) 175,900 17,048,917
- --------------------------------------------------------------------------
Nissan Motor Co., Ltd. (Automobile
Manufacturers) 1,863,300 20,891,751
- --------------------------------------------------------------------------
Nitto Denko Corp. (Specialty Chemicals) 596,700 31,333,810
- --------------------------------------------------------------------------
NOK Corp. (Auto Parts & Equipment) 269,000 10,600,382
- --------------------------------------------------------------------------
Ricoh Co., Ltd. (Office Electronics) 471,000 8,937,341
- --------------------------------------------------------------------------
Shin-Etsu Chemical Co., Ltd. (Specialty
Chemicals) 237,300 8,832,881
- --------------------------------------------------------------------------
Takeda Chemical Industries, Ltd.
(Pharmaceuticals) 338,400 11,980,124
- --------------------------------------------------------------------------
Toyota Motor Corp. (Automobile Manufacturers) 342,000 9,742,082
- --------------------------------------------------------------------------
Trend Micro Inc. (Application Software)(b) 331,900 9,152,321
- --------------------------------------------------------------------------
Yamaha Corp. (Leisure Products) 264,000 5,321,806
- --------------------------------------------------------------------------
Yamanouchi Pharmaceutical Co., Ltd.
(Pharmaceuticals) 534,000 13,413,178
==========================================================================
288,403,327
==========================================================================
MEXICO-2.22%
America Movil S.A. de C.V.-Series L-ADR
(Wireless Telecommunication Services) 649,100 15,448,580
- --------------------------------------------------------------------------
Grupo Financiero BBVA Bancomer, S.A. de C.V.-
Class B (Diversified Banks)(b) 10,436,700 8,893,381
- --------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V.-Series C
(Hypermarkets & Super Centers) 4,251,000 11,110,196
==========================================================================
35,452,157
==========================================================================
NETHERLANDS-2.39%
ABN AMRO Holding N.V. (Diversified Banks) 397,900 8,320,098
- --------------------------------------------------------------------------
Aegon N.V. (Life & Health Insurance) 637,479 8,330,140
- --------------------------------------------------------------------------
James Hardie Industries N.V. (Construction
Materials) 732,500 3,717,121
- --------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
NETHERLANDS-(CONTINUED)
Koninklijke (Royal) KPN N.V. (Integrated
Telecommunication Services)(b) 1,684,959 $ 12,765,692
- --------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics N.V.
(Consumer Electronics) 184,880 4,966,700
==========================================================================
38,099,751
==========================================================================
NORWAY-0.79%
Telenor A.S.A. (Integrated Telecommunication
Services) 2,321,602 12,573,385
==========================================================================
SINGAPORE-1.38%
Keppel Corp. Ltd. (Industrial Conglomerates) 2,300,000 7,867,203
- --------------------------------------------------------------------------
Singapore Airlines Ltd. (Airlines) 947,000 6,587,353
- --------------------------------------------------------------------------
United Overseas Bank Ltd. (Diversified Banks) 960,000 7,505,605
==========================================================================
21,960,161
==========================================================================
SOUTH KOREA-2.64%
Daewoo Shipbuilding & Marine Engineering Co.,
Ltd. (Construction & Farm Machinery & Heavy
Trucks)(b) 305,000 4,097,592
- --------------------------------------------------------------------------
Kookmin Bank (Diversified Banks) 323,360 11,803,255
- --------------------------------------------------------------------------
Samsung Electronics Co., Ltd. (Electronic
Equipment Manufacturers) 65,700 26,091,255
==========================================================================
41,992,102
==========================================================================
SPAIN-2.28%
Banco Popular Espanol S.A. (Diversified
Banks) 305,845 15,848,114
- --------------------------------------------------------------------------
Repsol YPF, S.A. (Integrated Oil & Gas) 1,181,716 20,534,383
==========================================================================
36,382,497
==========================================================================
SWEDEN-2.72%
AB SKF-Class B (Industrial Machinery) 135,100 4,759,289
- --------------------------------------------------------------------------
Atlas Copco A.B.-Class A (Industrial
Machinery) 234,200 8,190,588
- --------------------------------------------------------------------------
ForeningsSparbanken A.B. (Diversified Banks) 484,700 8,042,554
- --------------------------------------------------------------------------
Tele2 A.B.-Class B (Integrated
Telecommunication Services)(b) 117,500 5,886,473
- --------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson
(Communications Equipment) 4,463,292 7,633,746
- --------------------------------------------------------------------------
Volvo A.B.-Class B (Construction & Farm
Machinery & Heavy Trucks) 314,900 8,762,071
==========================================================================
43,274,721
==========================================================================
SWITZERLAND-3.97%
Credit Suisse Group (Diversified Capital
Markets) 536,212 18,821,825
- --------------------------------------------------------------------------
Nestle S.A. (Packaged Foods & Meats) 27,119 5,948,214
- --------------------------------------------------------------------------
Roche Holding A.G. (Pharmaceuticals) 146,575 12,083,361
- --------------------------------------------------------------------------
Syngenta A.G. (Fertilizers & Agricultural
Chemicals) 164,689 8,791,031
- --------------------------------------------------------------------------
UBS A.G. (Diversified Capital Markets) 286,398 17,520,618
==========================================================================
63,165,049
==========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
TAIWAN-3.96%
Compal Electronics Inc. (Computer Hardware) 5,778,880 $ 8,771,362
- --------------------------------------------------------------------------
Hon Hai Precision Industry Co., Ltd.
(Electronic Equipment Manufacturers) 2,785,960 12,480,575
- --------------------------------------------------------------------------
MediaTek Inc. (Semiconductors) 703,000 7,251,695
- --------------------------------------------------------------------------
Quanta Computer Inc. (Computer Hardware) 3,031,000 8,263,115
- --------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.
