--------------------------- OMB APPROVAL --------------------------- OMB Number: 3235-0570 Expires: September 30, 2007 Estimated average burden hours per response: 19.4 --------------------------- 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 811-06463 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) Philip A. Taylor 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: 10/31/06 Item 1. Reports to Stockholders. INTERNATIONAL/GLOBAL EQUITY AIM ASIA PACIFIC GROWTH FUND Emerging Markets Annual Report to Shareholders o October 31, 2006 Table of Contents Supplemental Information ...................... 2 Letters to Shareholders ....................... 3 Performance Summary ........................... 5 Management Discussion ......................... 5 Fund Expenses ................................. 7 Long-term Fund Performance .................... 8 Approval of Advisory Agreement ................ 10 Schedule of Investments ....................... F-1 Financial Statements .......................... F-4 Notes to Financial Statements ................. F-7 Financial Highlights .......................... F-13 Auditor's Report .............................. F-16 Tax Disclosures ............................... F-17 Trustees and Officers ......................... F-18 [AIM INVESTMENT SOLUTIONS] [GRAPHIC] [GRAPHIC] [GRAPHIC] [DOMESTIC [INTERNATIONAL/ [SECTOR EQUITY] GLOBAL EQUITY] EQUITY] [GRAPHIC] [GRAPHIC] [GRAPHIC] [FIXED [ALLOCATION [DIVERSIFIED INCOME] SOLUTIONS] PORTFOLIOS] [AIM INVESTMENTS LOGO APPEARS HERE] --Registered Trademark-- AIM Asia Pacific Growth Fund AIM ASIA PACIFIC GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of October 31, 2006, and is based on total net assets. ABOUT SHARE CLASSES future. returns based on those net asset values may differ from the net asset values and o Class B shares are not available as an ABOUT INDEXES USED IN THIS REPORT returns reported in the Financial investment for retirement plans Highlights. maintained pursuant to Section 401 of o The unmanaged MSCI EUROPE, AUSTRALASIA the Internal Revenue Code, including AND THE FAR EAST INDEX (the MSCI o Industry classifications used in this 401(k) plans, money purchase pension EAFE--Registered Trademark-- Index) is a report are generally according to the plans and profit sharing plans. Plans group of foreign securities tracked by Global Industry Classification Standard, that had existing accounts invested in Morgan Stanley Capital International. which was developed by and is the Class B shares prior to September 30, exclusive property and a service mark of 2003, will continue to be allowed to o The MSCI ALL COUNTRY (AC) ASIA PACIFIC Morgan Stanley Capital International make additional purchases. EX-JAPAN INDEX is a group of developed Inc. and Standard & Poor's. and emerging Asian and Asia-Pacific PRINCIPAL RISKS OF INVESTING IN markets (except Japan) covered by Morgan The Fund provides a complete list of its THE FUND Stanley Capital International. The index holdings four times in each fiscal year, represents investable opportunities for at the quarter-ends. For the second and o Foreign securities have additional global investors, taking into account fourth quarters, the lists appear in the risks, including exchange rate changes, the local market restrictions on share Fund's semiannual and annual reports to political and economic upheaval, the ownership by foreign investors. shareholders. For the first and third relative lack of information about these quarters, the Fund files the lists with companies, relatively low market o The unmanaged LIPPER PACIFIC REGION the Securities and Exchange Commission liquidity and the potential lack of EX-JAPAN FUNDS INDEX represents an (SEC) on Form N-Q. The most recent list strict financial and accounting controls average of the largest Pacific ex-Japan of portfolio holdings is available at and standards. funds tracked by Lipper Inc., an AIMinvestments.com. From our home page, independent mutual fund performance click on Products & Performance, then o Investing in a fund that invests in monitor, and is considered Mutual Funds, then Fund Overview. Select smaller companies involves risks not representative of Pacific ex-Japan your Fund from the drop-down menu and associated with investing in more stocks. click on Complete Quarterly Holdings. established companies, such as business Shareholders can also look up the Fund's risk, stock price fluctuations and o The Fund is not managed to track the Forms N-Q on the SEC Web site at illiquidity. performance of any particular index, sec.gov. Copies of the Fund's Forms N-Q including the indexes defined here, and may be reviewed and copied at the SEC o Investing in emerging markets involves consequently, the performance of the Public Reference Room in Washington, greater risks than investing in more Fund may deviate significantly from the D.C. You can obtain information on the established markets. Risks for emerging performance of the index. operation of the Public Reference Room, markets include risks relating to the including information about duplicating relatively smaller size and lesser o A direct investment cannot be made in fee charges, by calling 202-942-8090 or liquidity of these markets, high an index. Unless otherwise indicated, 800-732-0330, or by electronic request inflation rates, adverse political index results include reinvested at the following e-mail address: developments and lack of timely dividends, and they do not reflect sales publicinfo@sec.gov. The SEC file numbers information. charges. Performance of an index of for the Fund are 811-06463 and funds reflects fund expenses; 033-44611. o Prices of equity securities change in performance of a market index does not. response to many factors including the A description of the policies and historical and prospective earnings of OTHER INFORMATION procedures that the Fund uses to the issuer, the value of its assets, determine how to vote proxies relating general economic conditions, interest The returns shown in the management's to portfolio securities is available rates, investor perceptions and market discussion of Fund performance are based without charge, upon request, from our liquidity. on net asset values calculated for Client Services department at shareholder transactions. Generally 800-959-4246 or on the AIM Web site, o Although the Fund's return during accepted accounting principles require AIMinvestments.com. On the home page, certain periods was positively impacted adjustments to be made to the net assets scroll down and click on AIM Funds Proxy by its investments in initial public of the Fund at period end for financial Policy. The information is also offerings (IPOs), there can be no reporting purposes, and as such, the net available on the SEC Web site, sec.gov. assurance that the fund will have asset values for shareholder favorable IPO investment opportunities transactions and the Information regarding how the Fund voted in the proxies related to its portfolio securities during the 12 months ended June 30, 2006, is available at our Web site. Go to AIMinvestments.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov. ================================================================================ ======================================== THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND FUND NASDAQ SYMBOLS PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares ASIAX ================================================================================ Class B Shares ASIBX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class C Shares ASICX AIMinvestments.com ======================================== 2 AIM Asia Pacific Growth Fund Dear Shareholders of The AIM Family of Funds--Registered Trademark--: We're pleased to provide you with this report, which [TAYLOR includes a discussion of how your Fund was managed during PHOTO] the review period ended October 31, 2006, and what factors affected its performance. As we approach the end of 2006, it seems likely that many investors may see the value of their investments increase Philip Taylor this year. Global equity markets, collectively, recorded double-digit gains for the year ended October 31, 2006, as did the U.S. stock market. Also, the investment grade bond market in the United States rose for the same period. While stock and bond markets generally enjoyed positive year-to-date returns, their performance was affected by short-term economic and geopolitical events. For example, the U.S. stock market was weak in the second quarter of 2006 when it appeared that inflation might be rising. Only after the U.S. Federal Reserve Board decided in August that inflation was contained and that short-term interest rates need not be increased--the first time it kept rates unchanged in more than two years--did equities truly surge. Short-term market fluctuations are a fact of life for all investors. At AIM Investments--Registered Trademark--, we believe that investors can do two things to deal with short-term market fluctuations: maintain a long-term investment horizon and maintain a diversified portfolio. AIM Investments can help by offering a broad product line that gives your financial advisor the necessary tools to build a portfolio that's right for you regardless of market conditions. AIM Investments offers a comprehensive range of retail mutual funds, including domestic, global and international equity funds, taxable and tax-exempt fixed-income funds, and a variety of allocation portfolios--with varied risk and return characteristics to match your needs. We maintain this extensive set of product solutions for one reason: We believe in the value of comprehensive, diversified investment portfolios. We've changed the look of our annual reports to reflect that belief. In our marketing and now our shareholder literature, we represent a fully diversified portfolio graphically as an allocation pie chart and assign each asset class a color--green for domestic equity, blue for international, orange for sector and purple for fixed income. A legend in the left column illustrates the methodology. Your report cover now shows your Fund's asset class color, plus the asset class and sub-asset class name are shown in the upper-left corner. The reason for these changes is to help you better understand where your Fund fits into your overall portfolio. AIM has a variety of investment solutions, and knowing which ones are right for your portfolio is complex. That's why we also believe in the value of a trusted financial advisor who will work with you to create an investment plan you can stick with for the long term. Your financial advisor can help allocate your portfolio appropriately and review your investments regularly to help ensure they remain suitable as your financial situation changes. While there are no guarantees with any investment program, a long-term plan that's based on your financial goals, risk tolerance and time horizon is more likely to keep you and your investments on track. Our commitment to you In the short term, the one sure thing about markets is their unpredictability. While past performance cannot guarantee comparable future results, we believe that staying invested for the long term with a thoughtful plan offers the best opportunity for weathering that unpredictability. We at AIM Investments remain committed to building enduring solutions to help you achieve your investment goals, and we're pleased you've placed your trust in us. Information about investing, the markets and your Fund is always available on our Web site, AIMinvestments.com. If you have questions about your individual account, we invite you to contact one of our highly trained client services representatives at 800-959-4246. Sincerely, /s/ PHILIP TAYLOR Philip Taylor President -- AIM Funds CEO, AIM Investments December 14, 2006 AIM Investments is a registered service mark of A I M Management Group Inc. A I M Advisors, Inc. and A I M Capital Management, Inc. are the investment advisors. A I M Distributors, Inc. is the distributor for the retail funds represented by AIM Investments. 3 AIM Asia Pacific Growth Fund Dear Fellow AIM Fund Shareholders: At our meeting at the end of June, your Board completed its [CROCKETT comprehensive review* of each fund's advisory agreement with PHOTO] A I M Advisors, Inc. (AIM) to make certain your interests are being served in terms of fees, performance and operations. Looking ahead, your Board finds many reasons to be Bruce L. Crockett positive about AIM's management and strategic direction. Most importantly, AIM's investment management discipline has paid off in terms of improved overall performance. We are also pleased with AIM's efforts to seek more cost-effective ways of delivering superior service. In addition, AIM is realizing the benefits of belonging to a leading independent global investment management organization in its parent company, AMVESCAP PLC, which is dedicated to helping people worldwide build their financial security. AMVESCAP managed approximately $450 billion globally as of October 31, 2006, operating under the AIM, INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust brands. These companies are home to an abundance of investment talent that is gradually being integrated and leveraged into centers of excellence, each focusing on a given market segment or asset class. Over the next few years, your Board will be meeting at these various centers of excellence to learn about their progress and how they may serve you through our goal of enhancing performance and reducing costs. The seven new AIM funds--which include Asian funds, structured U.S. equity funds and specialized bond funds--are an early example of the kind of opportunities the AMVESCAP organization can provide AIM clients. More information on these funds can be found on AIM's Web site. Your Board is very pleased with the overall direction and progress of the AIM Funds. We're working closely and effectively with AIM's management to continue this momentum. As always, your Board is eager to hear your views on how we might better serve you. Please send your comments in a letter addressed to me at AIM Investments, AIM Investments Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046. Sincerely, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board December 14, 2006 *To learn more about all the factors we considered before approving each fund's advisory agreement, go to the "Products & Performance" tab at the AIM Web site (AIMinvestments.com) and click on "Investment Advisory Agreement Renewals." The approval of advisory agreement information for your Fund is also included in this annual report on pages 10-11. 4 AIM Asia Pacific Growth Fund Management's discussion While research responsibilities of Fund performance within the portfolio management team are focused by market capitalization, such ===================================================================================== as large- or mid/small-cap, we select PERFORMANCE SUMMARY investments for the Fund by using a "bottom-up" investment approach, which Asian equities performed strongly during the fiscal year ended October 31, 2006, means that we construct the Fund delivering double digit returns. Inflationary pressures across the region showed primarily on a stock-by-stock basis. We increasing signs of weakening and lower oil prices provided an additional focus on the strengths of individual tailwind for equity markets toward the end of the period. companies rather than sectors, countries or market-cap trends. We are pleased to once again have provided shareholders with double-digit Fund performance at net asset value. As the table illustrates, your Fund, We believe disciplined sell excluding applicable sales charges, significantly outperformed both its broad decisions are key to successful market and style-specific benchmarks. The strength of emerging Asian equities investing. We consider selling a stock enabled us to outperform our broad market index, which is composed of stocks for one of the following reasons: from developed nations. We attribute our comparative success in outperforming the style-specific benchmark to strong stock selection in Australia, Hong Kong o A company's fundamentals deteriorate, and Singapore. An overweight position relative to the benchmark, combined with or it posts disappointing earnings. strong stock selection, in China and Indonesia also contributed to outperformance. o A stock's price seems overvalued. Your Fund's long-term performance appears on pages 8 and 9. o A more attractive opportunity becomes available. FUND VS. INDEXES MARKET CONDITIONS AND YOUR FUND Total returns, 10/31/05-10/31/06, excluding applicable sales charges. If sales charges were included, returns would be lower. Asian markets moved higher during the period with nearly all Pacific Rim countries, as represented by the MSCI All Class A Shares 40.06% Country Asia Pacific ex Japan Index, Class B Shares 38.99 posting double digit returns in U.S. Class C Shares 38.92 dollar terms. MSCI EAFE Index (Broad Market Index) 27.52 MSCI AC Asia Pacific ex-Japan Index (Style-Specific Index) 32.82 Macroeconomic news remained robust Lipper Pacific Region Ex-Japan Funds Index (Peer Group Index) 34.29 with exports showing no signs, so far, of being adversely affected by a U.S. SOURCE: LIPPER INC. slowdown. Domestic demand has been ===================================================================================== more mixed, however, with strong demand in the two largest economies in the HOW WE INVEST (Earnings, Quality, Valuation) strategy region (China, India), along with focuses primarily on identifying quality Singapore. Elsewhere, however, demand When selecting stocks for your Fund, we companies that have experienced, or has been weaker, but still positive, in employ a disciplined investment strategy exhibit the potential for, accelerating Korea, Hong Kong and Thailand. The that emphasizes fundamental research, or above average earnings growth but Philippines and Indonesian stock markets supported by both quantitative analysis whose prices do not fully reflect these were two of the strongest performers for and portfolio construction techniques. attributes. the fiscal year with Our "EQV" (continued) ======================================== ======================================== ======================================== PORTFOLIO COMPOSITION TOP FIVE COUNTRIES* TOP 10 EQUITY HOLDINGS* By sector 1. Hong Kong 19.9% 1. Ezra Holdings Pte Ltd. 2. South Korea 17.8 (Singapore) 2.4% [PIE CHART] 3. Australia 14.3 2. Esprit Holdings Ltd. Consumer Staples 11.9% 4. China 10.2 (Hong Kong) 2.0 Energy 5.0% 5. Taiwan 6.1 3. Ping An Insurance Materials 4.8% (Group) Co. of China Ltd. - Telecommunication Services 3.8% Total Net Assets $401.60 million Class H (China) 1.9 Health Care 3.3% 4. Keppel Corp. Ltd. of China Money Market Funds Plus Total Number of Holdings* 90 Ltd. (Singapore) 1.9 Other Assets Less Liabilities 8.6% 5. Infosys Technologies Ltd. Financials 19.9% (India) 1.8 Consumer Discretionary 18.3% 6. Brambles Industries Ltd. Industrials 13.5% (Australia) 1.8 Information Technology 13.4% 7. Philippine Long Distance Telephone Co. (Philippines) 1.8 The Fund's holdings are subject to change, and there is no assurance that the 8. Hon Hai Precision Industry Fund will continue to hold any particular security. Co., Ltd. (Taiwan) 1.8 9. Cheung Kong (Holdings) Ltd. *Excluding money market fund holdings. (Hong Kong) 1.7 10. Hyundai Department Store Co., Ltd. (South Korea) 1.7 ======================================== ======================================== ======================================== 5 AIM Asia Pacific Growth Fund equities benefiting from a growth surge On a sector basis, every sector we We welcome new shareholders who propelled by declining interest rates. invested in during the reporting period invested in the Fund during the fiscal India's stock market also rallied delivered double-digit returns, year and thank all our shareholders for strongly with foreign inflows continuing outperforming the style-specific index. your continued investment in AIM Asia to bolster its stock market. In Taiwan, Our lack of exposure to the utilities Pacific Growth Fund. however, relations with mainland China, sector, however, detracted from further problems with retail credit and comparative results. Despite being THE VIEWS AND OPINIONS EXPRESSED IN slowing technology exports led to underweight the strong energy sector, MANAGEMENT'S DISCUSSION OF FUND mid-period volatility. the Fund's largest holding, PERFORMANCE ARE THOSE OF A I M ADVISORS, Singapore-based EZRA HOLDINGS, enabled INC. THESE VIEWS AND OPINIONS ARE The overall quality of the portfolio us to significantly outperform the SUBJECT TO CHANGE AT ANY TIME BASED ON and the attractiveness of individual style-specific index in this sector. FACTORS SUCH AS MARKET AND ECONOMIC securities largely explained the Fund's EZRA's profit margins continued to CONDITIONS. THESE VIEWS AND OPINIONS MAY strong absolute and relative strengthen, and the company benefited NOT BE RELIED UPON AS INVESTMENT ADVICE performance. Strong stock selection in from its shipping fleet expansion. In OR RECOMMENDATIONS, OR AS AN OFFER FOR A Australia, Hong Kong, Singapore and addition, strong pricing power led to PARTICULAR SECURITY. THE INFORMATION IS Taiwan was a major contributor to Ezra to raise charter rates as well. NOT A COMPLETE ANALYSIS OF EVERY ASPECT outperformance relative to the OF ANY MARKET, COUNTRY, INDUSTRY, style-specific benchmark. Although From a positioning perspective, the SECURITY OR THE FUND. STATEMENTS OF FACT significantly underweight Australian Fund remained overweight in the consumer ARE FROM SOURCES CONSIDERED RELIABLE, equities (we found stronger growth discretionary and consumer staples BUT A I M ADVISORS, INC. MAKES NO opportunities elsewhere in the region), sectors. Both sectors provided a rich REPRESENTATION OR WARRANTY AS TO THEIR strong stock selection in Australian source of high quality investment COMPLETENESS OR ACCURACY. ALTHOUGH materials stocks led to the Fund almost opportunities that continued to benefit HISTORICAL PERFORMANCE IS NO GUARANTEE doubling index return in this market. from consumer growth in Asia. We believe OF FUTURE RESULTS, THESE INSIGHTS MAY that domestic demand is becoming a HELP YOU UNDERSTAND OUR INVESTMENT A combination of favorable stock sustainable and important growth MANAGEMENT PHILOSOPHY. selection and an overweight exposure to driver for the region's economies, and the strong Chinese market relative to we positioned the Fund accordingly. See important Fund and index the style-specific index contributed disclosures on the inside front cover. positively as well. PING AN INSURANCE Foreign exchange was another COMPANY OF CHINA, a leading Chinese contributor to Fund performance with our Shuxin Cao life, property and casualty insurer, was exposure to the Korean won adding value [CAO Chartered Financial a top contributor to Fund performance. to our overall return. Because we do not PHOTO] Analyst, portfolio manager, Operating in a largely under-penetrated typically hedge currencies--generally we is co-manager of AIM Asia market, this company has increased its buy stocks in their local currency and Pacific Growth Fund. He market share significantly. High then translate that value back into joined AIM in 1997. Mr. quality, innovative management, combined dollars--foreign currency appreciation Cao graduated from Tianjin Foreign with potential growth prospects, provided a boost to Fund performance. Language Institute with a B.A. in continue to keep us optimistic about the English. He also earned a M.B.A. from stock. Stock specific detractors included Texas A&M University and is a certified TECHTRONIC INDUSTRIES (Hong public accountant. Despite a relatively volatile Kong/household appliances), CHARM E&T Taiwanese market environment, our (South Korea/industrials) and OPTIMAX bottom-up stock selection process TECHNOLOGY (Taiwan/information Barrett K. Sides allowed us to produce double-digit gains technology). The Fund held relatively [SIDES Senior portfolio manager, in this market, outperforming the style- small exposures to these stocks, which PHOTO] is co-manager of AIM Asia specific index. One standout holding was we sold early in the fiscal year. Pacific Growth Fund. He large-cap contract manufacturing company Additionally, although the Fund's cash joined AIM in 1990. Mr. HON HAI PRECISION. Over the fiscal year, position was relatively in line with Sides graduated with a the company produced a series of historical levels, not being fully B.S. in economics from Bucknell earnings surprises. Additionally, the invested in the strong Asian equity University. He also earned an M.B.A. in company was awarded new contracts in its markets detracted from relative returns. international business from the core manufacturing competencies of PCs, University of St. Thomas. handsets, consumer electronics and MP3 IN CLOSING players. This led to a favorable boost Assisted by the Asia Pacific/Latin in the company's stock price. During the fiscal year, the Fund America Team experienced double-digit returns. It Select holdings in Korea and a lack would be imprudent for us to suggest of exposure to certain strong-performing that such a level of performance is index stocks in India prevented the Fund sustainable over the long term. from out-performing the style-specific Regardless of macro-economic trends, the index in these markets. Over the period, Fund strives to maintain a disciplined we trimmed our exposure in India strategy of selecting attractive (because of valuation consideration) and investment opportunities based on its Korea (because of slowing growth) moving "EQV" (Earnings, Quality and Valuation) FOR A PRESENTATION OF YOUR FUND'S LONG- assets into more reasonably priced investment strategy. TERM PERFORMANCE, PLEASE SEE PAGES 8 AND 9. quality growth opportunities elsewhere across the region. 6 AIM Asia Pacific Growth Fund CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE mate the expenses that you paid over the THE HYPOTHETICAL ACCOUNT VALUES AND period. Simply divide your account value EXPENSES MAY NOT BE USED TO ESTIMATE THE As a shareholder of the Fund, you incur by $1,000 (for example, an $8,600 ACTUAL ENDING ACCOUNT BALANCE OR two types of costs: (1) transaction account value divided by $1,000 = 8.6), EXPENSES YOU PAID FOR THE PERIOD. YOU costs, which may include sales charges then multiply the result by the number MAY USE THIS INFORMATION TO COMPARE THE (loads) on purchase payments or in the table under the heading entitled ONGOING COSTS OF INVESTING IN THE FUND contingent deferred sales charges on "Actual Expenses Paid During Period" to AND OTHER FUNDS. TO DO SO, COMPARE THIS redemptions, and redemption fees, if estimate the expenses you paid on your 5% HYPOTHETICAL EXAMPLE WITH THE 5% any; and (2) ongoing costs, including account during this period. HYPOTHETICAL EXAMPLES THAT APPEAR IN THE management fees; distribution and/or SHAREHOLDER REPORTS OF THE OTHER FUNDS. service (12b-1) fees; and other Fund HYPOTHETICAL EXAMPLE FOR expenses. This example is intended to COMPARISON PURPOSES Please note that the expenses shown help you understand your ongoing costs in the table are meant to highlight your (in dollars) of investing in the Fund The table below also provides ongoing costs only and do not reflect and to compare these costs with ongoing information about hypothetical account any transaction costs, such as sales costs of investing in other mutual values and hypothetical expenses based charges (loads) on purchase payments, funds. The example is based on an on the Fund's actual expense ratio and contingent deferred sales charges on investment of $1,000 invested at the an assumed rate of return of 5% per year redemptions, and redemption fees, if beginning of the period and held for the before expenses, which is not the Fund's any. Therefore, the hypothetical entire period May 1, 2006, through actual return. The Fund's actual information is useful in comparing October 31, 2006. cumulative total returns at net asset ongoing costs only, and will not help value after expenses for the six months you determine the relative total costs ACTUAL EXPENSES ended October 31, 2006, appear in the of owning different funds. In addition, table "Cumulative Total Returns" on if these transaction costs were The table below provides information page 9. included, your costs would have been about actual account values and actual higher. expenses. You may use the information in this table, together with the amount you invested, to esti- ==================================================================================================================================== ACTUAL HYPOTHETICAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2,3) (10/31/06) PERIOD(2,4) RATIO A $1,000.00 $1,036.80 $ 9.29 $1,016.08 $ 9.20 1.81% B 1,000.00 1,032.40 13.11 1,012.30 12.98 2.56 C 1,000.00 1,032.60 13.12 1,012.30 12.98 2.56 (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value after expenses for the six months ended October 31, 2006, appear in the table "Cumulative Total Returns" on page 9. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. Effective October 1, 2006, the contractual custodian fee rates were reduced. The annualized expense ratios restated as if the new terms of contract had been in effect throughout the entire most recent fiscal half year are 1.75%, 2.50% and 2.50% for Class A, B and C shares, respectively. (3) The actual expenses paid restated as if the change discussed above had been in effect throughout the entire most recent fiscal half year are $8.98, $12.81, and $12.81 for Class A, B and C shares, respectively. (4) The hypothetical expenses paid restated as if the change discussed above had been in effect throughout the entire most recent fiscal half year are $8.89, $12.68, and $12.68 for Class A, B and C shares, respectively. ==================================================================================================================================== 7 AIM Asia Pacific Growth Fund Your Fund's long-term performance RESULTS OF A $10,000 INVESTMENT Index data from 10/31/97, Fund data from 11/03/97 Past performance cannot guarantee This chart, which is a logarithmic comparable future results. chart, presents the fluctuations in the value of the Fund and its indexes. We The data shown in the chart include believe that a logarithmic chart is more reinvested distributions, applicable effective than other types of charts in sales charges, Fund expenses and illustrating changes in value during the management fees. Results for Class B early years shown in the chart. The shares are calculated as if a vertical axis, the one that indicates hypothetical shareholder had liquidated the dollar value of an investment, is his entire investment in the Fund at the constructed with each segment close of the reporting period and paid representing a percent change in the the applicable contingent deferred sales value of the investment. In this chart, charges. Index results include each segment represents a doubling, or reinvested dividends, but they do not 100% change, in the value of the reflect sales charges. Performance of an investment. In other words, the space index of funds reflects fund expenses between $10,000 and $20,000 is the same and management fees; performance of a size as the space between $20,000 and market index does not. Performance shown $40,000, and so on. in the chart and table(s) 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. 8 [MOUNTAIN CHART] <Table> <Caption> AIM ASIA AIM ASIA AIM ASIA LIPPER PACIFIC PACIFIC GROWTH PACIFIC GROWTH PACIFIC GROWTH REGION EX- FUND-CLASS A FUND-CLASS B FUND-CLASS C MSCI EAFE JAPAN FUNDS DATE SHARES SHARES SHARES INDEX INDEX 10/31/97 $10000 $10000 11/97 $8401 $8890 $8890 9898 9650 12/97 8174 8650 8650 9984 9400 1/98 7834 8280 8290 10441 8511 2/98 9346 9879 9880 11111 9823 3/98 9167 9690 9690 11453 9751 4/98 8713 9199 9200 11544 9170 5/98 7759 8189 8190 11488 8065 6/98 6814 7189 7180 11575 7196 7/98 6682 7039 7030 11692 7014 8/98 5633 5939 5920 10244 6164 9/98 6474 6809 6800 9929 6787 10/98 7267 7629 7610 10965 7760 11/98 7475 7848 7820 11526 8133 12/98 7477 7848 7820 11981 8185 1/99 7305 7668 7640 11946 7981 2/99 7201 7558 7540 11661 7790 3/99 7714 8078 8061 12148 8516 4/99 9138 9580 9553 12640 9786 5/99 9395 9841 9813 11989 9562 6/99 10867 11372 11345 12456 11093 7/99 10459 10932 10914 12827 11082 8/99 10440 10902 10884 12873 11339 9/99 9946 10371 10353 13003 10767 10/99 10232 10662 10642 13490 11026 11/99 11628 12114 12085 13959 12606 12/99 12560 13074 13045 15212 14314 1/00 12085 12574 12544 14245 14151 2/00 13282 13815 13786 14628 14382 3/00 15126 15707 15689 15196 14927 4/00 13502 14016 14007 14396 13032 5/00 12447 12914 12906 14044 12199 6/00 13321 13805 13798 14594 13150 7/00 12456 12915 12906 13982 12397 8/00 12419 12864 12856 14103 12459 9/00 11183 11573 11564 13416 11173 10/00 10167 10511 10502 13099 10169 11/00 9872 10211 10202 12608 9678 12/00 9743 10065 10065 13056 9617 1/01 10810 11160 11160 13050 10806 2/01 10201 10527 10528 12071 10249 3/01 9123 9402 9402 11267 9082 4/01 9685 9985 9985 12050 9401 5/01 9772 10076 10066 11624 9401 6/01 9600 9885 9885 11149 9206 7/01 9285 9554 9554 10946 8850 8/01 8731 8982 8981 10669 8553 9/01 7797 8017 8017 9588 7334 10/01 8188 8419 8409 9834 7669 11/01 8712 8951 8951 10196 8605 12/01 9179 9422 9413 10257 9174 1/02 9407 9653 9645 9712 9537 2/02 9465 9713 9695 9780 9645 3/02 9931 10185 10167 10356 10286 4/02 9969 10225 10208 10377 10359 5/02 9921 10165 10147 10509 10308 6/02 9502 9733 9715 10090 9790 7/02 9092 9311 9294 9094 9352 8/02 8882 9080 9062 9074 9127 9/02 8044 8227 8208 8099 8124 10/02 8130 8307 8289 8534 8344 11/02 8454 8629 8611 8922 8887 12/02 8187 8358 8339 8622 8377 1/03 8339 8508 8490 8262 8437 2/03 8177 8337 8320 8072 8091 3/03 7796 7945 7928 7914 7714 4/03 8063 8216 8199 8689 8117 5/03 8654 8819 8792 9216 8842 6/03 9178 9341 9304 9439 9389 7/03 9712 9883 9847 9667 10064 8/03 10493 10667 10640 9900 10776 9/03 10646 10828 10791 10206 10912 10/03 11513 11692 11656 10842 11793 11/03 11522 11703 11666 11083 11701 12/03 12266 12446 12409 11949 12571 1/04 12627 12808 12761 12118 13080 2/04 13066 13250 13202 12397 13489 3/04 12913 13079 13041 12467 13228 4/04 12236 12396 12358 12185 12622 5/04 12112 12266 12217 12211 12390 6/04 11807 11945 11905 12494 12276 7/04 11655 11784 11745 12088 12003 8/04 12207 12336 12297 12142 12503 9/04 12731 12858 12809 12459 13012 10/04 13074 13200 13151 12884 13201 11/04 14036 14165 14106 13764 14339 12/04 14493 14617 14569 14368 14826 1/05 14550 14667 14620 14104 14904 2/05 15321 15440 15383 14714 15702 3/05 14749 14847 14800 14344 15051 4/05 14673 14766 14720 14007 14930 5/05 14768 14857 14801 14014 15403 6/05 15226 15308 15263 14200 15738 7/05 15960 16041 15986 14635 16837 8/05 16046 16112 16056 15005 16743 9/05 16723 16786 16729 15673 17792 10/05 15628 15671 15623 15215 16809 11/05 16658 16696 16639 15587 18132 12/05 17496 17524 17466 16313 19212 1/06 19021 19035 18966 17314 20594 2/06 19107 19114 19048 17276 20464 3/06 19923 19919 19844 17845 21181 4/06 21112 21096 21023 18698 22310 5/06 19721 19698 19623 17971 20535 6/06 19490 19455 19381 17970 20271 7/06 19509 19455 19391 18148 20294 8/06 20124 20059 19984 18647 20932 9/06 20718 20632 20568 18676 21732 10/06 21897 21941 21702 19402 22573 </Table> SOURCE: LIPPER INC. AIM Asia Pacific Growth Fund ======================================== ======================================== ======================================== AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS As of 10/31/06, including applicable As of 9/30/06, the most recent calendar 6 months ended 10/31/06, excluding sales charges quarter-end, including applicable sales applicable sales charges charges CLASS A SHARES Class A Shares 3.68% Inception (11/3/97) 9.11% CLASS A SHARES Class B Shares 3.24 5 Years 20.37 Inception (11/3/97) 8.53% Class C Shares 3.26 1 Year 32.39 5 Years 20.21 ======================================== 1 Year 17.08 CLASS B SHARES Inception (11/3/97) 9.13% CLASS B SHARES 5 Years 20.75 Inception (11/3/97) 8.55% 1 Year 33.99 5 Years 20.63 1 Year 17.92 CLASS C SHARES Inception (11/3/97) 9.00% CLASS C SHARES 5 Years 20.88 Inception (11/3/97) 8.43% 1 Year 37.92 5 Years 20.73 1 Year 21.94 ======================================== ======================================== THE PERFORMANCE DATA QUOTED REPRESENT CLASS A SHARE PERFORMANCE REFLECTS A REDEMPTION FEE OF 2% WILL BE PAST PERFORMANCE AND CANNOT GUARANTEE THE MAXIMUM 5.50% SALES CHARGE, AND IMPOSED ON CERTAIN REDEMPTIONS OR COMPARABLE FUTURE RESULTS; CURRENT CLASS B AND CLASS C SHARE PERFORMANCE EXCHANGES OUT OF THE FUND WITHIN 30 DAYS PERFORMANCE MAY BE LOWER OR HIGHER. REFLECTS THE APPLICABLE CONTINGENT OF PURCHASE. EXCEPTIONS TO THE PLEASE VISIT AIMinvestments.com FOR THE DEFERRED SALES CHARGE (CDSC) FOR THE REDEMPTION FEE ARE LISTED IN THE MOST RECENT MONTH-END PERFORMANCE. PERIOD INVOLVED. THE CDSC ON CLASS B FUND'S PROSPECTUS. PERFORMANCE FIGURES REFLECT REINVESTED SHARES DECLINES FROM 5% BEGINNING AT THE DISTRIBUTIONS, CHANGES IN NET ASSET TIME OF PURCHASE TO 0% AT THE BEGINNING HAD THE ADVISOR NOT WAIVED FEES VALUE AND THE EFFECT OF THE MAXIMUM OF THE SEVENTH YEAR. THE CDSC ON CLASS C AND/OR REIMBURSED EXPENSES, PERFORMANCE SALES CHARGE UNLESS OTHERWISE STATED. SHARES IS 1% FOR THE FIRST YEAR AFTER WOULD HAVE BEEN LOWER. INVESTMENT RETURN AND PRINCIPAL VALUE PURCHASE. WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. 9 AIM Asia Pacific Growth Fund APPROVAL OF INVESTMENT ADVISORY AGREEMENT The Board of Trustees of AIM services to be provided by AIM under the Board is meeting periodically with such International Mutual Funds (the "Board") Advisory Agreement was appropriate and Fund's portfolio managers and/or other oversees the management of AIM Asia that AIM currently is providing services investment personnel and believes that Pacific Growth Fund (the "Fund") and, as in accordance with the terms of the such individuals are competent and able required by law, determines annually Advisory Agreement. to continue to carry out their whether to approve the continuance of responsibilities under the Advisory the Fund's advisory agreement with A I M o The quality of services to be provided Agreement. Advisors, Inc. ("AIM"). Based upon the by AIM. The Board reviewed the recommendation of the Investments credentials and experience of the o Overall performance of AIM. The Board Committee of the Board, at a meeting officers and employees of AIM who will considered the overall performance of held on June 27, 2006, the Board, provide investment advisory services to AIM in providing investment advisory and including all of the independent the Fund. In reviewing the portfolio administrative services to the trustees, approved the continuance of qualifications of AIM to provide Fund and concluded that such performance the advisory agreement (the "Advisory investment advisory services, the Board was satisfactory. Agreement") between the Fund and AIM for considered such issues as AIM's another year, effective July 1, 2006. portfolio and product review process, o Fees relative to those of clients of various back office support functions AIM with comparable investment The Board considered the factors provided by AIM and AIM's equity and strategies. The Board noted that AIM discussed below in evaluating the fixed income trading operations. Based does not serve as an advisor to other fairness and reasonableness of the on the review of these and other mutual funds or other clients with Advisory Agreement at the meeting on factors, the Board concluded that the investment strategies comparable to June 27, 2006 and as part of the Board's quality of services to be provided by those of the Fund. ongoing oversight of the Fund. In their AIM was appropriate and that AIM deliberations, the Board and the currently is providing satisfactory o Fees relative to those of comparable independent trustees did not identify services in accordance with the terms of funds with other advisors. The Board any particular factor that was the Advisory Agreement. reviewed the advisory fee rate for the controlling, and each trustee attributed Fund under the Advisory Agreement. The different weights to the various o The performance of the Fund relative Board compared effective contractual factors. to comparable funds. The Board reviewed advisory fee rates at a common asset the performance of the Fund during the level at the end of the past calendar One responsibility of the past one, three and five calendar years year and noted that the Fund's rate was independent Senior Officer of the Fund against the performance of funds advised comparable to the median rate of the is to manage the process by which the by other advisors with investment funds advised by other advisors with Fund's proposed management fees are strategies comparable to those of the investment strategies comparable to negotiated to ensure that they are Fund. The Board noted that the Fund's those of the Fund that the Board negotiated in a manner which is at arms' performance in such periods was below reviewed. The Board noted that AIM has length and reasonable. To that end, the the median performance of such agreed to waive advisory fees of the Senior Officer must either supervise a comparable funds. Based on this review Fund, as discussed below. Based on this competitive bidding process or prepare and after taking account of all of the review, the Board concluded that the an independent written evaluation. The other factors that the Board considered advisory fee rate for the Fund under the Senior Officer has recommended an in determining whether to continue the Advisory Agreement was fair and independent written evaluation in lieu Advisory Agreement for the Fund, the reasonable. of a competitive bidding process and, Board concluded that no changes should upon the direction of the Board, has be made to the Fund and that it was not o Expense limitations and fee waivers. prepared such an independent written necessary to change the Fund's portfolio The Board noted that AIM has evaluation. Such written evaluation also management team at this time. Although contractually agreed to waive advisory considered certain of the factors the independent written evaluation of fees of the Fund through June 30, 2007 discussed below. In addition, as the Fund's Senior Officer (discussed to the extent necessary so that the discussed below, the Senior Officer made below) only considered Fund performance advisory fees payable by the Fund do not a recommendation to the Board in through the most recent calendar year, exceed a specified maximum advisory fee connection with such written evaluation. the Board also reviewed more recent Fund rate, which maximum rate includes performance, which did not change their breakpoints and is based on net asset The discussion below serves as a conclusions. levels. The Board considered the summary of the Senior Officer's contractual nature of this fee waiver independent written evaluation and o The performance of the Fund relative and noted that it remains in effect recommendation to the Board in to indices. The Board reviewed the until June 30, 2007. The Board connection therewith, as well as a performance of the Fund during the past considered the effect this fee waiver discussion of the material factors and one, three and five calendar years would have on the Fund's estimated the conclusions with respect thereto against the performance of the Lipper expenses and concluded that the levels that formed the basis for the Board's Pacific-Ex Japan Fund Index. The Board of fee waivers/expense limitations for approval of the Advisory Agreement. noted that the Fund's performance in the Fund were fair and reasonable. After consideration of all of the such periods was below the performance factors below and based on its informed of such Index. Based on this review and o Breakpoints and economies of scale. business judgment, the Board determined after taking account of all of the other The Board reviewed the structure of the that the Advisory Agreement is in the factors that the Board considered in Fund's advisory fee under the Advisory best interests of the Fund and its determining whether to continue the Agreement, noting that it includes one shareholders and that the compensation Advisory Agreement for the Fund, the breakpoint. The Board reviewed the level to AIM under the Advisory Agreement is Board concluded that no changes should of the Fund's advisory fees, and noted fair and reasonable and would have been be made to the Fund and that it was not that such fees, as a percentage of the obtained through arm's length necessary to change the Fund's portfolio Fund's net assets, would decrease as net negotiations. management team at this time. Although assets increase because the Advisory the independent written evaluation of Agreement includes a breakpoint. The Unless otherwise stated, information the Fund's Senior Officer (discussed Board noted that, due to the Fund's presented below is as of June 27, 2006 below) only considered Fund performance asset levels at the end of the past and does not reflect any changes that through the most recent calendar year, calendar year and the way in which the may have occurred since June 27, 2006, the Board also reviewed more recent Fund advisory fee breakpoints have been including but not limited to changes to performance, which did not change their structured, the Fund has yet to benefit the Fund's performance, advisory fees, conclusions. from the breakpoint. The Board noted expense limitations and/or fee waivers. that AIM has contractually agreed to o Meetings with the Fund's portfolio waive advisory fees of the Fund through o The nature and extent of the advisory managers and investment personnel. With June 30, 2007 to the extent necessary so services to be provided by AIM. The respect to the Fund, the that the advisory fees payable by the Board reviewed the services to be Fund do not provided by AIM under the Advisory Agreement. Based on such review, the Board concluded that the range of (continued) 10 AIM Asia Pacific Growth Fund exceed a specified maximum advisory fee o Profitability of AIM and its o Other factors and current trends. The rate, which maximum rate includes affiliates. The Board reviewed Board considered the steps that AIM and breakpoints and is based on net asset information concerning the profitability its affiliates have taken over the last levels. The Board concluded that the of AIM's (and its affiliates') several years, and continue to take, in Fund's fee levels under the Advisory investment advisory and other activities order to improve the quality and Agreement therefore would reflect and its financial condition. The Board efficiency of the services they provide economies of scale at higher asset considered the overall profitability of to the Funds in the areas of investment levels and that it was not necessary to AIM, as well as the profitability of AIM performance, product line change the advisory fee breakpoints in in connection with managing the Fund. diversification, distribution, fund the Fund's advisory fee schedule. The Board noted that AIM's operations operations, shareholder services and remain profitable, although increased compliance. The Board concluded that o Investments in affiliated money market expenses in recent years have reduced these steps taken by AIM have improved, funds. The Board also took into account AIM's profitability. Based on the review and are likely to continue to improve, the fact that uninvested cash and cash of the profitability of AIM's and its the quality and efficiency of the collateral from securities lending affiliates' investment advisory and services AIM and its affiliates provide arrangements, if any (collectively, other activities and its financial to the Fund in each of these areas, and "cash balances") of the Fund may be condition, the Board concluded that the support the Board's approval of the invested in money market funds advised compensation to be paid by the Fund to continuance of the Advisory Agreement by AIM pursuant to the terms of an SEC AIM under its Advisory Agreement was not for the Fund. exemptive order. The Board found that excessive. the Fund may realize certain benefits upon investing cash balances in AIM o Benefits of soft dollars to AIM. The advised money market funds, including a Board considered the benefits realized higher net return, increased liquidity, by AIM as a result of brokerage increased diversification or decreased transactions executed through "soft transaction costs. The Board also found dollar" arrangements. Under these that the Fund will not receive reduced arrangements, brokerage commissions paid services if it invests its cash balances by the Fund and/or other funds advised in such money market funds. The Board by AIM are used to pay for research and noted that, to the extent the Fund execution services. This research may be invests uninvested cash in affiliated used by AIM in making investment money market funds, AIM has voluntarily decisions for the Fund. The Board agreed to waive a portion of the concluded that such arrangements were advisory fees it receives from the Fund appropriate. attributable to such investment. The Board further determined that the o AIM's financial soundness in light of proposed securities lending program the Fund's needs. The Board considered and related procedures with respect to whether AIM is financially sound and has the lending Fund is in the best the resources necessary to perform its interests of the lending Fund and its obligations under the Advisory respective shareholders. The Board Agreement, and concluded that AIM has therefore concluded that the investment the financial resources necessary to of cash collateral received in fulfill its obligations under the connection with the securities lending Advisory Agreement. program in the money market funds according to the procedures is in the o Historical relationship between the best interests of the lending Fund and Fund and AIM. In determining whether to its respective shareholders. continue the Advisory Agreement for the Fund, the Board also considered the o Independent written evaluation and prior relationship between AIM and the recommendations of the Fund's Senior Fund, as well as the Board's knowledge Officer. The Board noted that, upon of AIM's operations, and concluded that their direction, the Senior Officer of it was beneficial to maintain the the Fund, who is independent of AIM and current relationship, in part, because of AIM's affiliates, had prepared an such knowledge. The Board also reviewed independent written evaluation in order the general nature of the non-investment to assist the Board in determining the advisory services currently performed by reasonableness of the proposed AIM and its affiliates, such as management fees of the AIM Funds, administrative, transfer agency and including the Fund. The Board noted that distribution services, and the fees the Senior Officer's written evaluation received by AIM and its affiliates for had been relied upon by the Board in performing such services. In addition to this regard in lieu of a competitive reviewing such services, the trustees bidding process. In determining whether also considered the organizational to continue the Advisory Agreement for structure employed by AIM and its the Fund, the Board considered the affiliates to provide those services. Senior Officer's written evaluation and Based on the review of these and other the recommendation made by the Senior factors, the Board concluded that AIM Officer to the Board that the Board and its affiliates were qualified to consider whether the advisory fee continue to provide non-investment waivers for certain equity AIM Funds, advisory services to the Fund, including including the Fund, should be administrative, transfer agency and simplified. The Board concluded that it distribution services, and that AIM and would be advisable to consider this its affiliates currently are providing issue and reach a decision prior to the satisfactory non-investment advisory expiration date of such advisory fee services. waivers. 11 AIM Asia Pacific Growth Fund SCHEDULE OF INVESTMENTS October 31, 2006 <Table> <Caption> SHARES VALUE - ------------------------------------------------------------------------ FOREIGN COMMON STOCKS & OTHER EQUITY INTERESTS-91.41% AUSTRALIA-14.27% Australia and New Zealand Banking Group Ltd. (Diversified Banks)(a) 178,000 $ 3,986,517 - ------------------------------------------------------------------------ Babcock & Brown Ltd. (Other Diversified Financial Services)(a) 125,000 2,105,908 - ------------------------------------------------------------------------ BHP Billiton Ltd. (Diversified Metals & Mining)(a) 315,700 6,716,340 - ------------------------------------------------------------------------ Bradken Ltd. (Construction & Farm Machinery & Heavy Trucks)(a) 867,625 4,100,602 - ------------------------------------------------------------------------ Brambles Industries Ltd. (Diversified Commercial & Professional Services)(a)(b) 749,800 7,217,630 - ------------------------------------------------------------------------ Computershare Ltd. (Data Processing & Outsourced Services)(a) 713,000 4,246,419 - ------------------------------------------------------------------------ CSL Ltd. (Biotechnology)(a) 144,100 6,251,474 - ------------------------------------------------------------------------ QBE Insurance Group Ltd. (Property & Casualty Insurance)(a)(b) 248,000 4,722,241 - ------------------------------------------------------------------------ Ramsay Health Care Ltd. (Health Care Facilities)(a)(b) 465,700 3,867,185 - ------------------------------------------------------------------------ Toll Holdings Ltd. (Trucking) 402,200 4,826,440 - ------------------------------------------------------------------------ Woolworths Ltd. (Food Retail)(a) 207,000 3,310,425 - ------------------------------------------------------------------------ Zinifex Ltd. (Diversified Metals & Mining)(a) 503,500 5,978,567 ======================================================================== 57,329,748 ======================================================================== CHINA-10.24% Celestial NutriFoods Ltd. (Packaged Foods & Meats)(a)(c) 2,582,000 2,825,324 - ------------------------------------------------------------------------ China Green (Holdings) Ltd. (Agricultural Products) 1,163,000 506,939 - ------------------------------------------------------------------------ China Medical Technologies, Inc.-ADR (Health Care Equipment)(b)(c) 118,099 2,999,715 - ------------------------------------------------------------------------ China Mengniu Dairy Co. Ltd. (Packaged Foods & Meats) 1,455,000 2,645,386 - ------------------------------------------------------------------------ China Petroleum and Chemical Corp. (Sinopec)- Class H (Integrated Oil & Gas)(a) 4,304,000 2,985,152 - ------------------------------------------------------------------------ FU JI Food & Catering Services (Restaurants) 2,648,000 4,650,990 - ------------------------------------------------------------------------ Industrial and Commercial Bank of China-Class H (Diversified Banks) (Acquired 10/20/2006; Cost $333,330)(c)(d) 837,000 374,525 - ------------------------------------------------------------------------ Longcheer Holdings Ltd. (Integrated Telecommunication Services)(a) 4,501,000 2,880,944 - ------------------------------------------------------------------------ Mingyuan Medicare Development Co. Ltd. (Technology Distributors)(a) 19,600,000 1,763,909 - ------------------------------------------------------------------------ New Oriental Education & Technology Group, Inc.-ADR (Education Services)(c) 6,691 161,253 - ------------------------------------------------------------------------ Ping An Insurance (Group) Co. of China Ltd.- Class H (Life & Health Insurance)(a) 2,172,000 7,545,794 - ------------------------------------------------------------------------ </Table> <Table> SHARES VALUE - ------------------------------------------------------------------------ <Caption> CHINA-(CONTINUED) SIM Technology Group Ltd. (Communications Equipment)(a) 5,478,000 $ 1,850,508 - ------------------------------------------------------------------------ Xiamen International Port Co. Ltd.-Class H (Marine Ports & Services)(a)(c) 13,212,000 3,073,331 - ------------------------------------------------------------------------ Xinyi Glass Holding Co. Ltd. (Auto Parts & Equipment)(a) 7,500,000 2,563,187 - ------------------------------------------------------------------------ Xiwang Sugar Holdings Co. Ltd. (Packaged Foods & Meats)(a) 4,280,000 2,249,022 - ------------------------------------------------------------------------ Yantai North Andre Juice Co. Ltd.-Class H (Packaged Foods & Meats)(a) 22,125,000 2,048,549 ======================================================================== 41,124,528 ======================================================================== HONG KONG-19.94% AAC Acoustic Technology Holdings Inc. (Communications Equipment)(c) 1,979,400 2,300,799 - ------------------------------------------------------------------------ ASM Pacific Technology Ltd. (Semiconductor Equipment)(a) 455,000 2,359,246 - ------------------------------------------------------------------------ Champion REIT (Office REIT's) (Acquired 05/16/2006; Cost $1,993,400)(c)(d) 3,000,000 1,488,968 - ------------------------------------------------------------------------ Cheung Kong (Holdings) Ltd. (Real Estate Management & Development)(a) 636,000 6,913,416 - ------------------------------------------------------------------------ China Yurun Food Group Ltd. (Packaged Foods & Meats)(a) 4,158,000 3,634,488 - ------------------------------------------------------------------------ China Yurun Food Group Ltd. (Packaged Foods & Meats) (Acquired 09/23/05; Cost $1,047,054)(a)(d) 2,174,181 1,900,442 - ------------------------------------------------------------------------ CNOOC Ltd.-ADR (Oil & Gas Exploration & Production)(b) 41,700 3,495,294 - ------------------------------------------------------------------------ Dickson Concepts (International) Ltd. (Apparel Retail) 3,149,000 2,984,124 - ------------------------------------------------------------------------ Esprit Holdings Ltd. (Apparel Retail)(a) 841,500 8,144,285 - ------------------------------------------------------------------------ Hengan International Group Co. Ltd. (Personal Products) 2,322,000 5,589,138 - ------------------------------------------------------------------------ Hopewell Holdings Ltd. (Highways & Railtracks) 1,753,000 5,206,797 - ------------------------------------------------------------------------ Hutchison Whampoa Ltd. (Industrial Conglomerates)(a) 611,000 5,416,558 - ------------------------------------------------------------------------ Lee & Man Paper Manufacturing Ltd. (Paper Products)(a) 1,964,000 3,988,845 - ------------------------------------------------------------------------ Li & Fung Ltd. (Distributors)(a) 2,550,200 6,708,585 - ------------------------------------------------------------------------ Paliburg Holdings Ltd. (Hotels, Resorts & Cruise Lines)(a) 83,576,000 3,805,199 - ------------------------------------------------------------------------ Regal Hotels International Holdings Ltd. (Hotels, Resorts & Cruise Lines)(a) 49,680,000 4,849,432 - ------------------------------------------------------------------------ Top Form International Ltd. (Apparel, Accessories & Luxury Goods) 18,154,000 3,594,759 - ------------------------------------------------------------------------ Wing Hang Bank Ltd. (Diversified Banks) 283,000 2,750,964 - ------------------------------------------------------------------------ Yue Yuen Industrial (Holdings) Ltd. (Footwear)(a) 1,636,000 4,950,712 ======================================================================== 80,082,051 ======================================================================== </Table> F-1 AIM Asia Pacific Growth Fund <Table> <Caption> SHARES VALUE - ------------------------------------------------------------------------ INDIA-4.78% Aztecsoft Ltd. (IT Consulting & Other Services) 504,668 $ 1,689,045 - ------------------------------------------------------------------------ Housing Development Finance Corp. Ltd. (Thrifts & Mortgage Finance)(a) 99,300 3,220,183 - ------------------------------------------------------------------------ Infosys Technologies Ltd. (IT Consulting & Other Services)(a) 159,056 7,391,251 - ------------------------------------------------------------------------ Maruti Udyog Ltd. (Automobile Manufacturers)(a) 192,200 4,124,601 - ------------------------------------------------------------------------ Tata Motors Ltd. (Construction & Farm Machinery & Heavy Trucks)(a) 152,000 2,788,665 ======================================================================== 19,213,745 ======================================================================== INDONESIA-3.24% PT Astra International Tbk (Automobile Manufacturers) 1,914,000 2,820,277 - ------------------------------------------------------------------------ PT Telekomunikasi Indonesia-Series B (Integrated Telecommunication Services)(a) 5,791,500 5,328,755 - ------------------------------------------------------------------------ PT United Tractors Tbk (Construction & Farm Machinery & Heavy Trucks)(a) 6,741,000 4,844,850 ======================================================================== 12,993,882 ======================================================================== MALAYSIA-2.56% Public Bank Berhad (Diversified Banks) 2,668,800 5,005,141 - ------------------------------------------------------------------------ SP Setia Berhad (Real Estate Management & Development) 4,907,700 5,267,128 ======================================================================== 10,272,269 ======================================================================== PHILIPPINES-1.75% Philippine Long Distance Telephone Co. (Wireless Telecommunication Services)(a) 148,000 7,031,118 ======================================================================== SINGAPORE-5.77% Ezra Holdings Pte Ltd. (Oil & Gas Equipment & Services)(a) 3,872,000 9,736,926 - ------------------------------------------------------------------------ Keppel Corp. Ltd. (Industrial Conglomerates)(a) 742,000 7,514,866 - ------------------------------------------------------------------------ United Overseas Bank Ltd. (Diversified Banks)(a) 520,000 5,906,440 ======================================================================== 23,158,232 ======================================================================== SOUTH KOREA-17.79% Cheil Communications Inc. (Advertising)(a) 13,700 3,015,665 - ------------------------------------------------------------------------ CJ Corp. (Packaged Foods & Meats)(a) 45,160 5,101,435 - ------------------------------------------------------------------------ Daegu Bank (Regional Banks)(a) 289,500 4,779,417 - ------------------------------------------------------------------------ Daesang Corp. (Packaged Foods & Meats)(a)(c) 269,600 3,415,364 - ------------------------------------------------------------------------ Hana Financial Group Inc. (Diversified Banks)(a) 117,157 5,379,730 - ------------------------------------------------------------------------ Hynix Semiconductor Inc. (Semiconductors)(c) 40,000 1,451,921 - ------------------------------------------------------------------------ Hyundai Department Store Co., Ltd. (Department Stores)(a) 81,790 6,809,241 - ------------------------------------------------------------------------ Hyundai Heavy Industries Co., Ltd. (Construction & Farm Machinery & Heavy Trucks)(a) 17,300 2,530,595 - ------------------------------------------------------------------------ </Table> <Table> SHARES VALUE - ------------------------------------------------------------------------ <Caption> SOUTH KOREA-(CONTINUED) Hyundai Mipo Dockyard Co., Ltd. (Construction & Farm Machinery & Heavy Trucks)(a) 33,940 $ 4,487,405 - ------------------------------------------------------------------------ Hyundai Motor Co. (Automobile Manufacturers) 59,000 4,796,646 - ------------------------------------------------------------------------ Joongang Construction Co., Ltd. (Construction & Engineering)(a) 135,860 2,003,114 - ------------------------------------------------------------------------ Kookmin Bank (Diversified Banks)(a) 61,330 4,860,531 - ------------------------------------------------------------------------ Lotte Confectionery Co., Ltd. (Packaged Foods & Meats)(a) 1,860 2,255,809 - ------------------------------------------------------------------------ NHN Corp. (Internet Software & Services)(a)(c) 21,600 2,137,310 - ------------------------------------------------------------------------ Samsung Electronics Co., Ltd. (Semiconductors)(a) 10,150 6,575,237 - ------------------------------------------------------------------------ Shinsegae Co., Ltd. (Hypermarkets & Super Centers) 4,100 2,362,874 - ------------------------------------------------------------------------ Taegu Department Store Co., Ltd. (Department Stores)(a) 165,880 3,191,618 - ------------------------------------------------------------------------ Techno Semichem Co., Ltd. (Commodity Chemicals)(a) 159,850 2,480,874 - ------------------------------------------------------------------------ Woongjin Coway Co., Ltd. (Housewares & Specialties)(a) 145,500 3,818,901 ======================================================================== 71,453,687 ======================================================================== TAIWAN-6.14% Catcher Technology Co., Ltd. (Computer Storage & Peripherals)(a) 301,516 2,597,694 - ------------------------------------------------------------------------ Delta Electronics Inc. (Electronic Equipment Manufacturers)(a) 525,000 1,481,914 - ------------------------------------------------------------------------ Hon Hai Precision Industry Co., Ltd. (Electronic Manufacturing Services)(a) 1,091,680 7,030,085 - ------------------------------------------------------------------------ Hung Poo Real Estate Development Corp. (Real Estate Management & Development)(a) 2,274,000 2,500,194 - ------------------------------------------------------------------------ MediaTek Inc. (Semiconductors)(a) 645,700 6,261,726 - ------------------------------------------------------------------------ Taiwan Semiconductor Manufacturing Co. Ltd. (Semiconductors)(a) 1,056,677 1,932,217 - ------------------------------------------------------------------------ Wistron Corp. (Computer Hardware)(a) 2,470,542 2,846,413 ======================================================================== 24,650,243 ======================================================================== THAILAND-4.93% Kasikornbank PCL (Diversified Banks)(a) 3,439,000 6,729,430 - ------------------------------------------------------------------------ Siam Commercial Bank PCL (Diversified Banks)(a) 3,686,000 6,530,562 - ------------------------------------------------------------------------ Thai Oil PCL (Oil & Gas Refining & Marketing)(a) 2,432,000 4,037,132 - ------------------------------------------------------------------------ Thai Stanley Electric PCL-Class F (Auto Parts & Equipment)(a) 557,800 2,491,575 ======================================================================== 19,788,699 ======================================================================== Total Foreign Common Stocks & Other Equity Interests (Cost $258,347,426) 367,098,202 ======================================================================== </Table> F-2 AIM Asia Pacific Growth Fund <Table> <Caption> SHARES VALUE - ------------------------------------------------------------------------ MONEY MARKET FUNDS-6.24% Liquid Assets Portfolio-Institutional Class(e) 12,536,110 $ 12,536,110 - ------------------------------------------------------------------------ Premier Portfolio-Institutional Class(e) 12,536,110 12,536,110 ======================================================================== Total Money Market Funds (Cost $25,072,220) 25,072,220 ======================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities loaned)-97.65% (Cost $283,419,646) 392,170,422 ======================================================================== </Table> <Table> SHARES VALUE - ------------------------------------------------------------------------ <Caption> INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED MONEY MARKET FUNDS-4.15% Liquid Assets Portfolio-Institutional Class(e)(f) 8,332,014 $ 8,332,014 - ------------------------------------------------------------------------ STIC Prime Portfolio-Institutional Class(e)(f) 8,332,013 8,332,013 ======================================================================== Total Money Market Funds (purchased with cash collateral from securities loaned) (Cost $16,664,027) 16,664,027 ======================================================================== TOTAL INVESTMENTS-101.80% (Cost $300,083,673) 408,834,449 ======================================================================== OTHER ASSETS LESS LIABILITIES-(1.80)% (7,229,456) ======================================================================== NET ASSETS-100.00% $401,604,993 ________________________________________________________________________ ======================================================================== </Table> Investment Abbreviations: <Table> ADR - American Depositary Receipt REIT - Real Estate Investment Trust </Table> Notes to Schedule of Investments: (a) In accordance with the procedures established by the Board of Trustees, the foreign security is fair valued using adjusted closing market prices. The aggregate value of these securities at October 31, 2006 was $300,129,079, which represented 74.73% of the Fund's Net Assets. See Note 1A. (b) All or a portion of this security was out on loan at October 31, 2006. (c) Non-income producing security. (d) 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 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 value of these securities at October 31, 2006 was $3,763,935, which represented 0.94% of the Fund's Net Assets. Unless otherwise indicated, these securities are not considered to be illiquid. (e) The money market fund and the Fund are affiliated by having the same investment advisor. See Note 3. (f) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 7. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-3 AIM Asia Pacific Growth Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 2006 <Table> ASSETS: Investments, at value (cost $258,347,426)* $367,098,202 - ----------------------------------------------------------- Investments in affiliated money market funds (cost $41,736,247) 41,736,247 =========================================================== Total investments (cost $300,083,673) 408,834,449 =========================================================== Foreign currencies, at value (cost $9,215,177) 9,049,948 - ----------------------------------------------------------- Receivables for: Fund shares sold 1,470,894 - ----------------------------------------------------------- Dividends 902,963 - ----------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 40,808 - ----------------------------------------------------------- Other assets 23,998 =========================================================== Total assets 420,323,060 ___________________________________________________________ =========================================================== LIABILITIES: Payables for: Investments purchased 478,663 - ----------------------------------------------------------- Fund shares reacquired 573,711 - ----------------------------------------------------------- Trustee deferred compensation and retirement plans 50,816 - ----------------------------------------------------------- Collateral upon return of securities loaned 16,664,027 - ----------------------------------------------------------- Accrued distribution fees 149,030 - ----------------------------------------------------------- Accrued trustees' and officer's fees and benefits 1,234 - ----------------------------------------------------------- Accrued transfer agent fees 158,476 - ----------------------------------------------------------- Accrued operating expenses 642,110 =========================================================== Total liabilities 18,718,067 =========================================================== Net assets applicable to shares outstanding $401,604,993 ___________________________________________________________ =========================================================== NET ASSETS CONSIST OF: Shares of beneficial interest $276,497,690 - ----------------------------------------------------------- Undistributed net investment income 1,398,279 - ----------------------------------------------------------- Undistributed net realized gain from investment securities and foreign currencies 15,107,279 - ----------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 108,601,745 =========================================================== $401,604,993 ___________________________________________________________ =========================================================== NET ASSETS: Class A $292,770,873 ___________________________________________________________ =========================================================== Class B $ 53,936,103 ___________________________________________________________ =========================================================== Class C $ 54,898,017 ___________________________________________________________ =========================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 12,830,223 ___________________________________________________________ =========================================================== Class B 2,491,797 ___________________________________________________________ =========================================================== Class C 2,545,786 ___________________________________________________________ =========================================================== Class A: Net asset value per share $ 22.82 - ----------------------------------------------------------- Offering price per share (Net asset value of $22.82 divided by 94.50%) $ 24.15 ___________________________________________________________ =========================================================== Class B: Net asset value and offering price per share $ 21.65 ___________________________________________________________ =========================================================== Class C: Net asset value and offering price per share $ 21.56 ___________________________________________________________ =========================================================== </Table> * At October 31, 2006, securities with an aggregate value of $16,003,615 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-4 AIM Asia Pacific Growth Fund STATEMENT OF OPERATIONS For the year ended October 31, 2006 <Table> INVESTMENT INCOME: Dividends (net of foreign withholding tax of $724,239) $ 6,976,795 - ------------------------------------------------------------------------- Dividends from affiliated money market funds (includes securities lending income of $156,996) 1,146,693 - ------------------------------------------------------------------------- Interest 7,026 ========================================================================= Total investment income 8,130,514 ========================================================================= EXPENSES: Advisory fees 3,094,875 - ------------------------------------------------------------------------- Administrative services fees 94,929 - ------------------------------------------------------------------------- Custodian fees 751,393 - ------------------------------------------------------------------------- Distribution fees: Class A 584,163 - ------------------------------------------------------------------------- Class B 474,594 - ------------------------------------------------------------------------- Class C 446,517 - ------------------------------------------------------------------------- Transfer agent fees 1,008,022 - ------------------------------------------------------------------------- Trustees' and officer's fees and benefits 22,401 - ------------------------------------------------------------------------- Other 260,646 ========================================================================= Total expenses 6,737,540 ========================================================================= Less: Fees waived, expenses reimbursed and expense offset arrangements (140,088) ========================================================================= Net expenses 6,597,452 ========================================================================= Net investment income 1,533,062 ========================================================================= REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 44,845,531 - ------------------------------------------------------------------------- Foreign currencies (398,572) ========================================================================= 44,446,959 ========================================================================= Change in net unrealized appreciation (depreciation) of: Investment securities (net of estimated tax on foreign investments of $(353,063) -- Note 1J) 52,456,433 - ------------------------------------------------------------------------- Foreign currencies (24,724) ========================================================================= 52,431,709 ========================================================================= Net gain from investment securities and foreign currencies 96,878,668 ========================================================================= Net increase in net assets resulting from operations $98,411,730 _________________________________________________________________________ ========================================================================= </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-5 AIM Asia Pacific Growth Fund STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2006 and 2005 <Table> <Caption> 2006 2005 - ------------------------------------------------------------------------------------------ OPERATIONS: Net investment income $ 1,533,062 $ 1,237,012 - ------------------------------------------------------------------------------------------ Net realized gain from investment securities and foreign currencies 44,446,959 13,912,360 - ------------------------------------------------------------------------------------------ Change in net unrealized appreciation of investment securities and foreign currencies 52,431,709 13,482,015 ========================================================================================== Net increase in net assets resulting from operations 98,411,730 28,631,387 ========================================================================================== Distributions to shareholders from net investment income: Class A (1,171,757) -- - ------------------------------------------------------------------------------------------ Class B (78,079) -- - ------------------------------------------------------------------------------------------ Class C (64,640) -- ========================================================================================== Decrease in net assets resulting from distributions (1,314,476) -- ========================================================================================== Share transactions-net: Class A 66,639,813 29,437,413 - ------------------------------------------------------------------------------------------ Class B 4,039,615 1,071,326 - ------------------------------------------------------------------------------------------ Class C 15,223,352 12,941,688 ========================================================================================== Net increase in net assets resulting from share transactions 85,902,780 43,450,427 ========================================================================================== Net increase in net assets 183,000,034 72,081,814 ========================================================================================== NET ASSETS: Beginning of year 218,604,959 146,523,145 ========================================================================================== End of year (including undistributed net investment income of $1,398,279 and $1,277,076, respectively) $401,604,993 $218,604,959 __________________________________________________________________________________________ ========================================================================================== </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-6 AIM Asia Pacific Growth Fund NOTES TO FINANCIAL STATEMENTS October 31, 2006 NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Asia Pacific Growth Fund (the "Fund") is a series portfolio of AIM International Mutual Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. 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. The Fund's investment objective is long-term growth of capital. 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 or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are recorded at amortized cost which approximates value. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures. 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 unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. 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. Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the realized and unrealized net F-7 AIM Asia Pacific Growth Fund gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund's net asset value and, accordingly, they reduce the Fund's total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the advisor. 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. COUNTRY DETERMINATION -- For the purposes of making investment selection decisions and presentation in the Schedule of Investments, AIM may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer's securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America unless otherwise noted. D. 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 treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. E. 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 to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. F. 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. G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to taxation. Actual results could differ from those estimates. H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) 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. K. 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. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The Fund could be exposed to risk, which may be in excess of the amount reflected in the Statement of Assets and Liabilities, if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F-8 AIM Asia Pacific Growth Fund NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust 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 based on the annual rate of the Fund's average daily net assets as follows: <Table> <Caption> AVERAGE NET ASSETS RATE - ------------------------------------------------------------------- First $500 million 0.95% - ------------------------------------------------------------------- Over $500 million 0.90% __________________________________________________________________ =================================================================== </Table> Through June 30, 2007, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund (based on the Fund's average daily net assets) do not exceed the annual rate of: <Table> <Caption> AVERAGE NET ASSETS RATE - --------------------------------------------------------------------- First $250 million 0.935% - --------------------------------------------------------------------- Next $250 million 0.91% - --------------------------------------------------------------------- Next $500 million 0.885% - --------------------------------------------------------------------- Next $1.5 billion 0.86% - --------------------------------------------------------------------- Next $2.5 billion 0.835% - --------------------------------------------------------------------- Next $2.5 billion 0.81% - --------------------------------------------------------------------- Next $2.5 billion 0.785% - --------------------------------------------------------------------- Over $10 billion 0.76% ____________________________________________________________________ ===================================================================== </Table> 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 on investments by the Fund in such affiliated money market funds (excluding investments made in affiliated money market funds with cash collateral from securities loaned by the fund). Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors. For the year ended October 31, 2006, AIM waived advisory fees of $72,465. At the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended October 31, 2006, AMVESCAP reimbursed expenses of the Fund in the amount of $2,231. 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. Pursuant to such agreement, for the year ended October 31, 2006, AIM was paid $94,929. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency and shareholder services to the Fund and reimburse AIS for certain expenses incurred by AIS in the course of providing such services. AIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by AIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended October 31, 2006, the Fund paid AIS $1,008,022. The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B and Class C 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 and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% 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 the Rule 12b-1 payments, up to 0.25% of the average daily net assets of the Class A, Class B or Class C shares may be paid to furnish continuing personal shareholder services to 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. National Association of Securities Dealers ("NASD") Rules 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, 2006, the Class A, Class B and Class C shares paid $584,163, $474,594 and $446,517, 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, 2006, ADI advised the Fund that it retained $196,900 in front-end sales commissions from the sale of Class A shares and $3,516, $48,339 and $15,220 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. Certain officers and trustees of the Trust are officers and directors of AIM, AIS and/or ADI. F-9 AIM Asia Pacific Growth Fund NOTE 3--INVESTMENTS IN AFFILIATES The Fund is permitted, pursuant to procedures approved by the Board of Trustees, to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the year ended October 31, 2006. INVESTMENTS OF DAILY AVAILABLE CASH BALANCES: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio- Institutional Class $ 6,845,216 $ 72,143,249 $ (66,452,355) $ -- $12,536,110 $ 494,104 $ -- - ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio- Institutional Class -- 33,938,815 (21,402,705) -- 12,536,110 187,395 -- - ----------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio- Institutional Class 6,845,216 48,337,977 (55,183,193) -- -- 308,198 -- =================================================================================================================================== Subtotal $13,690,432 $154,420,041 $(143,038,253) $ -- $25,072,220 $ 989,697 $ -- ___________________________________________________________________________________________________________________________________ =================================================================================================================================== </Table> INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME* GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio- Institutional Class $ 4,073,251 $ 35,285,123 $ (31,026,360) $ -- $ 8,332,014 $ 78,265 $ -- - ----------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio- Institutional Class 4,073,250 35,285,123 (31,026,360) -- 8,332,013 78,731 -- =================================================================================================================================== Subtotal $ 8,146,501 $ 70,570,246 $ (62,052,720) $ -- $16,664,027 $ 156,996 $ -- =================================================================================================================================== Total Investments in Affiliates $21,836,933 $224,990,287 $(205,090,973) $ -- $41,736,247 $1,146,693 $ -- ___________________________________________________________________________________________________________________________________ =================================================================================================================================== </Table> * Net of compensation to counterparties. NOTE 4--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions, (ii) custodian credits which result from periodic overnight cash balances at the custodian and (iii) a one time custodian fee credit to be used to offset future custodian fees. For the year ended October 31, 2006, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $65,392. NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee and Officer of the Fund who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended October 31, 2006, the Fund paid legal fees of $4,565 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 6--BORROWINGS Pursuant to an exemptive order from the Securities and Exchange Commission, 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. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. 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. F-10 AIM Asia Pacific Growth Fund The Fund is a participant in an uncommitted unsecured revolving 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 credit facility 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 year ended October 31, 2006, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility. Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and AIM, not to exceed the contractually agreed upon rate. NOTE 7--PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities having a market value up to 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 received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. At October 31, 2006, securities with an aggregate value of $16,003,615 were on loan to brokers. The loans were secured by cash collateral of $16,664,027 received by the Fund and subsequently invested in affiliated money market funds. For the year ended October 31, 2006, the Fund received dividends on cash collateral investments of $156,996 for securities lending transactions, which are net of compensation to counterparties. NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the years ended October 31, 2006 and 2005 was as follows: <Table> <Caption> 2006 2005 - -------------------------------------------------------------------------------- Distributions paid from ordinary income $1,314,476 $-- ________________________________________________________________________________ ================================================================================ </Table> TAX COMPONENTS OF NET ASSETS: As of October 31, 2006, the components of net assets on a tax basis were as follows: <Table> <Caption> 2006 - ---------------------------------------------------------------------------- Undistributed ordinary income $ 1,440,560 - ---------------------------------------------------------------------------- Undistributed long-term gain 15,392,940 - ---------------------------------------------------------------------------- Unrealized appreciation -- investments 108,316,084 - ---------------------------------------------------------------------------- Temporary book/tax differences (42,281) - ---------------------------------------------------------------------------- Shares of beneficial interest 276,497,690 ============================================================================ Total net assets $401,604,993 ____________________________________________________________________________ ============================================================================ </Table> The difference between book-basis and tax-basis unrealized appreciation (depreciation) 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 (depreciation) difference is attributable primarily to losses on wash sales. The tax-basis unrealized appreciation on investments amount includes appreciation (depreciation) on foreign currencies of $(149,031). 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 trustee deferral of compensation and retirement plan expenses. The Fund utilized $28,935,489 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund does not have a capital loss carryforward as of October 31, 2006. F-11 AIM Asia Pacific Growth Fund NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2006 was $241,142,490 and $173,959,698, respectively. <Table> <Caption> UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS - ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $114,006,983 - ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (5,541,868) ============================================================================== Net unrealized appreciation of investment securities $108,465,115 ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $300,369,334. </Table> NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions and passive foreign investment companies, on October 31, 2006, undistributed net investment income was decreased by $97,383 and undistributed net realized gain was increased by $97,383. This reclassification had no effect on the net assets of the Fund. NOTE 11--SHARE INFORMATION The Fund currently offers three different classes of shares: Class A, Class B and Class C. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Class B shares and Class C shares are sold with CDSC. Under certain circumstances, Class A shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. <Table> <Caption> CHANGES IN SHARES OUTSTANDING - ---------------------------------------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2006(a) 2005 -------------------------- -------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------------------------- Sold: Class A 6,736,406 $136,891,336 4,405,997 $ 70,360,970 - ---------------------------------------------------------------------------------------------------------------------- Class B 1,086,165 20,943,735 754,546 11,491,560 - ---------------------------------------------------------------------------------------------------------------------- Class C 1,830,093 34,886,344 1,693,546 25,384,096 ====================================================================================================================== Issued as reinvestment of dividends: Class A 57,543 1,028,861 -- -- - ---------------------------------------------------------------------------------------------------------------------- Class B 4,270 72,895 -- -- - ---------------------------------------------------------------------------------------------------------------------- Class C 3,486 59,266 -- -- ====================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 273,040 5,558,140 187,193 2,986,955 - ---------------------------------------------------------------------------------------------------------------------- Class B (286,944) (5,558,140) (196,169) (2,986,955) ====================================================================================================================== Reacquired:(b) Class A (3,768,936) (76,838,524) (2,798,484) (43,910,512) - ---------------------------------------------------------------------------------------------------------------------- Class B (592,965) (11,418,875) (497,986) (7,433,279) - ---------------------------------------------------------------------------------------------------------------------- Class C (1,000,372) (19,722,258) (838,123) (12,442,408) ====================================================================================================================== 4,341,786 $ 85,902,780 2,710,520 $ 43,450,427 ______________________________________________________________________________________________________________________ ====================================================================================================================== </Table> (a) There are three entities that are each record owners of more than 5% of the outstanding shares of the Fund and in the aggregate they own 27% of the outstanding shares of the Fund. ADI has an agreement with these entities to sell Fund shares. The Fund, AIM and/or AIM affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, AIM and/or AIM affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. (b) Amount is net of redemption fees of $32,992, $6,682 and $6,379 for Class A, Class B and Class C shares, respectively, for the year ended October 31, 2006 and $21,867, $5,526 and $3,201 for Class A, Class B and Class C shares, respectively, for the year ended October 31, 2005. NOTE 12--NEW ACCOUNTING STANDARD In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions for FIN 48 are effective for fiscal years beginning after December 15, 2006. Management is currently assessing the impact of FIN 48, if any, on the Fund's financial statements and intends for the Fund to adopt the FIN 48 provisions during 2007. F-12 AIM Asia Pacific Growth Fund 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, --------------------------------------------------------- 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 16.41 $ 13.72 $ 12.07 $ 8.53 $ 8.59 - ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) 0.14 0.14 (0.01) (0.01) (0.04) - ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 6.39 2.55 1.66 3.55 (0.02) ======================================================================================================================= Total from investment operations 6.53 2.69 1.65 3.54 (0.06) ======================================================================================================================= Less dividends from net investment income (0.12) -- -- -- -- ======================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ======================================================================================================================= Net asset value, end of period $ 22.82 $ 16.41 $ 13.72 $ 12.07 $ 8.53 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) 39.97% 19.61% 13.67% 41.50% (0.70)% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $292,771 $156,379 $106,129 $97,192 $62,806 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.83%(c) 2.01% 2.23% 2.26% 2.25% - ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.85%(c) 2.03% 2.25% 2.41% 2.49% ======================================================================================================================= Ratio of net investment income (loss) to average net assets 0.68%(c) 0.85% (0.09)% (0.11)% (0.41)% _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate 58% 36% 68% 100% 114% _______________________________________________________________________________________________________________________ ======================================================================================================================= </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $233,665,204. <Table> <Caption> CLASS B ------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------ 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 15.61 $ 13.14 $ 11.64 $ 8.27 $ 8.38 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) (0.01) 0.03 (0.09) (0.07) (0.10) - -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 6.08 2.44 1.59 3.44 (0.01) ==================================================================================================================== Total from investment operations 6.07 2.47 1.50 3.37 (0.11) ==================================================================================================================== Less dividends from net investment income (0.03) -- -- -- -- ==================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ==================================================================================================================== Net asset value, end of period $ 21.65 $ 15.61 $ 13.14 $ 11.64 $ 8.27 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(b) 38.96% 18.80% 12.89% 40.75% (1.31)% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $53,936 $35,600 $29,174 $24,599 $19,916 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.58%(c) 2.69% 2.88% 2.91% 2.90% - -------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.60%(c) 2.71% 2.90% 3.06% 3.14% ==================================================================================================================== Ratio of net investment income (loss) to average net assets (0.07)%(c) 0.17% (0.74)% (0.76)% (1.06)% ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate 58% 36% 68% 100% 114% ____________________________________________________________________________________________________________________ ==================================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $47,459,365. F-13 AIM Asia Pacific Growth Fund NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS C ---------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 15.55 $ 13.09 $ 11.60 $ 8.25 $ 8.37 - ------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss)(a) (0.01) 0.03 (0.09) (0.07) (0.10) - ------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) 6.05 2.43 1.58 3.42 (0.02) ================================================================================================================== Total from investment operations 6.04 2.46 1.49 3.35 (0.12) ================================================================================================================== Less dividends from net investment income (0.03) -- -- -- -- ================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ================================================================================================================== Net asset value, end of period $ 21.56 $ 15.55 $ 13.09 $11.60 $ 8.25 __________________________________________________________________________________________________________________ ================================================================================================================== Total return(b) 38.92% 18.79% 12.84% 40.61% (1.43)% __________________________________________________________________________________________________________________ ================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $54,898 $26,626 $11,220 $8,763 $6,019 __________________________________________________________________________________________________________________ ================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.58%(c) 2.69% 2.88% 2.91% 2.90% - ------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 2.60%(c) 2.71% 2.90% 3.06% 3.14% ================================================================================================================== Ratio of net investment income (loss) to average net assets (0.07)%(c) 0.17% (0.74)% (0.76)% (1.06)% __________________________________________________________________________________________________________________ ================================================================================================================== Portfolio turnover rate 58% 36% 68% 100% 114% __________________________________________________________________________________________________________________ ================================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $44,651,747. NOTE 14--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including the Securities and Exchange Commission ("SEC"), the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, AIM and ADI created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by AIM, which was done pursuant to the terms of the settlement. These two fair funds may increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading that also may have harmed applicable AIM Funds. These two fair funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. Management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these two fair funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future. At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. PENDING LITIGATION AND REGULATORY INQUIRIES On August 30, 2005, the West Virginia Office of the State Auditor - -Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes findings of fact that AIM and ADI entered into certain arrangements permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that AIM and ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or capped by statute. Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging: - that the defendants permitted improper market timing and related activity in the AIM Funds; F-14 AIM Asia Pacific Growth Fund NOTE 14--LEGAL PROCEEDINGS--(CONTINUED) - that certain AIM Funds inadequately employed fair value pricing; - that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans; and - that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions (all the claims in this category of lawsuits were dismissed with prejudice by the court on September 29, 2006, except for the Section 36(b) claim which was dismissed with leave to amend to plead it properly as a derivative claim). These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees. All lawsuits based on allegations of market timing, late trading and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court, all claims asserted against the AIM Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class Action Complaint for Violations of ERISA and dismissed such Complaint. The plaintiff has commenced an appeal from that decision. IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, among others, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost security holders. IFG, AIM and ADI have advised the Fund that they are providing full cooperation with respect to these inquiries. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Pending Litigation and Regulatory Inquiries described above may have on AIM, ADI or the Fund. F-15 AIM Asia Pacific Growth Fund REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM International Mutual Funds 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 AIM Asia Pacific Growth Fund (one of the funds constituting AIM International Mutual Funds, hereafter referred to as the "Fund") at October 31, 2006, 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 five 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP December 20, 2006 Houston, Texas F-16 AIM Asia Pacific Growth Fund TAX DISCLOSURES REQUIRED FEDERAL INCOME TAX INFORMATION Of ordinary dividends paid to shareholders during the Fund's tax year ended October 31, 2006, 0% is eligible for the dividends received deduction for corporations. For its tax year ended October 31, 2006, the Fund designates 100%, or the maximum amount allowable, of its dividend distributions as qualified dividend income. Your actual amount of qualified dividend income for the calendar year will be reported in your Form 1099-DIV. You should consult your tax advisor regarding treatment of the amounts. TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS For its tax year ended October 31, 2006, the Fund designates 0.02%, or the maximum amount allowable, of its dividend distributions as qualified interest income exempt from U.S. income tax for non-resident alien shareholders. Your actual amount of qualified interest income for the calendar year will be reported in your Form 1042-S mailing. You should consult your tax advisor regarding treatment of the amounts. The percentage of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended January 31, 2006, April 30, 2006, July 31, 2006 and October 31, 2006 are 99.31%, 99.61%, 99.66% and 99.72%, respectively. F-17 AIM Asia Pacific Growth Fund TRUSTEES AND OFFICERS The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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> TRUSTEE AND/ NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) POSITION(S) HELD WITH THE 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 Trustee and Vice Chair Group Inc. (financial services holding company); Director and Vice Chairman, AMVESCAP PLC; Chairman, AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) and Trustee and Vice Chair of The AIM Family of Funds--Registered Trademark-- Formerly: President and Chief Executive Officer, A I M Management Group Inc.; Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); 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); Chief Executive Officer, AMVESCAP PLC -- Managed Products; and President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- - ------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None Trustee, President and President, A I M Management Group Inc., Principal AIM Mutual Fund Dealer Inc. (registered Executive Officer broker dealer), AIM Funds Management Inc. (registered investment advisor) and 1371 Preferred Inc. (holding company); Director and President, A I M Advisors, Inc., INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, A I M Capital Management, Inc. and A I M Distributors, Inc.; Director and Chairman, AIM Investment Services, Inc., Fund Management Company and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, AVZ Callco Inc. (holding company); AMVESCAP Inc. (holding company) and AIM Canada Holdings Inc. (holding company); Director and Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); and Manager, Powershares Capital Management LLC Formerly: President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); Chairman, AIM Canada Holdings, Inc.; Executive Vice President and Chief Operations Officer, AIM Funds Management Inc.; President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - ------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates ACE Limited (insurance company); Trustee and Chair (technology consulting company) and Captaris, Inc. (unified messaging provider) - ------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 2001 Retired Badgley Funds, Inc. (registered Trustee investment company (2 portfolios)) Formerly: Partner, law firm of Baker & McKenzie - ------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None Trustee (investment banking firm); and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation - ------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2000 Director of a number of public and None Trustee private business corporations, including the Boss Group Ltd. (private investment and management); Cortland Trust, Inc. (Chairman) (registered investment company (3 portfolios)); Annuity and Life Re (Holdings), Ltd. (insurance company); CompuDyne Corporation (provider of products and services to the public security market); and Homeowners of America Holding Corporation (property casualty company) Formerly: Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; and Director of various affiliated Volvo companies; and Director, Magellan Insurance Company - ------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff, and Discovery Global Trustee Century Group, Inc. (government affairs Education Fund (non-profit) company); and Owner, Dos Angelos Ranch, L.P. Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) - ------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered Trustee Naftalis and Frankel LLP investment company (3 portfolios)) - ------------------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series Trustee Formerly: Partner, Deloitte & Touche Funds, Inc. (21 portfolios) - ------------------------------------------------------------------------------------------------------------------------------- </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. Taylor 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. F-18 TRUSTEES AND OFFICERS--(CONTINUED) AIM Asia Pacific Growth Fund The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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 - ------------------------------------------------------------------------------------------------------------------------------ OTHER OFFICERS - ------------------------------------------------------------------------------------------------------------------------------ Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A Senior Vice President and of The AIM Family of Funds--Registered Senior Officer Trademark-- Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A Senior Vice President, Chief Secretary and General Counsel, A I M Legal Officer and Secretary Management Group Inc. and A I M Advisors, Inc.; Director, Vice President and Secretary, INVESCO Distributors, Inc.; Vice President and Secretary, A I M Capital Management, Inc., AIM Investment Services, Inc., and Fund Management Company; Senior Vice President and Secretary, A I M Distributors, Inc.; Director, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; and Manager, Powershares Capital Management LLC Formerly: Chief Operating Officer, Senior Vice President, General Counsel, and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); General Counsel and Secretary, Pilgrim Baxter Value Investors (an investment adviser); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - ------------------------------------------------------------------------------------------------------------------------------ Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A Vice President PLC; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, A I M Management Group Inc. (financial services holding company); Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc. and A I M Distributors, Inc.; Vice President, AIM Investment Services, Inc. and Fund Management Company; Senior Vice President and Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - ------------------------------------------------------------------------------------------------------------------------------ Kevin M. Carome -- 1956 2003 Senior Vice President and General Vice President Counsel, AMVESCAP PLC; Director, INVESCO Funds Group, Inc.; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Director, Vice President and N/A General Counsel, Fund Management Company; Director, Senior Vice President, Secretary and General Counsel, A I M Management Group Inc. and A I M Advisors, Inc.; Director and Vice President, INVESCO Distributors, Inc.; Senior Vice President, A I M Distributors, Inc.; Vice President, A I M Capital Management, Inc. and AIM Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; Chief Executive Officer and President, INVESCO Funds Group, Inc.; and Senior Vice President, and General Counsel, Liberty Financial Companies, Inc. and Senior Vice President and General Counsel Liberty Funds Group, LLC - ------------------------------------------------------------------------------------------------------------------------------ Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A Vice President, Principal Advisors, Inc.; and Vice President, Financial Officer and Treasurer and Principal Officer of The Treasurer AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Investment Services, Inc.; and Vice President, A I M Distributors, Inc. - ------------------------------------------------------------------------------------------------------------------------------ J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A Vice President Investment Officer, A I M Advisors Inc.; Director, Chairman, Chief Executive Officer, President and Chief Investment Officer, A I M Capital Management, Inc.; Executive Vice President, A I M Management Group Inc. and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Private Asset Management, Inc.; and Chief Equity Officer, Senior Vice President and Senior Investment Officer, A I M Capital Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Karen Dunn Kelley -- 1960 2004 Director of Cash Management, Managing N/A Vice President Director and Chief Cash Management Officer, A I M Capital Management, Inc; Director and President, Fund Management Company; and Vice President, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust Only) Formerly: Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - ------------------------------------------------------------------------------------------------------------------------------ Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A Anti-Money Laundering Officer, A I M Advisors, Inc., A I M Compliance Officer Capital Management, Inc., A I M Distributors, Inc., AIM Investment Services, Inc., AIM Private Asset Management, Inc., Fund Management Company and The AIM Family of Funds--Registered Trademark-- Formerly: Manager of the Fraud Prevention Department, AIM Investment Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A Chief Compliance Officer Group Inc.; Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc.; Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc.; and Vice President, A I M Distributors, Inc., AIM Investment Services, Inc. and Fund Management Company Formerly: Global Head of Product Development, AIG-Global Investment Group, Inc.; Chief Compliance Officer and Deputy General Counsel, AIG-SunAmerica Asset Management; and Chief Compliance Officer, Chief Operating Officer and Deputy General Counsel, American General Investment Management - ------------------------------------------------------------------------------------------------------------------------------ </Table> 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 1.800.959.4246. <Table> OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers Suite 100 11 Greenway Plaza Inc. LLP Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street Houston, TX 77046-1173 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company 1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Philadelphia, PA 19103-7599 Americas New York, NY 10036-2714 </Table> F-19 [eDelivery GO PAPERLESS AIMinvestments.com/edelivery Graphic] REGISTER FOR eDELIVERY eDelivery is the process of receiving your fund and account If used after January 20, 2007, this report must be information via e-mail. Once your quarterly statements, tax accompanied by a Fund Performance & Commentary or by an AIM forms, fund reports, and prospectuses are available, we will Quarterly Performance Review for the most recent send you an e-mail notification containing links to these quarter-end. Mutual funds distributed by A I M Distributors, Inc. documents. For security purposes, you will need to log in to your account to view your statements and tax forms. A I M Management Group Inc. has provided leadership in the investment management industry since 1976. AIM Investment WHY SIGN UP? Services, Inc. is the transfer agent for the products and services represented by AIM Investments. AIM is a subsidiary Register for eDelivery to: of AMVESCAP PLC, one of the world's largest independent financial services companies with $450 billion in assets o reduce the amount of paper you receive. under management as of October 31, 2006. o gain access to your documents faster by not waiting for the mail. o view your documents online anytime at your convenience. CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY. FOR THIS AND OTHER INFORMATION ABOUT AIM o save the documents to your personal computer or print FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISOR AND them out for your records. READ IT CAREFULLY BEFORE INVESTING. HOW DO I SIGN UP? It's easy. Just follow these simple steps: 1. Log in to your account. 2. Click on the "Service Center" tab. 3. Select "Register for eDelivery" and complete the consent process. This AIM service is provided by AIM Investment Services, Inc. AIMinvestments.com APG-AR-1 A I M Distributors, Inc. [YOUR GOALS. OUR SOLUTIONS.] --Registered Trademark-- ================================================================================ Mutual Retirement Annuities College Separately Offshore Cash Funds Products Savings Managed Products Management [AIM INVESTMENTS LOGO APPEARS HERE] Plans Accounts --Registered Trademark-- ================================================================================ INTERNATIONAL/ AIM European Growth Fund GLOBAL EQUITY Annual Report to Shareholders o October 31,2006 International/Global Growth Table of Contents Supplemental Information ......... 2 Letters to Shareholders .......... 3 Performance Summary .............. 5 Management Discussion ............ 5 Fund Expenses .................... 7 Long-term Fund Performance ....... 8 Approval of Advisory Agreement ... 10 Schedule of Investments .......... F-1 Financial Statements ............. F-4 Notes to Financial Statements .... F-7 Financial Highlights ............. F-14 Auditor's Report ................. F-20 Tax Disclosures .................. F-21 [COVER GLOBE IMAGE] Trustees and Officers ............ F-22 [AIM INVESTMENT SOLUTIONS] [GRAPHIC] [GRAPHIC] [GRAPHIC] [DOMESTIC [INTERNATIONAL/ [SECTOR EQUITY] GLOBAL EQUITY] EQUITY] [GRAPHIC] [GRAPHIC] [GRAPHIC] [FIXED [ALLOCATION [DIVERSIFIED INCOME] SOLUTIONS] PORTFOLIOS] [AIM INVESTMENTS LOGO APPEARS HERE] --Registered Trademark-- AIM European Growth Fund AIM EUROPEAN GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of October 31, 2006, and is based on total net assets. ABOUT SHARE CLASSES value of its assets, general economic discussion of Fund performance are based conditions, interest rates, investor on net asset values calculated for o Class B shares are not available as an perceptions and market liquidity. shareholder transactions. Generally investment for retirement plans maintained accepted accounting principles require pursuant to Section 401 of the Internal o Although the Fund's return during adjustments to be made to the net assets Revenue Code, including 401(k) plans, certain periods was positively impacted by of the fund at period end for financial money purchase pension plans and profit its investments in initial public reporting purposes, and as such, the net sharing plans. Plans that had existing offerings (IPOs), there can be no asset values for shareholder transactions accounts invested in Class B shares prior assurance that the fund will have and the returns based on those net asset to September 30, 2003, will continue to be favorable IPO investment opportunities in values may differ from the net asset allowed to make additional purchases. the future. values and returns reported in the Financial Highlights. o Class R shares are available only to ABOUT INDEXES USED IN THIS REPORT certain retirement plans. Please see the o Industry classifications used in this prospectus for more information. o The unmanaged MSCI EUROPE, AUSTRALASIA report are generally according to the AND THE FAR EAST INDEX (the MSCI EAFE Global Industry Classification Standard, o Investor Class shares are closed to most --Registered Trademark--) is a group of which was developed by and is the investors. For more information on who may foreign securities tracked by Morgan exclusive property and a service mark of continue to invest in Investor Class Stanley Capital International. Morgan Stanley Capital International Inc. shares, please see the prospectus. and Standard & Poor's. o The unmanaged MSCI EUROPE INDEX PRINCIPAL RISKS OF INVESTING IN THE FUND --Service Mark-- is a group of European The Fund provides a complete list of its securities tracked by Morgan Stanley holdings four times in each fiscal year,at o Foreign securities have additional Capital International. The Growth portion the quarter-ends. For the second and risks, including exchange rate changes, measures performance of companies with fourth quarters,the lists appear in the political and economic upheaval, the higher price/earnings ratios and higher Fund's semiannual and annual reports to relative lack of information about these forecasted growth values. shareholders. For the first and third companies, relatively low market liquidity quarters,the Fund files the lists with the and the potential lack of strict financial o The unmanaged LIPPER EUROPEAN FUNDS Securities and Exchange Commission (SEC) and accounting controls and standards. INDEX represents an average of the on Form N-Q. The most recent list of performance of the 30 largest European portfolio holdings is available at o Investing in a fund that invests in equity funds tracked by Lipper Inc., an AIMinvestments.com. From our home smaller companies involves risks not independent mutual fund performance page,click on Products & Performance,then associated with investing in more monitor. Mutual Funds,then Fund Overview. Select established companies, such as business your Fund from the drop-down menu and risk, stock price fluctuations and o The Fund is not managed to track the click on Complete Quarterly Holdings. illiquidity. performance of any particular index, Shareholders can also look up the Fund's including the indexes defined here, and Forms N-Q on the SEC Web site at sec.gov. o Investing in emerging markets involves consequently, the performance of the Fund Copies of the Fund's Forms N-Q may be greater risks than investing in more may deviate significantly from the reviewed and copied at the SEC Public established markets. Risks for emerging performance of the index. Reference Room in Washington,D.C. You can markets include risks relating to the obtain information on the operation of the relatively smaller size and lesser o A direct investment cannot be made in an Public Reference Room,including liquidity of these markets, high inflation index. Unless otherwise indicated, index information about duplicating fee rates, adverse political developments and results include reinvested dividends, and charges,by calling 202-942-8090 or lack of timely information. they do not reflect sales charges. 800-732-0330,or by electronic request at Performance of an index of funds reflects the following e-mail address: o Prices of equity securities change in fund expenses; performance of a market publicinfo@sec.gov. The SEC file numbers response to many factors including the index does not. for the Fund are 811-06463 and 033-44611. historical and prospective earnings of the issuer, the OTHER INFORMATION A description of the policies and procedures that the Fund uses to determine o The returns shown in the management's how to vote proxies relating to portfolio securities is available without charge,upon request,from our Client Services department at 800-959-4246 or on the AIM Web site,AIMinvestments.com. On the home page,scroll down and click on AIM Funds Proxy Policy. The information is also available on the SEC Web site,sec.gov. Continued on page 9 ========================================== FUND NASDAQ SYMBOLS ====================================================================================== THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND Class A Shares AEDAX PROSPECTUS,WHICH CONTAINS MORE COMPLETE INFORMATION,INCLUDING SALES CHARGES AND Class B Shares AEDBX EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class C Shares AEDCX ====================================================================================== Class R Shares AEDRX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Investor Class Shares EGINX AIMinvestments.com ========================================== 2 AIM European Growth Fund Dear Shareholders of The AIM Family of Funds --Registered Trademark--: We're pleased to provide you with this report, which includes a discussion of how your Fund was managed during the review period ended October 31, 2006, and what factors affected its performance. As we approach the end of 2006, it seems likely that [TAYLOR many investors may see the value of their investments PHOTO] increase this year. Global equity markets, collectively, recorded double-digit gains for the year ended October 31, 2006, as did the U.S. stock market. Also, the investment grade bond market in the United States rose for the same period. While stock and bond markets generally enjoyed positive year-to-date returns, their performance was affected by Philip Taylor short-term economic and geopolitical events. For example, the U.S. stock market was weak in the second quarter of 2006 when it appeared that inflation might be rising. Only after the U.S. Federal Reserve Board decided in August that inflation was contained and that short-term interest rates need not be increased--the first time it kept rates unchanged in more than two years--did equities truly surge. Short-term market fluctuations are a fact of life for all investors. At AIM Investments --Registered Trademark--, we believe that investors can do two things to deal with short-term market fluctuations: maintain a long-term investment horizon and maintain a diversified portfolio. AIM Investments can help by offering a broad product line that gives your financial advisor the necessary tools to build a portfolio that's right for you regardless of market conditions. AIM Investments offers a comprehensive range of retail mutual funds, including domestic, global and international equity funds, taxable and tax-exempt fixed-income funds, and a variety of allocation portfolios--with varied risk and return characteristics to match your needs. We maintain this extensive set of product solutions for one reason: We believe in the value of comprehensive, diversified investment portfolios. We've changed the look of our annual reports to reflect that belief. In our marketing and now our shareholder literature, we represent a fully diversified portfolio graphically as an allocation pie chart and assign each asset class a color--green for domestic equity, blue for international, orange for sector and purple for fixed income. A legend in the left column illustrates the methodology. Your report cover now shows your Fund's asset class color, plus the asset class and sub-asset class name are shown in the upper-left corner. The reason for these changes is to help you better understand where your Fund fits into your overall portfolio. AIM has a variety of investment solutions, and knowing which ones are right for your portfolio is complex. That's why we also believe in the value of a trusted financial advisor who will work with you to create an investment plan you can stick with for the long term. Your financial advisor can help allocate your portfolio appropriately and review your investments regularly to help ensure they remain suitable as your financial situation changes. While there are no guarantees with any investment program, a long-term plan that's based on your financial goals, risk tolerance and time horizon is more likely to keep you and your investments on track. OUR COMMITMENT TO YOU In the short term, the one sure thing about markets is their unpredictability. While past performance cannot guarantee comparable future results, we believe that staying invested for the long term with a thoughtful plan offers the best opportunity for weathering that unpredictability. We at AIM Investments remain committed to building enduring solutions to help you achieve your investment goals, and we're pleased you've placed your trust in us. Information about investing, the markets and your Fund is always available on our Web site, AIMinvestments.com. If you have questions about your individual account, we invite you to contact one of our highly trained client services representatives at 800-959-4246. Sincerely, /S/ PHILIP TAYLOR Philip Taylor President - AIM Funds CEO, AIM Investments December 14, 2006 AIM Investments is a registered service mark of A I M Management Group Inc. A I M Advisors, Inc. and A I M Capital Management, Inc. are the investment advisors. A I M Distributors, Inc. is the distributor for the retail funds represented by AIM Investments. 3 AIM European Growth Fund Dear Fellow AIM Fund Shareholders: At our meeting at the end of June, your Board completed its comprehensive review* of each fund's advisory agreement with A I M Advisors, Inc. (AIM) to make certain your interests are being served in terms of fees, performance and operations. Looking ahead, your Board finds many reasons to be [CROCKETT positive about AIM's management and strategic direction. PHOTO] Most importantly, AIM's investment management discipline has paid off in terms of improved overall performance. We are also pleased with AIM's efforts to seek more cost-effective ways of delivering superior service. In addition, AIM is realizing the benefits of belonging to a leading independent global investment management organization in its parent company, AMVESCAP PLC, which is Bruce L. Crockett dedicated to helping people worldwide build their financial security. AMVESCAP managed approximately $450 billion globally as of October 31, 2006, operating under the AIM, INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust brands. These companies are home to an abundance of investment talent that is gradually being integrated and leveraged into centers of excellence, each focusing on a given market segment or asset class. Over the next few years, your Board will be meeting at these various centers of excellence to learn about their progress and how they may serve you through our goal of enhancing performance and reducing costs. The seven new AIM funds--which include Asian funds, structured U.S. equity funds and specialized bond funds--are an early example of the kind of opportunities the AMVESCAP organization can provide AIM clients. More information on these funds can be found on AIM's Web site. Your Board is very pleased with the overall direction and progress of the AIM Funds. We're working closely and effectively with AIM's management to continue this momentum. As always, your Board is eager to hear your views on how we might better serve you. Please send your comments in a letter addressed to me at AIM Investments, AIM Investments Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046. Sincerely, /S/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board December 14, 2006 *To learn more about all the factors we considered before approving each fund's advisory agreement, go to the "Products & Performance" tab at the AIM Web site (AIMinvestments.com) and click on "Investment Advisory Agreement Renewals." The approval of advisory agreement information for your Fund is also included in this annual report on pages 10-11. 4 AIM European Growth Fund Management's discussion a stock-by-stock basis focusing on the of Fund performance strengths of individual companies rather than sectors, countries or market-cap ====================================================================================== trends. PERFORMANCE SUMMARY We believe disciplined sell decisions are key to successful investing. We Global equity markets rallied strongly over the fiscal year,fueled by improving consider selling a stock when: economic growth prospects in Europe and Asia. o A company's fundamentals deteriorate, or We are pleased to provide shareholders with double-digit Fund performance at net it posts disappointing earnings. asset value once again. As the table below illustrates, your Fund significantly outperformed both its broad market and style-specific benchmarks. We attribute the o A stock's price seems overvalued. Fund's comparative success to strong stock selection,with key contributions coming from consumer discretionary, energy, consumer staples, industrials and health care o A more attractive opportunity becomes holdings. Additionally, the Fund's all-cap investment approach enabled us to invest in available. several strong performing smaller cap companies contributing positively to performance. MARKET CONDITIONS AND YOUR FUND Your Fund's long-term performance appears on pages 8 and 9. During the fiscal year, the superior performance of European equities relative FUND VS. INDEXES to those of the U.S. continued to underscore the importance of Total returns,10/31/05-10/31/06,excluding applicable sales charges. If sales charges diversification. Although returns varied were included,returns would be lower. and European markets saw a slight correction mid-year, all major countries represented in the MSCI Europe Index, Class A Shares 37.40% considered representative of European Class B Shares 36.39 stocks, posted double-digit gains for the Class C Shares 36.41 reporting period (in U.S. dollar terms). Class R Shares 37.02 Macroeconomic data was generally Investor Class Shares 37.47 supportive of this growth. French consumer MSCI EAFE Index (Broad Market Index) 27.52 spending grew at its fastest pace in MSCI Europe Growth Index (Style-Specific Index) 26.70 nearly seven years while unemployment fell Lipper European Funds Index (Peer Group Index) 32.54 to a four-year low. In the United Kingdom, SOURCE: LIPPER INC. the equity market recovered from mid-September lows and recorded positive ====================================================================================== returns for the third quarter as mergers and acquisitions activity picked up after HOW WE INVEST for, accelerated or above average earnings the summer lull and corporate results growth but whose prices do not fully remained generally strong. When selecting stocks for your Fund, we reflect these attributes. employ a disciplined investment strategy As previously noted, our investment that emphasizes fundamental research, While research responsibilities within process primarily focuses on bottom-up supported by both quantitative analysis the portfolio management team are focused stock selection as opposed to "top-down" and portfolio construction techniques. Our by market capitalization, such as large or allocation decisions. It is this and not "EQV" (Earnings, Quality, Valuation) mid/small-cap, we select investments for macroeconomic bets that again drove strategy focuses primarily on identifying the Fund by using a "bottom-up" investment absolute and relative performance. For quality companies that have experienced, approach. We construct the Fund primarily example, key contributors to relative or exhibit the potential on (continued) ========================================== ========================================== ========================================== PORTFOLIO COMPOSITION TOP FIVE COUNTRIES* TOP 10 EQUITY HOLDINGS* By sector 1. United Kingdom 19.6% 1. Anglo Irish Bank Corp. PLC 2. Germany 11.2 (Ireland) 2.2% [PIE CHART] 3. France 10.1 2. Puma A.G. Rudolf Dassler Sport 4. Switzerland 9.5 (Germany) 2.0 Energy 7.7% 5. Netherlands 7.3 3. USG People N.V. (Netherlands) 1.9 Health Care 7.2% 4. BNP Paribas (France) 1.9 Materials 5.7% Total Net Assets $1.31 billion 5. Petroleum Geo-Services A.S.A. Information Technology 1.7% (Norway) 1.9 Telecommunication Services 1.1% Total Number of Holdings* 90 6. Vinci S.A. (France) 1.7 Utilities 1.1% 7. Syngenta A.G. (Switzerland) 1.7 Money Market Funds Plus 8. Informa PLC (United Kingdom) 1.7 Other Assets Less Liabilities 7.0% 9. Roche Holding A.G. (Switzerland) 1.6 Financials 21.3% 10. Shire PLC (United Kingdom) 1.5 Consumer Discretionary 18.6% Industrials 15.5% Consumer Staples 13.1% The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. *Excluding money market fund holdings. ========================================== ========================================== ========================================== 5 AIM European Growth Fund outperformance came from holdings in wide range of the market-cap spectrum. We Jason T. Holzer France and Germany, markets many U.S. believe that the small/mid-cap universe [HOLZER Chartered Financial investors view as unattractive suffering remained less efficient (i.e., PHOTO] Analyst,senior from slow economic growth. The reality is underfollowed) and consequently allowed us portfolio manager,is quite the contrary. Applying our to identify attractive investment lead manager of AIM disciplined EQV investment process, we opportunities that the markets may not European Growth Fund with respect to the have been able to find many attractive follow closely. Although overall Fund's small- and mid-cap investments. Mr. growth stocks in both the German and valuations for the mid- and small-cap Holzer joined AIM in 1996. He earned a French equity markets. areas of the market looked fully valued, B.A. in quantitative economics and an M.S. we continued to find stock specific in engineering-economic systems from Leading contributors to Fund opportunities that met our investment Stanford University. performance included PUMA A.G. and criteria. EIFFAGE. Consumer discretionary holding Clas G. Olsson Puma, the German athletic shoe and apparel Because we do not typically hedge [OLSSON Senior portfolio manufacturer, surprised a market that was currencies--we buy stocks in their local PHOTO] manager and head of apprehensive about the company's phase IV currency and then translate that value AIM's International expansion program. Eiffage, a leading back into dollars--foreign currency Investment Management French construction company, benefited appreciation provided a boost to Fund Unit,is lead manager of AIM European from a double-digit operating profit as performance. Our exposure to the euro Growth Fund with respect to the Fund's well as a friendly merger proposal from a added significant value to overall return. large-cap investments. Mr. Olsson joined large Spanish construction group. Eiffage, AIM in 1994. Mr. Olsson became a the builder of the Eiffel Tower, was Given strong Fund performance for the commissioned naval officer at the Royal initially purchased at a mid- to reporting period, stock specific Swedish Naval Academy in 1988. He also high-single digit P/E with additional detractors were limited. Detractors earned a B.B.A. from the University of hidden value in a portfolio of included VODAFONE (UK/telecommunications Texas at Austin. concessions. Despite strong fundamentals, services) and BAM GROEP (Dutch valuations started to look stretched after construction). The Fund held relatively Borge Endresen a return of more than 200%. We sold the small exposures to these holdings, and [ENDRESEN Chartered Financial stock, realizing a substantial profit. VODAFONE was sold out of the portfolio PHOTO] Analyst,portfolio relatively early in the period. manager,is manager of Performance was also supported by AIM European Growth strong stock selection in the Netherlands, IN CLOSING Fund. He joined AIM in 1999 and graduated Switzerland and the U.K, where in some summa cum laude from the University of instances the Fund nearly doubled European markets once again outperformed Oregon with a B.S. in finance. He also style-index returns. A combination of U.S. markets during the reporting period. earned an M.B.A from the University of favorable stock selection and an Over the past 12 months, the Fund has Texas at Austin. overweight exposure to the strong experienced double-digit returns. It would Norwegian market relative to the be imprudent for us to suggest that such a Richard Nield style-specific index also boosted level of performance is sustainable over [NIELD Chartered Financial performance, as Norway benefited from the long term. Regardless of macroeconomic PHOTO] Analyst,portfolio strong energy prices. In contrast, our trends, the Fund strives to maintain a manager,is manager of lack of exposure to certain strong index disciplined strategy of selecting AIM European Growth performers in Finland and Italy and attractive investment opportunities based Fund. Mr. Nield joined AIM in 2000. He exposure to the more volatile Hungarian on its "EQV" investment strategy. earned a bachelor of commerce degree in market detracted from comparative results. finance and international business from We welcome new shareholders who McGill University in Montreal,Canada. Stock selection was strong across invested in the Fund during the reporting sectors with all sectors delivering period and thank all our shareholders for Matthew W. Dennis double-digit returns. The Fund your continued investment in AIM European [DENNIS Chartered Financial outperformed its style index during the Growth Fund. PHOTO] Analyst,is a portfolio period across almost all major sectors, manager of AIM with top contributors coming from the THE VIEWS AND OPINIONS EXPRESSED IN International Growth Fund's energy, consumer discretionary, MANAGEMENT'S DISCUSSION OF FUND Fund. He joined AIM in 2000. Mr. Dennis industrials and health care holdings. PERFORMANCE ARE THOSE OF A I M ADVISORS, graduated with a B.A. in economics from Although stock selection took precedence INC. THESE VIEWS AND OPINIONS ARE SUBJECT The University of Texas at Austin. He also over sector allocation, a significant TO CHANGE AT ANY TIME BASED ON FACTORS earned an M.S. in Finance from Texas A&M underweight exposure to telecommunication SUCH AS MARKET AND ECONOMIC CONDITIONS. University. services and overweight position in THESE VIEWS AND OPINIONS MAY NOT BE RELIED industrials contributed significantly to UPON AS INVESTMENT ADVICE OR Assisted by the Europe/Canada Team outperformance as well. In contrast, the RECOMMENDATIONS, OR AS AN OFFER FOR A Fund's underweight exposure to the PARTICULAR SECURITY. THE INFORMATION IS FOR A PRESENTATION OF YOUR FUND'S materials and utilities sectors was a NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF LONG-TERM PERFORMANCE,PLEASE SEE PAGES 8 detractor to performance, but strong stock ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR AND 9. selection within both sectors helped the THE FUND. STATEMENTS OF FACT ARE FROM Fund outperform the style-specific index. SOURCES CONSIDERED RELIABLE, BUT A I M ADVISORS, INC. MAKES NO REPRESENTATION OR The Fund also benefited from its WARRANTY AS TO THEIR COMPLETENESS OR "all-cap" flexibility, which enables it to ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE invest across a IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT PHILOSOPHY. See important Fund and index disclosures on the inside front cover. 6 AIM European Growth Fund Calculating your ongoing Fund expenses EXAMPLE mate the expenses that you paid over the The hypothetical account values and period. Simply divide your account value expenses may not be used to estimate the As a shareholder of the Fund, you incur by $1,000 (for example, an $8,600 account actual ending account balance or expenses two types of costs: (1) transaction costs, value divided by $1,000 = 8.6), then you paid for the period. You may use this which may include sales charges (loads) on multiply the result by the number in the information to compare the ongoing costs purchase payments or contingent deferred table under the heading entitled "Actual of investing in the Fund and other funds. sales charges on redemptions, and Expenses Paid During Period" to estimate To do so, compare this 5% hypothetical redemption fees, if any; and (2) ongoing the expenses you paid on your account example with the 5% hypothetical examples costs, including management fees; during this period. that appear in the shareholder reports of distribution and/or service (12b-1) fees; the other funds. and other Fund expenses. This example is HYPOTHETICAL EXAMPLE FOR intended to help you understand your COMPARISON PURPOSES Please note that the expenses shown in ongoing costs (in dollars) of investing in the table are meant to highlight your the Fund and to compare these costs with The table below also provides information ongoing costs only and do not reflect any ongoing costs of investing in other mutual about hypothetical account values and transaction costs, such as sales charges funds. The example is based on an hypothetical expenses based on the Fund's (loads) on purchase payments, contingent investment of $1,000 invested at the actual expense ratio and an assumed rate deferred sales charges on redemptions, and beginning of the period and held for the of return of 5% per year before expenses, redemption fees, if any. Therefore, the entire period May 1, 2006, through October which is not the Fund's actual return. The hypothetical information is useful in 31, 2006. Fund's actual cumulative total returns at comparing ongoing costs only, and will not net asset value after expenses for the six help you determine the relative total ACTUAL EXPENSES months ended October 31, 2006, appear in costs of owning different funds. In the table "Cumulative Total Returns" on addition, if these transaction costs were The table below provides information about page 9. included, your costs would have been actual account values and actual expenses. higher. You may use the information in this table, together with the amount you invested, to esti- ==================================================================================================================================== HYPOTHETICAL ACTUAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2) (10/31/06) PERIOD(2) RATIO A $1,000.00 $1,053.40 $8.02 $1,017.39 $7.88 1.55% B 1,000.00 1,049.40 11.88 1,013.61 11.67 2.30 C 1,000.00 1,049.30 11.88 1,013.61 11.67 2.30 R 1,000.00 1,052.10 9.31 1,016.13 9.15 1.80 Investor 1,000.00 1,053.50 7.97 1,017.44 7.83 1.54 (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value after expenses for the six months ended October 31, 2006, appear in the table "Cumulative Total Returns" on page 9. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. ==================================================================================================================================== 7 AIM European Growth Fund YOUR FUND'S LONG-TERM PERFORMANCE RESULTS OF A $10,000 INVESTMENT Index data from 10/31/97, Fund data from 11/03/97 ==================================================================================================================================== [MOUNTAIN CHART] AIM EUROPEAN GROWTH FUND AIM EUROPEAN GROWTH FUND AIM EUROPEAN GROWTH FUND MSCI EAFE MSCI EUROPE LIPPER EUROPEAN DATE -CLASS A SHARES -CLASS B SHARES -CLASS C SHARES INDEX GROWTH INDEX FUNDS INDEX 10/31/97 $10000 $10000 $10000 11/97 $ 9233 $ 9770 $ 9770 9898 10139 10075 12/97 9592 10150 10150 9984 10508 10309 1/98 10026 10600 10600 10441 10964 10694 2/98 10972 11590 11590 11111 11898 11575 3/98 12172 12850 12850 11453 12431 12451 4/98 12910 13609 13609 11544 12652 12738 5/98 13789 14529 14538 11488 12882 13058 6/98 13855 14599 14608 11575 13172 13097 7/98 14535 15298 15308 11692 13270 13346 8/98 12551 13197 13198 10244 11889 11419 9/98 11842 12457 12458 9929 11415 10779 10/98 12248 12867 12878 10965 12436 11533 11/98 12900 13546 13558 11526 13065 12190 12/98 13489 14156 14168 11981 13940 12758 1/99 14322 15025 15038 11946 14004 12985 2/99 13593 14245 14257 11661 13455 12605 3/99 13063 13685 13697 12148 13166 12640 4/99 13195 13815 13818 12640 13029 13002 5/99 12797 13386 13388 11989 12536 12530 6/99 13185 13786 13788 12456 12737 12849 7/99 13904 14526 14538 12827 12607 13065 8/99 14244 14876 14878 12873 12802 13171 9/99 14528 15167 15169 13003 12748 13027 10/99 15530 16196 16209 13490 13456 13468 11/99 18594 19385 19399 13959 14279 14404 12/99 22473 23404 23419 15212 16049 16266 1/00 23676 24644 24669 14245 15279 15741 2/00 29521 30712 30728 14628 16493 17911 3/00 26852 27914 27929 15196 16722 17924 4/00 24130 25064 25088 14396 15939 16952 5/00 23307 24194 24218 14044 15194 16609 6/00 24043 24944 24968 14594 15410 17002 7/00 24375 25284 25308 13982 14788 16872 8/00 25038 25954 25979 14103 14519 16936 9/00 23921 24775 24799 13416 13709 16062 10/00 22323 23115 23140 13099 13389 15574 11/00 20082 20785 20810 12608 12682 14740 12/00 21737 22475 22500 13056 13378 15847 1/01 21528 22246 22270 13050 13230 15799 2/01 19164 19805 19821 12071 11777 14466 3/01 17064 17617 17640 11267 10773 13196 4/01 18001 18577 18600 12050 11602 14070 5/01 17841 18397 18419 11624 10917 13528 6/01 17377 17917 17939 11149 10446 12977 7/01 16970 17487 17508 10946 10416 12845 8/01 17036 17537 17559 10669 9959 12516 9/01 15135 15568 15589 9588 9054 11112 10/01 15627 16068 16089 9834 9453 11501 11/01 15996 16437 16450 10196 9896 11999 12/01 16365 16807 16830 10257 10142 12254 1/02 15958 16377 16400 9712 9665 11717 2/02 16148 16577 16591 9780 9735 11725 3/02 16753 17187 17201 10356 10079 12312 4/02 17028 17446 17471 10377 9962 12279 5/02 17350 17776 17791 10509 9777 12286 6/02 17350 17765 17780 10090 9601 11957 7/02 15401 15767 15780 9094 8467 10708 8/02 15515 15866 15879 9074 8406 10636 9/02 14001 14306 14320 8099 7581 9318 10/02 14759 15076 15091 8534 8263 10032 11/02 14863 15176 15190 8922 8450 10506 12/02 14779 15075 15090 8622 8261 10119 1/03 14211 14486 14500 8262 7833 9677 2/03 14097 14366 14369 8072 7599 9308 3/03 14286 14555 14569 7914 7546 9194 4/03 15459 15734 15739 8689 8457 10350 5/03 16793 17084 17099 9216 8895 11112 6/03 16728 17014 17029 9439 8915 11201 7/03 16842 17115 17129 9667 8938 11415 8/03 16870 17144 17158 9900 8856 11502 9/03 17825 18094 18109 10206 9132 11758 10/03 18952 19223 19248 10842 9681 12502 11/03 19725 20003 20018 11083 10123 13052 12/03 21163 21453 21467 11949 10853 13979 1/04 22062 22352 22367 12118 11049 14387 2/04 23095 23383 23398 12397 11363 14835 3/04 22838 23111 23129 12467 10971 14357 4/04 22489 22742 22759 12185 10820 14128 5/04 22754 23001 23018 12211 10965 14274 6/04 23218 23461 23478 12494 11060 14549 7/04 22508 22722 22748 12088 10689 14040 8/04 22963 23172 23199 12142 10638 14079 9/04 24079 24291 24308 12459 11047 14696 10/04 24825 25029 25047 12884 11424 15216 11/04 26709 26909 26925 13764 12224 16309 12/04 28133 28327 28355 14368 12696 17067 1/05 28029 28208 28224 14104 12401 16871 2/05 29470 29647 29664 14714 12973 17829 3/05 28618 28766 28795 14344 12678 17313 4/05 27719 27857 27873 14007 12468 16867 5/05 27747 27868 27884 14014 12532 16857 6/05 28324 28429 28453 14200 12608 17232 7/05 29650 29748 29773 14635 13076 18074 8/05 30625 30708 30723 15005 13283 18663 9/05 30824 30877 30901 15673 13540 19068 10/05 29480 29519 29532 15215 13135 18258 11/05 30079 30097 30111 15587 13168 18625 12/05 31811 31807 31822 16313 13651 19438 1/06 34385 34355 34380 17314 14494 20931 2/06 34987 34942 34968 17276 14396 21139 3/06 36379 36312 36339 17845 15039 22039 4/06 38453 38367 38392 18698 15821 23298 5/06 37322 37201 37225 17971 15385 22325 6/06 37292 37145 37173 17970 15446 22159 7/06 37770 37605 37634 18148 15604 22384 8/06 38990 38805 38830 18647 16057 23038 9/06 38561 38355 38380 18676 16041 23172 10/06 40500 40551 40295 19402 16642 24198 ==================================================================================================================================== Past performance cannot guarantee This chart, which is a logarithmic comparable future results. chart, presents the fluctuations in the value of the Fund and its indexes. We The data shown in the chart include believe that a logarithmic chart is more reinvested distributions, applicable sales effective than other types of charts in charges, Fund expenses and management illustrating changes in value during the fees. Results for Class B shares are early years shown in the chart. The calculated as if a hypothetical vertical axis, the one that indicates the shareholder had liquidated his entire dollar value of an investment, is investment in the Fund at the close of the constructed with each segment representing reporting period and paid the applicable a percent change in the value of the contingent deferred sales charges. Index investment. In this chart, each segment results include reinvested dividends, but represents a doubling, or 100% change, in they do not reflect sales charges. the value of the investment. In other Performance of an index of funds reflects words, the space between $10,000 and fund expenses and management fees; $20,000 is the same size as the space performance of a market index does not. between $20,000 and $40,000, and so on. Performance shown in the chart and table(s) 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. 8 AIM European Growth Fund ========================================== ========================================== ========================================== AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS As of 10/31/06,including applicable sales As of 9/30/06, the most recent calendar 6 months ended 10/31/06,excluding charges quarter-end, including applicable sales applicable sales charges charges CLASS A SHARES Class A Shares 5.34% Inception (11/3/97) 16.83% CLASS A SHARES Class B Shares 4.94 5 Years 19.62 Inception (11/3/97) 16.36% Class C Shares 4.93 1 Year 29.85 5 Years 19.21 Class R Shares 5.21 1 Year 18.23 Investor Class Shares 5.35 CLASS B SHARES Inception (11/3/97) 16.85% CLASS B SHARES ========================================== 5 Years 19.98 Inception (11/3/97) 16.38% 1 Year 31.39 5 Years 19.57 SALES CHARGE UNLESS OTHERWISE STATED. 1 Year 19.22 INVESTMENT RETURN AND PRINCIPAL VALUE WILL CLASS C SHARES FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR Inception (11/3/97) 16.76% CLASS C SHARES LOSS WHEN YOU SELL SHARES. 5 Years 20.15 Inception (11/3/97) 16.30% 1 Year 35.41 5 Years 19.75 CLASS A SHARE PERFORMANCE REFLECTS THE 1 Year 23.20 MAXIMUM 5.50% SALES CHARGE, AND CLASS B CLASS R SHARES AND CLASS C SHARE PERFORMANCE REFLECTS THE Inception 17.37% CLASS R SHARES APPLICABLE CONTINGENT DEFERRED SALES 5 Years 20.75 Inception 16.90% CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE 1 Year 37.02 5 Years 20.35 CDSC ON CLASS B SHARES DECLINES FROM 5% 1 Year 24.84 BEGINNING AT THE TIME OF PURCHASE TO 0% AT INVESTOR CLASS SHARES THE BEGINNING OF THE SEVENTH YEAR. THE Inception 17.59% INVESTOR CLASS SHARES CDSC ON CLASS C SHARES IS 1% FOR THE FIRST 5 Years 21.02 Inception 17.12% YEAR AFTER PURCHASE. CLASS R SHARES DO NOT 1 Year 37.47 5 Years 20.60 HAVE A FRONT-END SALES CHARGE; RETURNS 1 Year 25.15 SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A 0.75% CDSC THAT MAY BE IMPOSED ========================================== ========================================== ON A TOTAL REDEMPTION OF RETIREMENT PLAN ASSETS WITHIN THE FIRST YEAR. INVESTOR CLASS R SHARES' INCEPTION DATE IS JUNE SHARE PERFORMANCE (FOR PERIODS PRIOR TO CLASS SHARES DO NOT HAVE A FRONT-END SALES 3, 2002. RETURNS SINCE THAT DATE ARE THE INCEPTION DATE OF INVESTOR CLASS CHARGE OR A CDSC; THEREFORE,PERFORMANCE IS HISTORICAL RETURNS. ALL OTHER RETURNS ARE SHARES) AT NET ASSET VALUE, WHICH RESTATED AT NET ASSET VALUE. BLENDED RETURNS OF HISTORICAL CLASS R PERFORMANCE WILL REFLECT THE HIGHER RULE SHARE PERFORMANCE AND RESTATED CLASS A 12B-1 FEES APPLICABLE TO CLASS A SHARES THE PERFORMANCE OF THE FUND'S SHARE SHARE PERFORMANCE (FOR PERIODS PRIOR TO FOR THE PERIOD USING BLENDED RETURNS. CLASSES WILL DIFFER PRIMARILY DUE TO THE INCEPTION DATE OF CLASS R SHARES) AT CLASS A SHARES' INCEPTION DATE IS NOVEMBER DIFFERENT SALES CHARGE STRUCTURES AND NET ASSET VALUE,ADJUSTED TO REFLECT THE 3, 1997. CLASS EXPENSES. HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS R SHARES. CLASS A SHARES' INCEPTION DATE THE PERFORMANCE DATA QUOTED REPRESENT A REDEMPTION FEE OF 2% WILL BE IMPOSED IS NOVEMBER 3, 1997. PAST PERFORMANCE AND CANNOT GUARANTEE ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF COMPARABLE FUTURE RESULTS; CURRENT THE FUND WITHIN 30 DAYS OF PURCHASE. INVESTOR CLASS SHARES' INCEPTION DATE PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE EXCEPTIONS TO THE REDEMPTION FEE ARE IS SEPTEMBER 30, 2003. RETURNS SINCE THAT VISIT AIMINVESTMENTS.COM FOR THE MOST LISTED IN THE FUND'S PROSPECTUS. DATE ARE HISTORICAL RETURNS. ALL OTHER RECENT MONTH-END PERFORMANCE. PERFORMANCE RETURNS ARE BLENDED RETURNS OF HISTORICAL FIGURES REFLECT REINVESTED INVESTOR CLASS SHARE PERFORMANCE AND DISTRIBUTIONS,CHANGES IN NET ASSET VALUE RESTATED CLASS A AND THE EFFECT OF THE MAXIMUM Continued from inside front cover Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2006, is available at our Web site. Go to AIMinvestments.com, access the About Us tab,click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov. 9 AIM European Growth Fund APPROVAL OF INVESTMENT ADVISORY AGREEMENT The Board of Trustees of AIM International on such review, the Board concluded that performance, which did not change their Mutual Funds (the "Board") oversees the the range of services to be provided by conclusions. management of AIM European Growth Fund AIM under the Advisory Agreement was (the "Fund") and, as required by law, appropriate and that AIM currently is o Meetings with the Fund's portfolio determines annually whether to approve the providing services in accordance with the managers and investment personnel. With continuance of the Fund's advisory terms of the Advisory Agreement. respect to the Fund, the Board is meeting agreement with A I M Advisors, Inc. periodically with such Fund's portfolio ("AIM"). Based upon the recommendation of o The quality of services to be provided managers and/or other investment personnel the Investments Committee of the Board, at by AIM. The Board reviewed the credentials and believes that such individuals are a meeting held on June 27, 2006, the and experience of the officers and competent and able to continue to carry Board, including all of the independent employees of AIM who will provide out their responsibilities under the trustees, approved the continuance of the investment advisory services to the Fund. Advisory Agreement. advisory agreement (the "Advisory In reviewing the qualifications of AIM to Agreement") between the Fund and AIM for provide investment advisory services, the o Overall performance of AIM. The Board another year, effective July 1, 2006. Board considered such issues as AIM's considered the overall performance of AIM portfolio and product review process, in providing investment advisory and The Board considered the factors various back office support functions portfolio administrative services to the discussed below in evaluating the fairness provided by AIM and AIM's equity and fixed Fund and concluded that such performance and reasonableness of the Advisory income trading operations. Based on the was satisfactory. Agreement at the meeting on June 27, 2006 review of these and other factors, the and as part of the Board's ongoing Board concluded that the quality of o Fees relative to those of clients of AIM oversight of the Fund. In their services to be provided by AIM was with comparable investment strategies. The deliberations, the Board and the appropriate and that AIM currently is Board reviewed the effective advisory fee independent trustees did not identify any providing satisfactory services in rate (before waivers) for the Fund under particular factor that was controlling, accordance with the terms of the Advisory the Advisory Agreement. The Board noted and each trustee attributed different Agreement. that this rate was (i) comparable to the weights to the various factors. effective advisory fee rate (before o The performance of the Fund relative to waivers) for a mutual fund advised by AIM One responsibility of the independent comparable funds. The Board reviewed the with investment strategies comparable to Senior Officer of the Fund is to manage performance of the Fund during the past those of the Fund; (ii) above the the process by which the Fund's proposed one, three and five calendar years against effective advisory and sub-advisory fee management fees are negotiated to ensure the performance of funds advised by other rates for one offshore fund advised and that they are negotiated in a manner which advisors with investment strategies sub-advised by AIM affiliates with is at arms' length and reasonable. To that comparable to those of the Fund. The Board investment strategies comparable to those end, the Senior Officer must either noted that the Fund's performance in such of the Fund; and (iii) above the effective supervise a competitive bidding process or periods was at or above the median sub-advisory fee rates for two Canadian prepare an independent written evaluation. performance of such comparable funds. mutual funds advised by an AIM affiliate The Senior Officer has recommended an Based on this review and after taking and sub-advised by AIM with investment independent written evaluation in lieu of account of all of the other factors that strategies comparable to those of the a competitive bidding process and, upon the Board considered in determining Fund, although the total advisory fees for the direction of the Board, has prepared whether to continue the Advisory Agreement such Canadian mutual funds were above such an independent written evaluation. for the Fund, the Board concluded that no those for the Fund. The Board noted that Such written evaluation also considered changes should be made to the Fund and AIM has agreed to waive advisory fees of certain of the factors discussed below. In that it was not necessary to change the the Fund, as discussed below. Based on addition, as discussed below, the Senior Fund's portfolio management team at this this review, the Board concluded that the Officer made a recommendation to the Board time. Although the independent written advisory fee rate for the Fund under the in connection with such written evaluation of the Fund's Senior Officer Advisory Agreement was fair and evaluation. (discussed below) only considered Fund reasonable. performance through the most recent The discussion below serves as a calendar year, the Board also reviewed o Fees relative to those of comparable summary of the Senior Officer's more recent Fund performance, which did funds with other advisors. The Board independent written evaluation and not change their conclusions. reviewed the advisory fee rate for the recommendation to the Board in connection Fund under the Advisory Agreement. The therewith, as well as a discussion of the o The performance of the Fund relative to Board compared effective contractual material factors and the conclusions with indices. The Board reviewed the advisory fee rates at a common asset level respect thereto that formed the basis for performance of the Fund during the past at the end of the past calendar year and the Board's approval of the Advisory one, three and five calendar years against noted that the Fund's rate was comparable Agreement. After consideration of all of the performance of the Lipper European to the median rate of the funds advised by the factors below and based on its Fund Index. The Board noted that the other advisors with investment strategies informed business judgment, the Board Fund's performance in such periods was comparable to those of the Fund that the determined that the Advisory Agreement is comparable to the performance of such Board reviewed. The Board noted that AIM in the best interests of the Fund and its Index for the one year period and above has agreed to waive advisory fees of the shareholders and that the compensation to such Index for the three and five year Fund, as discussed below. Based on this AIM under the Advisory Agreement is fair periods. Based on this review and after review, the Board concluded that the and reasonable and would have been taking account of all of the other factors advisory fee rate for the Fund under the obtained through arm's length that the Board considered in determining Advisory Agreement was fair and negotiations. whether to continue the Advisory Agreement reasonable. for the Fund, the Board concluded that no Unless otherwise stated, information changes should be made to the Fund and o Expense limitations and fee waivers. The presented below is as of June 27, 2006 and that it was not necessary to change the Board noted that AIM has contractually does not reflect any changes that may have Fund's portfolio management team at this agreed to waive advisory fees of the Fund occurred since June 27, 2006, including time. Although the independent written through December 31, 2009 to the extent but not limited to changes to the Fund's evaluation of the Fund's Senior Officer necessary so that the advisory fees performance, advisory fees, expense (discussed below) only considered Fund payable by the Fund do not exceed a limitations and/or fee waivers. performance through the most recent specified maximum advisory fee rate, which calendar year, the Board also reviewed maximum rate includes breakpoints and is o The nature and extent of the advisory more recent Fund based on net asset levels. The Board services to be provided by AIM. The Board considered the contractual nature of this reviewed the services to be provided by fee waiver AIM under the Advisory Agreement. Based (continued) 10 AIM European Growth Fund and noted that it remains in effect until ableness of the proposed management fees services. In addition to reviewing such December 31, 2009. The Board considered of the AIM Funds, including the Fund. The services, the trustees also considered the the effect this fee waiver would have on Board noted that the Senior Officer's organizational structure employed by AIM the Fund's estimated expenses and written evaluation had been relied upon by and its affiliates to provide those concluded that the levels of fee the Board in this regard in lieu of a services. Based on the review of these and waivers/expense limitations for the Fund competitive bidding process. In other factors, the Board concluded that were fair and reasonable. determining whether to continue the AIM and its affiliates were qualified to Advisory Agreement for the Fund, the Board continue to provide non-investment o Breakpoints and economies of scale. The considered the Senior Officer's written advisory services to the Fund, including Board reviewed the structure of the Fund's evaluation and the recommendation made by administrative, transfer agency and advisory fee under the Advisory Agreement, the Senior Officer to the Board that the distribution services, and that AIM and noting that it includes one breakpoint. Board consider whether the advisory fee its affiliates currently are providing The Board reviewed the level of the Fund's waivers for certain equity AIM Funds, satisfactory non-investment advisory advisory fees, and noted that such fees, including the Fund, should be simplified. services. as a percentage of the Fund's net assets, The Board concluded that it would be have decreased as net assets increased advisable to consider this issue and reach o Other factors and current trends. The because the Advisory Agreement includes a a decision prior to the expiration date of Board considered the steps that AIM and breakpoint. The Board noted that AIM has such advisory fee waivers. its affiliates have taken over the last contractually agreed to waive advisory several years, and continue to take, in fees of the Fund through December 31, 2009 o Profitability of AIM and its affiliates. order to improve the quality and to the extent necessary so that the The Board reviewed information concerning efficiency of the services they provide to advisory fees payable by the Fund do not the profitability of AIM's (and its the Funds in the areas of investment exceed a specified maximum advisory fee affiliates') investment advisory and other performance, product line diversification, rate, which maximum rate includes activities and its financial condition. distribution, fund operations, shareholder breakpoints and is based on net asset The Board considered the overall services and compliance. The Board levels. The Board concluded that the profitability of AIM, as well as the concluded that these steps taken by AIM Fund's fee levels under the Advisory profitability of AIM in connection with have improved, and are likely to continue Agreement therefore reflect economies of managing the Fund. The Board noted that to improve, the quality and efficiency of scale and that it was not necessary to AIM's operations remain profitable, the services AIM and its affiliates change the advisory fee breakpoints in the although increased expenses in recent provide to the Fund in each of these Fund's advisory fee schedule. years have reduced AIM's profitability. areas, and support the Board's approval of Based on the review of the profitability the continuance of the Advisory Agreement o Investments in affiliated money market of AIM's and its affiliates' investment for the Fund. funds. The Board also took into account advisory and other activities and its the fact that uninvested cash and cash financial condition, the Board concluded collateral from securities lending that the compensation to be paid by the arrangements, if any (collectively, "cash Fund to AIM under its Advisory Agreement balances") of the Fund may be invested in was not excessive. money market funds advised by AIM pursuant to the terms of an SEC exemptive order. o Benefits of soft dollars to AIM. The The Board found that the Fund may realize Board considered the benefits realized by certain benefits upon investing cash AIM as a result of brokerage transactions balances in AIM advised money market executed through "soft dollar" funds, including a higher net return, arrangements. Under these arrangements, increased liquidity, increased brokerage commissions paid by the Fund diversification or decreased transaction and/or other funds advised by AIM are used costs. The Board also found that the Fund to pay for research and execution will not receive reduced services if it services. This research may be used by AIM invests its cash balances in such money in making investment decisions for the market funds. The Board noted that, to the Fund. The Board concluded that such extent the Fund invests uninvested cash in arrangements were appropriate. affiliated money market funds, AIM has voluntarily agreed to waive a portion of o AIM's financial soundness in light of the advisory fees it receives from the the Fund's needs. The Board considered Fund attributable to such investment. The whether AIM is financially sound and has Board further determined that the proposed the resources necessary to perform its securities lending program and related obligations under the Advisory Agreement, procedures with respect to the lending and concluded that AIM has the financial Fund is in the best interests of the resources necessary to fulfill its lending Fund and its respective obligations under the Advisory Agreement. shareholders. The Board therefore concluded that the investment of cash o Historical relationship between the Fund collateral received in connection with the and AIM. In determining whether to securities lending program in the money continue the Advisory Agreement for the market funds according to the procedures Fund, the Board also considered the prior is in the best interests of the lending relationship between AIM and the Fund, as Fund and its respective shareholders. well as the Board's knowledge of AIM's operations, and concluded that it was o Independent written evaluation and beneficial to maintain the current recommendations of the Fund's Senior relationship, in part, because of such Officer. The Board noted that, upon their knowledge. The Board also reviewed the direction, the Senior Officer of the Fund, general nature of the non-investment who is independent of AIM and AIM's advisory services currently performed by affiliates, had prepared an independent AIM and its affiliates, such as written evaluation in order to assist the administrative, transfer agency and Board in determining the reason- distribution services, and the fees received by AIM and its affiliates for performing such 11 AIM European Growth Fund SCHEDULE OF INVESTMENTS October 31, 2006 <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- FOREIGN COMMON STOCKS & OTHER EQUITY INTERESTS-90.50% BELGIUM-3.21% Colruyt S.A. (Food Retail)(a)(b) 68,300 $ 12,025,694 - -------------------------------------------------------------------------- InBev N.V. (Brewers) 316,586 17,835,851 - -------------------------------------------------------------------------- KBC Groep N.V. (Diversified Banks)(a) 112,324 12,249,981 ========================================================================== 42,111,526 ========================================================================== CYPRUS-0.74% Bank of Cyprus Public PCL (Diversified Banks)(a) 858,090 9,718,307 ========================================================================== DENMARK-1.92% DSV A.S. (Trucking)(a) 69,200 12,767,511 - -------------------------------------------------------------------------- Novo Nordisk A.S.-Class B (Pharmaceuticals)(a) 165,033 12,451,634 ========================================================================== 25,219,145 ========================================================================== FINLAND-0.76% Nokian Renkaat Oyj (Tires & Rubber)(a) 517,950 9,912,177 ========================================================================== FRANCE-10.12% Axa (Multi-Line Insurance)(a) 333,795 12,686,903 - -------------------------------------------------------------------------- BNP Paribas (Diversified Banks)(a) 228,401 25,089,250 - -------------------------------------------------------------------------- Capgemini S.A. (IT Consulting & Other Services)(a) 158,221 8,978,787 - -------------------------------------------------------------------------- Euler Hermes S.A. (Property & Casualty Insurance) 63,700 8,276,696 - -------------------------------------------------------------------------- Neopost S.A. (Office Electronics)(a) 104,800 12,808,878 - -------------------------------------------------------------------------- Sanofi-Aventis (Pharmaceuticals)(a) 142,422 12,096,787 - -------------------------------------------------------------------------- Societe Generale (Diversified Banks)(a) 67,790 11,232,398 - -------------------------------------------------------------------------- Total S.A. (Integrated Oil & Gas)(a) 286,292 19,483,257 - -------------------------------------------------------------------------- Vinci S.A. (Construction & Engineering)(a) 196,000 22,064,133 ========================================================================== 132,717,089 ========================================================================== GERMANY-8.65% Bayer A.G. (Diversified Chemicals)(a)(b) 187,500 9,424,819 - -------------------------------------------------------------------------- Celesio A.G. (Health Care Distributors) 178,400 9,199,114 - -------------------------------------------------------------------------- Commerzbank A.G. (Diversified Banks)(a) 393,690 13,964,067 - -------------------------------------------------------------------------- Continental A.G. (Tires & Rubber)(a) 96,625 10,791,643 - -------------------------------------------------------------------------- Deutsche Boerse A.G. (Specialized Finance)(a) 92,500 14,894,671 - -------------------------------------------------------------------------- MAN A.G. (Industrial Machinery)(a) 159,365 14,148,678 - -------------------------------------------------------------------------- Merck KGaA (Pharmaceuticals) 88,568 9,337,415 - -------------------------------------------------------------------------- Puma A.G. Rudolf Dassler Sport (Footwear) 72,448 25,690,664 - -------------------------------------------------------------------------- Siemens A.G. (Industrial Conglomerates) 66,590 5,991,946 ========================================================================== 113,443,017 ========================================================================== GREECE-6.23% EFG Eurobank Ergasias (Diversified Banks)(a) 182,040 6,038,002 - -------------------------------------------------------------------------- Germanos S.A. (Computer & Electronics Retail)(a) 459,390 11,116,997 - -------------------------------------------------------------------------- </Table> <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- GREECE-(CONTINUED) Intralot S.A. (Casinos & Gaming)(a) 584,130 $ 16,073,102 - -------------------------------------------------------------------------- OPAP S.A. (Casinos & Gaming) (Acquired 07/14/03; Cost $1,109,094)(a)(c) 104,000 3,703,450 - -------------------------------------------------------------------------- OPAP S.A. (Casinos & Gaming)(a) 341,160 12,148,742 - -------------------------------------------------------------------------- Piraeus Bank S.A. (Diversified Banks)(a) 473,375 13,475,112 - -------------------------------------------------------------------------- Titan Cement Co. S.A. (Construction Materials)(a) 364,300 19,080,510 ========================================================================== 81,635,915 ========================================================================== HUNGARY-1.66% MOL Hungarian Oil and Gas Nyrt. (Integrated Oil & Gas)(a) 58,473 5,811,986 - -------------------------------------------------------------------------- OTP Bank Rt. (Diversified Banks) 452,858 15,920,141 ========================================================================== 21,732,127 ========================================================================== IRELAND-5.04% Anglo Irish Bank Corp. PLC (Diversified Banks)(a) 1,642,213 29,446,780 - -------------------------------------------------------------------------- CRH PLC (Construction Materials) 302,359 10,686,011 - -------------------------------------------------------------------------- FBD Holdings PLC (Multi-Line Insurance)(a) 126,600 6,390,375 - -------------------------------------------------------------------------- IAWS Group PLC (Packaged Foods & Meats)(a) 540,789 11,904,536 - -------------------------------------------------------------------------- Independent News & Media PLC (Publishing)(a) 2,289,800 7,681,851 ========================================================================== 66,109,553 ========================================================================== ITALY-2.89% Davide Campari-Milano S.p.A. (Distillers & Vintners)(a) 1,264,000 11,559,333 - -------------------------------------------------------------------------- Eni S.p.A. (Integrated Oil & Gas)(a)(b) 634,414 19,199,135 - -------------------------------------------------------------------------- Lottomatica S.p.A. (Casinos & Gaming) 195,000 7,118,204 ========================================================================== 37,876,672 ========================================================================== NETHERLANDS-7.29% Aalberts Industries N.V. (Industrial Machinery)(a) 252,436 19,800,433 - -------------------------------------------------------------------------- Heineken Holding N.V. (Brewers)(a) 257,603 10,073,643 - -------------------------------------------------------------------------- ING Groep N.V. (Other Diversified Financial Services)(a) 231,355 10,250,416 - -------------------------------------------------------------------------- Koninklijke BAM Groep N.V. (Construction & Engineering)(a) 939,129 19,565,931 - -------------------------------------------------------------------------- Nutreco Holding N.V. (Agricultural Products)(a) 177,617 10,583,389 - -------------------------------------------------------------------------- USG People N.V. (Human Resource & Employment Services)(a) 618,464 25,293,088 ========================================================================== 95,566,900 ========================================================================== NORWAY-4.79% Cermaq A.S.A. (Packaged Foods & Meats) 778,220 9,583,404 - -------------------------------------------------------------------------- Pan Fish A.S.A. (Packaged Foods & Meats)(d) 5,318,100 4,165,317 - -------------------------------------------------------------------------- </Table> F-1 AIM European Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- NORWAY-(CONTINUED) Pan Fish A.S.A. (Packaged Foods & Meats) (Acquired 03/07/06; Cost $6,058,660)(c)(d) 9,215,000 $ 7,217,500 - -------------------------------------------------------------------------- Petroleum Geo-Services A.S.A. (Oil & Gas Equipment & Services)(a)(d) 419,410 24,549,631 - -------------------------------------------------------------------------- Prosafe A.S.A. (Oil & Gas Equipment & Services)(a) 37,936 2,437,853 - -------------------------------------------------------------------------- TGS Nopec Geophysical Co. A.S.A. (Oil & Gas Equipment & Services)(a)(d) 836,000 14,891,166 ========================================================================== 62,844,871 ========================================================================== RUSSIA-1.61% LUKOIL-ADR (Integrated Oil & Gas)(a) 89,000 7,249,132 - -------------------------------------------------------------------------- OAO Vimpel-Communications-ADR (Wireless Telecommunication Services)(d) 210,400 13,884,296 ========================================================================== 21,133,428 ========================================================================== SPAIN-3.19% Banco Santander Central Hispano S.A. (Diversified Banks)(a) 745,275 12,891,505 - -------------------------------------------------------------------------- Corporacion Mapfre S.A. (Multi-Line Insurance)(a) 2,935,815 12,975,942 - -------------------------------------------------------------------------- Industria de Diseno Textil, S.A. (Apparel Retail)(a) 334,813 16,000,067 ========================================================================== 41,867,514 ========================================================================== SWEDEN-1.69% Atlas Copco A.B.