(Semiconductors) 13,305,513 26,273,780
==========================================================================
63,040,527
==========================================================================
UNITED KINGDOM-19.42%
AstraZeneca PLC (Pharmaceuticals) 514,875 24,153,849
- --------------------------------------------------------------------------
Barclays PLC (Diversified Banks) 1,676,680 14,122,937
- --------------------------------------------------------------------------
Centrica PLC (Gas Utilities) 4,458,290 13,940,654
- --------------------------------------------------------------------------
Enterprise Inns PLC (Restaurants) 311,400 4,462,217
- --------------------------------------------------------------------------
Galen Holdings PLC (Pharmaceuticals) 426,000 5,461,815
- --------------------------------------------------------------------------
GlaxoSmithKline PLC (Pharmaceuticals) 530,470 11,345,892
- --------------------------------------------------------------------------
GUS PLC (Catalog Retail) 1,250,290 15,256,739
- --------------------------------------------------------------------------
ICAP PLC (Investment Banking & Brokerage) 375,300 8,768,829
- --------------------------------------------------------------------------
Imperial Tobacco Group PLC (Tobacco) 1,607,620 26,619,287
- --------------------------------------------------------------------------
Kingfisher PLC (Home Improvement Retail) 1,686,995 8,077,012
- --------------------------------------------------------------------------
Man Group PLC (Asset Management & Custody
Banks) 401,860 9,868,738
- --------------------------------------------------------------------------
mm02 PLC (Wireless Telecommunication
Services)(b) 11,905,490 12,913,552
- --------------------------------------------------------------------------
Next PLC (Department Stores) 1,019,420 20,387,014
- --------------------------------------------------------------------------
Reckitt Benckiser PLC (Household Products) 1,100,240 23,122,116
- --------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC
(Pharmaceuticals)(b) 673,350 5,095,429
- --------------------------------------------------------------------------
Smith & Nephew PLC (Health Care Supplies) 3,075,235 24,404,760
- --------------------------------------------------------------------------
Tesco PLC (Food Retail) 5,919,043 23,699,641
- --------------------------------------------------------------------------
Travis Perkins PLC (Home Improvement Retail) 218,700 4,424,148
- --------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
UNITED KINGDOM-(CONTINUED)
Vodafone Group PLC (Wireless
Telecommunication Services) 18,480,590 $ 38,759,619
- --------------------------------------------------------------------------
Morrison (William) Supermarkets PLC (Food
Retail) 3,812,970 14,475,376
==========================================================================
309,359,624
==========================================================================
UNITED STATES OF AMERICA-1.03%
Autoliv, Inc.-SDR (Auto Parts & Equipment) 251,000 8,233,500
- --------------------------------------------------------------------------
Synthes-Stratec, Inc. (Health Care
Equipment)(b) 8,900 8,140,406
==========================================================================
16,373,906
==========================================================================
Total Stocks & Other Equity Interests
(Cost $1,206,227,506) 1,539,044,740
==========================================================================
<Caption>
PRINCIPAL
AMOUNT
BONDS-0.00%
INDIA-0.00%
Hindustan Lever Ltd. (Household Products),
Sec. Deb., 9.00%, 01/01/05 (Cost $0) INR 1,100,000 1,558
==========================================================================
TOTAL INVESTMENTS-96.61% (excluding
investments purchased with cash collateral
from securities loaned) (Cost
$1,206,227,506) 1,539,046,298
==========================================================================
<Caption>
SHARES
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-2.69%
STIC Liquid Assets Portfolio(c)(d) 42,838,030 42,838,030
==========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $42,838,030) 42,838,030
==========================================================================
TOTAL INVESTMENTS-99.30% (Cost
$1,249,065,536) 1,581,884,328
==========================================================================
OTHER ASSETS LESS LIABILITIES-0.70% 11,118,235
==========================================================================
NET ASSETS-100.00% $1,593,002,563
__________________________________________________________________________
==========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Deb. - Debentures
INR - Indian Rupee
SDR - Swedish Depository Receipt
Sec. - Secured
</Table>
Notes to Schedule of Investments:
(a) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction). The security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 10/31/03 was $48,854,309,
which represented 3.07% of the Fund's net assets. Unless otherwise
indicated, these securities are not considered to be illiquid.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
(d) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2003
<Table>
ASSETS:
Investments, at market value (cost
$1,206,227,506)* $1,539,046,298
- ------------------------------------------------------------
Investments in affiliated money market funds
(cost $42,838,030) 42,838,030
- ------------------------------------------------------------
Foreign currencies, at value (cost
$39,494,059) 39,394,759
- ------------------------------------------------------------
Cash 14,454,167
- ------------------------------------------------------------
Receivables for:
Investments sold 20,287,918
- ------------------------------------------------------------
Capital stock sold 3,280,743
- ------------------------------------------------------------
Dividends and interest 3,469,334
- ------------------------------------------------------------
Amount due from advisor 15,290
- ------------------------------------------------------------
Investment for deferred compensation plan 88,383
- ------------------------------------------------------------
Other assets 185,212
============================================================
Total assets 1,663,060,134
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 14,808,329
- ------------------------------------------------------------
Capital stock reacquired 9,828,142
- ------------------------------------------------------------
Deferred compensation plan 88,383
- ------------------------------------------------------------
Collateral upon return of securities
loaned 42,838,030
- ------------------------------------------------------------
Accrued distribution fees 676,640
- ------------------------------------------------------------
Accrued directors' fees 98,268
- ------------------------------------------------------------
Accrued transfer agent fees 1,257,312
- ------------------------------------------------------------
Accrued operating expenses 462,467
============================================================
Total liabilities 70,057,571
============================================================
Net assets applicable to shares outstanding $1,593,002,563
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,787,466,539
- ------------------------------------------------------------
Undistributed net investment income 1,385,424
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and futures contracts (528,589,622)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 332,740,222
============================================================
$1,593,002,563
____________________________________________________________
============================================================
NET ASSETS:
Class A $1,117,420,019
____________________________________________________________
============================================================
Class B $ 360,671,403
____________________________________________________________
============================================================
Class C $ 113,964,516
____________________________________________________________
============================================================
Class R $ 867,405
____________________________________________________________
============================================================
Institutional Class $ 79,220
____________________________________________________________
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 480,000,000
- ------------------------------------------------------------
Outstanding 73,387,899
____________________________________________________________
============================================================
Class B:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 25,188,905
____________________________________________________________
============================================================
Class C:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 7,951,939
____________________________________________________________
============================================================
Class R:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 57,282
____________________________________________________________
============================================================
Institutional Class:
Authorized 240,000,000
- ------------------------------------------------------------
Outstanding 5,155
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 15.23
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $15.23 divided by
94.50%) $ 16.12
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 14.32
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 14.33
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 15.14
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 15.37
____________________________________________________________
============================================================
</Table>
* At October 31, 2003, securities with an aggregate market value of $38,847,584
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the year ended October 31, 2003
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $3,554,080) $ 27,094,609
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 803,434
- --------------------------------------------------------------------------
Interest 79,655
- --------------------------------------------------------------------------
Securities lending 1,001,326