-Class A (Industrial Machinery)(a) 390,930 11,411,676 - -------------------------------------------------------------------------- Swedish Match A.B. (Tobacco)(a) 676,500 10,811,502 ========================================================================== 22,223,178 ========================================================================== SWITZERLAND-9.52% Compagnie Financiere Richemont A.G.-Class A (Apparel, Accessories & Luxury Goods)(a)(e) 354,630 17,511,212 - -------------------------------------------------------------------------- Credit Suisse Group (Diversified Capital Markets)(a) 180,380 10,867,732 - -------------------------------------------------------------------------- Nestle S.A. (Packaged Foods & Meats)(a) 39,628 13,528,712 - -------------------------------------------------------------------------- Phonak Holding A.G. (Health Care Equipment) 155,000 9,892,292 - -------------------------------------------------------------------------- Rieter Holding A.G. (Auto Parts & Equipment)(a) 28,139 13,326,685 - -------------------------------------------------------------------------- Roche Holding A.G. (Pharmaceuticals)(a) 119,600 20,901,215 - -------------------------------------------------------------------------- Syngenta A.G. (Fertilizers & Agricultural Chemicals)(a) 136,500 22,025,127 - -------------------------------------------------------------------------- UBS A.G. (Diversified Capital Markets)(a) 282,581 16,852,931 ========================================================================== 124,905,906 ========================================================================== TURKEY-1.61% Akbank T.A.S. (Diversified Banks)(a) 2,323,478 13,203,392 - -------------------------------------------------------------------------- Tupras-Turkiye Petrol Rafinerileri A.S. (Oil & Gas Refining & Marketing)(a) 475,398 7,887,342 ========================================================================== 21,090,734 ========================================================================== </Table> <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- UNITED KINGDOM-19.58% Amlin PLC (Multi-Line Insurance)(a) 2,210,571 $ 12,676,104 - -------------------------------------------------------------------------- Aviva PLC (Multi-Line Insurance)(a) 729,476 10,765,076 - -------------------------------------------------------------------------- Balfour Beatty PLC (Construction & Engineering)(a) 1,766,700 13,608,583 - -------------------------------------------------------------------------- Bunzl PLC (Trading Companies & Distributors)(a) 1,244,306 16,409,058 - -------------------------------------------------------------------------- Capita Group PLC (Human Resource & Employment Services)(a) 1,409,600 14,474,613 - -------------------------------------------------------------------------- Enterprise Inns PLC (Restaurants)(a) 816,780 16,776,752 - -------------------------------------------------------------------------- Homeserve PLC (Diversified Commercial & Professional Services)(a) 276,000 9,352,838 - -------------------------------------------------------------------------- Imperial Tobacco Group PLC (Tobacco) 520,261 18,429,311 - -------------------------------------------------------------------------- Inchcape PLC (Distributors)(a) 1,371,180 13,511,134 - -------------------------------------------------------------------------- Informa PLC (Publishing)(a) 2,073,141 21,597,386 - -------------------------------------------------------------------------- International Power PLC (Independent Power Producers & Energy Traders)(a) 2,298,000 14,667,007 - -------------------------------------------------------------------------- Mitie Group PLC (Diversified Commercial & Professional Services)(a) 1,842,000 7,196,948 - -------------------------------------------------------------------------- Punch Taverns PLC (Restaurants)(a) 524,640 10,289,170 - -------------------------------------------------------------------------- Reckitt Benckiser PLC (Household Products)(a) 257,245 11,181,503 - -------------------------------------------------------------------------- Shire PLC (Pharmaceuticals)(a) 1,105,300 20,183,264 - -------------------------------------------------------------------------- Tesco PLC (Food Retail) 1,308,319 9,820,516 - -------------------------------------------------------------------------- Ultra Electronics Holdings PLC (Aerospace & Defense)(a) 547,110 11,665,984 - -------------------------------------------------------------------------- Vedanta Resources PLC (Diversified Metals & Mining)(a) 491,300 13,661,128 - -------------------------------------------------------------------------- WPP Group PLC (Advertising)(a) 821,679 10,519,818 ========================================================================== 256,786,193 ========================================================================== Total Foreign Common Stocks & Other Equity Interests (Cost $703,449,409) 1,186,894,252 ========================================================================== PREFERRED STOCKS-2.52% GERMANY-2.52% Porsche A.G.-Pfd. (Automobile Manufacturers) 17,151 19,997,135 - -------------------------------------------------------------------------- Henkel KGaA-Pfd. (Household Products) 96,900 12,980,039 ========================================================================== Total Preferred Stocks (Cost $23,707,759) 32,977,174 ========================================================================== MONEY MARKET FUNDS-5.64% Liquid Assets Portfolio-Institutional Class(f) 36,994,298 36,994,298 - -------------------------------------------------------------------------- Premier Portfolio-Institutional Class(f) 36,994,298 36,994,298 ========================================================================== Total Money Market Funds (Cost $73,988,596) 73,988,596 ========================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities loaned)-98.66% (Cost $801,145,764) 1,293,860,022 ========================================================================== </Table> F-2 AIM European Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED MONEY MARKET FUNDS-1.63% Liquid Assets Portfolio-Institutional Class(f)(g) 21,417,700 $ 21,417,700 ========================================================================== Total Money Market Funds (purchased with cash collateral from securities loaned) (Cost $21,417,700) 21,417,700 ========================================================================== TOTAL INVESTMENTS-100.29% (Cost $822,563,464) 1,315,277,722 ========================================================================== OTHER ASSETS LESS LIABILITIES-(0.29)% (3,837,269) ========================================================================== NET ASSETS-100.00% $1,311,440,453 __________________________________________________________________________ ========================================================================== </Table> Investment Abbreviations: <Table> ADR - American Depositary Receipt Pfd. - Preferred </Table> Notes to Schedule of Investments: (a) In accordance with the procedures established by the Board of Trustees, the foreign security is fair valued using adjusted closing market prices. The aggregate value of these securities at October 31, 2006 was $1,003,845,574, which represented 76.55% of the Fund's Net Assets. See Note 1A. (b) All or a portion of this security was out on loan at October 31, 2006. (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 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 value of these securities at October 31, 2006 was $10,920,950, which represented 0.83% of the Fund's Net Assets. Unless otherwise indicated, these securities are not considered to be illiquid. (d) Non-income producing security. (e) Each unit represents one A bearer share in the company and one bearer share participation certificate in Richemont S.A. (f) The money market fund and the Fund are affiliated by having the same investment advisor. See Note 3. (g) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 8. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-3 AIM European Growth Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 2006 <Table> ASSETS: Investments, at value (cost $727,157,168)* $1,219,871,426 - ------------------------------------------------------------ Investments in affiliated money market funds (cost $95,406,296) 95,406,296 ============================================================ Total investments (cost $822,563,464) 1,315,277,722 ============================================================ Foreign currencies, at value (cost $14,702,722) 14,739,273 - ------------------------------------------------------------ Receivables for: Fund shares sold 4,093,249 - ------------------------------------------------------------ Dividends 1,707,997 - ------------------------------------------------------------ Investment for trustee deferred compensation and retirement plans 110,909 - ------------------------------------------------------------ Other assets 45,622 ============================================================ Total assets 1,335,974,772 ____________________________________________________________ ============================================================ LIABILITIES: Payables for: Investments purchased 686,637 - ------------------------------------------------------------ Fund shares reacquired 1,113,275 - ------------------------------------------------------------ Trustee deferred compensation and retirement plans 160,906 - ------------------------------------------------------------ Collateral upon return of securities loaned 21,417,700 - ------------------------------------------------------------ Accrued distribution fees 429,853 - ------------------------------------------------------------ Accrued trustees' and officer's fees and benefits 2,350 - ------------------------------------------------------------ Accrued transfer agent fees 496,667 - ------------------------------------------------------------ Accrued operating expenses 226,931 ============================================================ Total liabilities 24,534,319 ============================================================ Net assets applicable to shares outstanding $1,311,440,453 ____________________________________________________________ ============================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $ 779,810,604 - ------------------------------------------------------------ Undistributed net investment income 8,422,961 - ------------------------------------------------------------ Undistributed net realized gain from investment securities and foreign currencies 30,438,584 - ------------------------------------------------------------ Unrealized appreciation of investment securities and foreign currencies 492,768,304 ============================================================ $1,311,440,453 ____________________________________________________________ ============================================================ NET ASSETS: Class A $ 768,768,988 ____________________________________________________________ ============================================================ Class B $ 161,405,134 ____________________________________________________________ ============================================================ Class C $ 103,675,109 ____________________________________________________________ ============================================================ Class R $ 11,081,340 ____________________________________________________________ ============================================================ Investor Class $ 266,509,882 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 19,302,835 ____________________________________________________________ ============================================================ Class B 4,288,999 ____________________________________________________________ ============================================================ Class C 2,753,444 ____________________________________________________________ ============================================================ Class R 279,843 ____________________________________________________________ ============================================================ Investor Class 6,700,409 ____________________________________________________________ ============================================================ Class A: Net asset value per share $ 39.83 - ------------------------------------------------------------ Offering price per share (Net asset value of $39.83 divided by 94.50%) $ 42.15 ____________________________________________________________ ============================================================ Class B: Net asset value and offering price per share $ 37.63 ____________________________________________________________ ============================================================ Class C: Net asset value and offering price per share $ 37.65 ____________________________________________________________ ============================================================ Class R: Net asset value and offering price per share $ 39.60 ____________________________________________________________ ============================================================ Investor Class: Net asset value and offering price per share $ 39.78 ____________________________________________________________ ============================================================ * At October 31, 2006, securities with an aggregate value of $20,390,890 were on loan to brokers. </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-4 AIM European Growth Fund STATEMENT OF OPERATIONS For the year ended October 31, 2006 <Table> INVESTMENT INCOME: Dividends (net of foreign withholding tax of $2,642,549) $ 23,643,586 - -------------------------------------------------------------------------- Dividends from affiliated money market funds (includes securities lending income of $636,073) 3,245,318 - -------------------------------------------------------------------------- Interest 14,349 ========================================================================== Total investment income 26,903,253 ========================================================================== EXPENSES: Advisory fees 10,172,696 - -------------------------------------------------------------------------- Administrative services fees 293,580 - -------------------------------------------------------------------------- Custodian fees 1,160,060 - -------------------------------------------------------------------------- Distribution fees: Class A 1,551,864 - -------------------------------------------------------------------------- Class B 1,586,399 - -------------------------------------------------------------------------- Class C 806,742 - -------------------------------------------------------------------------- Class R 35,827 - -------------------------------------------------------------------------- Investor Class 512,130 - -------------------------------------------------------------------------- Transfer agent fees 2,833,079 - -------------------------------------------------------------------------- Trustees' and officer's fees and benefits 37,831 - -------------------------------------------------------------------------- Other 435,520 ========================================================================== Total expenses 19,425,728 ========================================================================== Less: Fees waived, expenses reimbursed and expense offset arrangements (409,046) ========================================================================== Net expenses 19,016,682 ========================================================================== Net investment income 7,886,571 ========================================================================== REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain from: Investment securities (includes net gains from securities sold to affiliates of $52,992) 101,355,327 - -------------------------------------------------------------------------- Foreign currencies 650,973 ========================================================================== 102,006,300 ========================================================================== Change in net unrealized appreciation of: Investment securities 224,497,526 - -------------------------------------------------------------------------- Foreign currencies 89,924 ========================================================================== 224,587,450 ========================================================================== Net gain from investment securities and foreign currencies 326,593,750 ========================================================================== Net increase in net assets resulting from operations $334,480,321 __________________________________________________________________________ ========================================================================== </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-5 AIM European Growth Fund STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2006 and 2005 <Table> <Caption> 2006 2005 - -------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 7,886,571 $ 5,143,976 - -------------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 102,006,300 134,097,248 - -------------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities and foreign currencies 224,587,450 5,533,988 ============================================================================================ Net increase in net assets resulting from operations 334,480,321 144,775,212 ============================================================================================ Distributions to shareholders from net investment income: Class A (3,358,722) (528,401) - -------------------------------------------------------------------------------------------- Class B (38,352) -- - -------------------------------------------------------------------------------------------- Class C (17,313) -- - -------------------------------------------------------------------------------------------- Class R (25,405) (715) - -------------------------------------------------------------------------------------------- Investor Class (1,509,105) (486,652) ============================================================================================ Total distributions from net investment income (4,948,897) (1,015,768) ============================================================================================ Distributions to shareholders from net realized gains: Class A (32,547,505) -- - -------------------------------------------------------------------------------------------- Class B (9,964,891) -- - -------------------------------------------------------------------------------------------- Class C (4,498,118) -- - -------------------------------------------------------------------------------------------- Class R (334,636) -- - -------------------------------------------------------------------------------------------- Investor Class (13,291,640) -- ============================================================================================ Total distributions from net realized gains (60,636,790) -- ============================================================================================ Decrease in net assets resulting from distributions (65,585,687) (1,015,768) ============================================================================================ Share transactions-net: Class A 120,909,916 11,635,750 - -------------------------------------------------------------------------------------------- Class B (21,307,049) (10,160,016) - -------------------------------------------------------------------------------------------- Class C 20,498,296 9,944,523 - -------------------------------------------------------------------------------------------- Class R 4,551,131 2,163,148 - -------------------------------------------------------------------------------------------- Investor Class 6,458,081 (16,521,258) ============================================================================================ Net increase (decrease) in net assets resulting from share transactions 131,110,375 (2,937,853) ============================================================================================ Net increase in net assets 400,005,009 140,821,591 ============================================================================================ NET ASSETS: Beginning of year 911,435,444 770,613,853 ============================================================================================ End of year (including undistributed net investment income of $8,422,961 and $4,834,314, respectively) $1,311,440,453 $911,435,444 ____________________________________________________________________________________________ ============================================================================================ </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-6 AIM European Growth Fund NOTES TO FINANCIAL STATEMENTS October 31, 2006 NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM European Growth Fund (the "Fund") is a series portfolio of AIM International Mutual Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently consists of 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. The Fund's investment objective is long-term growth of capital. 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 or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are recorded at amortized cost which approximates value. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures. 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 unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. 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. Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the realized and unrealized net F-7 AIM European Growth Fund gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund's net asset value and, accordingly, they reduce the Fund's total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the advisor. 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. COUNTRY DETERMINATION -- For the purposes of making investment selection decisions and presentation in the Schedule of Investments, AIM may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer's securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America unless otherwise noted. D. 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 treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. E. 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 to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. F. 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. G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to taxation. Actual results could differ from those estimates. H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) 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. K. 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. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The Fund could be exposed to risk, which may be in excess of the amount reflected in the Statement of Assets and Liabilities, if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F-8 AIM European Growth Fund NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust 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 based on the annual rate of the Fund's average daily net assets as follows: <Table> <Caption> AVERAGE NET ASSETS RATE - ------------------------------------------------------------------- First $500 million 0.95% - ------------------------------------------------------------------- Over $500 million 0.90% __________________________________________________________________ =================================================================== </Table> Through December 31, 2009, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund (based on the Fund's average daily net assets) do not exceed the annual rate of: <Table> <Caption> AVERAGE NET ASSETS RATE - -------------------------------------------------------------------- First $250 million 0.935% - -------------------------------------------------------------------- Next $250 million 0.91% - -------------------------------------------------------------------- Next $500 million 0.885% - -------------------------------------------------------------------- Next $1.5 billion 0.86% - -------------------------------------------------------------------- Next $2.5 billion 0.835% - -------------------------------------------------------------------- Next $2.5 billion 0.81% - -------------------------------------------------------------------- Next $2.5 billion 0.785% - -------------------------------------------------------------------- Over $10 billion 0.76% ___________________________________________________________________ ==================================================================== </Table> 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 on investments by the Fund in such affiliated money market funds (excluding investments made in affiliated money market funds with cash collateral from securities loaned by the fund). Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors. For the year ended October 31, 2006, AIM waived advisory fees of $266,035. At the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended October 31, 2006, AMVESCAP reimbursed expenses of the Fund in the amount of $2,865. 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. Pursuant to such agreement, for the year ended October 31, 2006, AIM was paid $293,580. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency and shareholder services to the Fund and reimburse AIS for certain expenses incurred by AIS in the course of providing such services. AIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by AIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended October 31, 2006, the Fund paid AIS $2,833,079. The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B, Class C, Class R and 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 Investor Class shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% 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. The Fund, pursuant to the Investor Class Plan, reimburses ADI for its allocated share of expenses incurred pursuant to the Investor Class Plan for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. Of the Rule 12b-1 payments, up to 0.25% of the average daily net assets of the Class A, Class B, Class C, Class R or Investor Class shares may be paid to furnish continuing personal shareholder services to 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. National Association of Securities Dealers ("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, 2006, the Class A, Class B, Class C, Class R and Investor Class shares paid $1,551,864, $1,586,399, $806,742, $35,827 and $512,130, 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, 2006, ADI advised the Fund that it retained $191,996 in front-end sales commissions from the sale of Class A shares and $7,573, $69,499, $13,008 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed on redemptions by shareholders. Certain officers and trustees of the Trust are officers and directors of AIM, AIS and/or ADI. F-9 AIM European Growth Fund NOTE 3--INVESTMENTS IN AFFILIATES The Fund is permitted, pursuant to procedures approved by the Board of Trustees, to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the year ended October 31, 2006. INVESTMENTS OF DAILY AVAILABLE CASH BALANCES: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio- Institutional Class $14,835,210 $117,034,944 $ (94,875,856) $ -- $36,994,298 $1,302,737 $ -- - ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio- Institutional Class -- 73,251,954 (36,257,656) -- 36,994,298 682,413 -- - ----------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio- Institutional Class 14,835,210 74,588,307 (89,423,517) -- -- 624,095 -- =================================================================================================================================== Subtotal $29,670,420 $264,875,205 $(220,557,029) $ -- $73,988,596 $2,609,245 $ -- =================================================================================================================================== </Table> INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME* GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio- Institutional Class $34,397,412 $525,233,249 $(538,212,961) $ -- $21,417,700 $ 636,073 $ -- =================================================================================================================================== Total Investments in Affiliates $64,067,832 $790,108,454 $(758,769,990) $ -- $95,406,296 $3,245,318 $ -- ___________________________________________________________________________________________________________________________________ =================================================================================================================================== </Table> * Net of compensation to counterparties. NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS The Fund is permitted to purchase or sell securities from or to certain other AIM Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment advisor (or affiliated investment advisors), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended October 31, 2006, the Fund engaged in securities sales of $93,568, which resulted in net realized gains of $52,992, and securities purchases of $246,720. NOTE 5--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions, (ii) custodian credits which result from periodic overnight cash balances at the custodian and (iii) a one time custodian fee credit to be used to offset future custodian fees. For the year ended October 31, 2006, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $140,146. NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee and Officer of the Fund who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended October 31, 2006, the Fund paid legal fees of $7,104 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. F-10 AIM European Growth Fund NOTE 7--BORROWINGS Pursuant to an exemptive order from the Securities and Exchange Commission, 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. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. 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. The Fund is a participant in an uncommitted unsecured revolving 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 credit facility 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 year ended October 31, 2006, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility. Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and AIM, not to exceed the contractually agreed upon rate. NOTE 8--PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities having a market value up to 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 received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. At October 31, 2006, securities with an aggregate value of $20,390,890 were on loan to brokers. The loans were secured by cash collateral of $21,417,700 received by the Fund and subsequently invested in affiliated money market funds. For the year ended October 31, 2006, the Fund received dividends on cash collateral investments of $636,073 for securities lending transactions, which are net of compensation to counterparties. NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the years ended October 31, 2006 and 2005 was as follows: <Table> <Caption> 2006 2005 - --------------------------------------------------------------------------------------- Distributions paid from: Ordinary income $ 4,948,897 $1,015,768 - --------------------------------------------------------------------------------------- Long-term capital gain 60,636,790 -- ======================================================================================= Total distributions $65,585,687 $1,015,768 _______________________________________________________________________________________ ======================================================================================= </Table> F-11 AIM European Growth Fund TAX COMPONENTS OF NET ASSETS: As of October 31, 2006, the components of net assets on a tax basis were as follows: <Table> <Caption> 2006 - ------------------------------------------------------------------------------ Undistributed ordinary income $ 8,542,066 - ------------------------------------------------------------------------------ Undistributed long-term gain 80,880,803 - ------------------------------------------------------------------------------ Unrealized appreciation -- investments 492,646,796 - ------------------------------------------------------------------------------ Temporary book/tax differences (119,105) - ------------------------------------------------------------------------------ Capital loss carryforward (50,320,711) - ------------------------------------------------------------------------------ Shares of beneficial interest 779,810,604 ============================================================================== Total net assets $1,311,440,453 ______________________________________________________________________________ ============================================================================== </Table> The difference between book-basis and tax-basis unrealized appreciation (depreciation) 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 (depreciation) difference is attributable primarily to losses on wash sales. The tax-basis unrealized appreciation on investments amount includes appreciation on foreign currencies of $54,046. 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 trustee deferral of compensation and retirement plan expenses. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. Under these limitation rules, the Fund is limited as of October 31, 2006 to utilizing $15,589,322 of capital loss carryforward in the fiscal year ended October 31, 2007. The Fund utilized $20,282,647 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of October 31, 2006 which expires as follows: <Table> <Caption> CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------- October 31, 2009 50,320,711 _____________________________________________________________________________ ============================================================================= </Table> * Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of November 24, 2003, the date of the reorganization of INVESCO European Growth Fund into the Fund, are realized on securities held on such date, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. NOTE 10--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2006 was $317,519,931 and $288,261,101, respectively. <Table> <Caption> UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS - ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $494,305,907 - ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (1,713,157) ============================================================================== Net unrealized appreciation of investment securities $492,592,750 ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $822,684,972. </Table> NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions and capital loss carryforward on October 31, 2006, undistributed net investment income was increased by $650,973, undistributed net realized gain was increased by $7,213,395 and shares of beneficial interest was decreased by $7,864,368. This reclassification had no effect on the net assets of the Fund. F-12 AIM European Growth Fund NOTE 12--SHARE INFORMATION The Fund currently consists of five different classes of shares: Class A, Class B, Class C, Class R and Investor Class. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. 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 certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. <Table> <Caption> CHANGES IN SHARES OUTSTANDING - ------------------------------------------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, ---------------------------------------------------------- 2006(a) 2005 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 5,572,165 $ 202,386,197 4,313,933 $ 128,881,535 - ------------------------------------------------------------------------------------------------------------------------ Class B 781,731 26,941,782 935,289 26,603,825 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,034,010 35,583,322 865,525 24,612,056 - ------------------------------------------------------------------------------------------------------------------------ Class R 173,556 6,277,323 122,192 3,670,884 - ------------------------------------------------------------------------------------------------------------------------ Investor Class 1,003,262 36,730,269 794,722 23,632,443 ======================================================================================================================== Issued as reinvestment of dividends: Class A 1,049,283 32,748,127 15,791 454,301 - ------------------------------------------------------------------------------------------------------------------------ Class B 316,706 9,399,848 -- -- - ------------------------------------------------------------------------------------------------------------------------ Class C 140,406 4,170,065 -- -- - ------------------------------------------------------------------------------------------------------------------------ Class R 11,497 357,559 24 704 - ------------------------------------------------------------------------------------------------------------------------ Investor Class 461,058 14,366,553 16,214 465,660 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 713,578 26,180,891 265,583 8,009,256 - ------------------------------------------------------------------------------------------------------------------------ Class B (753,318) (26,180,891) (278,801) (8,009,256) ======================================================================================================================== Reacquired:(b) Class A (3,987,665) (140,405,299) (4,180,070) (125,709,342) - ------------------------------------------------------------------------------------------------------------------------ Class B (940,293) (31,467,788) (999,545) (28,754,585) - ------------------------------------------------------------------------------------------------------------------------ Class C (580,844) (19,255,091) (511,006) (14,667,533) - ------------------------------------------------------------------------------------------------------------------------ Class R (59,186) (2,083,751) (49,790) (1,508,440) - ------------------------------------------------------------------------------------------------------------------------ Investor Class (1,273,793) (44,638,741) (1,351,519) (40,619,361) ======================================================================================================================== 3,662,153 $ 131,110,375 (41,458) $ (2,937,853) ________________________________________________________________________________________________________________________ ======================================================================================================================== </Table> (a) There are four entities that are each record owner of more than 5% of the outstanding shares of the Fund and in the aggregate they own 29% of the outstanding shares of the Fund. ADI has an agreement with these entities to sell Fund shares. The Fund, AIM and/or AIM affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, AIM and/or AIM affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially. (b) Amount is net of redemption fees of $30,606, $7,792, $3,943, $351 and $11,539 for Class A, Class B, Class C, Class R and Investor Class shares, respectively, for the year ended October 31, 2006 and $9,574, $2,938, $1,171, $70 and $4,128 for Class A, Class B, Class C, Class R and Investor Class shares, respectively, for the year ended October 31, 2005. NOTE 13--NEW ACCOUNTING STANDARD In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions for FIN 48 are effective for fiscal years beginning after December 15, 2006. Management is currently assessing the impact of FIN 48, if any, on the Fund's financial statements and intends for the Fund to adopt the FIN 48 provisions during 2007. F-13 AIM European Growth Fund NOTE 14--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, ----------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 31.11 $ 26.23 $ 20.02 $ 15.60 $ 16.52 - ------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) 0.31 0.21 0.05 (0.01) (0.07) - ------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 10.70 4.70 6.17 4.43 (0.85) ========================================================================================================================= Total from investment operations 11.01 4.91 6.22 4.42 (0.92) ========================================================================================================================= Less distributions: Dividends from net investment income (0.21) (0.03) (0.01) -- -- - ------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (2.08) -- -- -- -- ========================================================================================================================= Total distributions (2.29) (0.03) (0.01) -- -- ========================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ========================================================================================================================= Net asset value, end of period $ 39.83 $ 31.11 $ 26.23 $ 20.02 $ 15.60 _________________________________________________________________________________________________________________________ ========================================================================================================================= Total return(b) 37.44% 18.74% 31.06% 28.33% (5.57)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $768,769 $496,328 $407,566 $301,659 $283,812 _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.58%(c) 1.70% 1.87% 2.01% 1.93% - ------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.60%(c) 1.72% 1.87% 2.02% 1.93% ========================================================================================================================= Ratio of net investment income (loss) to average net assets 0.87%(c) 0.71% 0.19% (0.04)% (0.42)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Portfolio turnover rate 28% 48% 60% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $620,745,386. F-14 AIM European Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS B ---------------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 29.53 $ 25.03 $ 19.23 $ 15.08 $ 16.07 - ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss)(a) 0.04 0.01 (0.10) (0.11) (0.18) - ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) 10.15 4.49 5.90 4.26 (0.81) ======================================================================================================================== Total from investment operations 10.19 4.50 5.80 4.15 (0.99) ======================================================================================================================== Less distributions: Dividends from net investment income (0.01) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains (2.08) -- -- -- -- ======================================================================================================================== Total distributions (2.09) -- -- -- -- ======================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ======================================================================================================================== Net asset value, end of period $ 37.63 $ 29.53 $ 25.03 $ 19.23 $ 15.08 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) 36.39% 17.98% 30.16% 27.52% (6.16)% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $161,405 $144,211 $130,863 $107,959 $97,436 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.33%(c) 2.39% 2.52% 2.66% 2.58% - ------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 2.35%(c) 2.41% 2.52% 2.67% 2.58% ======================================================================================================================== Ratio of net investment income (loss) to average net assets 0.12%(c) 0.02% (0.46)% (0.69)% (1.07)% ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate 28% 48% 60% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $158,639,934. F-15 AIM European Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS C ------------------------------------------------------- YEAR ENDED OCTOBER 31, ------------------------------------------------------- 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 29.54 $ 25.05 $ 19.24 $ 15.09 $ 16.09 - --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) 0.04 0.01 (0.10) (0.11) (0.18) - --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 10.16 4.48 5.91 4.26 (0.82) ===================================================================================================================== Total from investment operations 10.20 4.49 5.81 4.15 (1.00) ===================================================================================================================== Less distributions: Dividends from net investment income (0.01) -- -- -- -- - --------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (2.08) -- -- -- -- ===================================================================================================================== Total distributions (2.09) -- -- -- -- ===================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ===================================================================================================================== Net asset value, end of period $ 37.65 $ 29.54 $ 25.05 $ 19.24 $ 15.09 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) 36.41% 17.92% 30.20% 27.50% (6.22)% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $103,675 $63,806 $45,222 $31,509 $27,323 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.33%(c) 2.39% 2.52% 2.66% 2.58% - --------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.35%(c) 2.41% 2.52% 2.67% 2.58% ===================================================================================================================== Ratio of net investment income (loss) to average net assets 0.12%(c) 0.02% (0.46)% (0.69)% (1.07)% _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate 28% 48% 60% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $80,674,189. F-16 AIM European Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS R --------------------------------------------------------- JUNE 3, 2002 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ---------------------------------------- OCTOBER 31, 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 30.96 $26.13 $19.98 $15.59 $ 18.35 - ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) 0.22 0.16 0.01 (0.03) (0.04) - ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 10.66 4.68 6.14 4.42 (2.72) ======================================================================================================================= Total from investment operations 10.88 4.84 6.15 4.39 (2.76) ======================================================================================================================= Less distributions: Dividends from net investment income (0.16) (0.01) -- -- -- - ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (2.08) -- -- -- -- ======================================================================================================================= Total distributions (2.24) (0.01) -- -- -- ======================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ======================================================================================================================= Net asset value, end of period $ 39.60 $30.96 $26.13 $19.98 $ 15.59 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) 37.11% 18.52% 30.78% 28.16% (15.04)% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $11,081 $4,767 $2,131 $ 660 $ 15 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.83%(c) 1.89% 2.02% 2.16% 2.08%(d) - ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.85%(c) 1.91% 2.02% 2.17% 2.08%(d) ======================================================================================================================= Ratio of net investment income (loss) to average net assets 0.62%(c) 0.52% 0.04% (0.19)% (0.57)%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(e) 28% 48% 60% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $7,165,370. (d) Annualized. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. F-17 AIM European Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> INVESTOR CLASS --------------------------------------------------------- SEPTEMBER 30, 2003 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ----------------------------------- OCTOBER 31, 2006 2005 2004 2003 - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 31.08 $ 26.22 $ 20.01 $18.84 - ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.32 0.24 0.09 0.00 - ----------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 10.69 4.69 6.15 1.17 ======================================================================================================================= Total from investment operations 11.01 4.93 6.24 1.17 ======================================================================================================================= Less distributions: Dividends from net investment income (0.23) (0.07) (0.03) -- - ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (2.08) -- -- -- ======================================================================================================================= Total distributions (2.31) (0.07) (0.03) -- ======================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- ======================================================================================================================= Net asset value, end of period $ 39.78 $ 31.08 $ 26.22 $20.01 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) 37.50% 18.82% 31.20% 6.21% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $266,510 $202,323 $184,832 $ 163 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.55%(c) 1.63% 1.71% 1.79%(d) - ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.57%(c) 1.65% 1.74% 1.79%(d) ======================================================================================================================= Ratio of net investment income to average net assets 0.91%(c) 0.78% 0.35% 0.18%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(e) 28% 48% 60% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $235,296,847. (d) Annualized. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. NOTE 15--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including the Securities and Exchange Commission ("SEC"), the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, AIM and ADI created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by AIM, which was done pursuant to the terms of the settlement. These two fair funds may increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading that also may have harmed applicable AIM Funds. These two fair funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. Management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these two fair funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future. At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. PENDING LITIGATION AND REGULATORY INQUIRIES On August 30, 2005, the West Virginia Office of the State Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes findings of fact that AIM and ADI entered into certain arrangements F-18 AIM European Growth Fund NOTE 15--LEGAL PROCEEDINGS--(CONTINUED) permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that AIM and ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or capped by statute. Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging: - that the defendants permitted improper market timing and related activity in the AIM Funds; - that certain AIM Funds inadequately employed fair value pricing; - that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans; and - that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions (all the claims in this category of lawsuits were dismissed with prejudice by the court on September 29, 2006, except for the Section 36(b) claim which was dismissed with leave to amend to plead it properly as a derivative claim). These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees. All lawsuits based on allegations of market timing, late trading and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court, all claims asserted against the AIM Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class Action Complaint for Violations of ERISA and dismissed such Complaint. The plaintiff has commenced an appeal from that decision. IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, among others, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost security holders. IFG, AIM and ADI have advised the Fund that they are providing full cooperation with respect to these inquiries. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Pending Litigation and Regulatory Inquiries described above may have on AIM, ADI or the Fund. F-19 AIM European Growth Fund REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM International Mutual Funds 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 AIM European Growth Fund (one of the funds constituting AIM International Mutual Funds, hereafter referred to as the "Fund") at October 31, 2006, 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 periods indicated, 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP December 20, 2006 Houston, Texas F-20 AIM European Growth Fund TAX DISCLOSURES REQUIRED FEDERAL INCOME TAX INFORMATION Of ordinary dividends paid to shareholders during the Fund's tax year ended October 31, 2006, 0% is eligible for the dividends received deduction for corporations. The Fund distributed long-term capital gains of $60,636,790 for the Fund's tax year ended October 31, 2006. For its tax year ended October 31, 2006, the Fund designates 100%, or the maximum amount allowable of its dividend distributions as qualified dividend income. Your actual amount of qualified dividend income for the calendar year will be reported in your Form 1099-DIV. You should consult your tax advisor regarding treatment of the amounts. For the fiscal year ended 10/31/06, the amount of income received by the fund from sources within foreign countries and possessions of the United States was $0.8235 (representing a total of $27,950,901. Of the foreign source income, $0.6360 per share is considered qualified dividend income. Foreign source income with the required adjustments for qualified dividends is $0.4610 per share. The amount of taxes paid by the fund to such countries for the fiscal year end 10/31/06 was $0.0499 per share (representing a total of $1,695,186). The following table provides a breakdown by country of ordinary income received and foreign taxes paid by the Fund during the fiscal year ended 10/31/06. The per share amount is based on shareholders of record on December 14, 2006. <Table> <Caption> FOREIGN ADJUSTED FOREIGN SOURCE FOREIGN TAX QUALIFIED FOREIGN SOURCE COUNTRY INCOME % PAID % DIVIDEND % INCOME % - --------------------------------------------------------------------------------------------------------------------------- Belgium 2.86% 1.78% 1.12% 4.23% - --------------------------------------------------------------------------------------------------------------------------- Denmark 0.11% 0.09% 0.06% 0.15% - --------------------------------------------------------------------------------------------------------------------------- France 16.92% 16.77% 10.11% 22.27% - --------------------------------------------------------------------------------------------------------------------------- Germany 5.90% 4.79% 2.95% 8.23% - --------------------------------------------------------------------------------------------------------------------------- Hungary 2.28% 0.00% 2.95% 1.75% - --------------------------------------------------------------------------------------------------------------------------- Greece 6.31% 0.00% 8.17% 4.84% - --------------------------------------------------------------------------------------------------------------------------- Ireland 4.23% 0.00% 5.48% 3.25% - --------------------------------------------------------------------------------------------------------------------------- Italy 6.29% 6.90% 3.91% 8.16% - --------------------------------------------------------------------------------------------------------------------------- The Netherlands 14.22% 27.93% 16.77% 12.24% - --------------------------------------------------------------------------------------------------------------------------- Norway 0.30% 0.25% 0.15% 0.41% - --------------------------------------------------------------------------------------------------------------------------- Russia 0.17% 0.36% 0.21% 0.13% - --------------------------------------------------------------------------------------------------------------------------- Spain 4.85% 10.44% 6.28% 3.73% - --------------------------------------------------------------------------------------------------------------------------- Sweden 7.73% 25.48% 8.97% 6.75% - --------------------------------------------------------------------------------------------------------------------------- Switzerland 7.55% 5.21% 7.29% 7.74% - --------------------------------------------------------------------------------------------------------------------------- Turkey 3.66% 0.00% 4.74% 2.81% - --------------------------------------------------------------------------------------------------------------------------- United Kingdom 16.62% 0.00% 20.84% 13.31% =========================================================================================================================== TOTAL 100.00% 100.00% 100.00% 100.00% ___________________________________________________________________________________________________________________________ =========================================================================================================================== </Table> TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS The percentage of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended January 31, 2006, April 30, 2006, July 31, 2006 and October 31, 2006, are 99.88%, 99.84%, 99.84% and 99.79%, respectively. F-21 AIM European Growth Fund TRUSTEES AND OFFICERS The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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> TRUSTEE AND/ NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) POSITION(S) HELD WITH THE 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 Trustee and Vice Chair Group Inc. (financial services holding company); Director and Vice Chairman, AMVESCAP PLC; Chairman, AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) and Trustee and Vice Chair of The AIM Family of Funds--Registered Trademark-- Formerly: President and Chief Executive Officer, A I M Management Group Inc.; Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); 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); Chief Executive Officer, AMVESCAP PLC -- Managed Products; and President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- - ------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None Trustee, President and President, A I M Management Group Inc., Principal AIM Mutual Fund Dealer Inc. (registered Executive Officer broker dealer), AIM Funds Management Inc. (registered investment advisor) and 1371 Preferred Inc. (holding company); Director and President, A I M Advisors, Inc., INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, A I M Capital Management, Inc. and A I M Distributors, Inc.; Director and Chairman, AIM Investment Services, Inc., Fund Management Company and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, AVZ Callco Inc. (holding company); AMVESCAP Inc. (holding company) and AIM Canada Holdings Inc. (holding company); Director and Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); and Manager, Powershares Capital Management LLC Formerly: President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); Chairman, AIM Canada Holdings, Inc.; Executive Vice President and Chief Operations Officer, AIM Funds Management Inc.; President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - ------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates ACE Limited (insurance company); Trustee and Chair (technology consulting company) and Captaris, Inc. (unified messaging provider) - ------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 2001 Retired Badgley Funds, Inc. (registered Trustee investment company (2 portfolios)) Formerly: Partner, law firm of Baker & McKenzie - ------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None Trustee (investment banking firm); and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation - ------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2000 Director of a number of public and None Trustee private business corporations, including the Boss Group Ltd. (private investment and management); Cortland Trust, Inc. (Chairman) (registered investment company (3 portfolios)); Annuity and Life Re (Holdings), Ltd. (insurance company); CompuDyne Corporation (provider of products and services to the public security market); and Homeowners of America Holding Corporation (property casualty company) Formerly: Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; and Director of various affiliated Volvo companies; and Director, Magellan Insurance Company - ------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff, and Discovery Global Trustee Century Group, Inc. (government affairs Education Fund (non-profit) company); and Owner, Dos Angelos Ranch, L.P. Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) - ------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered Trustee Naftalis and Frankel LLP investment company (3 portfolios)) - ------------------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series Trustee Formerly: Partner, Deloitte & Touche Funds, Inc. (21 portfolios) - ------------------------------------------------------------------------------------------------------------------------------- </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. Taylor 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. F-22 TRUSTEES AND OFFICERS--(CONTINUED) AIM European Growth Fund The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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 - ------------------------------------------------------------------------------------------------------------------------------ OTHER OFFICERS - ------------------------------------------------------------------------------------------------------------------------------ Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A Senior Vice President and of The AIM Family of Funds--Registered Senior Officer Trademark-- Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A Senior Vice President, Chief Secretary and General Counsel, A I M Legal Officer and Secretary Management Group Inc. and A I M Advisors, Inc.; Director, Vice President and Secretary, INVESCO Distributors, Inc.; Vice President and Secretary, A I M Capital Management, Inc., AIM Investment Services, Inc., and Fund Management Company; Senior Vice President and Secretary, A I M Distributors, Inc.; Director, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; and Manager, Powershares Capital Management LLC Formerly: Chief Operating Officer, Senior Vice President, General Counsel, and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); General Counsel and Secretary, Pilgrim Baxter Value Investors (an investment adviser); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - ------------------------------------------------------------------------------------------------------------------------------ Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A Vice President PLC; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, A I M Management Group Inc. (financial services holding company); Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc. and A I M Distributors, Inc.; Vice President, AIM Investment Services, Inc. and Fund Management Company; Senior Vice President and Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - ------------------------------------------------------------------------------------------------------------------------------ Kevin M. Carome -- 1956 2003 Senior Vice President and General Vice President Counsel, AMVESCAP PLC; Director, INVESCO Funds Group, Inc.; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Director, Vice President and N/A General Counsel, Fund Management Company; Director, Senior Vice President, Secretary and General Counsel, A I M Management Group Inc. and A I M Advisors, Inc.; Director and Vice President, INVESCO Distributors, Inc.; Senior Vice President, A I M Distributors, Inc.; Vice President, A I M Capital Management, Inc. and AIM Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; Chief Executive Officer and President, INVESCO Funds Group, Inc.; and Senior Vice President, and General Counsel, Liberty Financial Companies, Inc. and Senior Vice President and General Counsel Liberty Funds Group, LLC - ------------------------------------------------------------------------------------------------------------------------------ Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A Vice President, Principal Advisors, Inc.; and Vice President, Financial Officer and Treasurer and Principal Officer of The Treasurer AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Investment Services, Inc.; and Vice President, A I M Distributors, Inc. - ------------------------------------------------------------------------------------------------------------------------------ J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A Vice President Investment Officer, A I M Advisors Inc.; Director, Chairman, Chief Executive Officer, President and Chief Investment Officer, A I M Capital Management, Inc.; Executive Vice President, A I M Management Group Inc. and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Private Asset Management, Inc.; and Chief Equity Officer, Senior Vice President and Senior Investment Officer, A I M Capital Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Karen Dunn Kelley -- 1960 2004 Director of Cash Management, Managing N/A Vice President Director and Chief Cash Management Officer, A I M Capital Management, Inc; Director and President, Fund Management Company; and Vice President, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust Only) Formerly: Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - ------------------------------------------------------------------------------------------------------------------------------ Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A Anti-Money Laundering Officer, A I M Advisors, Inc., A I M Compliance Officer Capital Management, Inc., A I M Distributors, Inc., AIM Investment Services, Inc., AIM Private Asset Management, Inc., Fund Management Company and The AIM Family of Funds--Registered Trademark-- Formerly: Manager of the Fraud Prevention Department, AIM Investment Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A Chief Compliance Officer Group Inc.; Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc.; Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc.; and Vice President, A I M Distributors, Inc., AIM Investment Services, Inc. and Fund Management Company Formerly: Global Head of Product Development, AIG-Global Investment Group, Inc.; Chief Compliance Officer and Deputy General Counsel, AIG-SunAmerica Asset Management; and Chief Compliance Officer, Chief Operating Officer and Deputy General Counsel, American General Investment Management - ------------------------------------------------------------------------------------------------------------------------------ </Table> 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 1.800.959.4246. <Table> OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers Suite 100 11 Greenway Plaza Inc. LLP Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street Houston, TX 77046-1173 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company 1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Philadelphia, PA 19103-7599 Americas New York, NY 10036-2714 </Table> F-23 [eDELIVERY GO PAPERLESS AIMINVESTMENTS.COM/EDELIVERY GRAPHIC] REGISTER FOR EDELIVERY eDelivery is the process of receiving your fund and account If used after January 20, 2007, this report must be information via e-mail. Once your quarterly statements, tax accompanied by a Fund Performance & Commentary or by an AIM forms, fund reports, and prospectuses are available,we will Quarterly Performance Review for the most recent quarter-end. send you an e-mail notification containing links to these Mutual funds distributed by A I M Distributors, Inc. documents. For security purposes, you will need to log in to your account to view your statements and tax forms. A I M Management Group Inc. has provided leadership in the investment management industry since 1976. AIM Investment WHY SIGN UP? Services, Inc. is the transfer agent for the products and services represented by AIM Investments. AIM is a subsidiary Register for eDelivery to: of AMVESCAP PLC, one of the world's largest independent financial services companies with $450 billion in assets o reduce the amount of paper you receive. under management as of October 31, 2006. o gain access to your documents faster by not waiting for the mail. o view your documents online anytime at your convenience. o save the documents to your personal computer or print CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND them out for your records. EXPENSES CAREFULLY. FOR THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISOR AND HOW DO I SIGN UP? READ IT CAREFULLY BEFORE INVESTING. It's easy. Just follow these simple steps: 1. Log in to your account. 2. Click on the "Service Center" tab. 3. Select "Register for eDelivery" and complete the consent process. This AIM service is provided by AIM Investment Services,Inc. AIMinvestments.com EGR-AR-1 A I M Distributors,Inc. [YOUR GOALS. OUR SOLUTIONS.]--Registered Trademark-- - ------------------------------------------------------------------------------ Mutual Retirement Annuities College Separately Offshore Cash Funds Products Savings Managed Products Management Plans Accounts [AIM INVESTMENTS LOGO APPEARS HERE] - ------------------------------------------------------------------------------ --Registered Trademark-- INTERNATIONAL/GLOBAL EQUITY AIM GLOBAL AGGRESSIVE GROWTH FUND International/Global Growth Annual Report to Shareholders o October 31,2006 Table of Contents Supplemental Information ......... 2 Letters to Shareholders .......... 3 Performance Summary .............. 5 Management Discussion ............ 5 Fund Expenses .................... 7 Long-term Fund Performance ....... 8 Approval of Advisory Agreement ... 10 Schedule of Investments .......... F-1 Financial Statements ............. F-5 Notes to Financial Statements .... F-7 Financial Highlights ............. F-14 Auditor's Report ................. F-17 [COVER GLOBE IMAGE] Tax Disclosures .................. F-18 Trustees and Officers ............ F-19 [AIM INVESTMENT SOLUTIONS] [GRAPHIC] [GRAPHIC] [GRAPHIC] [DOMESTIC [INTERNATIONAL/ [SECTOR EQUITY] GLOBAL EQUITY] EQUITY] [GRAPHIC] [GRAPHIC] [GRAPHIC] [FIXED [ALLOCATION [DIVERSIFIED INCOME] SOLUTIONS] PORTFOLIOS] [AIM INVESTMENTS LOGO APPEARS HERE] --Registered Trademark-- AIM Global Aggressive Growth Fund AIM GLOBAL AGGRESSIVE GROWTH FUND SEEKS TO PROVIDE ABOVE-AVERAGE LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of October 31, 2006, and is based on total net assets. ABOUT SHARE CLASSES ABOUT INDEXES USED IN THIS REPORT transactions. Generally accepted accounting principles require adjustments o Class B shares are not available as an o The unmanaged MSCI WORLD INDEX is a to be made to the net assets of the Fund investment for retirement plans maintained group of global securities tracked by at period end for financial reporting pursuant to Section 401 of the Internal Morgan Stanley Capital International. purposes, and as such, the net asset Revenue Code, including 401(k) plans, values for shareholder transactions and money purchase pension plans and profit o The unmanaged MSCI WORLD GROWTH INDEX is the returns based on those net asset sharing plans. Plans that had existing a subset of the MSCI WORLD INDEX, a group values may differ from the net asset accounts invested in Class B shares prior of global securities tracked by Morgan values and returns reported in the to September 30, 2003, will continue to be Stanley Capital International; the Growth Financial Highlights. allowed to make additional purchases. sub-set measures performance of companies with higher price/earnings ratios and The Fund provides a complete list of its PRINCIPAL RISKS OF INVESTING IN higher forecasted growth values. holdings four times in each fiscal year, THE FUND at the quarter-ends. For the second and o The unmanaged LIPPER GLOBAL SMALL/MID- fourth quarters, the lists appear in the o Foreign securities have additional CAP CATEGORY AVERAGE represents an average Fund's semiannual and annual reports to risks, including exchange rate changes, of the performance of all global shareholders. For the first and third political and economic upheaval, the small/mid-cap mutual funds tracked by quarters, the Fund files the lists with relative lack of information about these Lipper Inc., an independent mutual fund the Securities and Exchange Commission companies, relatively low market liquidity performance monitor. (SEC) on Form N-Q. The most recent list of and the potential lack of strict financial portfolio holdings is available at and accounting controls and standards. o The Fund is not managed to track the AIMinvestments.com. From our home page, performance of any particular index, click on Products & Performance, then o Investing in a fund that invests in including the indexes defined here, and Mutual Funds, then Fund Overview. Select smaller companies involves risks not consequently, the performance of the Fund your Fund from the drop-down menu and associated with investing in more may deviate significantly from the click on Complete Quarterly Holdings. established companies, such as business performance of the indexes. Shareholders can also look up the Fund's risk, stock price fluctuations and Forms N-Q on the SEC Web site at sec.gov. illiquidity. o A direct investment cannot be made in an Copies of the Fund's Forms N-Q may be index. Unless otherwise indicated, index reviewed and copied at the SEC Public o Investing in emerging markets involves results include reinvested dividends, and Reference Room in Washington, D.C. You can greater risks than investing in more they do not reflect sales charges. obtain information on the operation of the established markets. Risks for emerging Performance of an index of funds reflects Public Reference Room, including markets include risks relating to the fund expenses; performance of a market information about duplicating fee charges, relatively smaller size and lesser index does not. by calling 202-942-8090 or 800-732-0330,or liquidity of these markets, high inflation by electronic request at the following rates, adverse political developments and OTHER INFORMATION e-mail address: publicinfo@sec.gov. The lack of timely information. SEC file numbers for the Fund are o Industry classifications used in this 811-06463 and 033-44611. o Prices of equity securities change in report are generally according to the response to many factors including the Global Industry Classification Standard, A description of the policies and historical and prospective earnings of the which was developed by and is the procedures that the Fund uses to determine issuer, the value of its assets, general exclusive property and a service mark of how to vote proxies relating to portfolio economic conditions, interest rates, Morgan Stanley Capital International Inc. securities is available without charge, investor perceptions and market liquidity. and Standard & Poor's. upon request, from our Client Services department at 800-959-4246 or on the AIM o The returns shown in management's Web site, AIMinvestments.com. On the home discussion of Fund performance are based page, scroll down and click on AIM Funds on net asset values calculated for Proxy Policy. The information is also shareholder available on the SEC Web site, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2006, is available at our Web site. Go to AIMinvestments.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov. ====================================================================================== ========================================== THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND FUND NASDAQ SYMBOLS PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares AGAAX ====================================================================================== Class B Shares AGABX Class C Shares AGACX ========================================== NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE AIMinvestments.com 2 AIM Global Aggressive Growth Fund Dear Shareholders of The AIM Family of Funds --Registered Trademark--: We're pleased to provide you with this report, which includes a discussion of how your Fund was managed during the review period ended October 31, 2006, and what factors affected its performance. As we approach the end of 2006, it seems likely that [TAYLOR many investors may see the value of their investments PHOTO] increase this year. Global equity markets, collectively, recorded double-digit gains for the year ended October 31, 2006, as did the U.S. stock market. Also, the investment grade bond market in the United States rose for the same period. While stock and bond markets generally enjoyed positive year-to-date returns, their performance was affected by Philip Taylor short-term economic and geopolitical events. For example, the U.S. stock market was weak in the second quarter of 2006 when it appeared that inflation might be rising. Only after the U.S. Federal Reserve Board decided in August that inflation was contained and that short-term interest rates need not be increased--the first time it kept rates unchanged in more than two years--did equities truly surge. Short-term market fluctuations are a fact of life for all investors. At AIM Investments --Registered Trademark--, we believe that investors can do two things to deal with short-term market fluctuations: maintain a long-term investment horizon and maintain a diversified portfolio. AIM Investments can help by offering a broad product line that gives your financial advisor the necessary tools to build a portfolio that's right for you regardless of market conditions. AIM Investments offers a comprehensive range of retail mutual funds, including domestic, global and international equity funds, taxable and tax-exempt fixed-income funds, and a variety of allocation portfolios--with varied risk and return characteristics to match your needs. We maintain this extensive set of product solutions for one reason: We believe in the value of comprehensive, diversified investment portfolios. We've changed the look of our annual reports to reflect that belief. In our marketing and now our shareholder literature, we represent a fully diversified portfolio graphically as an allocation pie chart and assign each asset class a color--green for domestic equity, blue for international, orange for sector and purple for fixed income. A legend in the left column illustrates the methodology. Your report cover now shows your Fund's asset class color, plus the asset class and sub-asset class name are shown in the upper-left corner. The reason for these changes is to help you better understand where your Fund fits into your overall portfolio. AIM has a variety of investment solutions, and knowing which ones are right for your portfolio is complex. That's why we also believe in the value of a trusted financial advisor who will work with you to create an investment plan you can stick with for the long term. Your financial advisor can help allocate your portfolio appropriately and review your investments regularly to help ensure they remain suitable as your financial situation changes. While there are no guarantees with any investment program, a long-term plan that's based on your financial goals, risk tolerance and time horizon is more likely to keep you and your investments on track. OUR COMMITMENT TO YOU In the short term, the one sure thing about markets is their unpredictability. While past performance cannot guarantee comparable future results, we believe that staying invested for the long term with a thoughtful plan offers the best opportunity for weathering that unpredictability. We at AIM Investments remain committed to building enduring solutions to help you achieve your investment goals, and we're pleased you've placed your trust in us. Information about investing, the markets and your Fund is always available on our Web site, AIMinvestments.com. If you have questions about your individual account, we invite you to contact one of our highly trained client services representatives at 800-959-4246. Sincerely, /s/ PHILIP TAYLOR Philip Taylor President -- AIM Funds CEO, AIM Investments December 14, 2006 AIM Investments is a registered service mark of A I M Management Group Inc. A I M Advisors, Inc. and A I M Capital Management, Inc. are the investment advisors. A I M Distributors, Inc. is the distributor for the retail funds represented by AIM Investments. 3 AIM Global Aggressive Growth Fund Dear Fellow AIM Fund Shareholders: At our meeting at the end of June, your Board completed its comprehensive review* of each fund's advisory agreement with A I M Advisors, Inc. (AIM) to make certain your interests are being served in terms of fees, performance and operations. Looking ahead, your Board finds many reasons to be [CROCKETT positive about AIM's management and strategic direction. PHOTO] Most importantly, AIM's investment management discipline has paid off in terms of improved overall performance. We are also pleased with AIM's efforts to seek more cost-effective ways of delivering superior service. In addition, AIM is realizing the benefits of belonging to a leading independent global investment management Bruce L. Crockett organization in its parent company, AMVESCAP PLC, which is dedicated to helping people worldwide build their financial security. AMVESCAP managed approximately $450 billion globally as of October 31, 2006, operating under the AIM, INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust brands. These companies are home to an abundance of investment talent that is gradually being integrated and leveraged into centers of excellence, each focusing on a given market segment or asset class. Over the next few years, your Board will be meeting at these various centers of excellence to learn about their progress and how they may serve you through our goal of enhancing performance and reducing costs. The seven new AIM funds--which include Asian funds, structured U.S. equity funds and specialized bond funds--are an early example of the kind of opportunities the AMVESCAP organization can provide AIM clients. More information on these funds can be found on AIM's Web site. Your Board is very pleased with the overall direction and progress of the AIM Funds. We're working closely and effectively with AIM's management to continue this momentum. As always, your Board is eager to hear your views on how we might better serve you. Please send your comments in a letter addressed to me at AIM Investments, AIM Investments Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046. Sincerely, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board December 14, 2006 *To learn more about all the factors we considered before approving each fund's advisory agreement, go to the "Products & Performance" tab at the AIM Web site (AIMinvestments.com) and click on "Investment Advisory Agreement Renewals." The approval of advisory agreement information for your Fund is also included in this annual report on pages 10-11. 4 AIM Global Aggressive Growth Fund Management's discussion We believe disciplined sell decisions of Fund performance are key to successful investing. We consider selling a stock when: ====================================================================================== PERFORMANCE SUMMARY o A company's fundamentals deteriorate, or it posts disappointing earnings. We are pleased to once again provide shareholders with double-digit Fund performance. As the table illustrates, AIM Global Aggressive Growth Fund, excluding applicable o A stock's price seems overvalued. sales charges, significantly outperformed both its broad market and style-specific benchmarks. We attribute our comparative success to strong stock selection across o A more attractive opportunity becomes Asia, Europe and North America. Our relatively larger exposure to both mid-cap and available. emerging market stocks, which performed strongly during the fiscal year, provided a competitive advantage as well. MARKET CONDITIONS AND YOUR FUND Your Fund's long-term performance appears on pages 8 and 9. Markets continued to rally in Europe, as positive economic data and takeover FUND VS. INDEXES activity--both rumored and Total returns,10/31/05-10/31/06, excluding applicable sales charges. If sales charges actual--particularly in the Spanish were included, returns would be lower. utilities sector, continued to bolster investor confidence. Asian stock markets Class A Shares 27.71% also performed strongly during the period. Class B Shares 26.80 Inflationary pressures across the region Class C Shares 26.73 showed signs of weakening and a general MSCI World Index (Broad Market) 21.32 perception that the United States can MSCI World Growth Index (Style-Specific Index) 16.96 coordinate a "soft landing" for its Lipper Global Small/Mid-Cap Growth Category Average (Peer Group Index) 22.99 economy provided a positive backdrop for Asian equities. Despite the general rally SOURCE: LIPPER INC. in global stock markets, Japanese shares remained lackluster in comparison. Fears of an economic slowdown in the U.S. along ====================================================================================== with weaker economic data at home provided some- what of a headwind for Japanese HOW WE INVEST growth but whose prices do not fully equities. Emerging markets experienced a reflect these attributes. volatile 12-month period during which When selecting stocks for your Fund, we stocks hit record highs in many countries employ a disciplined investment strategy While research responsibilities within before correcting sharply lower from early that emphasizes fundamental research, the portfolio management team are focused May onward. A combination of higher global supported by both quantitative analysis by region and market capitalization, such interest rates and rising levels of risk and portfolio construction techniques. Our as large or mid/small-cap, we select aversion accentuated the sell-off of "EQV" (Earnings, Quality, Valuation) investments for the Fund by using a illiquid emerging market securities. strategy focuses primarily on identifying "bottom-up" investment approach. We However, most of these markets bounced quality companies that have experienced, construct the Fund primarily on a back from July or exhibit the potential for, accelerated stock-by-stock basis focusing on the or above average earnings strengths of individual companies rather than sectors, countries or market-cap trends. (continued) ========================================== ========================================== ========================================== PORTFOLIO COMPOSITION TOP FIVE COUNTRIES* TOP 10 EQUITY HOLDINGS* By sector 1. U.S.A. 33.5% 1. Anglo Irish Bank Corp. PLC 2. United Kingdom 9.1 (Ireland) 2.5% [PIE CHART] 3. Canada 6.1 2. Syngenta A.G. (Switzerland) 2.5 4. Germany 4.8 3. USG People N.V. (Netherlands) 1.9 Information Technology 8.9% 5. Switzerland 4.2 4. Enterprise Inns PLC Materials 6.0% (United Kingdom) 1.9 Energy 5.6% Total Net Assets $970.32 million 5. OTP Bank Nyrt. (Hungary) 1.7 Consumer Staples 5.5% 6. OAO Vimpel-Communications-ADR Telecommunication Services 3.8% Total Number of Holdings* 112 (Russia) 1.7 Utilities 1.2% 7. Standard Bank Group Ltd. Money Market Funds Plus (South Africa) 1.6 Other Assets Less Liabilities 4.7% 8. Petroleum Geo-Services A.S.A. Consumer Discretionary 22.1% (Norway) 1.6 Financials 20.3% 9. Puma A.G. Rudolf Dassler Sport Industrials 12.2% (Germany) 1.6 Health Care 9.7% 10. Shire PLC (United Kingdom) 1.5 The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. *Excluding money market fund holdings. ========================================== ========================================== ========================================== 5 AIM Global Aggressive Growth Fund onward ending the period with strong in consumer discretionary and consumer James G. Birdsall positive overall returns. staples sectors. These two sectors have [BIRDSALL Portfolio manager, is proven to be a rich and diverse source of PHOTO] lead manager of AIM Fund performance was broad-based, with high-quality growth companies. Two Global Aggressive the Fund outperforming its style-specific holdings that continued to perform well Growth Fund with index across all regions and sectors. The were long-time Fund holdings SYNGENTA, the respect to the domestic portion of the Fund's "go-anywhere" global mandate Swiss based fertilizer and agrochemical Fund's portfolio. He joined AIM in 1997. enabled us to invest in several high manufacturer, and British pub operator Mr. Birdsall earned his B.B.A with a quality emerging market names not found in ENTERPRISE INNS. Relative performance was concentration in finance from Stephen F. the benchmark. Several of these names, also aided by investments in Japanese Austin State University. He also earned an supported by positive news on the stocks, where the Fund remained M.B.A. with a concentration in finance and macroeconomic and corporate fronts and underweight versus its benchmark. Good international business from the University strong company fundamentals with stock selection, however, delivered of St. Thomas. attractive valuations, delivered strong positive returns in a relatively positive results contributing favorably to lack-luster Japanese market. Jason T. Holzer the Fund's relative outperformance. Top [HOLZER Chartered Financial contributors included Brazilian consumer Stock specific detractors included PHOTO] Analyst, senior products retailer LOJAS AMERICANAS, Korean U.S. based PMC-SIERRA, SOLOMON SYSTECH and portfolio manager, is ship builder HYUNDAI MIPO DOCKYARD and WESTERN DIGITAL. The Fund held relatively lead manager of AIM Mexico's largest wireless distributor small exposures to these names and we sold Global Aggressive Growth with respect to AMERICAN MOVIL. Strong subscriber growth, these stocks relatively early in the the Fund's investments in Europe and impressive operating leverage and strong period. Additionally, although the Fund's Canada. Mr. Holzer joined AIM in 1996. He buybacks combined with double-digit top cash position was in line with historical earned a B.A. in quantitative economics line growth enabled American Movil to levels (approximately 5%), not being fully and an M.S. in engineering-economic deliver over 65% for the period. invested in strong global equity markets systems from Stanford University. also detracted from relative returns. In contrast, select holdings in Shuxin Cao Hungary, South Africa and Turkey, IN CLOSING [CAO Chartered Financial negatively impacted by uncertainties in PHOTO] Analyst, portfolio the political arena, detracted from It would be imprudent for us to suggest manager, is lead relative returns. However, underlying fun- that the current period's performance is manager of AIM Global damentals remained strong in these sustainable over the long term. We believe Aggressive Growth Fund with respect to the companies and in some instances we added our bottom-up investment process should Fund's investments in Asia Pacific and to our positions when the prices of their allow us to build a diversified portfolio Latin America. He joined AIM in 1997. Mr. stocks declined. of world-class companies from around the Cao graduated from Tianjin Foreign globe. Regardless of macroeconomic trends, Language Institute with a B.A. in English. In North America, strong stock the Fund strives to maintain a disciplined He also earned an M.B.A. from Texas A&M selection in the U.S., predominantly in strategy of selecting attractive University and is a Certified Public the information technology sector, was investment opportunities based on its Accountant. another driver of outperformance. Our "EQV" (Earnings, Quality and Valuation) investment process led us to invest in a investment strategy. Borge Endresen number of holdings in the communications [ENDRESEN Chartered Financial equipment, semiconductor and software Thank you for your continued PHOTO] Analyst, portfolio industries that performed well during the participation in AIM Global Aggressive manager, is manager of fiscal year. Key contributors included Growth Fund. AIM Global Aggressive software maker AMDOCS, semiconductor Growth Fund. He joined AIM in 1999 and manufacturer FREESCALE and application THE VIEWS AND OPINIONS EXPRESSED IN graduated summa cum laude from the software developer BEA SYSTEMS. Freescale MANAGEMENT'S DISCUSSION OF FUND University of Oregon with a B.S. in received a cash buy out bid from a private PERFORMANCE ARE THOSE OF A I M ADVISORS, finance. He also earned an M.B.A. from the equity consortium led by The Blackstone INC. THESE VIEWS AND OPINIONS ARE SUBJECT University of Texas at Austin. Group that included The Carlyle Group, TO CHANGE AT ANY TIME BASED ON FACTORS Permira Funds and Texas Pacific Group. The SUCH AS MARKET AND ECONOMIC CONDITIONS. Assisted by the Asia Pacific/Latin transaction held a total equity value of THESE VIEWS AND OPINIONS MAY NOT BE RELIED American Team, Europe/Canada Team and $17.6 billion. Long-term holding Amdocs, a UPON AS INVESTMENT ADVICE OR Large/Multi-Cap Growth Team leading supplier of billing software for RECOMMENDATIONS, OR AS AN OFFER FOR A telecommunications companies, was up PARTICULAR SECURITY. THE INFORMATION IS significantly for the 12-month period NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF after reporting earnings ahead of market ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR expectations due to new contracts. THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED RELIABLE, BUT A I M One of our largest regional ADVISORS, INC. MAKES NO REPRESENTATION OR allocations remained in European stocks. WARRANTY AS TO THEIR COMPLETENESS OR We continued to find several opportunities ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE in Europe, particularly IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT PHILOSOPHY. FOR A PRESENTATION OF YOUR FUND'S See important Fund and index LONG-TERM PERFORMANCE, PLEASE SEE PAGES 8 disclosures on the inside front cover. AND 9. 6 AIM Global Aggressive Growth Fund CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE mate the expenses that you paid over the THE HYPOTHETICAL ACCOUNT VALUES AND period. Simply divide your account value EXPENSES MAY NOT BE USED TO ESTIMATE THE As a shareholder of the Fund, you incur by $1,000 (for example, an $8,600 account ACTUAL ENDING ACCOUNT BALANCE OR EXPENSES two types of costs: (1) transaction costs, value divided by $1,000 = 8.6), then YOU PAID FOR THE PERIOD. YOU MAY USE THIS which may include sales charges (loads) on multiply the result by the number in the INFORMATION TO COMPARE THE ONGOING COSTS purchase payments or contingent deferred table under the heading entitled "Actual OF INVESTING IN THE FUND AND OTHER FUNDS. sales charges on redemptions, and Expenses Paid During Period" to estimate TO DO SO, COMPARE THIS 5% HYPOTHETICAL redemption fees, if any; and (2) ongoing the expenses you paid on your account EXAMPLE WITH THE 5% HYPOTHETICAL EXAMPLES costs, including management fees; during this period. THAT APPEAR IN THE SHAREHOLDER REPORTS OF distribution and/or service (12b-1) fees; THE OTHER FUNDS. and other Fund expenses. This example is HYPOTHETICAL EXAMPLE FOR intended to help you understand your COMPARISON PURPOSES Please note that the expenses shown in ongoing costs (in dollars) of investing in the table are meant to highlight your the Fund and to compare these costs with The table below also provides information ongoing costs only and do not reflect any ongoing costs of investing in other mutual about hypothetical account values and transaction costs, such as sales charges funds. The example is based on an hypothetical expenses based on the Fund's (loads) on purchase payments, contingent investment of $1,000 invested at the actual expense ratio and an assumed rate deferred sales charges on redemptions, and beginning of the period and held for the of return of 5% per year before expenses, redemption fees, if any. Therefore, the entire period May 1, 2006, through October which is not the Fund's actual return. The hypothetical information is useful in 31, 2006. Fund's actual cumulative total returns at comparing ongoing costs only, and will not net asset value after expenses for the six help you determine the relative total ACTUAL EXPENSES months ended October 31, 2006, appear in costs of owning different funds. In the table "Cumulative Total Returns" on addition, if these transaction costs were The table below provides information about page 9. included, your costs would have been actual account values and actual expenses. higher. You may use the information in this table, together with the amount you invested, to esti- ==================================================================================================================================== ACTUAL HYPOTHETICAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2) (10/31/06) PERIOD(2) RATIO A $1,000.00 $1,001.60 $7.52 $1,017.69 $7.58 1.49% B 1,000.00 997.80 11.28 1,013.91 11.37 2.24 C 1,000.00 997.80 11.28 1,013.91 11.37 2.24 (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value after expenses for the six months ended October 31, 2006, appear in the table "Cumulative Total Returns" on page 9. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. ==================================================================================================================================== 7 AIM Global Aggressive Growth Fund YOUR FUND'S LONG-TERM PERFORMANCE RESULTS OF A $10,000 INVESTMENT Index data from 8/31/94, Fund data from 9/15/94 ==================================================================================================================================== [MOUNTAIN CHART] AIM GLOBAL AGGRESSIVE AIM GLOBAL AGGRESSIVE LIPPER GLOBAL SMALL/MID- GROWTH FUND GROWTH FUND MSCI WORLD MSCI WORLD CAP GROWTH DATE -CLASS A SHARES -CLASS B SHARES INDEX GROWTH INDEX CATEGORY AVERAGE 8/31/94 $10000 $10000 $10000 9/94 $ 9459 $10010 9735 9770 9746 10/94 9658 10210 10010 10004 9842 11/94 9431 9970 9573 9605 9335 12/94 9516 10060 9664 9749 9391 1/95 9185 9710 9516 9600 8963 2/95 9516 10050 9653 9747 9017 3/95 9865 10420 10116 10222 9225 4/95 10224 10789 10466 10601 9511 5/95 10592 11169 10553 10685 9622 6/95 11320 11939 10548 10698 9969 7/95 12415 13079 11073 11222 10740 8/95 12255 12909 10824 10906 10686 9/95 12576 13239 11137 11288 10901 10/95 12369 13020 10959 11165 10619 11/95 12426 13069 11337 11520 10713 12/95 12575 13217 11666 11782 10879 1/96 12754 13407 11875 11991 10932 2/96 13400 14079 11945 12077 11275 3/96 13684 14360 12141 12253 11525 4/96 14584 15304 12424 12508 12183 5/96 15248 15996 12432 12581 12388 6/96 14945 15674 12493 12667 12179 7/96 13901 14571 12049 12195 11454 8/96 14621 15314 12185 12296 11803 9/96 15171 15886 12659 12856 12003 10/96 14944 15635 12745 12894 11762 11/96 15380 16097 13457 13547 11984 12/96 15532 16237 13239 13281 12075 1/97 15893 16609 13396 13466 12081 2/97 15475 16167 13547 13615 11877 3/97 14925 15585 13277 13296 11468 4/97 14716 15363 13708 13906 11374 5/97 16187 16889 14552 14717 12231 6/97 17078 17813 15275 15528 12732 7/97 17770 18515 15976 16245 12977 8/97 16963 17672 14905 15036 12718 9/97 18102 18846 15712 15901 13349 10/97 16386 17059 14883 14884 12594 11/97 15930 16568 15144 15261 12206 12/97 16158 16798 15326 15400 12243 1/98 15712 16336 15750 16002 12166 2/98 17248 17922 16813 17131 13194 3/98 18225 18915 17520 17722 13985 4/98 18575 19286 17689 17824 14183 5/98 18157 18835 17465 17624 13775 6/98 17948 18614 17876 18377 13705 7/98 17645 18292 17845 18345 13273 8/98 14222 14731 15463 16195 11088 9/98 14222 14731 15734 16556 10845 10/98 15046 15574 17153 17994 11236 11/98 15900 16447 18171 19152 11852 12/98 16790 17360 19055 20549 12595 1/99 17216 17791 19470 21271 12976 2/99 16051 16586 18949 20423 12263 3/99 16611 17158 19735 21175 12834 4/99 17294 17852 20511 21137 13652 5/99 16905 17439 19758 20398 13648 6/99 18260 18834 20677 21649 14666 7/99 18478 19045 20612 21407 14940 8/99 18677 19236 20573 21668 15181 9/99 19180 19747 20371 21702 15251 10/99 20810 21424 21427 23121 16023 11/99 24167 24865 22027 24474 18602 12/99 28640 29450 23807 27274 22401 1/00 29250 30065 22441 25562 22310 2/00 36758 37759 22499 26448 27904 3/00 33579 34485 24051 28022 26042 4/00 29589 30374 23031 26140 23164 5/00 26651 27343 22445 24588 21618 6/00 28919 29665 23198 26089 23816 7/00 28269 28985 22543 24775 22695 8/00 30708 31466 23273 25652 24720 9/00 27868 28540 22033 23378 24041 10/00 25858 26474 21661 22395 22175 11/00 21690 22203 20343 20666 20117 12/00 22343 22865 20670 20275 21485 1/01 23851 24386 21068 20887 21715 2/01 20056 20499 19285 18221 19707 3/01 18033 18428 18015 16745 17563 4/01 19578 20002 19343 18095 19281 5/01 19641 20056 19091 17730 19724 6/01 19226 19625 18490 17110 19495 7/01 18371 18738 18243 16856 18601 8/01 17340 17675 17365 15816 18113 9/01 15091 15376 15832 14501 15380 10/01 15808 16102 16134 15118 16268 11/01 16323 16626 17086 16266 17454 12/01 16625 16922 17192 16345 18208 1/02 16361 16640 16670 15811 17810 2/02 16109 16384 16523 15853 17344 3/02 16837 17124 17284 16244 18482 4/02 16750 17016 16664 15548 18224 5/02 16662 16923 16692 15464 18219 6/02 15909 16156 15677 14570 17142 7/02 14477 14689 14354 13542 15288 8/02 14427 14635 14378 13538 15254 9/02 13496 13679 12795 12194 14111 10/02 13823 14016 13738 13142 14405 11/02 14275 14460 14477 13619 15139 12/02 13872 14043 13773 13093 14584 1/03 13584 13747 13354 12620 14231 2/03 13320 13478 13120 12484 13870 3/03 13332 13478 13077 12591 13924 4/03 14175 14339 14235 13489 15089 5/03 15180 15334 15046 14044 16642 6/03 15506 15656 15304 14241 17069 7/03 15996 16154 15613 14516 17990 8/03 16586 16745 15949 14807 18998 9/03 16776 16919 16045 14891 19066 10/03 17945 18090 16995 15777 20463 11/03 18372 18521 17252 16000 20904 12/03 19314 19461 18333 16769 21682 1/04 20056 20187 18627 17112 22327 2/04 20710 20845 18939 17320 22771 3/04 20722 20858 18814 17146 22664 4/04 20119 20238 18428 16804 21696 5/04 20395 20508 18582 16970 21702 6/04 20733 20830 18978 17200 22171 7/04 19440 19526 18358 16376 21064 8/04 19665 19740 18439 16324 21038 9/04 20495 20562 18788 16652 22232 10/04 21350 21423 19248 17060 22955 11/04 22857 22916 20259 17922 24774 12/04 24025 24074 21032 18597 25874 1/05 23722 23766 20558 18096 25682 2/05 24690 24721 21210 18557 26790 3/05 23962 23994 20800 18202 26237 4/05 23121 23121 20345 17802 24937 5/05 23687 23671 20706 18264 25733 6/05 24353 24329 20885 18349 26390 7/05 25471 25431 21615 19110 27604 8/05 26135 26090 21778 19280 28084 9/05 26927 26857 22344 19706 28942 10/05 25885 25793 21801 19287 27791 11/05 27016 26910 22528 19913 28971 12/05 28200 28073 23027 20347 30320 1/06 30334 30178 24055 21285 32700 2/06 30677 30504 24019 21067 32560 3/06 31809 31605 24548 21591 33901 4/06 33008 32778 25293 22091 35057 5/06 31282 31041 24429 21240 32987 6/06 30728 30476 24422 21205 32378 7/06 30664 30390 24574 21034 31502 8/06 31467 31168 25212 21592 32444 9/06 31599 31281 25513 21782 32836 10/06 33080 33507 26449 22558 34321 ==================================================================================================================================== SOURCE LIPPER INC. Past performance cannot guarantee of funds reflects fund expenses and during the early years shown in the chart. comparable future results. management fees; performance of a market The vertical axis, the one that indicates index does not. Performance shown in the the dollar value of an investment, is The data shown in the chart include chart and table(s) does not reflect constructed with each segment representing reinvested distributions, applicable sales deduction of taxes a shareholder would pay a percent change in the value of the charges, Fund expenses and management on Fund distributions or sale of Fund investment. In this chart, each segment fees. Results for Class B shares are shares. Performance of the indexes does represents a doubling, or 100% change, in calculated as if a hypothetical not reflect the effects of taxes. the value of the investment. In other shareholder had liquidated his entire words, the space between $10,000 and investment in the Fund at the close of the This chart, which is a logarithmic $20,000 is the same size as the space reporting period and paid the applicable chart, presents the fluctuations in the between $20,000 and $40,000, and so on. contingent deferred sales charges. Index value of the Fund and its indexes. We results include reinvested dividends, but believe that a logarithmic chart is more they do not reflect sales charges. effective than other types of charts in Performance of an index illustrating changes in value 8 AIM Global Aggressive Growth Fund ========================================== ========================================== ========================================== AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS As of 10/31/06, including applicable As of 9/30/06,the most recent calendar 6 months ended 10/31/06, excluding sales charges quarter-end, including applicable sales applicable sales charges charges CLASS A SHARES Class A Shares 0.16% Inception (9/15/94) 10.37% CLASS A SHARES Class B Shares -0.22 10 Years 7.65 Inception (9/15/94) 10.03% Class C Shares -0.22 5 Years 14.60 10 Years 7.01 ========================================== 1 Year 20.68 5 Years 14.62 1 Year 10.87 CLASS B SHARES Inception (9/15/94) 10.49% CLASS B SHARES 10 Years 7.81 Inception (9/15/94) 10.15% 5 Years 15.01 10 Years 7.15 1 Year 21.80 5 Years 15.04 1 Year 11.47 CLASS C SHARES Inception (8/4/97) 6.39% CLASS C SHARES 5 Years 15.21 Inception (8/4/97) 5.93% 1 Year 25.73 5 Years 15.25 1 Year 15.41 ========================================== ========================================== THE PERFORMANCE DATA QUOTED REPRESENT PAST AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT THE PERFORMANCE OF THE FUND'S SHARE PERFORMANCE AND CANNOT GUARANTEE YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL CLASSES WILL DIFFER DUE TO DIFFERENT SALES COMPARABLE FUTURE RESULTS; CURRENT SHARES. CHARGE STRUCTURES AND CLASS EXPENSES. PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT AIMinvestments.com FOR THE MOST CLASS A SHARE PERFORMANCE REFLECTS THE A REDEMPTION FEE OF 2% WILL BE IMPOSED RECENT MONTH-END PERFORMANCE. MAXIMUM 5.50% SALES CHARGE, AND CLASS B ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF AND CLASS C SHARE PERFORMANCE REFLECTS THE THE FUND WITHIN 30 DAYS OF PURCHASE. PERFORMANCE FIGURES REFLECT REINVESTED APPLICABLE CONTINGENT DEFERRED SALES EXCEPTIONS TO THE REDEMPTION FEE ARE DISTRIBUTIONS, CHANGES IN NET ASSET VALUE CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE LISTED IN THE FUND'S PROSPECTUS. AND THE EFFECT OF THE MAXIMUM SALES CHARGE CDSC ON CLASS B SHARES DECLINES FROM 5% UNLESS OTHERWISE STATED. PERFORMANCE BEGINNING AT THE TIME OF PURCHASE TO 0% AT FIGURES DO NOT REFLECT DEDUCTION OF TAXES THE BEGINNING OF THE SEVENTH YEAR. THE A SHAREHOLDER WOULD PAY ON FUND CDSC ON CLASS C SHARES IS 1% FOR THE FIRST DISTRIBUTIONS OR SALE OF FUND SHARES. YEAR AFTER PURCHASE. INVESTMENT RETURN 9 AIM Global Aggressive Growth Fund APPROVAL OF INVESTMENT ADVISORY AGREEMENT The Board of Trustees of AIM International on such review, the Board concluded that o Meetings with the Fund's portfolio Mutual Funds (the "Board") oversees the the range of services to be provided by managers and investment personnel. With management of AIM Global Aggressive Growth AIM under the Advisory Agreement was respect to the Fund, the Board is meeting Fund (the "Fund") and, as required by law, appropriate and that AIM currently is periodically with such Fund's portfolio determines annually whether to approve the providing services in accordance with the managers and/or other investment personnel continuance of the Fund's advisory terms of the Advisory Agreement. and believes that such individuals are agreement with A I M Advisors, Inc. competent and able to continue to carry ("AIM"). Based upon the recommendation of o The quality of services to be provided out their responsibilities under the the Investments Committee of the Board, at by AIM. The Board reviewed the credentials Advisory Agreement. a meeting held on June 27, 2006, the and experience of the officers and Board, including all of the independent employees of AIM who will provide o Overall performance of AIM. The Board trustees, approved the continuance of the investment advisory services to the Fund. considered the overall performance of AIM advisory agreement (the "Advisory In reviewing the qualifications of AIM to in providing investment advisory and Agreement") between the Fund and AIM for provide investment advisory services, the portfolio administrative services to the another year, effective July 1, 2006. Board considered such issues as AIM's Fund and concluded that such performance portfolio and product review process, was satisfactory. The Board considered the factors various back office support functions discussed below in evaluating the fairness provided by AIM and AIM's equity and fixed o Fees relative to those of clients of AIM and reasonableness of the Advisory income trading operations. Based on the with comparable investment strategies. The Agreement at the meeting on June 27, 2006 review of these and other factors, the Board noted that AIM does not serve as an and as part of the Board's ongoing Board concluded that the quality of advisor to other mutual funds or other oversight of the Fund. In their services to be provided by AIM was clients with investment strategies deliberations, the Board and the appropriate and that AIM currently is comparable to those of the Fund. independent trustees did not identify any providing satisfactory services in particular factor that was controlling, accordance with the terms of the Advisory o Fees relative to those of comparable and each trustee attributed different Agreement. funds with other advisors. The Board weights to the various factors. reviewed the advisory fee rate for the o The performance of the Fund relative to Fund under the Advisory Agreement. The One responsibility of the independent comparable funds. The Board reviewed the Board compared effective contractual Senior Officer of the Fund is to manage performance of the Fund during the past advisory fee rates at a common asset level the process by which the Fund's proposed one, three and five calendar years against at the end of the past calendar year and management fees are negotiated to ensure the performance of funds advised by other noted that the Fund's rate was below the that they are negotiated in a manner which advisors with investment strategies median rate of the funds advised by other is at arms' length and reasonable. To that comparable to those of the Fund. The Board advisors with investment strategies end, the Senior Officer must either noted that the Fund's performance in such comparable to those of the Fund that the supervise a competitive bidding process or periods was below the median performance Board reviewed. The Board noted that AIM prepare an independent written evaluation. of such comparable funds. Based on this has agreed to waive advisory fees of the The Senior Officer has recommended an review and after taking account of all of Fund, as discussed below. Based on this independent written evaluation in lieu of the other factors that the Board review, the Board concluded that the a competitive bidding process and, upon considered in determining whether to advisory fee rate for the Fund under the the direction of the Board, has prepared continue the Advisory Agreement for the Advisory Agreement was fair and such an independent written evaluation. Fund, the Board concluded that no changes reasonable. Such written evaluation also considered should be made to the Fund and that it was certain of the factors discussed below. In not necessary to change the Fund's o Expense limitations and fee waivers. The addition, as discussed below, the Senior portfolio management team at this time. Board noted that AIM has contractually Officer made a recommendation to the Board Although the independent written agreed to waive advisory fees of the Fund in connection with such written evaluation of the Fund's Senior Officer through December 31, 2009 to the extent evaluation. (discussed below) only considered Fund necessary so that the advisory fees performance through the most recent payable by the Fund do not exceed a The discussion below serves as a calendar year, the Board also reviewed specified maximum advisory fee rate, which summary of the Senior Officer's more recent Fund performance, which did maximum rate includes breakpoints and is independent written evaluation and not change their conclusions. based on net asset levels. The Board recommendation to the Board in connection considered the contractual nature of this therewith, as well as a discussion of the o The performance of the Fund relative to fee waiver and noted that it remains in material factors and the conclusions with indices. The Board reviewed the effect until December 31, 2009. The Board respect thereto that formed the basis for performance of the Fund during the past considered the effect this fee waiver the Board's approval of the Advisory one, three and five calendar years against would have on the Fund's estimated Agreement. After consideration of all of the performance of the MSCI World Growth expenses and concluded that the levels of the factors below and based on its Index. The Board noted that the Fund's fee waivers/expense limitations for the informed business judgment, the Board performance in such periods was above the Fund were fair and reasonable. determined that the Advisory Agreement is performance of such Index. The Board noted in the best interests of the Fund and its that the performance of such Index does o Breakpoints and economies of scale. The shareholders and that the compensation to not reflect fees, while the performance of Board reviewed the structure of the Fund's AIM under the Advisory Agreement is fair the Fund does reflect fees. Based on this advisory fee under the Advisory Agreement, and reasonable and would have been review and after taking account of all of noting that it includes one breakpoint. obtained through arm's length the other factors that the Board The Board reviewed the level of the Fund's negotiations. considered in determining whether to advisory fees, and noted that such fees, continue the Advisory Agreement for the as a percentage of the Fund's net assets, Unless otherwise stated, information Fund, the Board concluded that no changes would decrease as net assets increase presented below is as of June 27, 2006 and should be made to the Fund and that it was because the Advisory Agreement includes a does not reflect any changes that may have not necessary to change the Fund's breakpoint. The Board noted that AIM has occurred since June 27, 2006, including portfolio management team at this time. contractually agreed to waive advisory but not limited to changes to the Fund's Although the independent written fees of the Fund through December 31, 2009 performance, advisory fees, expense evaluation of the Fund's Senior Officer to the extent necessary so that the limitations and/or fee waivers. (discussed below) only considered Fund advisory fees payable by the Fund do not performance through the most recent exceed a specified maximum advisory fee o The nature and extent of the advisory calendar year, the Board also reviewed rate, which maximum rate includes services to be provided by AIM. The Board more recent Fund performance, which did breakpoints and is based on net asset reviewed the services to be provided by not change their conclusions. levels. The Board noted that, due to the AIM under the Advisory Agreement. Based Fund's (continued) 10 AIM Global Aggressive Growth Fund asset levels at the end of the past o Profitability of AIM and its affiliates. o Other factors and current trends. The calendar year and the way in which the The Board reviewed information concerning Board considered the steps that AIM and advisory fee breakpoints have been the profitability of AIM's (and its its affiliates have taken over the last structured, the Fund has yet to benefit affiliates') investment advisory and other several years, and continue to take, in from the breakpoint. The Board concluded activities and its financial condition. order to improve the quality and that the Fund's fee levels under the The Board considered the overall efficiency of the services they provide to Advisory Agreement therefore would reflect profitability of AIM, as well as the the Funds in the areas of investment economies of scale at higher asset levels profitability of AIM in connection with performance, product line diversification, and that it was not necessary to change managing the Fund. The Board noted that distribution, fund operations, shareholder the advisory fee breakpoints in the Fund's AIM's operations remain profitable, services and compliance. The Board advisory fee schedule. although increased expenses in recent concluded that these steps taken by AIM years have reduced AIM's profitability. have improved, and are likely to continue o Investments in affiliated money market Based on the review of the profitability to improve, the quality and efficiency of funds. The Board also took into account of AIM's and its affiliates' investment the services AIM and its affiliates the fact that uninvested cash and cash advisory and other activities and its provide to the Fund in each of these collateral from securities lending financial condition, the Board concluded areas, and support the Board's approval of arrangements, if any (collectively, "cash that the compensation to be paid by the the continuance of the Advisory Agreement balances") of the Fund may be invested in Fund to AIM under its Advisory Agreement for the Fund. money market funds advised by AIM pursuant was not excessive. to the terms of an SEC exemptive order. The Board found that the Fund may realize o Benefits of soft dollars to AIM. The certain benefits upon investing cash Board considered the benefits realized by balances in AIM advised money market AIM as a result of brokerage transactions funds, including a higher net return, executed through "soft dollar" increased liquidity, increased arrangements. Under these arrangements, diversification or decreased transaction brokerage commissions paid by the Fund costs. The Board also found that the Fund and/or other funds advised by AIM are used will not receive reduced services if it to pay for research and execution invests its cash balances in such money services. This research may be used by AIM market funds. The Board noted that, to the in making investment decisions for the extent the Fund invests uninvested cash in Fund. The Board concluded that such affiliated money market funds, AIM has arrangements were appropriate. voluntarily agreed to waive a portion of the advisory fees it receives from the o AIM's financial soundness in light of Fund attributable to such investment. The the Fund's needs. The Board considered Board further determined that the proposed whether AIM is financially sound and has securities lending program and related the resources necessary to perform its procedures with respect to the lending obligations under the Advisory Agreement, Fund is in the best interests of the and concluded that AIM has the financial lending Fund and its respective resources necessary to fulfill its shareholders. The Board therefore obligations under the Advisory Agreement. concluded that the investment of cash collateral received in connection with the o Historical relationship between the Fund securities lending program in the money and AIM. In determining whether to market funds according to the procedures continue the Advisory Agreement for the is in the best interests of the lending Fund, the Board also considered the prior Fund and its respective shareholders. relationship between AIM and the Fund, as well as the Board's knowledge of AIM's o Independent written evaluation and operations, and concluded that it was recommendations of the Fund's Senior beneficial to maintain the current Officer. The Board noted that, upon their relationship, in part, because of such direction, the Senior Officer of the Fund, knowledge. The Board also reviewed the who is independent of AIM and AIM's general nature of the non-investment affiliates, had prepared an independent advisory services currently performed by written evaluation in order to assist the AIM and its affiliates, such as Board in determining the reasonableness of administrative, transfer agency and the proposed management fees of the AIM distribution services, and the fees Funds, including the Fund. The Board noted received by AIM and its affiliates for that the Senior Officer's written performing such services. In addition to evaluation had been relied upon by the reviewing such services, the trustees also Board in this regard in lieu of a considered the organizational structure competitive bidding process. In employed by AIM and its affiliates to determining whether to continue the provide those services. Based on the Advisory Agreement for the Fund, the Board review of these and other factors, the considered the Senior Officer's written Board concluded that AIM and its evaluation and the recommendation made by affiliates were qualified to continue to the Senior Officer to the Board that the provide non-investment advisory services Board consider whether the advisory fee to the Fund, including administrative, waivers for certain equity AIM Funds, transfer agency and distribution services, including the Fund, should be simplified. and that AIM and its affiliates currently The Board concluded that it would be are providing satisfactory non-investment advisable to consider this issue and reach advisory services. a decision prior to the expiration date of such advisory fee waivers. 