==========================================================================
Total investment income 28,979,024
==========================================================================
EXPENSES:
Advisory fees 14,723,373
- --------------------------------------------------------------------------
Administrative services fees 387,366
- --------------------------------------------------------------------------
Custodian fees 1,354,320
- --------------------------------------------------------------------------
Distribution fees:
Class A 3,330,664
- --------------------------------------------------------------------------
Class B 3,602,319
- --------------------------------------------------------------------------
Class C 1,092,583
- --------------------------------------------------------------------------
Class R 2,950
- --------------------------------------------------------------------------
Transfer agent fees 6,313,971
- --------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 65
- --------------------------------------------------------------------------
Directors' fees 36,990
- --------------------------------------------------------------------------
Other 1,128,604
==========================================================================
Total expenses 31,973,205
==========================================================================
Less: Fees waived, expenses reimbursed and expenses paid
indirectly (1,251,776)
==========================================================================
Net expenses 30,721,429
==========================================================================
Net investment income (loss) (1,742,405)
==========================================================================
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain from:
Investment securities 46,644,664
- --------------------------------------------------------------------------
Foreign currencies 3,194,368
- --------------------------------------------------------------------------
Futures contracts 593,783
==========================================================================
50,432,815
==========================================================================
Change in net unrealized appreciation of:
Investment securities 262,645,749
- --------------------------------------------------------------------------
Foreign currencies 7,957
==========================================================================
262,653,706
==========================================================================
Net gain from investment securities, foreign currencies and
futures contracts 313,086,521
==========================================================================
Net increase in net assets resulting from operations $311,344,116
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2003 and 2002
<Table>
<Caption>
2003 2002
- ----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,742,405) $ (8,846,063)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts 50,432,815 (221,331,772)
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, and foreign currencies 262,653,706 52,979,939
==============================================================================================
Net increase (decrease) in net assets resulting from
operations 311,344,116 (177,197,896)
==============================================================================================
Share transactions-net:
Class A (206,630,297) (212,077,269)
- ----------------------------------------------------------------------------------------------
Class B (101,031,208) (148,436,124)
- ----------------------------------------------------------------------------------------------
Class C (20,132,725) (35,844,117)
- ----------------------------------------------------------------------------------------------
Class R 636,461 49,318
- ----------------------------------------------------------------------------------------------
Institutional Class (8,827) 80,835
==============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (327,166,596) (396,227,357)
==============================================================================================
Net increase (decrease) in net assets (15,822,480) (573,425,253)
==============================================================================================
NET ASSETS:
Beginning of year 1,608,825,043 2,182,250,296
==============================================================================================
End of year (including undistributed net investment income
(loss) of $1,385,424 and $(168,216) for 2003 and 2002,
respectively) $1,593,002,563 $1,608,825,043
______________________________________________________________________________________________
==============================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM International Growth Fund (the "Fund") is a series portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of five
separate portfolios. The Fund currently offers multiple classes of shares.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Effective November 25, 2003, the
Fund redomesticated as a series portfolio of a newly formed Delaware statutory
trust, AIM International Mutual Funds.
The Fund's investment objective is long-term growth of capital. Companies
are listed in the Schedule of Investments based on the country in which they are
organized.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued on the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Securities for which market prices
are not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Market trends, movement in exchange traded funds
and ADRs, and the bid/ask quotes of brokers and information providers may
be reviewed in the course of making a good faith determination of a
security's fair value. Short-term obligations having 60 days or less to
maturity and commercial paper are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the NYSE. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of the close of the respective
markets. Occasionally, events affecting the values of such foreign
securities may occur between the times at which the particular foreign
market closes and the close of the customary trading session of the NYSE
which would not ordinarily be reflected in the computation of the Fund's
net asset value. If a development/event is so significant that there is a
reasonably high degree of certainty as to both the effect and the degree of
effect that the development/event has actually caused that closing price to
no longer reflect actual value, the closing prices, as determined at the
close of the applicable foreign market, may be adjusted to reflect the fair
value of the affected foreign securities as of the close of the NYSE as
determined in good faith by or under the supervision of the Board of
Directors.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M 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
gain) which is distributed to shareholders. Therefore, no provision for
federal income taxes is recorded in the financial statements. Any capital
loss carryforwards listed are reduced for limitations, if any, to the
extent required by the Internal Revenue Code.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included
F-7
with the net realized and unrealized gain or loss from investments in the
Statement of Operations. Reported net realized foreign currency gains or
losses arise from sales of foreign currencies, currency gains or losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
currency gains and losses arise from changes in the fair values of assets
and liabilities, other than investments in securities at fiscal period end,
resulting from changes in exchange rates.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such class.
Transfer agency fees and expenses relating to all other classes are
allocated among those classes based on relative net assets. All other
expenses are allocated among the classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $1
billion of the Fund's average daily net assets, plus 0.90% of the Fund's average
daily net assets in excess of $1 billion. AIM has contractually agreed to waive
advisory fees payable by the Fund to AIM at the annual rate of 0.05% on net
assets in excess of $500 million. Further, AIM has voluntarily agreed to waive
advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives
from the affiliated money market funds in which the Fund has invested (excluding
investments made in affiliated money market funds with cash collateral from
securities loaned by the Fund). For the year ended October 31, 2003, AIM waived
fees of $555,986. Under a prior agreement to limit the aggregate costs of
certain shareholder services provided by third party administrators, AIM
reimbursed fees of $670,300 for Class A, Class B, Class C and Class R shares
based on the relative net assets of those classes.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2003, AIM was
paid $387,366 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay AIM Investment Services, Inc. ("AISI"), formerly known as A I M Fund
Services, Inc., a fee for providing transfer agency and shareholder services to
the Fund. For the Institutional Class, the transfer agent has contractually
agreed to reimburse class specific transfer agent fees to the extent necessary
to limit transfer agent fees to 0.10% of the average net assets. During the year
ended October 31, 2003, AISI retained $2,406,157 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Institutional Class shares of the
Fund. The Company has adopted plans pursuant to Rule 12b-1 under the 1940 Act
with respect to the Fund's Class A, Class B, Class C and Class R shares
(collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.30% of the Fund's average
daily net assets of Class A shares, 1.00% of the average daily net assets of
Class B and Class C shares and 0.50% of the average daily net assets of Class R
shares. Of these amounts, the AIM Distributors may pay a service fee up to 0.25%
of the average daily net assets of the Class A, Class B, Class C or Class R
shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own shares of
such classes. Any amounts not paid as a service fee under the Plans would
constitute an asset-based sales charge. NASD Rules also impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. Pursuant to the Plans, for the year ended October
31, 2003, the Class A, Class B, Class C and Class R shares paid $3,330,664,
$3,602,319, $1,092,583 and $2,950, respectively.
Front-end sales commissions and contingent deferred sales charges ("CDSC")
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. CDSC are deducted from
redemption proceeds prior to remittance to the shareholder. During the year
ended October 31, 2003, AIM Distributors retained $85,350 in front-end sales
commissions from the sale of Class A shares and $1,104,821, $142, $36,471 and $0
from Class A, Class B, Class C and Class R shares, respectively, for CDSC
imposed upon redemptions by shareholders.
Certain officers and directors of the Company are officers and directors of
AIM, AISI and/or AIM Distributors.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
For the year ended October 31, 2003, the Fund received reductions in transfer
agency fees from AISI (an affiliate of AIM) of $24,533 and reductions in
custodian fees of $957 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $25,490.
NOTE 4--DIRECTORS' FEES
Directors' fees represent remuneration paid to each Director of the Company who
is not an "interested person" of AIM. Directors have the option to defer
compensation payable by the Company. The Directors deferring compensation have
the option to select various AIM Funds in which their deferral accounts shall be
deemed to be invested.
Current Directors are eligible to participate in a retirement plan that
provides for benefits to be paid upon retirement to Directors over a period of
time based on the number of years of service. Certain former Trustees also
participate in a retirement plan and receive benefits under such plan.
During the year ended October 31, 2003, the Fund paid legal fees of $4,784
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Directors. A member of that firm is a Director of the Company.
F-8
NOTE 5--BORROWINGS
The Fund may participate in an interfund lending facility that AIM has
established for temporary borrowings by the AIM Funds. An interfund loan will be
made under this facility only if the loan rate (an average of the rate available
on bank loans and the rate available on investments in overnight repurchase
agreements) is favorable to both the lending fund and the borrowing fund. Under
certain circumstances, a loan will be secured by collateral. To the extent that
the loan is required to be secured by collateral, the collateral is marked to
market daily to ensure that the market value is at least 102% of the outstanding
principal value of the loan.
Effective June 26, 2003, the Fund became a participant in an uncommitted
unsecured revolving line of credit facility with State Street Bank and Trust
Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000 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 can borrow on a first
come, first served basis. Principal on each loan outstanding shall bear interest
at the bid rate quoted by SSB at the time of the request for the loan.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could 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 were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the year ended October 31, 2003, the Fund did not borrow or lend
under the interfund lending facility or borrow under either the uncommitted
unsecured revolving line of credit facility or the committed line of credit
facility.
Additionally the Fund is permitted to carry a negative or overdrawn balance
in its account with the custodian bank. To compensate the custodian bank for
such overdrafts, the overdrawn Fund may either (i) leave funds in the account so
the custodian can be compensated by earning the additional interest; or (ii)
compensate by paying the custodian bank. In either case, the custodian bank will
be compensated an amount equal to the Federal Funds rate plus 100 basis points.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value of the loaned securities determined daily. Such collateral will be
cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, following the
valuation date of the securities loaned. Therefore, the value of the collateral
held may be temporarily less than the value of the securities on loan.
At October 31, 2003, securities with an aggregate value of $38,847,584 were
on loan to brokers. The loans were secured by cash collateral of $42,838,030
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended October 31, 2003, the Fund received fees of $1,001,326
for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid
during the years ended October 31, 2003 and 2002.
Tax Components of Net Assets:
As of October 31, 2003, the components of net assets on a tax basis were as
follows:
<Table>
Undistributed ordinary income $ 1,573,558
- ------------------------------------------------------------
Unrealized appreciation -- investments 330,833,847
- ------------------------------------------------------------
Temporary book/tax differences (188,136)
- ------------------------------------------------------------
Capital loss carryforward (526,683,245)
- ------------------------------------------------------------
Capital (par value and additional paid-in) 1,787,466,539
============================================================
Total net assets $1,593,002,563
____________________________________________________________
============================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation is
due to differences in the timing of recognition of gains and losses on
investments for tax and book purposes. The Fund's unrealized appreciation
difference is attributable primarily to the tax deferral of losses on wash
sales. Amount includes appreciation (depreciation) on foreign currencies of
$(78,570).
The temporary book/tax differences are a result of timing differences
between book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the deferral of director compensation and
director retirement plan expenses.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2008 $ 8,427,649
- ----------------------------------------------------------
October 31, 2009 296,794,208
- ----------------------------------------------------------
October 31, 2010 221,461,388
==========================================================
Total capital loss carryforward $526,683,245
__________________________________________________________
==========================================================
</Table>
F-9
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the year ended
October 31, 2003 was $1,136,347,378 and $1,406,098,946 respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES ON A TAX BASIS
- -----------------------------------------------------------
Aggregate unrealized appreciation of
investment securities $337,542,565
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (6,630,148)
===========================================================
Net unrealized appreciation of investment
securities $330,912,417
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $1,250,971,911.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions and capital loss limitations, on October 31, 2003, undistributed
net investment income was increased by $3,296,045, undistributed net realized
gains decreased by $3,622,479 and paid in capital increased by $326,434. This
reclassification had no effect on net assets of the Fund.