11 AIM Global Aggressive Growth Fund SCHEDULE OF INVESTMENTS October 31, 2006 <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- FOREIGN COMMON STOCKS & OTHER EQUITY INTERESTS-61.16% ARUBA-0.76% Bank of Cyprus Public PCL (Diversified Banks)(a) 653,000 $ 7,395,558 ========================================================================== AUSTRALIA-1.47% CSL Ltd. (Biotechnology)(a)(b) 145,100 6,294,857 - -------------------------------------------------------------------------- Zinifex Ltd. (Diversified Metals & Mining)(a)(b) 675,200 8,017,335 ========================================================================== 14,312,192 ========================================================================== BRAZIL-1.42% Perdigao S.A. (Packaged Foods & Meats) 549,700 6,404,396 - -------------------------------------------------------------------------- Unibanco-Uniao de Bancos Brasileiros S.A.-ADR (Diversified Banks) 93,600 7,371,000 ========================================================================== 13,775,396 ========================================================================== CANADA-6.06% Astral Media Inc. (Broadcasting & Cable TV) 158,400 5,632,251 - -------------------------------------------------------------------------- Brookfield Asset Management Inc.-Class A (Real Estate Management & Development)(b) 204,550 9,317,437 - -------------------------------------------------------------------------- Canadian Oil Sands Trust (Oil & Gas Exploration & Production) 194,400 5,267,345 - -------------------------------------------------------------------------- Power Financial Corp. (Life & Health Insurance) 263,200 8,453,720 - -------------------------------------------------------------------------- Precision Drilling Trust (Oil & Gas Drilling) 145,300 4,133,680 - -------------------------------------------------------------------------- Sherritt International Corp. (Diversified Metals & Mining) 967,300 9,873,749 - -------------------------------------------------------------------------- Shoppers Drug Mart Corp. (Drug Retail) (Acquired 05/16/03-11/18/03; Cost $4,714,720)(c)(d)(e) 277,500 11,263,628 - -------------------------------------------------------------------------- Trican Well Service Ltd. (Oil & Gas Equipment & Services) 279,300 4,900,873 ========================================================================== 58,842,683 ========================================================================== DENMARK-1.06% DSV A.S. (Trucking)(a)(b) 55,900 10,313,640 ========================================================================== FINLAND-0.78% Nokian Renkaat Oyj (Tires & Rubber)(a) 393,500 7,530,537 ========================================================================== GERMANY-4.75% Celesio A.G. (Health Care Distributors) 170,600 8,796,910 - -------------------------------------------------------------------------- Continental A.G. (Tires & Rubber)(a) 90,140 10,067,361 - -------------------------------------------------------------------------- Deutsche Boerse A.G. (Specialized Finance)(a) 75,200 12,108,965 - -------------------------------------------------------------------------- Puma A.G. Rudolf Dassler Sport (Footwear) 38,700 13,723,342 - -------------------------------------------------------------------------- Puma A.G. Rudolf Dassler Sport (Footwear) (Acquired 06/02/03; Cost $398,309)(c) 3,935 1,395,384 ========================================================================== 46,091,962 ========================================================================== GREECE-3.18% EFG Eurobank Ergasias (Diversified Banks)(a) 167,424 5,553,211 - -------------------------------------------------------------------------- OPAP S.A. (Casinos & Gaming)(a) 205,630 7,322,505 - -------------------------------------------------------------------------- </Table> <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- GREECE-(CONTINUED) OPAP S.A. (Casinos & Gaming) (Acquired 07/14/03; Cost $2,090,216)(a)(c) 196,000 $ 6,979,580 - -------------------------------------------------------------------------- Titan Cement Co. S.A. (Construction Materials)(a) 209,800 10,988,446 ========================================================================== 30,843,742 ========================================================================== HONG KONG-2.13% Esprit Holdings Ltd. (Apparel Retail)(a) 764,000 7,394,217 - -------------------------------------------------------------------------- Hongkong Land Holdings Ltd. (Real Estate Management & Development)(a) 1,308,000 4,909,601 - -------------------------------------------------------------------------- Regal Hotels International Holdings Ltd. (Hotels, Resorts & Cruise Lines)(a) 85,292,000 8,325,639 ========================================================================== 20,629,457 ========================================================================== HUNGARY-1.70% OTP Bank Nyrt. (Diversified Banks) 470,069 16,525,190 ========================================================================== INDIA-0.56% Maruti Udyog Ltd. (Automobile Manufacturers)(a) 253,500 5,440,096 ========================================================================== INDONESIA-0.53% PT Astra International Tbk (Automobile Manufacturers) 3,487,000 5,138,091 ========================================================================== IRELAND-3.08% Anglo Irish Bank Corp. PLC (Diversified Banks)(a) 1,372,142 24,604,094 - -------------------------------------------------------------------------- Independent News & Media PLC (Publishing)(a) 1,566,800 5,256,322 ========================================================================== 29,860,416 ========================================================================== JAPAN-2.06% EXEDY Corp. (Auto Parts & Equipment)(a)(b) 267,400 7,836,677 - -------------------------------------------------------------------------- JSR Corp. (Specialty Chemicals)(a)(b) 214,000 5,341,835 - -------------------------------------------------------------------------- Suzuki Motor Corp. (Automobile Manufacturers)(a)(b) 207,000 5,873,224 - -------------------------------------------------------------------------- Yamaha Motor Co., Ltd. (Motorcycle Manufacturers)(a) 32,800 892,848 ========================================================================== 19,944,584 ========================================================================== MEXICO-2.55% America Movil S.A. de C.V.-Series L-ADR (Wireless Telecommunication Services) 207,900 8,912,673 - -------------------------------------------------------------------------- Corporacion GEO, S.A. de C.V.-Series B (Homebuilding)(e) 1,350,200 6,190,313 - -------------------------------------------------------------------------- Wal-Mart de Mexico S.A. de C.V.-Series V (Hypermarkets & Super Centers) 2,761,100 9,601,370 ========================================================================== 24,704,356 ========================================================================== </Table> F-1 AIM Global Aggressive Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- NETHERLANDS-3.08% Koninklijke BAM Groep N.V. (Construction & Engineering)(a)(b) 536,875 $ 11,185,321 - -------------------------------------------------------------------------- USG People N.V. (Human Resource & Employment Services)(a) 457,718 18,719,119 ========================================================================== 29,904,440 ========================================================================== NORWAY-2.54% Pan Fish A.S.A. (Packaged Foods & Meats)(e) 8,797,000 6,890,108 - -------------------------------------------------------------------------- Pan Fish A.S.A. (Packaged Foods & Meats) (Acquired 04/10/06; Cost $728,615)(c)(e) 740,000 579,593 - -------------------------------------------------------------------------- Petroleum Geo-Services A.S.A. (Oil & Gas Equipment & Services)(a)(e) 261,940 15,332,325 - -------------------------------------------------------------------------- Prosafe A.S.A. (Oil & Gas Equipment & Services)(a) 29,350 1,886,098 ========================================================================== 24,688,124 ========================================================================== RUSSIA-1.65% OAO Vimpel-Communications-ADR (Wireless Telecommunication Services)(b)(e) 243,070 16,040,189 ========================================================================== SOUTH AFRICA-2.89% Standard Bank Group Ltd. (Diversified Banks)(a)(b) 1,338,442 15,706,548 - -------------------------------------------------------------------------- Telkom South Africa Ltd. (Integrated Telecommunication Services)(a)(b) 602,700 11,183,291 - -------------------------------------------------------------------------- Telkom South Africa Ltd. (Integrated Telecommunication Services) (Acquired 06/18/04; Cost $727,409)(a)(c) 64,700 1,200,529 ========================================================================== 28,090,368 ========================================================================== SOUTH KOREA-2.13% Daegu Bank (Regional Banks)(a) 454,800 7,508,389 - -------------------------------------------------------------------------- Hyundai Mipo Dockyard Co., Ltd. (Construction & Farm Machinery & Heavy Trucks)(a) 60,290 7,971,292 - -------------------------------------------------------------------------- Woongjin Coway Co., Ltd. (Housewares & Specialties)(a) 196,300 5,152,236 ========================================================================== 20,631,917 ========================================================================== SPAIN-1.04% Corporacion Mapfre S.A. (Multi-Line Insurance)(a) 2,282,860 10,089,961 ========================================================================== SWEDEN-0.81% Swedish Match A.B. (Tobacco)(a) 493,700 7,890,079 ========================================================================== SWITZERLAND-4.16% Baloise Holding A.G. (Multi-Line Insurance)(a) 93,300 8,911,753 - -------------------------------------------------------------------------- Phonak Holding A.G. (Health Care Equipment) 119,000 7,594,727 - -------------------------------------------------------------------------- Syngenta A.G. (Fertilizers & Agricultural Chemicals)(a) 147,600 23,816,181 ========================================================================== 40,322,661 ========================================================================== THAILAND-1.03% Siam Commercial Bank PCL (Diversified Banks)(a) 5,641,000 9,994,276 ========================================================================== </Table> <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- TURKEY-0.63% Tupras-Turkiye Petrol Rafinerileri A.S. (Oil & Gas Refining & Marketing)(a) 367,305 $ 6,093,968 ========================================================================== UNITED KINGDOM-9.11% Bunzl PLC (Trading Companies & Distributors)(a) 799,533 10,543,696 - -------------------------------------------------------------------------- Capita Group PLC (Human Resource & Employment Services)(a) 885,000 9,087,707 - -------------------------------------------------------------------------- Enterprise Inns PLC (Restaurants)(a) 892,600 18,334,103 - -------------------------------------------------------------------------- Inchcape PLC (Distributors)(a) 1,200,600 11,830,297 - -------------------------------------------------------------------------- Informa PLC (Publishing)(a) 1,187,305 12,369,002 - -------------------------------------------------------------------------- International Power PLC (Independent Power Producers & Energy Traders)(a) 1,845,000 11,775,730 - -------------------------------------------------------------------------- Shire PLC (Pharmaceuticals)(a) 789,500 14,416,618 ========================================================================== 88,357,153 ========================================================================== Total Foreign Common Stocks & Other Equity Interests (Cost $318,951,152) 593,451,036 ========================================================================== DOMESTIC COMMON STOCKS-33.50% AEROSPACE & DEFENSE-1.35% Precision Castparts Corp. 115,000 7,826,900 - -------------------------------------------------------------------------- Rockwell Collins, Inc. 91,500 5,314,320 ========================================================================== 13,141,220 ========================================================================== APPAREL RETAIL-1.71% Aeropostale, Inc.(e) 175,000 5,129,250 - -------------------------------------------------------------------------- AnnTaylor Stores Corp.(e) 80,000 3,521,600 - -------------------------------------------------------------------------- Limited Brands, Inc. 270,457 7,970,368 ========================================================================== 16,621,218 ========================================================================== APPAREL, ACCESSORIES & LUXURY GOODS-1.38% Carter's, Inc.(e) 220,000 6,210,600 - -------------------------------------------------------------------------- Liz Claiborne, Inc. 60,000 2,530,200 - -------------------------------------------------------------------------- Polo Ralph Lauren Corp. 65,000 4,615,000 ========================================================================== 13,355,800 ========================================================================== APPLICATION SOFTWARE-3.30% Amdocs Ltd.(e) 363,400 14,085,384 - -------------------------------------------------------------------------- BEA Systems, Inc.(e) 637,778 10,376,648 - -------------------------------------------------------------------------- Citrix Systems, Inc.(e) 255,000 7,530,150 ========================================================================== 31,992,182 ========================================================================== ASSET MANAGEMENT & CUSTODY BANKS-1.14% AllianceBernstein Holding L.P. 142,500 11,072,250 ========================================================================== COMPUTER STORAGE & PERIPHERALS-0.81% Seagate Technology 347,479 7,846,076 ========================================================================== CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-0.46% Oshkosh Truck Corp. 100,000 4,521,000 ========================================================================== </Table> F-2 AIM Global Aggressive Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- DATA PROCESSING & OUTSOURCED SERVICES-1.24% Fiserv, Inc.(e) 75,000 $ 3,705,000 - -------------------------------------------------------------------------- Global Payments Inc. 75,000 3,278,250 - -------------------------------------------------------------------------- VeriFone Holdings, Inc.(e) 171,606 5,012,611 ========================================================================== 11,995,861 ========================================================================== ELECTRICAL COMPONENTS & EQUIPMENT-1.28% Acuity Brands, Inc. 80,000 3,963,200 - -------------------------------------------------------------------------- Cooper Industries, Ltd.-Class A 95,000 8,497,750 ========================================================================== 12,460,950 ========================================================================== ELECTRONIC EQUIPMENT MANUFACTURERS-1.62% Amphenol Corp.-Class A 120,000 8,148,000 - -------------------------------------------------------------------------- Mettler-Toledo International Inc.(e) 110,000 7,551,500 ========================================================================== 15,699,500 ========================================================================== ENVIRONMENTAL & FACILITIES SERVICES-0.70% Republic Services, Inc. 165,000 6,766,650 ========================================================================== FOOD RETAIL-0.60% Safeway Inc. 200,000 5,872,000 ========================================================================== GENERAL MERCHANDISE STORES-0.79% Family Dollar Stores, Inc. 260,500 7,671,725 ========================================================================== HEALTH CARE DISTRIBUTORS-0.73% AmerisourceBergen Corp. 150,000 7,080,000 ========================================================================== HEALTH CARE EQUIPMENT-0.65% Varian Medical Systems, Inc.(b)(e) 115,000 6,308,900 ========================================================================== HEALTH CARE FACILITIES-1.28% Manor Care, Inc. 135,000 6,478,650 - -------------------------------------------------------------------------- VCA Antech, Inc.(e) 184,093 5,959,090 ========================================================================== 12,437,740 ========================================================================== HEALTH CARE SERVICES-1.07% DaVita, Inc.(e) 97,500 5,423,925 - -------------------------------------------------------------------------- Laboratory Corp. of America Holdings(e) 72,000 4,931,280 ========================================================================== 10,355,205 ========================================================================== HEALTH CARE SUPPLIES-0.50% DENTSPLY International Inc. 155,000 4,848,400 ========================================================================== HEALTH CARE TECHNOLOGY-0.75% IMS Health Inc. 260,000 7,241,000 ========================================================================== HOUSEHOLD PRODUCTS-0.52% Clorox Co. (The) 78,000 5,035,680 ========================================================================== </Table> <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES-1.44% McDermott International, Inc.(e) 164,273 $ 7,343,003 - -------------------------------------------------------------------------- Textron Inc. 72,500 6,592,425 ========================================================================== 13,935,428 ========================================================================== INVESTMENT BANKING & BROKERAGE-0.78% Edwards (A.G.), Inc. 132,500 7,559,125 ========================================================================== MANAGED HEALTH CARE-0.88% Health Net Inc.(e) 205,000 8,509,550 ========================================================================== MULTI-LINE INSURANCE-2.03% Assurant, Inc. 225,000 11,848,500 - -------------------------------------------------------------------------- HCC Insurance Holdings, Inc. 232,500 7,825,950 ========================================================================== 19,674,450 ========================================================================== OIL & GAS EQUIPMENT & SERVICES-1.73% Cameron International Corp.(e) 175,000 8,767,500 - -------------------------------------------------------------------------- National-Oilwell Varco Inc.(e) 132,500 8,003,000 ========================================================================== 16,770,500 ========================================================================== PROPERTY & CASUALTY INSURANCE-0.52% Ambac Financial Group, Inc. 60,000 5,009,400 ========================================================================== REGIONAL BANKS-0.53% Cullen/Frost Bankers, Inc. 95,000 5,145,200 ========================================================================== RESTAURANTS-0.86% Darden Restaurants, Inc. 200,492 8,400,615 ========================================================================== SEMICONDUCTORS-1.50% Freescale Semiconductor Inc.-Class B(e) 250,000 9,832,500 - -------------------------------------------------------------------------- Microchip Technology Inc. 145,000 4,774,850 ========================================================================== 14,607,350 ========================================================================== SPECIALTY STORES-0.96% Office Depot, Inc.(e) 160,000 6,718,400 - -------------------------------------------------------------------------- OfficeMax Inc. 54,000 2,569,320 ========================================================================== 9,287,720 ========================================================================== SYSTEMS SOFTWARE-0.39% Sybase, Inc.(e) 155,000 3,774,250 ========================================================================== Total Domestic Common Stocks (Cost $273,719,337) 324,996,945 ========================================================================== FOREIGN PREFERRED STOCKS-0.69% BRAZIL-0.69% Lojas Americanas S.A.-Pfd. (General Merchandise Stores) (Cost $2,759,415) 148,300 6,717,301 ========================================================================== </Table> F-3 AIM Global Aggressive Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- MONEY MARKET FUNDS-3.75% Liquid Assets Portfolio-Institutional Class(f) 18,202,851 $ 18,202,851 - -------------------------------------------------------------------------- Premier Portfolio-Institutional Class(f) 18,202,851 18,202,851 ========================================================================== Total Money Market Funds (Cost $36,405,702) 36,405,702 ========================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities loaned)-99.10% (Cost $631,835,606) 961,570,984 ========================================================================== </Table> <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED MONEY MARKET FUNDS-5.79% Liquid Assets Portfolio-Institutional Class(f)(g) 28,104,584 $ 28,104,584 - -------------------------------------------------------------------------- STIC Prime Portfolio-Institutional Class(f)(g) 28,104,585 28,104,585 ========================================================================== Total Money Market Funds (purchased with cash collateral from securities loaned) (Cost $56,209,169) 56,209,169 ========================================================================== TOTAL INVESTMENTS-104.89% (Cost $688,044,775) 1,017,780,153 ========================================================================== OTHER ASSETS LESS LIABILITIES-(4.89)% (47,462,115) ========================================================================== NET ASSETS-100.00% $ 970,318,038 __________________________________________________________________________ ========================================================================== </Table> Investment Abbreviations: <Table> ADR - American Depositary Receipt Pfd. - Preferred </Table> Notes to Schedule of Investments: (a) In accordance with the procedures established by the Board of Trustees, the foreign security is fair valued using adjusted closing market prices. The aggregate value of these securities at October 31, 2006 was $419,445,067, which represented 43.23% of the Fund's Net Assets. See Note 1A. (b) All or a portion of this security was out on loan at October 31, 2006. (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 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 value of these securities at October 31, 2006 was $21,418,714, which represented 2.21% of the Fund's Net Assets. Unless otherwise indicated, these securities are not considered to be illiquid. (d) Security fair valued in good faith in accordance with the procedures established by the Board of Trustees. The value of this security at October 31, 2006 represented 1.16% of the Fund's Net Assets. See Note 1A. (e) Non-income producing security. (f) The money market fund and the Fund are affiliated by having the same investment advisor. See Note 3. (g) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 8. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-4 AIM Global Aggressive Growth Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 2006 <Table> ASSETS: Investments, at value (cost $595,429,904)* $ 925,165,282 - ------------------------------------------------------------ Investments in affiliated money market funds (cost $92,614,871) 92,614,871 ============================================================ Total investments (cost $688,044,775) 1,017,780,153 ============================================================ Foreign currencies, at value (cost $11,637,718) 11,506,046 - ------------------------------------------------------------ Receivables for: Investments sold 9,220,598 - ------------------------------------------------------------ Fund shares sold 872,655 - ------------------------------------------------------------ Dividends 1,413,420 - ------------------------------------------------------------ Investment for trustee deferred compensation and retirement plans 92,134 - ------------------------------------------------------------ Other assets 23,508 ============================================================ Total assets 1,040,908,514 ____________________________________________________________ ============================================================ LIABILITIES: Payables for: Investments purchased 11,480,170 - ------------------------------------------------------------ Fund shares reacquired 1,268,325 - ------------------------------------------------------------ Trustee deferred compensation and retirement plans 185,453 - ------------------------------------------------------------ Collateral upon return of securities loaned 56,209,169 - ------------------------------------------------------------ Accrued distribution fees 306,197 - ------------------------------------------------------------ Accrued trustees' and officer's fees and benefits 1,735 - ------------------------------------------------------------ Accrued transfer agent fees 502,725 - ------------------------------------------------------------ Accrued operating expenses 636,702 ============================================================ Total liabilities 70,590,476 ============================================================ Net assets applicable to shares outstanding $ 970,318,038 ____________________________________________________________ ============================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $ 510,049,584 - ------------------------------------------------------------ Undistributed net investment income 1,202,879 - ------------------------------------------------------------ Undistributed net realized gain from investment securities and foreign currencies 129,422,578 - ------------------------------------------------------------ Unrealized appreciation of investment securities and foreign currencies 329,642,997 ============================================================ $ 970,318,038 ____________________________________________________________ ============================================================ NET ASSETS: Class A $ 809,308,907 ____________________________________________________________ ============================================================ Class B $ 132,390,579 ____________________________________________________________ ============================================================ Class C $ 28,618,552 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 32,239,975 ____________________________________________________________ ============================================================ Class B 5,718,971 ____________________________________________________________ ============================================================ Class C 1,235,938 ____________________________________________________________ ============================================================ Class A: Net asset value per share $ 25.10 - ------------------------------------------------------------ Offering price per share (Net asset value of $25.10 divided by 94.50%) $ 26.56 ____________________________________________________________ ============================================================ Class B: Net asset value and offering price per share $ 23.15 ____________________________________________________________ ============================================================ Class C: Net asset value and offering price per share $ 23.16 ____________________________________________________________ ============================================================ </Table> * At October 31, 2006, securities with an aggregate value of $55,029,465 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-5 AIM Global Aggressive Growth Fund STATEMENT OF OPERATIONS For the year ended October 31, 2006 <Table> INVESTMENT INCOME: Dividends (net of foreign withholding tax of $1,131,049) $ 17,945,763 - -------------------------------------------------------------------------- Dividends from affiliated money market funds (includes securities lending income of $134,004) 1,522,448 - -------------------------------------------------------------------------- Interest 22,685 ========================================================================== Total investment income 19,490,896 ========================================================================== EXPENSES: Advisory fees 8,521,900 - -------------------------------------------------------------------------- Administrative services fees 237,782 - -------------------------------------------------------------------------- Custodian fees 832,458 - -------------------------------------------------------------------------- Distribution fees: Class A 1,929,754 - -------------------------------------------------------------------------- Class B 1,484,694 - -------------------------------------------------------------------------- Class C 265,069 - -------------------------------------------------------------------------- Transfer agent fees 3,111,049 - -------------------------------------------------------------------------- Trustees' and officer's fees and benefits 37,968 - -------------------------------------------------------------------------- Other 392,369 ========================================================================== Total expenses 16,813,043 ========================================================================== Less: Fees waived, expenses reimbursed and expense offset arrangements (1,282,853) ========================================================================== Net expenses 15,530,190 ========================================================================== Net investment income 3,960,706 ========================================================================== REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities (includes net gains (losses) from securities sold to affiliates of $(550,375)) 129,919,387 - -------------------------------------------------------------------------- Foreign currencies (230,897) ========================================================================== 129,688,490 ========================================================================== Change in net unrealized appreciation (depreciation) of: Investment securities (net of estimated tax on foreign investments of $(308,093) -- Note 1J) 90,731,190 - -------------------------------------------------------------------------- Foreign currencies (49,079) ========================================================================== 90,682,111 ========================================================================== Net gain from investment securities and foreign currencies 220,370,601 ========================================================================== Net increase in net assets resulting from operations $224,331,307 __________________________________________________________________________ ========================================================================== </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-6 AIM Global Aggressive Growth Fund STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2006 and 2005 <Table> <Caption> 2006 2005 - ------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $ 3,960,706 $ (1,731,446) - ------------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 129,688,490 191,046,523 - ------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies 90,682,111 (22,315,039) =========================================================================================== Net increase in net assets resulting from operations 224,331,307 167,000,038 =========================================================================================== Distributions to shareholders from net investment income: Class A (2,378,111) -- - ------------------------------------------------------------------------------------------- Class B (367,177) -- - ------------------------------------------------------------------------------------------- Class C (56,652) -- =========================================================================================== Total distributions from net investment income (2,801,940) -- =========================================================================================== Distributions to shareholders from net realized gains: Class A (30,928,472) -- - ------------------------------------------------------------------------------------------- Class B (7,262,436) -- - ------------------------------------------------------------------------------------------- Class C (1,120,528) -- =========================================================================================== Total distributions from net realized gains (39,311,436) -- =========================================================================================== Decrease in net assets resulting from distributions (42,113,376) -- =========================================================================================== Share transactions-net: Class A (15,873,539) (10,578,408) - ------------------------------------------------------------------------------------------- Class B (48,985,987) (146,902,790) - ------------------------------------------------------------------------------------------- Class C 1,302,802 (2,724,516) =========================================================================================== Net increase (decrease) in net assets resulting from share transactions (63,556,724) (160,205,714) =========================================================================================== Net increase in net assets 118,661,207 6,794,324 =========================================================================================== NET ASSETS: Beginning of year 851,656,831 844,862,507 =========================================================================================== End of year (including undistributed net investment income (loss) of $1,202,879 and $(149,711), respectively) $970,318,038 $ 851,656,831 ___________________________________________________________________________________________ =========================================================================================== </Table> NOTES TO FINANCIAL STATEMENTS October 31, 2006 NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Global Aggressive Growth Fund (the "Fund") is a series portfolio of AIM International Mutual Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. 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. The Fund's investment objective is above-average long-term growth of capital. 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 or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent F-7 AIM Global Aggressive Growth Fund source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are recorded at amortized cost which approximates value. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures. 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 unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. 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. Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the realized and unrealized net gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund's net asset value and, accordingly, they reduce the Fund's total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the advisor. 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. COUNTRY DETERMINATION -- For the purposes of making investment selection decisions and presentation in the Schedule of Investments, AIM may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer's securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America unless otherwise noted. D. 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 treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. E. 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 to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. F. 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. F-8 AIM Global Aggressive Growth Fund G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to taxation. Actual results could differ from those estimates. H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) 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. K. 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. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The Fund could be exposed to risk, which may be in excess of the amount reflected in the Statement of Assets and Liabilities, if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust 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 based on the annual rate of the Fund's average daily net assets as follows: <Table> <Caption> AVERAGE NET ASSETS RATE - ------------------------------------------------------------------- First $1 billion 0.90% - ------------------------------------------------------------------- Over $1 billion 0.85% __________________________________________________________________ =================================================================== </Table> Through December 31, 2009, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund (based on the Fund's average daily net assets) do not exceed the annual rate of: <Table> <Caption> AVERAGE NET ASSETS RATE - ------------------------------------------------------------------- First $250 million 0.80% - ------------------------------------------------------------------- Next $250 million 0.78% - ------------------------------------------------------------------- Next $500 million 0.76% - ------------------------------------------------------------------- Next $1.5 billion 0.74% - ------------------------------------------------------------------- Next $2.5 billion 0.72% - ------------------------------------------------------------------- Next $2.5 billion 0.70% - ------------------------------------------------------------------- Next $2.5 billion 0.68% - ------------------------------------------------------------------- Over $10 billion 0.66% __________________________________________________________________ =================================================================== </Table> F-9 AIM Global Aggressive Growth Fund 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 on investments by the Fund in such affiliated money market funds (excluding investments made in affiliated money market funds with cash collateral from securities loaned by the fund). Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors. For the year ended October 31, 2006, AIM waived advisory fees of $1,182,251. At the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended October 31, 2006, AMVESCAP reimbursed expenses of the Fund in the amount of $3,689. 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. Pursuant to such agreement, for the year ended October 31, 2006, AIM was paid $237,782. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency and shareholder services to the Fund and reimburse AIS for certain expenses incurred by AIS in the course of providing such services. AIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by AIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended October 31, 2006, the Fund paid AIS $3,111,049. The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B and Class C 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 and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% 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 the Rule 12b-1 payments, up to 0.25% of the average daily net assets of the Class A, Class B or Class C shares may be paid to furnish continuing personal shareholder services to 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. National Association of Securities Dealers ("NASD") Rules 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, 2006, the Class A, Class B and Class C shares paid $1,929,754, $1,484,694 and $265,069, 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, 2006, ADI advised the Fund that it retained $94,493 in front-end sales commissions from the sale of Class A shares and $155, $65,627 and $3,290 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. Certain officers and trustees of the Trust are officers and directors of AIM, AIS and/or ADI. NOTE 3--INVESTMENTS IN AFFILIATES The Fund is permitted, pursuant to procedures approved by the Board of Trustees, to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the year ended October 31, 2006. INVESTMENTS OF DAILY AVAILABLE CASH BALANCES: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio-Institutional Class $12,714,164 $130,708,858 $(125,220,171) $ -- $18,202,851 $ 693,500 $ -- - ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio-Institutional Class -- 52,969,337 (34,766,486) -- 18,202,851 297,758 -- - ----------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio-Institutional Class 12,714,164 91,596,924 (104,311,088) -- -- 397,186 -- =================================================================================================================================== Subtotal $25,428,328 $275,275,119 $(264,297,745) $ -- $36,405,702 $1,388,444 $ -- =================================================================================================================================== </Table> F-10 AIM Global Aggressive Growth Fund INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME* GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio-Institutional Class $36,454,453 $161,672,747 $(170,022,616) $ -- $28,104,584 $ 66,816 $ -- - ----------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio-Institutional Class 36,454,454 161,649,414 (169,999,283) -- 28,104,585 67,188 -- =================================================================================================================================== Subtotal $72,908,907 $323,322,161 $(340,021,899) $ -- $56,209,169 $ 134,004 $ -- =================================================================================================================================== Total Investments in Affiliates $98,337,235 $598,597,280 $(604,319,644) $ -- $92,614,871 $1,522,448 $ -- ___________________________________________________________________________________________________________________________________ =================================================================================================================================== </Table> * Net of compensation to counterparties. NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS The Fund is permitted to purchase or sell securities from or to certain other AIM Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment advisor (or affiliated investment advisors), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended October 31, 2006, the Fund engaged in securities sales of $4,725,424, which resulted in net realized gains (losses) of $(550,375), and securities purchases of $3,158,505. NOTE 5--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions, (ii) custodian credits which result from periodic overnight cash balances at the custodian and (iii) a one time custodian fee credit to be used to offset future custodian fees. For the year ended October 31, 2006, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $96,913. NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee and Officer of the Fund who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended October 31, 2006, the Fund paid legal fees of $6,862 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 7--BORROWINGS Pursuant to an exemptive order from the Securities and Exchange Commission, 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. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. 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. The Fund is a participant in an uncommitted unsecured revolving 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 credit facility 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 year ended October 31, 2006, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility. Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and AIM, not to exceed the contractually agreed upon rate. F-11 AIM Global Aggressive Growth Fund NOTE 8--PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities having a market value up to 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 received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. At October 31, 2006, securities with an aggregate value of $55,029,465 were on loan to brokers. The loans were secured by cash collateral of $56,209,169 received by the Fund and subsequently invested in affiliated money market funds. For the year ended October 31, 2006, the Fund received dividends on cash collateral investments of $134,004 for securities lending transactions, which are net of compensation to counterparties. NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the year ended October 31, 2006 and 2005 was as follows: <Table> <Caption> 2006 2005 - ----------------------------------------------------------------------------------- Distributions paid from: Ordinary income $ 2,801,940 $ -- - ----------------------------------------------------------------------------------- Long-term capital gain 39,311,436 -- =================================================================================== Total distributions $42,113,376 $ -- ___________________________________________________________________________________ =================================================================================== </Table> TAX COMPONENTS OF NET ASSETS: As of October 31, 2006, the components of net assets on a tax basis were as follows: <Table> <Caption> 2006 - ---------------------------------------------------------------------------- Undistributed ordinary income $ 18,914,998 - ---------------------------------------------------------------------------- Undistributed long-term gain 111,779,571 - ---------------------------------------------------------------------------- Unrealized appreciation -- investments 329,736,620 - ---------------------------------------------------------------------------- Temporary book/tax differences (162,735) - ---------------------------------------------------------------------------- Shares of beneficial interest 510,049,584 ============================================================================ Total net assets $970,318,038 ____________________________________________________________________________ ============================================================================ </Table> The difference between book-basis and tax-basis unrealized appreciation (depreciation) 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 (depreciation) difference is attributable primarily to losses on wash sales and the recognition of income for tax purposes on certain partnership investments. The tax-basis net unrealized appreciation on investments amount includes appreciation (depreciation) on foreign currencies of $(92,381). 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 trustee deferral of compensation, retirement plan expenses and partnership distribution. The Fund does not have a capital loss carryforward as of October 31, 2006. NOTE 10--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2006 was $583,614,284 and $695,148,178, respectively. <Table> <Caption> UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS - ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $334,553,518 - ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (4,724,517) ============================================================================== Net unrealized appreciation of investment securities $329,829,001 ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $687,951,152. </Table> F-12 AIM Global Aggressive Growth Fund NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions, partnership investments and passive foreign investment companies, on October 31, 2006, undistributed net investment income was increased by $193,824, undistributed net realized gain was decreased by $165,258 and shares of beneficial interest decreased by $28,566. This reclassification had no effect on the net assets of the Fund. NOTE 12--SHARE INFORMATION The Fund currently consists of three different classes of shares: Class A, Class B and Class C. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Class B shares and Class C shares are sold with CDSC. Under certain circumstances, Class A shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. <Table> <Caption> CHANGES IN SHARES OUTSTANDING - ------------------------------------------------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, ---------------------------------------------------------- 2006(A) 2005 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 2,487,493 $ 58,384,812 1,806,958 $ 34,695,693 - ------------------------------------------------------------------------------------------------------------------------ Class B 674,033 14,535,268 702,915 12,661,037 - ------------------------------------------------------------------------------------------------------------------------ Class C 296,198 6,421,861 231,761 4,170,979 ======================================================================================================================== Issued as reinvestment of dividends: Class A 1,502,663 31,916,560 -- -- - ------------------------------------------------------------------------------------------------------------------------ Class B 371,106 7,318,215 -- -- - ------------------------------------------------------------------------------------------------------------------------ Class C 57,317 1,130,865 -- -- ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,776,939 41,306,299 5,877,678 113,101,296 - ------------------------------------------------------------------------------------------------------------------------ Class B (1,918,853) (41,306,299) (6,287,823) (113,101,296) ======================================================================================================================== Reacquired:(b) Class A (6,359,614) (147,481,210) (8,196,078) (158,375,397) - ------------------------------------------------------------------------------------------------------------------------ Class B (1,377,064) (29,533,171) (2,595,138) (46,462,531) - ------------------------------------------------------------------------------------------------------------------------ Class C (289,576) (6,249,924) (381,426) (6,895,495) ======================================================================================================================== (2,779,358) $ (63,556,724) (8,841,153) $(160,205,714) ________________________________________________________________________________________________________________________ ======================================================================================================================== </Table> (a) There are three entities that are each record owners of more than 5% of the outstanding shares of the Fund and in the aggregate they own 23% of the outstanding shares of the Fund. ADI has an agreement with these entities to sell Fund shares. The Fund, AIM and/or AIM affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, AIM and/or AIM affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. (b) Amount is net of redemption fees of $9,316, $1,781 and $320 for Class A, Class B and Class C shares, respectively, for the year ended October 31, 2006 and $7,020, $1,738 and $237 for Class A, Class B and Class C shares, respectively, for the year ended October 31, 2005. NOTE 13--NEW ACCOUNTING STANDARD In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions for FIN 48 are effective for fiscal years beginning after December 15, 2006. Management is currently assessing the impact of FIN 48, if any, on the Fund's financial statements and intends for the Fund to adopt the FIN 48 provisions during 2007. F-13 AIM Global Aggressive Growth Fund NOTE 14--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, ------------------------------------------------------------------------------ 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 20.60 $ 16.99 $ 14.28 $ 11.00 $ 12.58 - --------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.13(a) (0.00)(a) (0.13)(a) (0.13) (0.15)(a) - --------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.39 3.61 2.84 3.41 (1.43) ================================================================================================================================= Total from investment operations 5.52 3.61 2.71 3.28 (1.58) ================================================================================================================================= Less distributions: Dividends from net investment income (0.07) -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.95) -- -- -- -- ================================================================================================================================= Total distributions (1.02) -- -- -- -- ================================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ================================================================================================================================= Net asset value, end of period $ 25.10 $ 20.60 $ 16.99 $ 14.28 $ 11.00 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Total return(b) 27.71% 21.25% 18.98% 29.82% (12.56)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $809,309 $676,291 $566,573 $465,855 $405,360 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.51%(c) 1.65% 2.02% 2.10% 2.00% - --------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.64%(c) 1.76% 2.03% 2.11% 2.00% ================================================================================================================================= Ratio of net investment income (loss) to average net assets 0.56%(c) (0.02)% (0.81)% (0.97)% (1.19)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Portfolio turnover rate 64% 67% 68% 64% 73% _________________________________________________________________________________________________________________________________ ================================================================================================================================= </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $771,901,522. <Table> <Caption> CLASS B ------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------------------------------ 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 19.18 $ 15.93 $ 13.45 $ 10.42 $ 11.97 - --------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.04)(a) (0.12)(a) (0.19)(a) (0.19) (0.20)(a) - --------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.01 3.37 2.67 3.22 (1.35) ================================================================================================================================= Total from investment operations 4.97 3.25 2.48 3.03 (1.55) ================================================================================================================================= Less distributions: Dividends from net investment income (0.05) -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.95) -- -- -- -- ================================================================================================================================= Total distributions (1.00) -- -- -- -- ================================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ================================================================================================================================= Net asset value, end of period $ 23.15 $ 19.18 $ 15.93 $ 13.45 $ 10.42 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Total return(b) 26.80% 20.40% 18.44% 29.08% (12.95)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $132,391 $152,878 $257,230 $374,027 $388,101 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.26%(c) 2.31% 2.52% 2.60% 2.51% - --------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.39%(c) 2.42% 2.53% 2.61% 2.51% ================================================================================================================================= Ratio of net investment income (loss) to average net assets (0.19)%(c) (0.68)% (1.31)% (1.47)% (1.70)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Portfolio turnover rate 64% 67% 68% 64% 73% _________________________________________________________________________________________________________________________________ ================================================================================================================================= </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $148,469,376. F-14 AIM Global Aggressive Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS C -------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 19.19 $ 15.93 $ 13.46 $ 10.42 $ 11.98 - --------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.04)(a) (0.12)(a) (0.19)(a) (0.19) (0.20)(a) - --------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.01 3.38 2.66 3.23 (1.36) ================================================================================================================================= Total from investment operations 4.97 3.26 2.47 3.04 (1.56) ================================================================================================================================= Less distributions: Dividends from net investment income (0.05) -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.95) -- -- -- -- ================================================================================================================================= Total distributions (1.00) -- -- -- -- ================================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ================================================================================================================================= Net asset value, end of period $ 23.16 $ 19.19 $ 15.93 $ 13.46 $ 10.42 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Total return(b) 26.79% 20.47% 18.35% 29.17% (13.02)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $28,619 $22,488 $21,059 $20,153 $19,099 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.26%(c) 2.31% 2.52% 2.60% 2.51% - --------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.39%(c) 2.42% 2.53% 2.61% 2.51% ================================================================================================================================= Ratio of net investment income (loss) to average net assets (0.19)%(c) (0.68)% (1.31)% (1.47)% (1.70)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Portfolio turnover rate 64% 67% 68% 64% 73% _________________________________________________________________________________________________________________________________ ================================================================================================================================= </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $26,506,872. NOTE 15--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including the Securities and Exchange Commission ("SEC"), the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, AIM and ADI created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by AIM, which was done pursuant to the terms of the settlement. These two fair funds may increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading that also may have harmed applicable AIM Funds. These two fair funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. Management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these two fair funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future. At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. PENDING LITIGATION AND REGULATORY INQUIRIES On August 30, 2005, the West Virginia Office of the State Auditor - -Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes findings of fact that AIM and ADI entered into certain arrangements permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that AIM and ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or capped by statute. F-15 AIM Global Aggressive Growth Fund NOTE 15--LEGAL PROCEEDINGS--(CONTINUED) Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging: - that the defendants permitted improper market timing and related activity in the AIM Funds; - that certain AIM Funds inadequately employed fair value pricing; - that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans; and - that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions (all the claims in this category of lawsuits were dismissed with prejudice by the court on September 29, 2006, except for the Section 36(b) claim which was dismissed with leave to amend to plead it properly as a derivative claim). These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees. All lawsuits based on allegations of market timing, late trading and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court, all claims asserted against the AIM Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class Action Complaint for Violations of ERISA and dismissed such Complaint. The plaintiff has commenced an appeal from that decision. IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, among others, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost security holders. IFG, AIM and ADI have advised the Fund that they are providing full cooperation with respect to these inquiries. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Pending Litigation and Regulatory Inquiries described above may have on AIM, ADI or the Fund. F-16 AIM Global Aggressive Growth Fund REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM International Mutual Funds 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 AIM Global Aggressive Growth Fund (one of the funds constituting AIM International Mutual Funds, hereafter referred to as the "Fund") at October 31, 2006, 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 five 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP December 20, 2006 Houston, Texas F-17 AIM Global Aggressive Growth Fund TAX DISCLOSURES REQUIRED FEDERAL INCOME TAX INFORMATION Of ordinary dividends paid to shareholders during the Fund's tax year ended October 31, 2006, 6.48% is eligible for the dividends received deduction for corporations. The Fund distributed long-term capital gains of $39,311,436 for the Fund's tax year ended October 31, 2006. For its tax year ended October 31, 2006, the Fund designates 72.09%, or the maximum amount allowable, of its dividend distributions as qualified dividend income. Your actual amount of qualified dividend income for the calendar year will be reported in your Form 1099-DIV. You should consult your tax advisor regarding treatment of the amounts. TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS For its tax year ended October 31, 2006, the Fund designates 3.40%, or the maximum amount allowable, of its dividend distributions as qualified interest income exempt from U.S. income tax for non-resident alien shareholders. Your actual amount of qualified interest income for the calendar year will be reported in your Form 1042-S mailing. You should consult your tax advisor regarding treatment of the amounts. The percentage of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended January, 31, 2006, April 30, 2006, July 31, 2006, October 31, 2006 are 68.78%, 64.89%, 67.48% and 62.71%, respectively. F-18 AIM Global Aggressive Growth Fund TRUSTEES AND OFFICERS The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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> TRUSTEE AND/ NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) POSITION(S) HELD WITH THE 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 Trustee and Vice Chair Group Inc. (financial services holding company); Director and Vice Chairman, AMVESCAP PLC; Chairman, AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) and Trustee and Vice Chair of The AIM Family of Funds--Registered Trademark-- Formerly: President and Chief Executive Officer, A I M Management Group Inc.; Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); 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); Chief Executive Officer, AMVESCAP PLC -- Managed Products; and President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- - ------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None Trustee, President and President, A I M Management Group Inc., Principal AIM Mutual Fund Dealer Inc. (registered Executive Officer broker dealer), AIM Funds Management Inc. (registered investment advisor) and 1371 Preferred Inc. (holding company); Director and President, A I M Advisors, Inc., INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, A I M Capital Management, Inc. and A I M Distributors, Inc.; Director and Chairman, AIM Investment Services, Inc., Fund Management Company and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, AVZ Callco Inc. (holding company); AMVESCAP Inc. (holding company) and AIM Canada Holdings Inc. (holding company); Director and Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); and Manager, Powershares Capital Management LLC Formerly: President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); Chairman, AIM Canada Holdings, Inc.; Executive Vice President and Chief Operations Officer, AIM Funds Management Inc.; President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - ------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates ACE Limited (insurance company); Trustee and Chair (technology consulting company) and Captaris, Inc. (unified messaging provider) - ------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 2001 Retired Badgley Funds, Inc. (registered Trustee investment company (2 portfolios)) Formerly: Partner, law firm of Baker & McKenzie - ------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None Trustee (investment banking firm); and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation - ------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2000 Director of a number of public and None Trustee private business corporations, including the Boss Group Ltd. (private investment and management); Cortland Trust, Inc. (Chairman) (registered investment company (3 portfolios)); Annuity and Life Re (Holdings), Ltd. (insurance company); CompuDyne Corporation (provider of products and services to the public security market); and Homeowners of America Holding Corporation (property casualty company) Formerly: Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; and Director of various affiliated Volvo companies; and Director, Magellan Insurance Company - ------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff, and Discovery Global Trustee Century Group, Inc. (government affairs Education Fund (non-profit) company); and Owner, Dos Angelos Ranch, L.P. Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) - ------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered Trustee Naftalis and Frankel LLP investment company (3 portfolios)) - ------------------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series Trustee Formerly: Partner, Deloitte & Touche Funds, Inc. (21 portfolios) - ------------------------------------------------------------------------------------------------------------------------------- </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. Taylor 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. F-19 TRUSTEES AND OFFICERS--(CONTINUED) AIM Global Aggressive Growth Fund The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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 - ------------------------------------------------------------------------------------------------------------------------------ OTHER OFFICERS - ------------------------------------------------------------------------------------------------------------------------------ Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A Senior Vice President and of The AIM Family of Funds--Registered Senior Officer Trademark-- Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A Senior Vice President, Chief Secretary and General Counsel, A I M Legal Officer and Secretary Management Group Inc. and A I M Advisors, Inc.; Director, Vice President and Secretary, INVESCO Distributors, Inc.; Vice President and Secretary, A I M Capital Management, Inc., AIM Investment Services, Inc., and Fund Management Company; Senior Vice President and Secretary, A I M Distributors, Inc.; Director, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; and Manager, Powershares Capital Management LLC Formerly: Chief Operating Officer, Senior Vice President, General Counsel, and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); General Counsel and Secretary, Pilgrim Baxter Value Investors (an investment adviser); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - ------------------------------------------------------------------------------------------------------------------------------ Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A Vice President PLC; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, A I M Management Group Inc. (financial services holding company); Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc. and A I M Distributors, Inc.; Vice President, AIM Investment Services, Inc. and Fund Management Company; Senior Vice President and Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - ------------------------------------------------------------------------------------------------------------------------------ Kevin M. Carome -- 1956 2003 Senior Vice President and General Vice President Counsel, AMVESCAP PLC; Director, INVESCO Funds Group, Inc.; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Director, Vice President and N/A General Counsel, Fund Management Company; Director, Senior Vice President, Secretary and General Counsel, A I M Management Group Inc. and A I M Advisors, Inc.; Director and Vice President, INVESCO Distributors, Inc.; Senior Vice President, A I M Distributors, Inc.; Vice President, A I M Capital Management, Inc. and AIM Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; Chief Executive Officer and President, INVESCO Funds Group, Inc.; and Senior Vice President, and General Counsel, Liberty Financial Companies, Inc. and Senior Vice President and General Counsel Liberty Funds Group, LLC - ------------------------------------------------------------------------------------------------------------------------------ Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A Vice President, Principal Advisors, Inc.; and Vice President, Financial Officer and Treasurer and Principal Officer of The Treasurer AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Investment Services, Inc.; and Vice President, A I M Distributors, Inc. - ------------------------------------------------------------------------------------------------------------------------------ J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A Vice President Investment Officer, A I M Advisors Inc.; Director, Chairman, Chief Executive Officer, President and Chief Investment Officer, A I M Capital Management, Inc.; Executive Vice President, A I M Management Group Inc. and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Private Asset Management, Inc.; and Chief Equity Officer, Senior Vice President and Senior Investment Officer, A I M Capital Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Karen Dunn Kelley -- 1960 2004 Director of Cash Management, Managing N/A Vice President Director and Chief Cash Management Officer, A I M Capital Management, Inc; Director and President, Fund Management Company; and Vice President, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust Only) Formerly: Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - ------------------------------------------------------------------------------------------------------------------------------ Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A Anti-Money Laundering Officer, A I M Advisors, Inc., A I M Compliance Officer Capital Management, Inc., A I M Distributors, Inc., AIM Investment Services, Inc., AIM Private Asset Management, Inc., Fund Management Company and The AIM Family of Funds--Registered Trademark-- Formerly: Manager of the Fraud Prevention Department, AIM Investment Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A Chief Compliance Officer Group Inc.; Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc.; Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc.; and Vice President, A I M Distributors, Inc., AIM Investment Services, Inc. and Fund Management Company Formerly: Global Head of Product Development, AIG-Global Investment Group, Inc.; Chief Compliance Officer and Deputy General Counsel, AIG-SunAmerica Asset Management; and Chief Compliance Officer, Chief Operating Officer and Deputy General Counsel, American General Investment Management - ------------------------------------------------------------------------------------------------------------------------------ </Table> 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 1.800.959.4246. <Table> OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers Suite 100 11 Greenway Plaza Inc. LLP Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street Houston, TX 77046-1173 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company 1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Philadelphia, PA 19103-7599 Americas New York, NY 10036-2714 </Table> F-20 [eDELIVERY GO PAPERLESS AIMinvestments.com/eDELIVERY GRAPHIC] REGISTER FOR eDELIVERY eDelivery is the process of receiving your fund and account If used after January 20, 2007, this report must be information via e-mail. Once your quarterly statements, tax accompanied by a Fund Performance & Commentary or by an AIM forms, fund reports, and prospectuses are available, we will Quarterly Performance Review for the most recent quarter-end. send you an e-mail notification containing links to these documents. For security purposes, you will need to log in to Mutual funds distributed by A I M Distributors, Inc. your account to view your statements and tax forms. A I M Management Group Inc. has provided leadership in the WHY SIGN UP? investment management industry since 1976. AIM Investment Services, Inc. is the transfer agent for the products and Register for eDelivery to: services represented by AIM Investments. AIM is a subsidiary of AMVESCAP PLC, one of the world's largest independent o reduce the amount of paper you receive. financial services companies with $450 billion in assets under management as of October 31, 2006. o gain access to your documents faster by not waiting for the mail. o view your documents online anytime at your convenience. o save the documents to your personal computer or print CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND them out for your records. EXPENSES CAREFULLY. FOR THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISOR AND HOW DO I SIGN UP? READ IT CAREFULLY BEFORE INVESTING. It's easy. Just follow these simple steps: 1. Log in to your account. 2. Click on the "Service Center" tab. 3. Select "Register for eDelivery" and complete the consent process. This AIM service is provided by AIM Investment Services, Inc. AIMinvestments.com GLA-AR-1 A I M Distributors, Inc. [YOUR GOALS. OUR SOLUTIONS.]--Registered Trademark-- - ------------------------------------------------------------------------------------ Mutual Retirement Annuities College Separately Offshore Cash Funds Products Savings Managed Products Management [AIM INVESTMENTS LOGO APPEARS HERE] Plans Accounts --Registered Trademark-- - ------------------------------------------------------------------------------------ INTERNATIONAL/ AIM GLOBAL GLOBAL EQUITY GROWTH FUND Annual Report to Shareholders o October 31,2006 International/Global Growth Table of Contents Supplemental Information ......... 2 Letters to Shareholders .......... 3 Performance Summary .............. 5 Management Discussion ............ 5 Fund Expenses .................... 7 Long-term Fund Performance ....... 8 Approval of Advisory Agreement ... 10 Schedule of Investments .......... F-1 Financial Statements ............. F-4 Notes to Financial Statements .... F-7 Financial Highlights ............. F-14 Auditor's Report ................. F-17 [COVER GLOBE IMAGE] Tax Disclosures .................. F-18 Trustees and Officers ............ F-19 [AIM INVESTMENT SOLUTIONS] [GRAPHIC] [GRAPHIC] [GRAPHIC] [DOMESTIC [INTERNATIONAL/ [SECTOR EQUITY] GLOBAL EQUITY] EQUITY] [GRAPHIC] [GRAPHIC] [GRAPHIC] [FIXED [ALLOCATION [DIVERSIFIED INCOME] SOLUTIONS] PORTFOLIOS] [AIM INVESTMENTS LOGO APPEARS HERE] --Registered Trademark-- AIM Global Growth Fund AIM GLOBAL GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of October 31, 2006, and is based on total net assets. ABOUT SHARE CLASSES higher price/earnings ratios and higher The Fund provides a complete list of its forecasted growth values. holdings four times in each fiscal year, o Class B shares are not available as an at the quarter-ends. For the second and investment for retirement plans o The unmanaged LIPPER GLOBAL LARGE-CAP fourth quarters, the lists appear in the maintained pursuant to Section 401 of GROWTH FUNDS INDEX represents an average Fund's semiannual and annual reports to the Internal Revenue Code, including of the performance of the 10 largest shareholders. For the first and third 401(k) plans, money purchase pension global large-capitalization growth quarters, the Fund files the lists with plans and profit sharing plans. Plans equity funds tracked by Lipper Inc., an the Securities and Exchange Commission that had existing accounts invested in independent mutual fund performance (SEC) on Form N-Q. The most recent list Class B shares prior to September 30, monitor. of portfolio holdings is available at 2003, will continue to be allowed to AIMinvestments.com. From our home page, make additional purchases. o The Fund is not managed to track the click on Products & Performance, then performance of any particular index, Mutual Funds, then Fund Overview. Select PRINCIPAL RISKS OF INVESTING IN including the indexes defined here, and your Fund from the drop-down menu and THE FUND consequently, the performance of the click on Complete Quarterly Holdings. Fund may deviate significantly from the Shareholders can also look up the Fund's o Foreign securities have additional performance of the indexes. Forms N-Q on the SEC Web site at risks, including exchange rate changes, sec.gov. Copies of the Fund's Forms N-Q political and economic upheaval, the o A direct investment cannot be made in may be reviewed and copied at the SEC relative lack of information about these an index. Unless otherwise indicated, Public Reference Room in Washington, companies, relatively low market index results include reinvested D.C. You can obtain information on the liquidity and the potential lack of dividends, and they do not reflect sales operation of the Public Reference Room, strict financial and accounting controls charges. Performance of an index of including information about duplicating and standards. funds reflects fund expenses; fee charges, by calling 202-942-8090 or performance of a market index does not. 800-732-0330, or by electronic request o Investing in emerging markets involves at the following e-mail address: greater risks than investing in more OTHER INFORMATION publicinfo@sec.gov. The SEC file numbers established markets. Risks for emerging for the Fund are 811-06463 and markets include risks relating to the o Industry classifications used in this 033-44611. relatively smaller size and lesser report are generally according to the liquidity of these markets, high Global Industry Classification Standard, A description of the policies and inflation rates, adverse political which was developed by and is the procedures that the Fund uses to developments and lack of timely exclusive property and a service mark of determine how to vote proxies relating information. Morgan Stanley Capital International to portfolio securities is available Inc. and Standard & Poor's. without charge, upon request, from our o Prices of equity securities change in Client Services department at response to many factors including the o The returns shown in management's 800-959-4246 or on the AIM Web site, historical and prospective earnings of discussion of Fund performance are based AIMinvestments.com. On the home page, the issuer, the value of its assets, on net asset values calculated for scroll down and click on AIM Funds Proxy general economic conditions, interest shareholder transactions. Generally Policy. The information is also rates, investor perceptions and market accepted accounting principles require available on the SEC Web site, sec.gov. liquidity. adjustments to be made to the net assets of the Fund at period end for financial Information regarding how the Fund voted ABOUT INDEXES USED IN THIS REPORT reporting purposes, and as such, the net proxies related to its portfolio asset values for shareholder securities during the 12 months ended o The unmanaged MSCI WORLD INDEX is a transactions and the returns based on June 30, 2006, is available at our Web group of global securities tracked by those net asset values may differ from site. Go to AIMinvestments.com, access Morgan Stanley Capital International. the net asset values and returns the About Us tab, click on Required reported in the Financial Highlights. Notices and then click on Proxy Voting Activity. Next, select the Fund from the o The unmanaged MSCI WORLD GROWTH INDEX drop-down menu. The information is also is a subset of the MSCI WORLD INDEX, a available on the SEC Web site, sec.gov. group of global securities tracked by Morgan Stanley Capital International; the Growth subset measures performance of companies with ========================================== FUND NASDAQ SYMBOLS ====================================================================================== Class A Shares AGGAX THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND Class B Shares AGGBX PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND Class C Shares AGGCX EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. ====================================================================================== ========================================== NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE AIMinvestments.com 2 AIM Global Growth Fund Dear Shareholders of The AIM Family of Funds--Registered Trademark--: We're pleased to provide you with this report, which includes a discussion of how your Fund was managed during the review period ended October 31, 2006, and what factors affected its performance. As we approach the end of 2006, it seems likely that many [TAYLOR investors may see the value of their investments increase PHOTO] this year. Global equity markets, collectively, recorded double-digit gains for the year ended October 31, 2006, as did the U.S. stock market. Also, the investment grade bond market in the United States rose for the same period. While stock and bond markets generally enjoyed positive Philip Taylor year-to-date returns, their performance was affected by short-term economic and geopolitical events. For example, the U.S. stock market was weak in the second quarter of 2006 when it appeared that inflation might be rising. Only after the U.S. Federal Reserve Board decided in August that inflation was contained and that short-term interest rates need not be increased--the first time it kept rates unchanged in more than two years--did equities truly surge. Short-term market fluctuations are a fact of life for all investors. At AIM Investments--Registered Trademark--, we believe that investors can do two things to deal with short-term market fluctuations: maintain a long-term investment horizon and maintain a diversified portfolio. AIM Investments can help by offering a broad product line that gives your financial advisor the necessary tools to build a portfolio that's right for you regardless of market conditions. AIM Investments offers a comprehensive range of retail mutual funds, including domestic, global and international equity funds, taxable and tax-exempt fixed-income funds, and a variety of allocation portfolios--with varied risk and return characteristics to match your needs. We maintain this extensive set of product solutions for one reason: We believe in the value of comprehensive, diversified investment portfolios. We've changed the look of our annual reports to reflect that belief. In our marketing and now our shareholder literature, we represent a fully diversified portfolio graphically as an allocation pie chart and assign each asset class a color--green for domestic equity, blue for international, orange for sector and purple for fixed income. A legend in the left column illustrates the methodology. Your report cover now shows your Fund's asset class color, plus the asset class and sub-asset class name are shown in the upper-left corner. The reason for these changes is to help you better understand where your Fund fits into your overall portfolio. AIM has a variety of investment solutions, and knowing which ones are right for your portfolio is complex. That's why we also believe in the value of a trusted financial advisor who will work with you to create an investment plan you can stick with for the long term. Your financial advisor can help allocate your portfolio appropriately and review your investments regularly to help ensure they remain suitable as your financial situation changes. While there are no guarantees with any investment program, a long-term plan that's based on your financial goals, risk tolerance and time horizon is more likely to keep you and your investments on track. OUR COMMITMENT TO YOU In the short term, the one sure thing about markets is their unpredictability. While past performance cannot guarantee comparable future results, we believe that staying invested for the long term with a thoughtful plan offers the best opportunity for weathering that unpredictability. We at AIM Investments remain committed to building enduring solutions to help you achieve your investment goals, and we're pleased you've placed your trust in us. Information about investing, the markets and your Fund is always available on our Web site, AIMinvestments.com. If you have questions about your individual account, we invite you to contact one of our highly trained client services representatives at 800-959-4246. Sincerely, /s/ PHILIP TAYLOR Philip Taylor President -- AIM Funds CEO, AIM Investments December 14, 2006 AIM INVESTMENTS IS A REGISTERED SERVICE MARK OF A I M MANAGEMENT GROUP INC. A I M ADVISORS, INC. AND A I M CAPITAL MANAGEMENT, INC. ARE THE INVESTMENT ADVISORS. A I M DISTRIBUTORS, INC. IS THE DISTRIBUTOR FOR THE RETAIL FUNDS REPRESENTED BY AIM INVESTMENTS. 3 AIM Global Growth Fund Dear Fellow AIM Fund Shareholders: At our meeting at the end of June, your Board completed its comprehensive review* of each fund's advisory agreement with A I M Advisors, Inc. (AIM) to make certain your interests are being served in terms of fees, performance and operations. [CROCKETT Looking ahead, your Board finds many reasons to be PHOTO positive about AIM's management and strategic direction. Most importantly, AIM's investment management discipline has paid off in terms of improved overall performance. We are also pleased with AIM's efforts to seek more cost-effective ways of delivering superior service. In addition, AIM is realizing the benefits of belonging Bruce L. Crockett to a leading independent global investment management organization in its parent company, AMVESCAP PLC, which is dedicated to helping people worldwide build their financial security. AMVESCAP managed approximately $450 billion globally as of October 31, 2006, operating under the AIM, INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust brands. These companies are home to an abundance of investment talent that is gradually being integrated and leveraged into centers of excellence, each focusing on a given market segment or asset class. Over the next few years, your Board will be meeting at these various centers of excellence to learn about their progress and how they may serve you through our goal of enhancing performance and reducing costs. The seven new AIM funds--which include Asian funds, structured U.S. equity funds and specialized bond funds--are an early example of the kind of opportunities the AMVESCAP organization can provide AIM clients. More information on these funds can be found on AIM's Web site. Your Board is very pleased with the overall direction and progress of the AIM Funds. We're working closely and effectively with AIM's management to continue this momentum. As always, your Board is eager to hear your views on how we might better serve you. Please send your comments in a letter addressed to me at AIM Investments, AIM Investments Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046. Sincerely, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board December 14, 2006 *To learn more about all the factors we considered before approving each fund's advisory agreement, go to the "Products & Performance" tab at the AIM Web site (AIMinvestments.com) and click on "Investment Advisory Agreement Renewals." The approval of advisory agreement information for your Fund is also included in this annual report on pages 10-11. 4 AIM Global Growth Fund MANAGEMENT'S DISCUSSION using a "bottom-up" investment approach. OF FUND PERFORMANCE We construct the Fund primarily on a stock-by-stock basis focusing on the ====================================================================================== strengths of individual companies rather than sectors, countries or market-cap PERFORMANCE SUMMARY trends. Global equity markets rallied strongly over the fiscal year ended October 31, We believe disciplined sell decisions 2006, fueled by improving economic growth prospects in Europe and Asia. U.S. are key to successful investing. We equity markets outperformed international markets toward the end of the fiscal consider selling a stock when: year, however international equities continued to outperform over the 12-month period. o A company's fundamentals deteriorate, or it posts disappointing earnings. We are pleased to provide shareholders with double-digit Fund performance. Class A shares of AIM Global Growth Fund, excluding applicable sales charges, o A stock's price seems overvalued. performed inline with its broad market index and outperformed its style-specific index. We attribute our comparative success to strong stock selection across the o A more attractive opportunity becomes consumer staples, consumer discretionary, industrials and financials sectors and available. our large weighting to outperforming European markets (compared to the style-specific index). MARKET CONDITIONS AND YOUR FUND Your Fund's long-term performance appears on pages 8 and 9. Markets continued to rally in Europe as positive economic data and strong FUND VS. INDEXES company earnings continued to bolster investor confidence. Asian stock markets Total returns, 10/31/05-10/31/06, excluding applicable sales charges. If sales also performed strongly during the charges were included, returns would be lower. period. Inflationary pressures across the region showed signs of weakening and Class A Shares 21.39% a general perception that the United States can coordinate a "soft landing" Class B Shares 20.54 for its economy provided a positive backdrop for Asian equities. Despite the Class C Shares 20.52 general rally in global stock markets, Japanese shares have remained lackluster MSCI World Index (Broad Market) 21.32 in comparison. Fears of an economic slowdown in the U.S. along with weaker MSCI World Growth Index (Style-Specific Index) 15.59 economic data at home provided somewhat of a headwind for Japanese equities. Lipper Global Large-Cap Growth Funds Index 19.18 Emerging markets experienced a volatile 12-month period during which stocks hit record highs in many countries before SOURCE: LIPPER INC. correcting sharply lower from early May onward. A combination of higher global ====================================================================================== interest rates and rising levels of risk aversion accentu- HOW WE INVEST focuses primarily on identifying quality companies that have experienced, or (continued) When selecting stocks for your Fund, we exhibit the potential for, accelerated employ a disciplined investment strategy or above average earnings growth but that emphasizes fundamental research, whose prices do not fully reflect these supported by both quantitative analysis attributes. and portfolio construction techniques. Our "EQV" (Earnings, Quality, and While research responsibilities Valuation) strategy within the portfolio management team are focused by region, we select investments for the Fund by ========================================== ========================================== ========================================== PORTFOLIO COMPOSITION TOP FIVE COUNTRIES* TOP 10 EQUITY HOLDINGS* By sector 1. United States 25.7% 1. BNP Paribas (France) 2.6% [PIE CHART] 2. France 11.4 2. Vinci S.A. (France) 2.5 Consumer Discretionary 11.0% 3. Switzerland 9.9 3. Syngenta A.G. (Switzerland) 2.4 Industrials 8.9% 4. Germany 7.6 4. UBS A.G. (Switzerland) 2.0 Energy 8.4% 5. Japan 6.8 5. Roche Holding A.G. (Switzerland) 1.9 Materials 5.9% Total Net Assets $425.16 million 6. Total S.A. (France) 1.9 Telecommunication Services 0.5% Total Number of 7. Eni S.p.A. (Italy) 1.8 Money Market Funds Plus Holdings* 94 Other Assets Less 8. InBev N.V. (Belgium) 1.7 Liabilities 4.4% 9. Anglo Irish Bank Corp. Financials 23.2% PLC (Ireland) 1.7 Information Technology 13.4% 10. Imperial Tobacco Group PLC (United Kingdom) 1.7 Consumer Staples 12.6% Health Care 11.7% The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. *Excluding money market fund holdings. ========================================== ========================================== ========================================== 5 AIM Global Growth Fund ated the sell-off of illiquid emerging tionary and industrial sectors, combined Barrett K. Sides market securities. However, most of with an overweight exposure to the [SIDES Senior portfolio these markets bounced back from July financial services sector relative to PHOTOS] manager, is lead onward ending the fiscal year with the style-specific index, helped the manager of AIM strong positive overall returns. Fund outperform. One of the Fund's Global Growth Fund largest U.S. positions, GOLDMAN SACHS--a with respect to the Fund performance was broad-based for premier Wall Street investment Fund's investments the fiscal year, with the Fund firm--delivered better than average in Asia Pacific and Latin America. He outperforming its style-specific index revenues, margins and returns through joined AIM in 1990. Mr. Sides graduated across Europe, Asia and Latin America. their diversified business lines. We with a B.S. in economics from Bucknell As previously noted, our investment have owned Goldman Sachs for quite some University. He also earned a master's in process primarily focuses on bottom-up time given its high quality earnings and international business from the stock selection as opposed to "top-down" attractive valuation. In contrast, University of St. Thomas. allocation decisions. It was our stock select holdings in the health care selection process and not macroeconomic sector detracted over the fiscal year. Kirk L. Anderson bets that again drove strong absolute The Fund's underperformance in this [ANDERSON Portfolio manager, and relative performance for the fiscal sector was primarily due to two PHOTO] is lead manager of year. Key contributors to relative holdings: ALCON and AETNA. Investors AIM Global Growth outperformance came from holdings in appeared to rotate out of last year's Fund with respect to France and Germany, markets most U.S. strong performers in U.S. health care to the domestic portion investors may view as offering subdued invest in other opportunities, of the Fund's growth opportunities. The reality is particularly information technology portfolio. He joined AIM in 1994. quite the contrary. In applying our stocks. We sold these positions over the Mr. Anderson earned a B.A. in political disciplined EQV investment process, we fiscal year. science from Texas A&M University. He also were able to find several strong earned an M.S. in finance from the performing quality stocks in both the IN CLOSING University of Houston. German and French equity markets. As previously noted, international Matthew W. Dennis Leading contributors to Fund markets have experienced strong [DENNIS Chartered Financial performance included BNP PARIBAS double-digit returns over the past few PHOTO] Analyst, portfolio (France/financials), VINCI years. It would be imprudent for us to manager, is lead (France/industrials) and MAN AG suggest that such a level of performance manager of AIM (Germany/industrials). SYNGENTA, the is sustainable over the long term. We Global Growth Fund world's second largest maker of believe our bottom- up investment with respect to the agricultural chemicals, performed well process should allow us to build a Fund's investments in Europe and Canada. due to continued strong earnings growth diversified portfolio of world-class He has been in the investment business and an attractive valuation. Strong companies from around the globe. since 1994. Mr. Dennis earned a B.A. in growth from its agrichemical products Regardless of macroeconomic trends, the economics from The University of Texas portfolio, supported by new product Fund strives to maintain a disciplined at Austin. He also earned an M.S. in launches and cost cutting, keep us strategy of selecting attractive finance from Texas A&M University. optimistic about the stock. investment opportunities based on its "EQV" investment strategy. As always, we Clas G. Olsson Our underweight exposure to U.S. thank you for your continued [OLSSON Senior portfolio stocks and overweight exposure to participation in AIM Global Growth Fund. PHOTO] manager and head of European stocks relative to the AIM's International style-specific index also helped THE VIEWS AND OPINIONS EXPRESSED IN Investment performance. Our rationale for this MANAGEMENT'S DISCUSSION OF FUND Management Unit, is regional allocation was based on results PERFORMANCE ARE THOSE OF A I M ADVISORS, manager of AIM of our bottom-up fundamental research INC. THESE VIEWS AND OPINIONS ARE Global Growth Fund. that has led us to find more attractive SUBJECT TO CHANGE AT ANY TIME BASED ON He joined AIM in 1994. Mr. Olsson became valuation and growth opportunities in FACTORS SUCH AS MARKET AND ECONOMIC a commissioned naval officer at the Europe. In contrast, select holdings in CONDITIONS. THESE VIEWS AND OPINIONS MAY Royal Swedish Naval Academy in 1988. South Africa and Korea and a lack of NOT BE RELIED UPON AS INVESTMENT ADVICE He earned a B.B.A. from The University of exposure to certain index performers in OR RECOMMENDATIONS, OR AS AN OFFER FOR A Texas at Austin. Italy negatively impacted relative PARTICULAR SECURITY. THE INFORMATION IS return. NOT A COMPLETE ANALYSIS OF EVERY ASPECT Assisted by the Asia Pacific/Latin OF ANY MARKET, COUNTRY, INDUSTRY, America Team, Europe/Canada Team and Foreign exchange was another positive SECURITY OR THE FUND. STATEMENTS OF FACT Large/Multi-Cap Growth Team contributor to performance, with our ARE FROM SOURCES CONSIDERED RELIABLE, exposure to the euro greatly BUT A I M ADVISORS, INC. MAKES NO contributing to overall return. Because REPRESENTATION OR WARRANTY AS TO THEIR we do not typically hedge currencies-- COMPLETENESS OR ACCURACY. ALTHOUGH we buy stocks in their local currency HISTORICAL PERFORMANCE IS NO GUARANTEE and then translate that value back into OF FUTURE RESULTS, THESE INSIGHTS MAY dollars--foreign currency appreciation HELP YOU UNDERSTAND OUR INVESTMENT provided a boost to Fund performance. MANAGEMENT PHILOSOPHY. FOR A PRESENTATION OF YOUR FUND'S From a sector perspective, strong See important Fund and index LONG-TERM PERFORMANCE, PLEASE SEE PAGES stock selection in the consumer staples, disclosures on the inside front cover. 8 AND 9. consumer discre- 6 AIM Global Growth Fund CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE mate the expenses that you paid over the The hypothetical account values and period. Simply divide your account value expenses may not be used to estimate the As a shareholder of the Fund, you incur by $1,000 (for example, an $8,600 actual ending account balance or two types of costs: (1) transaction account value divided by $1,000 = 8.6), expenses you paid for the period. You costs, which may include sales charges then multiply the result by the number may use this information to compare the (loads) on purchase payments or in the table under the heading entitled ongoing costs of investing in the Fund contingent deferred sales charges on "Actual Expenses Paid During Period" to and other funds. To do so, compare this redemptions; and redemption fees, if estimate the expenses you paid on your 5% hypothetical example with the 5% any; and (2) ongoing costs, including account during this period. hypothetical examples that appear in the management fees; distribution and/or shareholder reports of the other funds. service (12b-1) fees; and other Fund HYPOTHETICAL EXAMPLE FOR expenses. This example is intended to COMPARISON PURPOSES Please note that the expenses shown help you understand your ongoing costs in the table are meant to highlight your (in dollars) of investing in the Fund The table below also provides ongoing costs only and do not reflect and to compare these costs with ongoing information about hypothetical account any transaction costs, such as sales costs of investing in other mutual values and hypothetical expenses based charges (loads) on purchase payments, funds. The example is based on an on the Fund's actual expense ratio and contingent deferred sales charges on investment of $1,000 invested at the an assumed rate of return of 5% per year redemptions, and redemption fees, if beginning of the period and held for the before expenses, which is not the Fund's any. Therefore, the hypothetical entire period May 1, 2006, through actual return. The Fund's actual information is useful in comparing October 31, 2006. cumulative total returns at net asset ongoing costs only, and will not help value after expenses for the six months you determine the relative total costs ACTUAL EXPENSES ended October 31, 2006, appear in the of owning different funds. In addition, table "Cumulative Total Returns" on page if these transaction costs were The table below provides information 9. included, your costs would have been about actual account values and actual higher. expenses. You may use the information in this table, together with the amount you invested, to esti- ==================================================================================================================================== HYPOTHETICAL ACTUAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2) (10/31/06) PERIOD(2) RATIO A $1,000.00 $1,025.00 $ 8.12 $1,017.19 $ 8.08 1.59% B 1,000.00 1,021.30 11.92 1,013.41 11.88 2.34 C 1,000.00 1,021.30 11.92 1,013.41 11.88 2.34 (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value after expenses for the six months ended October 31, 2006, appear in the table "Cumulative Total Returns" on page 9. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. ==================================================================================================================================== 7 AIM Global Growth Fund YOUR FUND'S LONG-TERM PERFORMANCE RESULTS OF A $10,000 INVESTMENT Index data from 8/31/94, Fund data from 9/15/94 ======================================================================================================================= [MOUNTAIN CHART] DATE AIM GLOBAL GROWTH FUND AIM GLOBAL GROWTH FUND MSCI WORLD MSCI WORLD GROWTH -CLASS A SHARES -CLASS B SHARES INDEX INDEX 8/31/94 $10000 $10000 9/94 $9289 $9830 9735 9770 10/94 9667 10220 10010 10004 11/94 9261 9790 9573 9605 12/94 9227 9750 9664 9749 1/95 8991 9490 9516 9600 2/95 9332 9849 9653 9747 3/95 9710 10239 10116 10222 4/95 10013 10549 10466 10601 5/95 10287 10840 10553 10685 6/95 10750 11330 10548 10698 7/95 11487 12109 11073 11222 8/95 11384 11989 10824 10906 9/95 11658 12270 11137 11288 10/95 11649 12260 10959 11165 11/95 11876 12490 11337 11520 12/95 12005 12616 11666 11782 1/96 12217 12840 11875 11991 2/96 12477 13104 11945 12077 3/96 12698 13339 12141 12253 4/96 13141 13796 12424 12508 5/96 13391 14050 12432 12581 6/96 13429 14081 12493 12667 7/96 12746 13359 12049 12195 8/96 13093 13715 12185 12296 9/96 13612 14254 12659 12856 10/96 13660 14296 12745 12894 11/96 14353 15018 13457 13547 12/96 14391 15048 13239 13281 1/97 14681 15343 13396 13466 2/97 14691 15343 13547 13615 3/97 14325 14967 13277 13296 4/97 14517 15149 13708 13906 5/97 15459 16127 14552 14717 6/97 16190 16880 15275 15528 7/97 17191 17918 15976 16245 8/97 16094 16767 14905 15036 9/97 17287 18008 15712 15901 10/97 16016 16676 14883 14884 11/97 16199 16859 15144 15261 12/97 16383 17044 15326 15400 1/98 16580 17232 15750 16002 2/98 17834 18538 16813 17131 3/98 18772 19498 17520 17722 4/98 19029 19760 17689 17824 5/98 18939 19655 17465 17624 6/98 19284 19999 17876 18377 7/98 19531 20249 17845 18345 8/98 16640 17242 15463 16195 9/98 16897 17502 15734 16556 10/98 17686 18306 17153 17994 11/98 18694 19340 18171 19152 12/98 20002 20682 19055 20549 1/99 20804 21509 19470 21271 2/99 20003 20673 18949 20423 3/99 20663 21338 19735 21175 4/99 20907 21575 20511 21137 5/99 20178 20814 19758 20398 6/99 21538 22210 20677 21649 7/99 21589 22252 20612 21407 8/99 21620 22275 20573 21668 9/99 22056 22716 20371 21702 10/99 23781 24476 21427 23121 11/99 26216 26968 22027 24474 12/99 30450 31310 23807 27273 1/00 28848 29657 22441 25562 2/00 31774 32646 22499 26448 3/00 31624 32476 24051 28022 4/00 29126 29894 23031 26140 5/00 27140 27847 22445 24588 6/00 29276 30019 23198 26089 7/00 28400 29100 22543 24775 8/00 30814 31568 23273 25652 9/00 28540 29225 22033 23378 10/00 26511 27142 21661 22395 11/00 22614 23135 20343 20666 12/00 23706 24237 20670 20275 1/01 23417 23931 21068 20887 2/01 19459 19882 19285 18221 3/01 17566 17944 18015 16745 4/01 18882 19282 19343 18095 5/01 18689 19078 19091 17730 6/01 18315 18692 18490 17110 7/01 17845 18193 18243 16856 8/01 17042 17366 17364 15816 9/01 15063 15358 15832 14501 10/01 15598 15880 16134 15118 11/01 16379 16674 17086 16266 12/01 16582 16868 17192 16345 1/02 16111 16380 16670 15811 2/02 15929 16198 16523 15853 3/02 16700 16970 17284 16244 4/02 16380 16628 16664 15548 5/02 16219 16470 16692 15464 6/02 15567 15802 15677 14570 7/02 14133 14339 14354 13542 8/02 14070 14271 14378 13538 9/02 12808 12978 12795 12194 10/02 13545 13727 13738 13142 11/02 13803 13977 14477 13619 12/02 13289 13455 13773 13093 1/03 12893 13046 13354 12620 2/03 12776 12921 13120 12484 3/03 12786 12921 13077 12591 4/03 13524 13669 14235 13489 5/03 14306 14453 15046 14044 6/03 14542 14691 15304 14241 7/03 14702 14838 15613 14516 8/03 14927 15065 15949 14807 9/03 15034 15167 16045 14891 10/03 15954 16087 16995 15777 11/03 16243 16370 17252 16000 12/03 16863 16982 18333 16769 1/04 17120 17243 18627 17112 2/04 17387 17504 18939 17320 3/04 17387 17493 18814 17146 4/04 17130 17220 18428 16804 5/04 17344 17436 18582 16970 6/04 17644 17730 18978 17200 7/04 16851 16925 18358 16376 8/04 16841 16903 18439 16324 9/04 17409 17471 18788 16652 10/04 17827 17880 19248 17060 11/04 18864 18924 20259 17922 12/04 19496 19549 21032 18597 1/05 19079 19117 20558 18096 2/05 19764 19786 21210 18557 3/05 19347 19366 20800 18202 4/05 18759 18754 20345 17802 5/05 19036 19026 20706 18264 6/05 19432 19413 20885 18349 7/05 20223 20195 21615 19110 8/05 20458 20411 21778 19280 9/05 20812 20752 22344 19706 10/05 20352 20275 21801 19287 11/05 20983 20899 22528 19913 12/05 21765 21660 23027 20347 1/06 23047 22931 24055 21285 2/06 22854 22727 24019 21067 3/06 23478 23329 24548 21591 4/06 24102 23931 25293 22091 5/06 23015 22842 24429 21240 6/06 23004 22820 24422 21205 7/06 23112 22911 24574 21033 8/06 23844 23614 25212 21592 9/06 24059 23820 25513 21782 10/06 24695 25029 26449 22558 ======================================================================================================================= SOURCE: LIPPER INC. Past performance cannot guarantee or sale of Fund shares. Performance of comparable future results. the indexes does not reflect the effects of taxes. The data shown in the chart include reinvested distributions, applicable This chart, which is a logarithmic sales charges, Fund expenses and chart, presents the fluctuations in the management fees. Results for Class B value of the Fund and its indexes. We shares are calculated as if a believe that a logarithmic chart is more hypothetical shareholder had liquidated effective than other types of charts in his entire investment in the Fund at the illustrating changes in value during the close of the reporting period and paid early years shown in the chart. The the applicable contingent deferred sales vertical axis, the one that indicates charges. Index results include the dollar value of an investment, is reinvested dividends, but they do not constructed with each segment reflect sales charges. Performance of an representing a percent change in the index of funds reflects fund expenses value of the investment. In this chart, and management fees; performance of a each segment represents a doubling, or market index does not. Performance shown 100% change, in the value of the in the chart and table(s) does not investment. In other words, the space reflect deduction of taxes a shareholder between $5,000 and $10,000 is the same would pay on Fund distributions size as the space between $10,000 and $20,000, and so on. 8 AIM Global Growth Fund ========================================== ========================================== ========================================== AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS As of 10/31/06, including applicable As of 9/30/06, the most recent calendar 6 months ended 10/31/06, excluding sales charges quarter-end, including applicable sales applicable sales charges charges CLASS A SHARES Class A Shares 2.50% Inception (9/15/94) 7.74% CLASS A SHARES Class B Shares 2.13 10 Years 5.50 Inception (9/15/94) 7.56% Class C Shares 2.13 5 Years 8.39 10 Years 5.26 1 Year 14.70 5 Years 8.58 ========================================== 1 Year 9.26 CLASS B SHARES Inception (9/15/94) 7.86% CLASS B SHARES 10 Years 5.65 Inception (9/15/94) 7.68% 5 Years 8.71 10 Years 5.41 1 Year 15.54 5 Years 8.88 1 Year 9.76 CLASS C SHARES Inception (8/4/97) 3.56% CLASS C SHARES 5 Years 8.99 Inception (8/4/97) 3.30% 1 Year 19.52 5 Years 9.17 1 Year 13.75 ========================================== ========================================== THE PERFORMANCE DATA QUOTED REPRESENT CONTINGENT DEFERRED SALES CHARGE (CDSC) PAST PERFORMANCE AND CANNOT GUARANTEE FOR THE PERIOD INVOLVED. THE CDSC ON COMPARABLE FUTURE RESULTS; CURRENT CLASS B SHARES DECLINES FROM 5% PERFORMANCE MAY BE LOWER OR HIGHER. BEGINNING AT THE TIME OF PURCHASE TO 0% PLEASE VISIT AIMINVESTMENTS.COM FOR THE AT THE BEGINNING OF THE SEVENTH YEAR. MOST RECENT MONTH-END PERFORMANCE. THE CDSC ON CLASS C SHARES IS 1% FOR THE PERFORMANCE FIGURES REFLECT REINVESTED FIRST YEAR AFTER PURCHASE. DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM THE PERFORMANCE OF THE FUND'S SHARE SALES CHARGE UNLESS OTHERWISE STATED. CLASSES WILL DIFFER PRIMARILY DUE TO INVESTMENT RETURN AND PRINCIPAL VALUE DIFFERENT SALES CHARGE STRUCTURES AND WILL FLUCTUATE SO THAT YOU MAY HAVE A CLASS EXPENSES. GAIN OR LOSS WHEN YOU SELL SHARES. A REDEMPTION FEE OF 2% WILL BE CLASS A SHARE PERFORMANCE REFLECTS IMPOSED ON CERTAIN REDEMPTIONS OR THE MAXIMUM 5.50% SALES CHARGE, AND EXCHANGES OUT OF THE FUND WITHIN 30 DAYS CLASS B AND CLASS C SHARE PERFORMANCE OF PURCHASE. EXCEPTIONS TO THE REFLECTS THE APPLICABLE REDEMPTION FEE ARE LISTED IN THE FUND'S PROSPECTUS. 9 AIM Global Growth Fund APPROVAL OF INVESTMENT ADVISORY AGREEMENT The Board of Trustees of AIM services to be provided by AIM under the o Meetings with the Fund's portfolio International Mutual Funds (the "Board") Advisory Agreement was appropriate and managers and investment personnel. With oversees the management of AIM Global that AIM currently is providing services respect to the Fund, the Board is Growth Fund (the "Fund") and, as in accordance with the terms of the meeting periodically with such Fund's required by law, determines annually Advisory Agreement. portfolio managers and/or other whether to approve the continuance of investment personnel and believes that the Fund's advisory agreement with A I M o The quality of services to be provided such individuals are competent and able Advisors, Inc. ("AIM"). Based upon the by AIM. The Board reviewed the to continue to carry out their recommendation of the Investments credentials and experience of the responsibilities under the Advisory Committee of the Board, at a meeting officers and employees of AIM who will Agreement. held on June 27, 2006, the Board, provide investment advisory services to including all of the independent the Fund. In reviewing the o Overall performance of AIM. The Board trustees, approved the continuance of qualifications of AIM to provide considered the overall performance of the advisory agreement (the "Advisory investment advisory services, the Board AIM in providing investment advisory and Agreement") between the Fund and AIM for considered such issues as AIM's portfolio administrative services to the another year, effective July 1, 2006. portfolio and product review process, Fund and concluded that such performance various back office support functions was satisfactory. The Board considered the factors provided by AIM and AIM's equity and discussed below in evaluating the fixed income trading operations. Based o Fees relative to those of clients of fairness and reasonableness of the on the review of these and other AIM with comparable investment Advisory Agreement at the meeting on factors, the Board concluded that the strategies. The Board noted that AIM June 27, 2006 and as part of the Board's quality of services to be provided by does not serve as an advisor to other ongoing oversight of the Fund. In their AIM was appropriate and that AIM mutual funds or other clients with deliberations, the Board and the currently is providing satisfactory investment strategies comparable to independent trustees did not identify services in accordance with the terms of those of the Fund. any particular factor that was the Advisory Agreement. controlling, and each trustee attributed o Fees relative to those of comparable different weights to the various o The performance of the Fund relative funds with other advisors. The Board factors. to comparable funds. The Board reviewed reviewed the advisory fee rate for the the performance of the Fund during the Fund under the Advisory Agreement. The One responsibility of the independent past one, three and five calendar years Board compared effective contractual Senior Officer of the Fund is to manage against the performance of funds advised advisory fee rates at a common asset the process by which the Fund's proposed by other advisors with investment level at the end of the past calendar management fees are negotiated to ensure strategies comparable to those of the year and noted that the Fund's rate was that they are negotiated in a manner Fund. The Board noted that the Fund's below the median rate of the funds which is at arms' length and reasonable. performance was above the median advised by other advisors with To that end, the Senior Officer must performance of such comparable funds for investment strategies comparable to either supervise a competitive bidding the one year period and below such those of the Fund that the Board process or prepare an independent median performance for the three and reviewed. The Board noted that AIM has written evaluation. The Senior Officer five year periods. Based on this review agreed to waive advisory fees of the has recommended an independent written and after taking account of all of the Fund, as discussed below. Based on this evaluation in lieu of a competitive other factors that the Board considered review, the Board concluded that the bidding process and, upon the direction in determining whether to continue the advisory fee rate for the Fund under the of the Board, has prepared such an Advisory Agreement for the Fund, the Advisory Agreement was fair and independent written evaluation. Such Board concluded that no changes should reasonable. written evaluation also considered be made to the Fund and that it was not certain of the factors discussed below. necessary to change the Fund's portfolio o Expense limitations and fee waivers. In addition, as discussed below, the management team at this time. Although The Board noted that AIM has Senior Officer made a recommendation to the independent written evaluation of contractually agreed to waive advisory the Board in connection with such the Fund's Senior Officer (discussed fees of the Fund through December 31, written evaluation. below) only considered Fund performance 2009 to the extent necessary so that the through the most recent calendar year, advisory fees payable by the Fund do not The discussion below serves as a the Board also reviewed more recent Fund exceed a specified maximum advisory fee summary of the Senior Officer's performance, which did not change their rate, which maximum rate includes independent written evaluation and conclusions. breakpoints and is based on net asset recommendation to the Board in levels. The Board considered the connection therewith, as well as a o The performance of the Fund relative contractual nature of this fee waiver discussion of the material factors and to indices. The Board reviewed the and noted that it remains in effect the conclusions with respect thereto performance of the Fund during the past until December 31, 2009. The Board that formed the basis for the Board's one, three and five calendar years considered the effect this fee waiver approval of the Advisory Agreement. against the performance of the Lipper would have on the Fund's estimated After consideration of all of the Global Large-Cap Growth Index. The Board expenses and concluded that the levels factors below and based on its informed noted that the Fund's performance in of fee waivers/expense limitations for business judgment, the Board determined such periods was comparable to the the Fund were fair and reasonable. that the Advisory Agreement is in the performance of such Index. Based on this best interests of the Fund and its review and after taking account of all o Breakpoints and economies of scale. shareholders and that the compensation of the other factors that the Board The Board reviewed the structure of the to AIM under the Advisory Agreement is considered in determining whether to Fund's advisory fee under the Advisory fair and reasonable and would have been continue the Advisory Agreement for the Agreement, noting that it includes one obtained through arm's length Fund, the Board concluded that no breakpoint. The Board reviewed the level negotiations. changes should be made to the Fund and of the Fund's advisory fees, and noted that it was not necessary to change the that such fees, as a percentage of the Unless otherwise stated, information Fund's portfolio management team at this Fund's net assets, would decrease as net presented below is as of June 27, 2006 time. Although the independent written assets increase because the Advisory and does not reflect any changes that evaluation of the Fund's Senior Officer Agreement includes a breakpoint. The may have occurred since June 27, 2006, (discussed below) only considered Fund Board noted that, due to the Fund's including but not limited to changes to performance through the most recent asset levels at the end of the past the Fund's performance, advisory fees, calendar year, the Board also reviewed calendar year and the way in which the expense limitations and/or fee waivers. more recent Fund performance, which did advisory fee breakpoints have been not change their conclusions. structured, the Fund has yet to benefit o The nature and extent of the advisory from the breakpoint. The Board noted services to be provided by AIM. The that AIM has contractually agreed to Board reviewed the services to be waive advisory fees of the Fund through provided by AIM under the Advisory Agreement. Based on such review, the Board concluded that the range of (continued) 10 AIM Global Growth Fund December 31, 2009 to the extent o Profitability of AIM and its o Other factors and current trends. The necessary so that the advisory fees affiliates. The Board reviewed Board considered the steps that AIM and payable by the Fund do not exceed a information concerning the profitability its affiliates have taken over the last specified maximum advisory fee rate, of AIM's (and its affiliates') several years, and continue to take, in which maximum rate includes breakpoints investment advisory and other activities order to improve the quality and and is based on net asset levels. The and its financial condition. The Board efficiency of the services they provide Board concluded that the Fund's fee considered the overall profitability of to the Funds in the areas of investment levels under the Advisory Agreement AIM, as well as the profitability of AIM performance, product line therefore would reflect economies of in connection with managing the Fund. diversification, distribution, fund scale at higher asset levels and that it The Board noted that AIM's operations operations, shareholder services and was not necessary to change the advisory remain profitable, although increased compliance. The Board concluded that fee breakpoints in the Fund's advisory expenses in recent years have reduced these steps taken by AIM have improved, fee schedule. AIM's profitability. Based on the review and are likely to continue to improve, of the profitability of AIM's and its the quality and efficiency of the o Investments in affiliated money market affiliates' investment advisory and services AIM and its affiliates provide funds. The Board also took into account other activities and its financial to the Fund in each of these areas, and the fact that uninvested cash and cash condition, the Board concluded that the support the Board's approval of the collateral from securities lending compensation to be paid by the Fund to continuance of the Advisory Agreement arrangements, if any (collectively, AIM under its Advisory Agreement was not for the Fund. "cash balances") of the Fund may be excessive. invested in money market funds advised by AIM pursuant to the terms of an SEC o Benefits of soft dollars to AIM. The exemptive order. The Board found that Board considered the benefits realized the Fund may realize certain benefits by AIM as a result of brokerage upon investing cash balances in AIM transactions executed through "soft advised money market funds, including a dollar" arrangements. Under these higher net return, increased liquidity, arrangements, brokerage commissions paid increased diversification or decreased by the Fund and/or other funds advised transaction costs. The Board also found by AIM are used to pay for research and that the Fund will not receive reduced execution services. This research may be services if it invests its cash balances used by AIM in making investment in such money market funds. The Board decisions for the Fund. The Board noted that, to the extent the Fund concluded that such arrangements were invests uninvested cash in affiliated appropriate. money market funds, AIM has voluntarily agreed to waive a portion of the o AIM's financial soundness in light of advisory fees it receives from the Fund the Fund's needs. The Board considered attributable to such investment. The whether AIM is financially sound and has Board further determined that the the resources necessary to perform its proposed securities lending program and obligations under the Advisory related procedures with respect to the Agreement, and concluded that AIM has lending Fund is in the best interests of the financial resources necessary to the lending Fund and its respective fulfill its obligations under the shareholders. The Board therefore Advisory Agreement. concluded that the investment of cash collateral received in connection with o Historical relationship between the the securities lending program in the Fund and AIM. In determining whether to money market funds according to the continue the Advisory Agreement for the procedures is in the best interests of Fund, the Board also considered the the lending Fund and its respective prior relationship between AIM and the shareholders. Fund, as well as the Board's knowledge of AIM's operations, and concluded that o Independent written evaluation and it was beneficial to maintain the recommendations of the Fund's Senior current relationship, in part, because Officer. The Board noted that, upon of such knowledge. The Board also their direction, the Senior Officer of reviewed the general nature of the the Fund, who is independent of AIM and non-investment advisory services AIM's affiliates, had prepared an currently performed by AIM and its independent written evaluation in order affiliates, such as administrative, to assist the Board in determining the transfer agency and distribution reasonableness of the proposed services, and the fees received by AIM management fees of the AIM Funds, and its affiliates for performing such including the Fund. The Board noted that services. In addition to reviewing such the Senior Officer's written evaluation services, the trustees also considered had been relied upon by the Board in the organizational structure employed by this regard in lieu of a competitive AIM and its affiliates to provide those bidding process. In determining whether services. Based on the review of these to continue the Advisory Agreement for and other factors, the Board concluded the Fund, the Board considered the that AIM and its affiliates were Senior Officer's written evaluation and qualified to continue to provide the recommendation made by the Senior non-investment advisory services to the Officer to the Board that the Board Fund, including administrative, transfer consider whether the advisory fee agency and distribution services, and waivers for certain equity AIM Funds, that AIM and its affiliates currently including the Fund, should be are providing satisfactory simplified. The Board concluded that it non-investment advisory services. would be advisable to consider this issue and reach a decision prior to the expiration date of such advisory fee waivers. 