NOTE 10--CAPITAL STOCK INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and the Institutional Class
shares. Class A shares are sold with front-end sales charge. Class B shares and
Class C shares are sold with CDSC. Class R shares and the Institutional Class
shares are sold at net asset value. Under some circumstances, Class A shares and
Class R shares are subject to CDSC. Generally, Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2003 2002
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 360,002,923 $ 4,667,044,231 368,401,191 $ 5,196,926,844
- --------------------------------------------------------------------------------------------------------------------------------
Class B 1,810,130 22,361,870 3,311,442 44,849,213
- --------------------------------------------------------------------------------------------------------------------------------
Class C 18,493,883 227,638,038 15,573,890 203,220,053
- --------------------------------------------------------------------------------------------------------------------------------
Class R* 1,257,373 16,539,372 3,845 49,318
- --------------------------------------------------------------------------------------------------------------------------------
Institutional Class** -- -- 5,818 80,835
================================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 2,013,886 26,283,106 660,780 9,377,577
- --------------------------------------------------------------------------------------------------------------------------------
Class B (2,133,943) (26,283,106) (698,495) (9,377,577)
================================================================================================================================
Reacquired:
Class A (374,808,645) (4,899,957,634) (380,070,713) (5,418,381,690)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (7,880,064) (97,109,972) (13,644,671) (183,907,760)
- --------------------------------------------------------------------------------------------------------------------------------
Class C (20,026,701) (247,770,763) (18,116,304) (239,064,170)
- --------------------------------------------------------------------------------------------------------------------------------
Class R* (1,203,936) (15,902,911) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Institutional Class** (663) (8,827) -- --
================================================================================================================================
(22,475,757) $ (327,166,596) (24,573,217) $ (396,227,357)
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
** Institutional Class shares commenced sales on March 15, 2002.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.69 $ 14.45 $ 21.60 $ 21.73 $ 17.59
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01(a) (0.03)(a) (0.01) 0.08(a) (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 2.53 (1.73) (5.66) 0.72 4.49
=================================================================================================================================
Total from investment operations 2.54 (1.76) (5.67) 0.80 4.46
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.11)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (1.48) (0.93) (0.21)
=================================================================================================================================
Total distributions -- -- (1.48) (0.93) (0.32)
=================================================================================================================================
Net asset value, end of period $ 15.23 $ 12.69 $ 14.45 $ 21.60 $ 21.73
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 20.02% (12.18)% (27.96)% 3.16% 25.73%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,117,420 $1,093,344 $1,404,269 $2,325,636 $2,058,419
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.74%(c) 1.70% 1.57% 1.44% 1.48%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 1.82%(c) 1.74% 1.61% 1.48% 1.52%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets 0.09%(c) (0.21)% (0.04)% 0.30% (0.14)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 77% 77% 85% 87% 86%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $1,110,221,314.
<Table>
<Caption>
CLASS B
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.02 $ 13.78 $ 20.81 $ 21.11 $ 17.13
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.12)(a) (0.13) (0.11)(a) (0.17)(a)
- -------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.38 (1.64) (5.42) 0.74 4.36
===============================================================================================================================
Total from investment operations 2.30 (1.76) (5.55) 0.63 4.19
===============================================================================================================================
Less distributions from net realized gains -- -- (1.48) (0.93) (0.21)
===============================================================================================================================
Net asset value, end of period $ 14.32 $ 12.02 $ 13.78 $ 20.81 $ 21.11
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) 19.14% (12.77)% (28.48)% 2.42% 24.72%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $360,671 $401,288 $612,125 $997,843 $887,106
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 2.44%(c) 2.40% 2.27% 2.18% 2.27%
- -------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 2.52%(c) 2.44% 2.31% 2.22% 2.31%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.61)(c) (0.91)% (0.75)% (0.44)% (0.93)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 77% 77% 85% 87% 86%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $360,231,865.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.03 $ 13.79 $ 20.82 $ 21.13 $ 17.14
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.12)(a) (0.13) (0.11)(a) (0.17)(a)
- -------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.38 (1.64) (5.42) 0.73 4.37
===============================================================================================================================
Total from investment operations 2.30 (1.76) (5.55) 0.62 4.20
===============================================================================================================================
Less distributions from net realized gains -- -- (1.48) (0.93) (0.21)
===============================================================================================================================
Net asset value, end of period $ 14.33 $ 12.03 $ 13.79 $ 20.82 $ 21.13
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) 19.12% (12.76)% (28.47)% 2.37% 24.76%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $113,965 $114,070 $165,857 $253,998 $118,208
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 2.44%(c) 2.40% 2.27% 2.18% 2.27%
- -------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 2.52%(c) 2.44% 2.31% 2.22% 2.31%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.61)(c) (0.91)% (0.75)% (0.44)% (0.93)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 77% 77% 85% 87% 86%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not include sales
charges.
(c) Ratios are based on average daily net assets of $109,258,326.
<Table>
<Caption>
CLASS R
----------------------------------
JUNE 3, 2002
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.69 $ 15.27
- ------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01(a) (0.02)(a)
- ------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.44 (2.56)
================================================================================================
Total from investment operations 2.45 (2.58)
================================================================================================
Net asset value, end of period $15.14 $ 12.69
________________________________________________________________________________________________
================================================================================================
Total return(b) 19.31% (16.90)%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 867 $ 49
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.94%(c) 1.89%(d)
- ------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 2.02%(c) 1.93%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.11)(c) (0.40)(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate(e) 77% 77%
________________________________________________________________________________________________
================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $589,989.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
---------------------------------
MARCH 15, 2002
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2003 2002
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.73 $ 15.09
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.09(a) 0.03(a)
- -----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.55 (2.39)
===============================================================================================
Total from investment operations 2.64 (2.36)
===============================================================================================
Net asset value, end of period $15.37 $ 12.73
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 20.74% (15.64)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 79 $ 74
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.17%(c) 1.16%(d)
- -----------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 1.21%(c) 1.20%(d)
===============================================================================================
Ratio of net investment income to average net assets 0.66%(c) 0.33%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 77% 77%
_______________________________________________________________________________________________
===============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $73,309.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 12--SUBSEQUENT EVENTS
Your Fund's investment advisor, A I M Advisors, Inc. ("AIM") is an indirect
wholly owned subsidiary of AMVESCAP PLC ("AMVESCAP"). Another indirect wholly
owned subsidiary of AMVESCAP, INVESCO Funds Group, Inc. ("INVESCO"), was, until
recently, the investment advisor to the INVESCO Funds.
On December 2, 2003, each of the Securities and Exchange Commission ("SEC")
and the Office of the Attorney General of the State of New York ("NYAG") filed
civil proceedings against INVESCO and Raymond R. Cunningham, in his capacity as
the Chief Executive Officer of INVESCO. Mr. Cunningham currently holds the
positions of Chief Operating Officer and Senior Vice President of A I M
Management Group, Inc., the parent company of AIM, and he also holds the
position of Senior Vice President with AIM. In addition, on December 2, 2003,
the State of Colorado filed civil proceedings against INVESCO. Neither your Fund
nor any of the funds in the AIM Family of Funds(R), which includes the INVESCO
Funds (the "Funds") has been named as a defendant in any of these proceedings.
The SEC proceeding alleges that INVESCO failed to disclose in the INVESCO
Funds' prospectuses and to the INVESCO Funds' independent directors that INVESCO
had entered into certain arrangements permitting market timing of the INVESCO
Funds. The SEC is seeking injunctions, including permanent injunctions from
serving as an investment advisor, officer or director of an investment company;
an accounting of all market timing as well as certain fees and compensation
received; disgorgement; civil monetary penalties; and other relief.
The NYAG proceeding is also based on the circumstances described above. The
NYAG is seeking injunctions, including permanent injunctions from directly or
indirectly selling or distributing shares of mutual funds; disgorgement of all
profits obtained, including fees collected, and payment of all restitution and
damages caused, directly or indirectly from the alleged illegal activities;
civil monetary penalties; and other relief.
The Colorado proceeding is also based on the circumstances described above.
The State of Colorado is seeking injunctions; restitution, disgorgement and
other equitable relief; civil monetary penalties; and other relief.
If INVESCO is unsuccessful in its defense of these proceedings, it could be
barred from serving as an investment advisor for any investment company
registered under the Investment Company Act of 1940, as amended (a "registered
investment company"). Similarly, if Mr. Cunningham is unsuccessful in his
defense of these proceedings, he could be barred from serving as an officer or
director of any registered investment company. Such results could also affect
the ability of AIM, or any other investment advisor directly or indirectly owned
by AMVESCAP, from serving as an investment advisor to any registered investment
company, including your Fund. Your Fund has been informed by AIM that, if either
of these results occurs, AIM will seek exemptive relief from the SEC to permit
it to continue to serve as your Fund's investment advisor. There can be no
assurance that such exemptive relief will be granted.
AIM has received inquiries from the SEC, the NASD, Inc., the NYAG and the
Secretary of the Commonwealth of Massachusetts with respect to market timing,
late trading, fair value pricing and other similar issues and AIM has been
providing full cooperation with respect to these inquiries.
F-13
NOTE 12--SUBSEQUENT EVENTS (CONTINUED)
In addition to the complaints described above, multiple lawsuits, including
purported class action and shareholder derivative suits, have been filed against
certain Funds, INVESCO, AIM, AMVESCAP and certain related parties, primarily
based upon the allegations in the complaints described above, but also regarding
the funds' fair valuation pricing methodology. Such lawsuits allege a variety of
theories for recovery including, but not limited to: (i) violation of various
provisions of the Federal securities laws; (ii) breach of fiduciary duty; and
(iii) breach of contract. The lawsuits have been filed in both Federal and state
courts and seek such remedies as compensatory damages; restitution; rescission;
accounting for wrongfully gotten gains, profits and compensation; injunctive
relief; disgorgement; equitable relief; interest and the payment of attorneys'
and experts' fees. Additional lawsuits arising out of these circumstances and
presenting similar allegations and requests for relief may be filed against the
Funds, INVESCO, AIM, AMVESCAP and related parties in the future.
As a result of these developments, investors in the Funds might react by
redeeming their investments. This might require the Funds to sell investments to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the Funds.
At the present time, management of AIM and the Fund is unable to estimate the
impact, if any, that the outcome of these matters described above may have on
the Fund or AIM's financial condition.
F-14
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors/Trustees
and Shareholders of AIM International Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the AIM International Growth Fund
(one of the funds constituting AIM International Funds, Inc., now known as AIM
International Mutual Funds; hereafter referred to as the "Fund") at October 31,
2003, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the three years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The financial
highlights for each of the periods ended on or before October 31, 2000 were
audited by other independent accountants whose report dated December 6, 2000,
expressed an unqualified opinion on the financial highlights.
PRICEWATERHOUSECOOPERS LLP
December 16, 2003
Houston, Texas
F-15
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM International Funds, Inc., a Maryland
corporation, was held on October 21, 2003. The meeting was adjourned and
reconvened on October 28, 2003, on November 4, 2003, on November 11, 2003, on
November 17, 2003 and reconvened on November 21, 2003. The meeting was held for
the following purposes:
(1)* To elect sixteen individuals to the Board, each of whom will serve until
his or her successor is elected and qualified: Bob R. Baker, Frank S.
Bayley, James T. Bunch, Bruce L. Crockett, Albert R. Dowden, Edward K.
Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Gerald J.
Lewis, Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley, Louis S.
Sklar, Larry Soll, Ph.D. and Mark H. Williamson.
(2)* To approve an Agreement and Plan of Reorganization which provides for the
redomestication of Company as a Delaware statutory trust and, in connection
therewith, the sale of all of Company's assets and the dissolution of
Company as a Maryland corporation.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHOLDING
DIRECTORS/MATTER VOTES FOR AUTHORITY
- ---------------------------------------------------------------------------------
(1)* Bob R. Baker................................. 162,211,196 3,444,279
Frank S. Bayley.............................. 162,236,962 3,418,513
James T. Bunch............................... 162,287,588 3,367,887
Bruce L. Crockett............................ 162,276,496 3,378,979
Albert R. Dowden............................. 162,251,386 3,404,089
Edward K. Dunn, Jr. ......................... 162,221,226 3,434,249
Jack M. Fields............................... 162,278,318 3,377,157
Carl Frischling.............................. 162,182,906 3,472,569
Robert H. Graham............................. 162,243,892 3,411,583
Gerald J. Lewis.............................. 162,147,868 3,507,607
Prema Mathai-Davis........................... 162,219,866 3,435,609
Lewis F. Pennock............................. 162,263,207 3,392,268
Ruth H. Quigley.............................. 162,163,064 3,492,411
Louis S. Sklar............................... 162,243,759 3,411,716
Larry Soll, Ph.D. ........................... 162,236,226 3,419,249
Mark H. Williamson........................... 162,238,962 3,416,513
</Table>
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 76,302,938 2,822,366 86,530,171**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on October 28, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 84,066,011 2,989,031 83,338,957**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 4, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 95,512,525 3,144,748 78,504,573**
</Table>
F-16
PROXY RESULTS (UNAUDITED) (CONTINUED)
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 11, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 109,217,698 3,531,752 71,913,039**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 17, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 116,710,545 3,761,148 69,451,190**
</Table>
The Special Meeting of Shareholders of the Company noted above was adjourned and
reconvened on November 21, 2003. At the reconvened meeting the following matter
was then considered:
<Table>
<Caption>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
- ---------------------------------------------------------------------------------------------------------------
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the redomestication of Company as a Delaware
statutory trust and, in connection therewith, the sale of
all of Company's assets and the dissolution of Company as a
Maryland corporation........................................ 137,239,949 4,617,039 51,798,672**
</Table>
* Proposal required approval by a combined vote of all the portfolios of AIM
International Funds, Inc.
** Includes Broker Non-Votes
F-17
OTHER INFORMATION
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- ------------------------------------------------------------------------------------------------------------------------------------
Robert H. Graham(1) -- 1946 1991 Director and Chairman, A I M Management Group Inc. None
Trustee, Chairman and (financial services holding company); and Director and Vice
President Chairman, AMVESCAP PLC and Chairman of AMVESCAP PLC -- AIM
Division (parent of AIM and a global investment management
firm)
Formerly: President and Chief Executive Officer, A I M
Management Group Inc.; Director, Chairman and President,
A I M Advisors, Inc. (registered investment advisor); and
Director and Chairman, A I M Capital Management, Inc.
(registered investment advisor), A I M Distributors, Inc.
(registered broker dealer), AIM Investment Services, Inc.,
(registered transfer agent), and Fund Management Company
(registered broker dealer); and Chief Executive Officer,
AMVESCAP PLC -- Managed Products
- ------------------------------------------------------------------------------------------------------------------------------------
Mark H. Williamson(2) -- 195 2003 Director, President and Chief Executive Officer, A I M Director and Chairman,
Trustee and Executive Vice Management Group Inc. (financial services holding company); INVESCO Bond Funds,
President Director, Chairman and President, A I M Advisors, Inc. Inc., INVESCO
(registered investment advisor); Director, A I M Capital Combination Stock &
Management, Inc. (registered investment advisor) and A I M Bond Funds, Inc.,
Distributors, Inc. (registered broker dealer); Director and INVESCO Counselor
Chairman, AIM Investment Services, Inc. (registered transfer Series Funds, Inc.,
agent); and Fund Management Company (registered broker INVESCO International
dealer); and Chief Executive Officer, AMVESCAP PLC -- AIM Funds, Inc., INVESCO
Division (parent of AIM and a global investment management Manager Series Funds,
firm) Inc., INVESCO Money
Formerly: Director, Chairman, President and Chief Executive Market Funds, Inc.,
Officer, INVESCO Funds Group, Inc. and INVESCO Distributors, INVESCO Sector Funds,
Inc.; Chief Executive Officer, AMVESCAP PLC -- Managed Inc., INVESCO Stock
Products; Chairman and Chief Executive Officer of Funds, Inc., INVESCO
NationsBanc Advisors, Inc.; and Chairman of NationsBanc Treasurer's Series
Investments, Inc. Funds, Inc. and
INVESCO Variable
Investment Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker(3) -- 1936 2003 Consultant None
Trustee
Formerly: President and Chief Executive Officer, AMC Cancer
Research Center; and Chairman and Chief Executive Officer,
First Columbia Financial Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc.
Trustee (registered investment
company)
- ------------------------------------------------------------------------------------------------------------------------------------
James T. Bunch(3) -- 1942 2003 Co-President and Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm); and Director, Policy Studies,
Inc. and Van Gilder Insurance Corporation
Formerly: General Counsel and Director, Boettcher & Co.; and
Chairman and Managing Partner, law firm of Davis, Graham &
Stubbs
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates (technology ACE Limited (insurance
Trustee consulting company) company); and
Captaris, Inc.
(unified messaging
provider)
- ------------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Director of a number of public and private business Cortland Trust, Inc.
Trustee corporations, including the Boss Group Ltd. (private (Chairman) (registered
investment and management) and Magellan Insurance Company investment company);
Formerly: Director, President and Chief Executive Officer, Annuity and Life Re
Volvo Group North America, Inc.; Senior Vice President, AB (Holdings), Ltd.
Volvo; and director of various affiliated Volvo Group (insurance company)
companies
- ------------------------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly: Chairman, Mercantile Mortgage Corp.; President and None
Trustee Chief Operating Officer, Mercantile-Safe Deposit & Trust
Co.; and President, Mercantile Bankshares Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Group, Inc. Administaff
Trustee (government affairs company) and Texana Timber LP
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Graham is considered an interested person of the Trust because he is a
director of AMVESCAP PLC, parent of the advisor to the Trust.
(2) Mr. Williamson is considered an interested person of the Trust because he is
an officer and a director of the advisor to, and a director of the principal
underwriter of, the Trust. Mr. Williamson became Executive Vice President of
the Trust on March 4, 2003.
(3) Elected trustee of the Trust on October 21, 2003.
TRUSTEES AND OFFICERS (CONTINUED)
As of January 1, 2003
The address of each trustee and officer of AIM International Funds, Inc., now
known as AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Each trustee oversees 132 portfolios in the AIM
Funds complex. The trustees serve for the life of the Trust, subject to their
earlier death, incapacitation, resignation, retirement or removal as more
specifically provided in the Trust's organizational documents. Column two below
includes length of time served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST OR OFFICER SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Cortland Trust, Inc.
Trustee (registered
investment company)
- ------------------------------------------------------------------------------------------------------------------------------------
Gerald J. Lewis(3) -- 1933 2003 Chairman, Lawsuit Resolution Services (San Diego, General Chemical
Trustee California) Group, Inc.,
Formerly: Associate Justice of the California Court of Wheelabrator
Appeals Technologies, Inc.
(waste management
company), Fisher
Scientific, Inc.,
Henley
Manufacturing, Inc.
(laboratory
supplies), and
California Coastal
Properties, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly: Chief Executive Officer, YWCA of the USA None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1991 Partner, law firm of Pennock & Cooper None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1991 Executive Vice President, Development and Operations Hines None
Trustee Interests Limited Partnership (real estate development
company)
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Soll, Ph.D.(3) -- 1942 2003 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome(4) -- 1956 2003 Director, Senior Vice President, Secretary and General N/A
Senior Vice President Counsel, A I M Management Group Inc. (financial services
holding company) and A I M Advisors, Inc.; Vice President,
A I M Capital Management, Inc., A I M Distributors, Inc. and
AIM Investment Services, Inc.; and Director, Vice President
and General Counsel, Fund Management Company
Formerly: Senior Vice President and General Counsel, Liberty
Financial Companies, Inc.; and Senior Vice President and
General Counsel, Liberty Funds Group, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
Gary T. Crum(5) -- 1947 1991 Director, Chairman and Director of Investments, A I M N/A
Senior Vice President Capital Management, Inc.; Director and Executive Vice
President, A I M Management Group Inc.; Director and Senior
Vice President, A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC
Formerly: Chief Executive Officer and President, A I M
Capital Management Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert G. Alley(5) -- 1948 1994 Managing Director and Chief Fixed Income Officer, A I M N/A
Vice President Capital Management, Inc.; and Vice President, A I M
Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart W. Coco -- 1955 2002 Managing Director and Chief Research Officer -- Fixed N/A
Vice President Income, A I M Capital Management, Inc.; and Vice President,
A I M Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance Officer, A I M Advisors, N/A
Vice President Inc. and A I M Capital Management, Inc.; and Vice President,
AIM Investment Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Edgar M. Larsen(5) -- 1940 1999 Vice President, A I M Advisors, Inc., and President, Chief N/A
Vice President Executive Officer and Chief Investment Officer, A I M
Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1991 Vice President and Fund Treasurer, A I M Advisors, Inc. N/A
Vice President and Treasurer
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(3) Elected trustee of the Trust on October 21, 2003.
(4) Mr. Carome became Senior Vice President of the Trust on May 13, 2003.
(5) Information is current as of January 10, 2003.
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.347.4246.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, Inc. PricewaterhouseCoopers LLP
Suite 100 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana, Suite 2900
Houston, TX 77046 Suite 100 Suite 100 Houston, TX 77002
Houston, TX 77046 Houston, TX 77046-1173
COUNSEL TO THE FUND COUNSEL TO THE TRUSTEES TRANSFER AGENT CUSTODIAN
Ballard Spahr Kramer, Levin, Naftalis & AIM Investment Services, Inc. State Street Bank and
Andrews & Ingersoll, LLP Frankel LLP P.O. Box 4739 Trust Company
1735 Market Street 919 Third Avenue Houston, TX 77210-4739 225 Franklin Street
Philadelphia, PA 19103 New York, NY 10022-3852 Boston, MA 02110
</Table>
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund
AIM Constellation Fund AIM Global Value Fund(4) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Emerging Growth Fund AIM Short Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM Trimark Fund INVESCO U.S. Government Money Fund
AIM Large Cap Basic Value Fund INVESCO International Core Equity Fund(5)
AIM Large Cap Growth Fund TAX-FREE
AIM Libra Fund SECTOR EQUITY
AIM Mid Cap Basic Value Fund AIM High Income Municipal Fund
AIM Mid Cap Core Equity Fund AIM Global Health Care Fund AIM Municipal Bond Fund
AIM Mid Cap Growth Fund AIM Real Estate Fund AIM Tax-Exempt Cash Fund
AIM Opportunities I Fund INVESCO Advantage Health Sciences Fund AIM Tax-Free Intermediate Fund
AIM Opportunities II Fund INVESCO Energy Fund
AIM Opportunities III Fund INVESCO Financial Services Fund
AIM Premier Equity Fund INVESCO Gold & Precious Metals Fund
AIM Select Equity Fund INVESCO Health Sciences Fund
AIM Small Cap Equity Fund(2) INVESCO Leisure Fund
AIM Small Cap Growth Fund(3) INVESCO Multi-Sector Fund
AIM Trimark Endeavor Fund INVESCO Technology Fund
AM Trimark Small Companies Fund INVESCO Utilities Fund
AIM Weingarten Fund
INVESCO Core Equity Fund
INVESCO Dynamics Fund
INVESCO Mid-Cap Growth Fund
INVESCO Small Company Growth Fund
INVESCO S&P 500 Index Fund
INVESCO Total Return Fund*
</Table>
* Domestic equity and income fund
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) AIM Small Cap Equity Fund was closed to most
investors on December 19, 2003. For information on who may continue to invest in
AIM Small Cap Equity Fund, please contact your financial advisor. (3) AIM Small
Cap Growth Fund was closed to most investors on March 18, 2002. For information
on who may continue to invest in AIM Small Cap Growth Fund, please contact your
financial advisor. (4) Effective April 30, 2003, AIM Worldwide Spectrum Fund was
renamed AIM Global Value Fund. (5) Effective November 24, 2003, INVESCO
International Blue Chip Value Fund was renamed INVESCO International Core Equity
Fund.
For more complete information about any AIM or INVESCO fund, including sales
charges and expenses, ask your financial advisor for a prospectus. Please read
it carefully before investing. If used after January 20, 2004, this brochure
must be accompanied by a fund Performance & Commentary or by an AIM Quarterly
Performance Review for the most recent quarter-end. Mutual funds distributed by
A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $142 billion in assets for approximately 11
million shareholders, including individual investors, corporate clients and
financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $345 billion in assets
under management. Data as of September 30, 2003.
AIMinvestments.com IGR-AR-1
<Table>
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
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Mutual Retirement Annuities College Separately Offshore Alternative Cash [AIM INVESTMENTS LOGO APPEARS HERE]
Funds Products Savings Managed Products Investments Management --Servicemark--
Plans Accounts
</Table>
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, Registrant had adopted a
code of ethics (the "Code") that applies to the Registrant's principal executive
office ("PEO") and principal financial officer ("PFO"). There were no amendments
to the Code during the period covered by the report. The Registrant did not
grant any waivers, including implicit waivers, from any provisions of the Code
to the PEO or PFO during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees has determined that the registrant has at least one audit
committee financial expert serving on its Audit Committee. The Audit Committee
financial expert is Prema Mathai-Davis. Ms. Mathai-Davis is "independent" within
the meaning of that term used in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) As of December 18, 2003, an evaluation was performed under the
supervision and with the participation of the officers of AIM
International Mutual Funds (the "Company"), including the Principal
Executive Officer (PEO") and Principal Financial Officer ("PFO"), to
assess the effectiveness of the Company's disclosure controls and
procedures, as that term in defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act"), as amended. Based on that
evaluation, the Company's officers, including the PEO and PFO,
concluded that, as of December 18, 2003, the Company's disclosure
controls and procedures were reasonably designed so as to ensure: (1)
that information required to be disclosed by the Company on Form N-CSR
is recorded, processed, summarized and reported with in the time
periods specified by the rules and forms of the Securities and Exchange
Commission; and (2) that material information relating to the Company
is made known to the PEO and PFO as appropriate to allow timely
decisions regarding required disclosure.
1
(b) There have been no changes in the Company's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the Company's last fiscal half-year (the Company's
second fiscal half-year in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
ITEM 10. EXHIBITS. CODE OF ETHICS.
(a)(1) Code of Ethics.
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Act.
(b) Certification of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Act and Section 906 of
the Sarbanes-Oxley Act of 2002.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Registrant: AIM International Mutual Funds
-------------------------------
By: /s/ ROBERT H. GRAHAM
-----------------------------------
Robert H. Graham
Principal Executive Officer
Date: December 18, 2003
-----------------------------------
By: /s/ DANA R. SUTTON
-----------------------------------
Dana R. Sutton
Principal Financial Officer
Date: December 18, 2003
-----------------------------------
EXHIBIT INDEX
10(a)(1) Code of Ethics
10(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of 1940, as amended.
(b) Certification of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002.