11 AIM Global Growth Fund SCHEDULE OF INVESTMENTS October 31, 2006 <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- FOREIGN COMMON STOCKS & OTHER EQUITY INTERESTS-65.98% AUSTRALIA-2.07% BHP Billiton Ltd. (Diversified Metals & Mining)(a) 228,130 $ 4,853,338 - -------------------------------------------------------------------------- QBE Insurance Group Ltd. (Property & Casualty Insurance)(a) 207,382 3,948,822 ========================================================================== 8,802,160 ========================================================================== BELGIUM-2.56% InBev N.V. (Brewers) 129,802 7,312,797 - -------------------------------------------------------------------------- KBC Groep N.V. (Diversified Banks)(a) 32,761 3,572,893 ========================================================================== 10,885,690 ========================================================================== CANADA-2.10% Manulife Financial Corp. (Life & Health Insurance)(b) 123,250 4,006,970 - -------------------------------------------------------------------------- Suncor Energy, Inc. (Integrated Oil & Gas) 63,900 4,909,036 ========================================================================== 8,916,006 ========================================================================== CHINA-0.07% Industrial and Commercial Bank of China- Class H (Diversified Banks) (Acquired 10/20/06; Cost $247,310)(c)(d) 621,000 277,874 ========================================================================== DENMARK-1.01% Novo Nordisk A.S.-Class B (Pharmaceuticals)(a) 57,149 4,311,855 ========================================================================== FRANCE-11.45% Axa (Multi-Line Insurance)(a)(b) 113,084 4,298,104 - -------------------------------------------------------------------------- BNP Paribas (Diversified Banks)(a)(b) 101,817 11,184,330 - -------------------------------------------------------------------------- Capgemini S.A. (IT Consulting & Other Services)(a)(b) 54,420 3,088,247 - -------------------------------------------------------------------------- Sanofi-Aventis (Pharmaceuticals)(a)(b) 54,450 4,624,778 - -------------------------------------------------------------------------- Societe Generale (Diversified Banks)(a)(b) 41,932 6,947,882 - -------------------------------------------------------------------------- Total S.A. (Integrated Oil & Gas)(a)(b) 116,440 7,924,184 - -------------------------------------------------------------------------- Vinci S.A. (Construction & Engineering)(a)(b) 94,254 10,610,371 ========================================================================== 48,677,896 ========================================================================== GERMANY-4.58% Bayer A.G. (Diversified Chemicals)(a) 66,300 3,332,616 - -------------------------------------------------------------------------- Commerzbank A.G. (Diversified Banks)(a) 156,052 5,535,118 - -------------------------------------------------------------------------- MAN A.G. (Industrial Machinery)(a) 54,207 4,812,584 - -------------------------------------------------------------------------- Merck KGaA (Pharmaceuticals) 33,552 3,537,270 - -------------------------------------------------------------------------- Siemens A.G. (Industrial Conglomerates) 24,924 2,242,728 ========================================================================== 19,460,316 ========================================================================== GREECE-1.34% OPAP S.A. (Casinos & Gaming)(a) 159,430 5,677,318 ========================================================================== HONG KONG-0.73% Cheung Kong (Holdings) Ltd. (Real Estate Management & Development)(a) 287,000 3,119,734 ========================================================================== </Table> <Table> SHARES VALUE - -------------------------------------------------------------------------- <Caption> HUNGARY-0.64% OTP Bank Nyrt. (Diversified Banks)(b) 77,501 $ 2,724,534 ========================================================================== INDIA-1.32% Infosys Technologies Ltd.-ADR (IT Consulting & Other Services)(b) 107,674 5,609,815 ========================================================================== IRELAND-2.73% Anglo Irish Bank Corp. PLC (Diversified Banks)(a) 406,809 7,294,556 - -------------------------------------------------------------------------- CRH PLC (Construction Materials) 122,302 4,322,414 ========================================================================== 11,616,970 ========================================================================== ISRAEL-0.94% Teva Pharmaceutical Industries Ltd.-ADR (Pharmaceuticals) 121,590 4,008,822 ========================================================================== ITALY-1.83% Eni S.p.A. (Integrated Oil & Gas)(a) 257,549 7,794,150 ========================================================================== JAPAN-6.79% AEON Co., Ltd. (Hypermarkets & Super Centers) 100,200 2,345,041 - -------------------------------------------------------------------------- Canon Inc. (Office Electronics)(a) 88,500 4,707,835 - -------------------------------------------------------------------------- Hoya Corp. (Electronic Equipment Manufacturers)(a) 134,400 5,167,767 - -------------------------------------------------------------------------- Keyence Corp. (Electronic Equipment Manufacturers)(a)(b) 23,000 5,087,012 - -------------------------------------------------------------------------- Mizuho Financial Group, Inc. (Diversified Banks)(a) 121 938,781 - -------------------------------------------------------------------------- Mizuho Financial Group, Inc. (Diversified Banks) (Acquired 10/24/05; Cost $1,965,554)(a)(c) 327 2,537,038 - -------------------------------------------------------------------------- ORIX Corp. (Consumer Finance) 13,150 3,704,748 - -------------------------------------------------------------------------- Toyota Motor Corp. (Automobile Manufacturers)(a) 74,400 4,391,379 ========================================================================== 28,879,601 ========================================================================== MEXICO-1.87% Grupo Televisa S.A.-ADR (Broadcasting & Cable TV) 105,306 2,598,952 - -------------------------------------------------------------------------- Wal-Mart de Mexico S.A. de C.V.-Series V (Hypermarkets & Super Centers) 1,541,700 5,361,064 ========================================================================== 7,960,016 ========================================================================== NETHERLANDS-0.74% ING Groep N.V. (Other Diversified Financial Services)(a) 70,842 3,138,726 ========================================================================== RUSSIA-0.70% LUKOIL-ADR (Integrated Oil & Gas)(a) 36,681 2,987,701 ========================================================================== SOUTH AFRICA-0.53% Telkom South Africa Ltd. (Integrated Telecommunication Services)(a) 121,700 2,258,182 ========================================================================== </Table> F-1 AIM Global Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- SOUTH KOREA-1.64% Hyundai Motor Co. (Automobile Manufacturers) 30,890 $ 2,511,329 - -------------------------------------------------------------------------- Samsung Electronics Co., Ltd. (Semiconductors)(a) 6,850 4,437,475 ========================================================================== 6,948,804 ========================================================================== SPAIN-2.57% Banco Santander Central Hispano S.A. (Diversified Banks)(a) 270,951 4,686,815 - -------------------------------------------------------------------------- Industria de Diseno Textil, S.A. (Apparel Retail)(a) 130,526 6,237,586 ========================================================================== 10,924,401 ========================================================================== SWEDEN-0.99% Atlas Copco A.B.-Class A (Industrial Machinery)(a) 144,700 4,223,952 ========================================================================== SWITZERLAND-9.94% Compagnie Financiere Richemont A.G.-Class A (Apparel, Accessories & Luxury Goods)(a)(b) 125,694 6,206,622 - -------------------------------------------------------------------------- Credit Suisse Group (Diversified Capital Markets)(a) 62,189 3,746,831 - -------------------------------------------------------------------------- Nestle S.A. (Packaged Foods & Meats)(a) 16,640 5,680,776 - -------------------------------------------------------------------------- Roche Holding A.G. (Pharmaceuticals)(a) 46,573 8,139,066 - -------------------------------------------------------------------------- Syngenta A.G. (Fertilizers & Agricultural Chemicals)(a)(d) 63,298 10,213,527 - -------------------------------------------------------------------------- UBS A.G. (Diversified Capital Markets)(a) 138,954 8,287,118 ========================================================================== 42,273,940 ========================================================================== TAIWAN-0.54% Taiwan Semiconductor Manufacturing Co. Ltd. (Semiconductors)(a) 1,243,967 2,274,692 ========================================================================== UNITED KINGDOM-6.30% Aviva PLC (Multi-Line Insurance)(a) 315,733 4,659,358 - -------------------------------------------------------------------------- Imperial Tobacco Group PLC (Tobacco) 200,975 7,119,178 - -------------------------------------------------------------------------- Reckitt Benckiser PLC (Household Products)(a) 130,857 5,687,877 - -------------------------------------------------------------------------- Tesco PLC (Food Retail) 736,140 5,525,621 - -------------------------------------------------------------------------- WPP Group PLC (Advertising)(a) 295,060 3,777,603 ========================================================================== 26,769,637 ========================================================================== Total Foreign Common Stocks & Other Equity Interests (Cost $164,107,798) 280,522,792 ========================================================================== DOMESTIC COMMON STOCKS-25.65% AEROSPACE & DEFENSE-2.48% Boeing Co. (The) 31,754 2,535,875 - -------------------------------------------------------------------------- General Dynamics Corp. 83,463 5,934,219 - -------------------------------------------------------------------------- Precision Castparts Corp. 30,733 2,091,688 ========================================================================== 10,561,782 ========================================================================== APPAREL RETAIL-0.36% TJX Cos., Inc. (The) 52,403 1,517,067 ========================================================================== APPLICATION SOFTWARE-0.77% Amdocs Ltd.(d) 84,493 3,274,949 ========================================================================== BIOTECHNOLOGY-0.83% Gilead Sciences, Inc.(d) 51,492 3,547,799 ========================================================================== </Table> <Table> SHARES VALUE - -------------------------------------------------------------------------- <Caption> COMMUNICATIONS EQUIPMENT-2.37% Cisco Systems, Inc.(d) 288,116 $ 6,952,239 - -------------------------------------------------------------------------- Motorola, Inc. 134,655 3,105,144 ========================================================================== 10,057,383 ========================================================================== COMPUTER HARDWARE-0.64% Apple Computer, Inc.(d) 33,393 2,707,505 ========================================================================== COMPUTER STORAGE & PERIPHERALS-0.82% Seagate Technology(b) 155,063 3,501,323 ========================================================================== DEPARTMENT STORES-1.23% Federated Department Stores, Inc. 59,396 2,608,078 - -------------------------------------------------------------------------- J.C. Penney Co., Inc. 34,739 2,613,415 ========================================================================== 5,221,493 ========================================================================== DIVERSIFIED METALS & MINING-0.54% Phelps Dodge Corp. 22,752 2,283,846 ========================================================================== ELECTRICAL COMPONENTS & EQUIPMENT-0.51% Emerson Electric Co. 25,837 2,180,643 ========================================================================== ENVIRONMENTAL & FACILITIES SERVICES-0.80% Waste Management, Inc. 91,223 3,419,038 ========================================================================== HEALTH CARE DISTRIBUTORS-0.91% Cardinal Health, Inc. 59,105 3,868,422 ========================================================================== HEALTH CARE EQUIPMENT-0.72% Becton, Dickinson and Co. 43,471 3,044,274 ========================================================================== HEALTH CARE SERVICES-1.24% Medco Health Solutions, Inc.(d) 52,128 2,788,848 - -------------------------------------------------------------------------- Quest Diagnostics Inc. 50,000 2,487,000 ========================================================================== 5,275,848 ========================================================================== HOUSEHOLD PRODUCTS-1.00% Colgate-Palmolive Co. 66,189 4,234,110 ========================================================================== INTEGRATED OIL & GAS-0.59% Occidental Petroleum Corp. 53,594 2,515,702 ========================================================================== INVESTMENT BANKING & BROKERAGE-1.60% Goldman Sachs Group, Inc. (The) 35,793 6,793,154 ========================================================================== MULTI-LINE INSURANCE-0.92% Assurant, Inc. 23,824 1,254,572 - -------------------------------------------------------------------------- Hartford Financial Services Group, Inc. (The) 30,644 2,671,237 ========================================================================== 3,925,809 ========================================================================== OIL & GAS EQUIPMENT & SERVICES-1.35% National-Oilwell Varco Inc.(d) 42,655 2,576,362 - -------------------------------------------------------------------------- Weatherford International Ltd.(d) 77,401 3,179,633 ========================================================================== 5,755,995 ========================================================================== </Table> F-2 AIM Global Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- OIL & GAS REFINING & MARKETING-0.88% Valero Energy Corp. 71,686 $ 3,751,328 ========================================================================== OTHER DIVERSIFIED FINANCIAL SERVICES-0.75% JPMorgan Chase & Co. 67,188 3,187,399 ========================================================================== PHARMACEUTICALS-2.16% Allergan, Inc. 27,839 3,215,404 - -------------------------------------------------------------------------- Wyeth 116,727 5,956,579 ========================================================================== 9,171,983 ========================================================================== SPECIALTY STORES-0.55% Office Depot, Inc.(d) 55,558 2,332,880 ========================================================================== SYSTEMS SOFTWARE-1.63% Microsoft Corp. 106,571 3,059,653 - -------------------------------------------------------------------------- Oracle Corp.(d) 70,133 1,295,357 - -------------------------------------------------------------------------- Symantec Corp.(d) 128,726 2,553,924 ========================================================================== 6,908,934 ========================================================================== Total Domestic Common Stocks (Cost $95,829,568) 109,038,666 ========================================================================== FOREIGN PREFERRED STOCKS-3.94% BRAZIL-0.96% Companhia de Bebidas das Americas-Pfd.-ADR (Brewers) 93,455 4,080,244 ========================================================================== GERMANY-2.98% Henkel KGaA-Pfd. (Household Products)(b) 46,787 6,267,256 - -------------------------------------------------------------------------- Porsche A.G.-Pfd. (Automobile Manufacturers) 5,502 6,415,034 ========================================================================== 12,682,290 ========================================================================== Total Foreign Preferred Stocks (Cost $10,281,280) 16,762,534 ========================================================================== </Table> <Table> SHARES VALUE - -------------------------------------------------------------------------- <Caption> MONEY MARKET FUNDS-3.92% Liquid Assets Portfolio-Institutional Class(e) 8,342,502 $ 8,342,502 - -------------------------------------------------------------------------- Premier Portfolio-Institutional Class(e) 8,342,502 8,342,502 ========================================================================== Total Money Market Funds (Cost $16,685,004) 16,685,004 ========================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities loaned)-99.49% (Cost $286,903,650) 423,008,996 ========================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED MONEY MARKET FUNDS-11.46% Liquid Assets Portfolio-Institutional Class(e)(f) 28,377,970 28,377,970 - -------------------------------------------------------------------------- STIC Prime Portfolio-Institutional Class(e)(f) 20,347,646 20,347,646 ========================================================================== Total Money Market Funds (purchased with cash collateral from securities loaned) (Cost $48,725,616) 48,725,616 ========================================================================== TOTAL INVESTMENTS-110.95% (Cost $335,629,266) 471,734,612 ========================================================================== OTHER ASSETS LESS LIABILITIES-(10.95)% (46,569,904) ========================================================================== NET ASSETS-100.00% $425,164,708 __________________________________________________________________________ ========================================================================== </Table> Investment Abbreviations: <Table> ADR - American Depositary Receipt Pfd. - Preferred </Table> Notes to Schedule of Investments: (a) In accordance with the procedures established by the Board of Trustees, the foreign security is fair valued using adjusted closing market prices. The aggregate value of these securities at October 31, 2006 was $212,404,599, which represented 49.96% of the Fund's Net Assets. See Note 1A. (b) All or a portion of this security was out on loan at October 31, 2006. (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 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 value of these securities at October 31, 2006 was $2,814,912, which represented 0.66% of the Fund's Net Assets. Unless otherwise indicated, these securities are not considered to be illiquid. (d) Non-income producing security. (e) The money market fund and the Fund are affiliated by having the same investment advisor. See Note 3. (f) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 8. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-3 AIM Global Growth Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 2006 <Table> ASSETS: Investments, at value (cost $270,218,646)* $ 406,323,992 - ------------------------------------------------------------ Investments in affiliated money market funds (cost $65,410,620) 65,410,620 ============================================================ Total investments (cost $335,629,266) 471,734,612 ============================================================ Foreign currencies, at value (cost $4,330,737) 4,340,753 - ------------------------------------------------------------ Receivables for: Investments sold 4,218,919 - ------------------------------------------------------------ Fund shares sold 422,130 - ------------------------------------------------------------ Dividends 446,810 - ------------------------------------------------------------ Investment for trustee deferred compensation and retirement plans 66,778 - ------------------------------------------------------------ Other assets 15,046 ============================================================ Total assets 481,245,048 ____________________________________________________________ ============================================================ LIABILITIES: Payables for: Investments purchased 6,003,319 - ------------------------------------------------------------ Fund shares reacquired 656,468 - ------------------------------------------------------------ Trustee deferred compensation and retirement plans 108,005 - ------------------------------------------------------------ Collateral upon return of securities loaned 48,725,616 - ------------------------------------------------------------ Accrued distribution fees 164,167 - ------------------------------------------------------------ Accrued trustees' and officer's fees and benefits 1,774 - ------------------------------------------------------------ Accrued transfer agent fees 277,354 - ------------------------------------------------------------ Accrued operating expenses 143,637 ============================================================ Total liabilities 56,080,340 ============================================================ Net assets applicable to shares outstanding $ 425,164,708 ____________________________________________________________ ============================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $ 567,581,637 - ------------------------------------------------------------ Undistributed net investment income (593,935) - ------------------------------------------------------------ Undistributed net realized gain (loss) from investment securities and foreign currencies (277,941,097) - ------------------------------------------------------------ Unrealized appreciation of investment securities and foreign currencies 136,118,103 ============================================================ $ 425,164,708 ____________________________________________________________ ============================================================ NET ASSETS: Class A $ 310,028,169 ____________________________________________________________ ============================================================ Class B $ 90,571,494 ____________________________________________________________ ============================================================ Class C $ 24,565,045 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 13,512,317 ____________________________________________________________ ============================================================ Class B 4,204,122 ____________________________________________________________ ============================================================ Class C 1,139,653 ____________________________________________________________ ============================================================ Class A: Net asset value per share $ 22.94 - ------------------------------------------------------------ Offering price per share (Net asset value of $22.94 divided by 94.50%) $ 24.28 ____________________________________________________________ ============================================================ Class B: Net asset value and offering price per share $ 21.54 ____________________________________________________________ ============================================================ Class C: Net asset value and offering price per share $ 21.55 ____________________________________________________________ ============================================================ * At October 31, 2006, securities with an aggregate value of $46,625,924 were on loan to brokers. </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-4 AIM Global Growth Fund STATEMENT OF OPERATIONS For the year ended October 31, 2006 <Table> INVESTMENT INCOME: Dividends (net of foreign withholding tax of $672,953) $ 7,381,717 - ------------------------------------------------------------------------- Dividends from affiliated money market funds (includes securities lending income of $190,302) 708,119 - ------------------------------------------------------------------------- Interest 4,965 ========================================================================= Total investment income 8,094,801 ========================================================================= EXPENSES: Advisory fees 3,632,157 - ------------------------------------------------------------------------- Administrative services fees 118,282 - ------------------------------------------------------------------------- Custodian fees 281,641 - ------------------------------------------------------------------------- Distribution fees: Class A 754,511 - ------------------------------------------------------------------------- Class B 1,012,434 - ------------------------------------------------------------------------- Class C 242,651 - ------------------------------------------------------------------------- Transfer agent fees 1,777,914 - ------------------------------------------------------------------------- Trustees' and officer's fees and benefits 26,163 - ------------------------------------------------------------------------- Other 270,660 ========================================================================= Total expenses 8,116,413 ========================================================================= Less: Fees waived, expenses reimbursed and expense offset arrangements (290,077) ========================================================================= Net expenses 7,826,336 ========================================================================= Net investment income 268,465 ========================================================================= REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities (includes net gains from securities sold to affiliates of $144,573) 50,234,942 - ------------------------------------------------------------------------- Foreign currencies (48,607) ========================================================================= 50,186,335 ========================================================================= Change in net unrealized appreciation of: Investment securities 31,346,490 - ------------------------------------------------------------------------- Foreign currencies 44,538 ========================================================================= 31,391,028 ========================================================================= Net gain from investment securities and foreign currencies 81,577,363 ========================================================================= Net increase in net assets resulting from operations $81,845,828 _________________________________________________________________________ ========================================================================= See accompanying Notes to Financial Statements which are an integral part of the financial statements. </Table> F-5 AIM Global Growth Fund STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2006 and 2005 <Table> <Caption> 2006 2005 - ------------------------------------------------------------------------------------------ OPERATIONS: Net investment income $ 268,465 $ 939,243 - ------------------------------------------------------------------------------------------ Net realized gain from investment securities and foreign currencies 50,186,335 59,443,217 - ------------------------------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies 31,391,028 (1,597,121) ========================================================================================== Net increase in net assets resulting from operations 81,845,828 58,785,339 ========================================================================================== Distributions to shareholders from net investment income -- Class A (1,936,684) -- ========================================================================================== Share transactions-net: Class A (30,264,870) (40,745,440) - ------------------------------------------------------------------------------------------ Class B (34,026,563) (50,289,812) - ------------------------------------------------------------------------------------------ Class C (3,561,784) (7,418,997) ========================================================================================== Net increase (decrease) in net assets resulting from share transactions (67,853,217) (98,454,249) ========================================================================================== Net increase (decrease) in net assets 12,055,927 (39,668,910) ========================================================================================== NET ASSETS: Beginning of year 413,108,781 452,777,691 ========================================================================================== End of year (including undistributed net investment income of $(593,935) and $971,774, respectively) $425,164,708 $413,108,781 __________________________________________________________________________________________ ========================================================================================== </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-6 AIM Global Growth Fund NOTES TO FINANCIAL STATEMENTS October 31, 2006 NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Global Growth (the "Fund") is a series portfolio of AIM International Mutual Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. 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. The Fund's investment objective is long-term growth of capital. 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 or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are recorded at amortized cost which approximates value. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures. 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 unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. 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. Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the realized and unrealized net gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund's net asset value and, accordingly, they reduce the Fund's total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and F-7 AIM Global Growth Fund ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the advisor. 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. COUNTRY DETERMINATION -- For the purposes of making investment selection decisions and presentation in the Schedule of Investments, AIM may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer's securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America unless otherwise noted. D. 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 treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. E. 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 to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. F. 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. G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to taxation. Actual results could differ from those estimates. H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) 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. K. 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. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The Fund could be exposed to risk, which may be in excess of the amount reflected in the Statement of Assets and Liabilities, if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F-8 AIM Global Growth Fund NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust 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 based on the annual rate of the Fund's average daily net assets as follows: <Table> <Caption> AVERAGE NET ASSETS RATE - ------------------------------------------------------------------- First $1 billion 0.85% - ------------------------------------------------------------------- Over $1 billion 0.80% __________________________________________________________________ =================================================================== </Table> Through December 31, 2009, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund (based on the Fund's average daily net assets) do not exceed the annual rate of: <Table> <Caption> AVERAGE NET ASSETS RATE - ------------------------------------------------------------------- First $250 million 0.80% - ------------------------------------------------------------------- Next $250 million 0.78% - ------------------------------------------------------------------- Next $500 million 0.76% - ------------------------------------------------------------------- Next $1.5 billion 0.74% - ------------------------------------------------------------------- Next $2.5 billion 0.72% - ------------------------------------------------------------------- Next $2.5 billion 0.70% - ------------------------------------------------------------------- Next $2.5 billion 0.68% - ------------------------------------------------------------------- Over $10 billion 0.66% __________________________________________________________________ =================================================================== </Table> 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 on investments by the Fund in such affiliated money market funds (excluding investments made in affiliated money market funds with cash collateral from securities loaned by the fund). Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors. For the year ended October 31, 2006, AIM waived advisory fees of $251,322. At the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended October 31, 2006, AMVESCAP reimbursed expenses of the Fund in the amount of $3,084. 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. Pursuant to such agreement, for the year ended October 31, 2006, AIM was paid $118,282. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency and shareholder services to the Fund and reimburse AIS for certain expenses incurred by AIS in the course of providing such services. AIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by AIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended October 31, 2006, the Fund paid AIS $1,777,914. The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B and Class C 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 and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% 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 the Rule 12b-1 payments, up to 0.25% of the average daily net assets of the Class A, Class B or Class C shares may be paid to furnish continuing personal shareholder services to 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. National Association of Securities Dealers ("NASD") Rules 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, 2006, the Class A, Class B and Class C shares paid $754,511, $1,012,434 and $242,651, 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, 2006, ADI advised the Fund that it retained $38,251 in front-end sales commissions from the sale of Class A shares and $107, $46,278 and $1,457 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. Certain officers and trustees of the Trust are officers and directors of AIM, AIS and/or ADI. F-9 AIM Global Growth Fund NOTE 3--INVESTMENTS IN AFFILIATES The Fund is permitted, pursuant to procedures approved by the Board of Trustees, to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the year ended October 31, 2006. INVESTMENTS OF DAILY AVAILABLE CASH BALANCES: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio-Institutional Class $1,997,903 $ 64,001,540 $ (57,656,941) $ -- $ 8,342,502 $258,522 $ -- - ---------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio-Institutional Class -- 25,445,829 (17,103,327) -- 8,342,502 123,279 -- - ---------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio-Institutional Class 1,997,903 43,865,870 (45,863,773) -- -- 136,016 -- ================================================================================================================================== Subtotal $3,995,806 $133,313,239 $(120,624,041) $ -- $16,685,004 $517,817 $ -- ================================================================================================================================== </Table> INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME* GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio-Institutional Class $ -- $ 60,487,168 $ (32,109,198) $ -- $28,377,970 $ 49,754 $-- - ---------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio-Institutional Class 74,176,177 247,134,260 (300,962,791) -- 20,347,646 140,548 -- ================================================================================================================================== Subtotal $74,176,177 $307,621,428 $(333,071,989) $ -- $48,725,616 $190,302 $-- ================================================================================================================================== Total Investments in Affiliates $78,171,983 $440,934,667 $(453,696,030) $ -- $65,410,620 $708,119 $-- __________________________________________________________________________________________________________________________________ ================================================================================================================================== </Table> * Net of compensation to counterparties. NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS The Fund is permitted to purchase or sell securities from or to certain other AIM Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment advisor (or affiliated investment advisors), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended October 31, 2006, the Fund engaged in securities sales of $314,781, which resulted in net realized gains of $144,573, and securities purchases of $1,822,311. NOTE 5--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions, (ii) custodian credits which result from periodic overnight cash balances at the custodian and (iii) a one time custodian fee credit to be used to offset future custodian fees. For the year ended October 31, 2006, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $35,671. NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee and Officer of the Fund who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended October 31, 2006, the Fund paid legal fees of $5,180 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. F-10 AIM Global Growth Fund NOTE 7--BORROWINGS Pursuant to an exemptive order from the Securities and Exchange Commission, 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. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceed 10% of the Fund's total assets. 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. The Fund is a participant in an uncommitted unsecured revolving 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 credit facility 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 year ended October 31, 2006, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility. Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and AIM, not to exceed the contractually agreed upon rate. NOTE 8--PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities having a market value up to 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 received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. At October 31, 2006, securities with an aggregate value of $46,625,924 were on loan to brokers. The loans were secured by cash collateral of $48,725,616 received by the Fund and subsequently invested in affiliated money market funds. For the year ended October 31, 2006, the Fund received dividends on cash collateral investments of $190,302 for securities lending transactions, which are net of compensation to counterparties. NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the years ended October 31, 2006 and 2005 was as follows: <Table> <Caption> 2006 2005 - ---------------------------------------------------------------------------------- Distributions paid from ordinary income $1,936,684 $ -- __________________________________________________________________________________ ================================================================================== </Table> TAX COMPONENTS OF NET ASSETS: As of October 31, 2006, the components of net assets on a tax basis were as follows: <Table> <Caption> 2006 - ----------------------------------------------------------------------------- Undistributed ordinary income $ 1,362,734 - ----------------------------------------------------------------------------- Unrealized appreciation -- investments 134,247,213 - ----------------------------------------------------------------------------- Temporary book/tax differences (93,680) - ----------------------------------------------------------------------------- Capital loss carryover (277,933,196) - ----------------------------------------------------------------------------- Shares of beneficial interest 567,581,637 ============================================================================= Total net assets $ 425,164,708 _____________________________________________________________________________ ============================================================================= </Table> The difference between book-basis and tax-basis unrealized appreciation (depreciation) 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 (depreciation) difference is attributable primarily to losses on wash sales and the recognition of income for tax purposes on certain passive foreign investment companies. The tax-basis unrealized appreciation on investments amount includes appreciation on foreign currencies of $12,757. F-11 AIM Global Growth Fund 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 trustee deferral of compensation, retirement plan expenses and passive foreign investment companies. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. The Fund utilized $49,871,243 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of October 31, 2006 which expires as follows: <Table> <Caption> CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------- October 31, 2009 $165,569,319 - ----------------------------------------------------------------------------- October 31, 2010 101,042,257 - ----------------------------------------------------------------------------- October 31, 2011 11,321,620 ============================================================================= Total capital loss carryforward $277,933,196 _____________________________________________________________________________ ============================================================================= </Table> * Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. NOTE 10--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2006 was $175,607,960 and $254,536,248, respectively. <Table> <Caption> UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS - ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $137,051,855 - ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (2,817,399) ============================================================================== Net unrealized appreciation of investment securities $134,234,456 ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $337,500,156. </Table> NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions and passive foreign investment companies, on October 31, 2006, undistributed net investment income was increased by $102,510 and undistributed net realized gain (loss) was decreased by $102,510. This reclassification had no effect on the net assets of the Fund. F-12 AIM Global Growth Fund NOTE 12--SHARE INFORMATION The Fund currently offers three different classes of shares: Class A, Class B and Class C. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Class B shares and Class C shares are sold with CDSC. Under certain circumstances, Class A shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. <Table> <Caption> CHANGES IN SHARES OUTSTANDING - ---------------------------------------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, 2006(A) 2005 -------------------------- -------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------------------------- Sold: Class A 852,695 $ 18,221,986 818,989 $ 14,908,841 - ---------------------------------------------------------------------------------------------------------------------- Class B 340,221 6,833,268 432,979 7,415,155 - ---------------------------------------------------------------------------------------------------------------------- Class C 239,434 4,855,978 174,146 2,989,787 ====================================================================================================================== Issued as reinvestment of dividends: Class A 89,660 1,817,402 -- -- ====================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 785,511 16,845,277 1,378,417 25,054,414 - ---------------------------------------------------------------------------------------------------------------------- Class B (833,972) (16,845,277) (1,461,084) (25,054,414) ====================================================================================================================== Reacquired:(b) Class A (3,156,593) (67,149,535) (4,433,381) (80,708,695) - ---------------------------------------------------------------------------------------------------------------------- Class B (1,197,180) (24,014,554) (1,902,178) (32,650,553) - ---------------------------------------------------------------------------------------------------------------------- Class C (420,536) (8,417,762) (607,182) (10,408,784) ====================================================================================================================== (3,300,760) $(67,853,217) (5,599,294) $(98,454,249) ______________________________________________________________________________________________________________________ ====================================================================================================================== </Table> (a) There are three entities that are each record owners of more than 5% of the outstanding shares of the Fund and in the aggregate they own 20% of the outstanding shares of the Fund. ADI has an agreement with these entities to sell Fund shares. The Fund, AIM and/or AIM affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, AIM and/or AIM affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. (b) Amount is net of redemption fees of $5,532, $1,819 and $442 for Class A, Class B and Class C shares, respectively, for the year ended October 31, 2006 and $1,339, $566 and $118 for Class A, Class B and Class C shares, respectively, for the year ended October 31, 2005. NOTE 13--NEW ACCOUNTING STANDARD In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions for FIN 48 are effective for fiscal years beginning after December 15, 2006. Management is currently assessing the impact of FIN 48, if any, on the Fund's financial statements and intends for the Fund to adopt the FIN 48 provisions during 2007. F-13 AIM Global Growth Fund NOTE 14--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, ----------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 19.02 $ 16.65 $ 14.91 $ 12.66 $ 14.58 - ------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.06(a) 0.08(a)(b) (0.04)(a) (0.08) (0.11)(a) - ------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 3.99 2.29 1.78 2.33 (1.81) ========================================================================================================================= Total from investment operations 4.05 2.37 1.74 2.25 (1.92) ========================================================================================================================= Less dividends from net investment income (0.13) -- -- -- -- ========================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ========================================================================================================================= Net asset value, end of period $ 22.94 $ 19.02 $ 16.65 $ 14.91 $ 12.66 _________________________________________________________________________________________________________________________ ========================================================================================================================= Total return(c) 21.39% 14.23% 11.67% 17.77% (13.17)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $310,028 $284,122 $286,068 $329,739 $335,954 _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.62%(d) 1.77% 1.96% 2.04% 1.95% - ------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.68%(d) 1.82% 1.97% 2.04% 1.95% ========================================================================================================================= Ratio of net investment income (loss) to average net assets 0.28%(d) 0.44%(b) (0.24)% (0.58)% (0.75)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Portfolio turnover rate 42% 51% 56% 75% 98% _________________________________________________________________________________________________________________________ ========================================================================================================================= </Table> (a) Calculated using average shares outstanding. (b) Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets include a special cash dividend received of $3.00 per share owned of Microsoft Corp. on December 2, 2004. Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets excluding the special dividend are $0.05 and 0.27%, respectively. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (d) Ratios are based on average daily net assets of $301,804,230. <Table> <Caption> CLASS B ---------------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 17.87 $ 15.76 $ 14.18 $ 12.09 $ 14.00 - ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss) (0.09)(a) (0.04)(a)(b) (0.11)(a) (0.15) (0.17)(a) - ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) 3.76 2.15 1.69 2.24 (1.74) ======================================================================================================================== Total from investment operations 3.67 2.11 1.58 2.09 (1.91) ======================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ======================================================================================================================== Net asset value, end of period $ 21.54 $ 17.87 $ 15.76 $ 14.18 $ 12.09 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(c) 20.54% 13.39% 11.14% 17.29% (13.64)% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $90,571 $105,368 $139,061 $181,891 $206,189 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.37%(d) 2.43% 2.46% 2.54% 2.45% - ------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 2.43%(d) 2.48% 2.47% 2.54% 2.45% ======================================================================================================================== Ratio of net investment income (loss) to average net assets (0.47)%(d) (0.22)%(b) (0.74)% (1.08)% (1.25)% ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate 42% 51% 56% 75% 98% ________________________________________________________________________________________________________________________ ======================================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets include a special cash dividend received of $3.00 per share owned of Microsoft Corp. on December 2, 2004. Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets excluding the special dividend are $(0.07) and (0.39)%, respectively. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (d) Ratios are based on average daily net assets of $101,243,351. F-14 AIM Global Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS C ------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------ 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 17.88 $ 15.77 $ 14.18 $ 12.10 $ 14.01 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.09)(a) (0.04)(a)(b) (0.11)(a) (0.15) (0.17)(a) - -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 3.76 2.15 1.70 2.23 (1.74) ==================================================================================================================== Total from investment operations 3.67 2.11 1.59 2.08 (1.91) ==================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ==================================================================================================================== Net asset value, end of period $ 21.55 $ 17.88 $ 15.77 $ 14.18 $ 12.10 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(c) 20.52% 13.38% 11.21% 17.19% (13.63)% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $24,565 $23,619 $27,649 $32,844 $34,778 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.37%(d) 2.43% 2.46% 2.54% 2.45% - -------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.43%(d) 2.48% 2.47% 2.54% 2.45% ==================================================================================================================== Ratio of net investment income (loss) to average net assets (0.47)%(d) (0.22)%(b) (0.74)% (1.08)% (1.25)% ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate 42% 51% 56% 75% 98% ____________________________________________________________________________________________________________________ ==================================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets include a special cash dividend received of $3.00 per share owned of Microsoft Corp. on December 2, 2004. Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets excluding the special dividend are $(0.07) and (0.39)%, respectively. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (d) Ratios are based on average daily net assets of $24,265,067. NOTE 15--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including the Securities and Exchange Commission ("SEC"), the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, AIM and ADI created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by AIM, which was done pursuant to the terms of the settlement. These two fair funds may increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading that also may have harmed applicable AIM Funds. These two fair funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. Management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these two fair funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future. At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. PENDING LITIGATION AND REGULATORY INQUIRIES On August 30, 2005, the West Virginia Office of the State Auditor - -Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes findings of fact that AIM and ADI entered into certain arrangements permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that AIM and ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or capped by statute. Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging: - that the defendants permitted improper market timing and related activity in the AIM Funds; - that certain AIM Funds inadequately employed fair value pricing; F-15 AIM Global Growth Fund NOTE 15--LEGAL PROCEEDINGS--(CONTINUED) - that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans; and - that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions (all the claims in this category of lawsuits were dismissed with prejudice by the court on September 29, 2006, except for the Section 36(b) claim which was dismissed with leave to amend to plead it properly as a derivative claim). These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees. All lawsuits based on allegations of market timing, late trading and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court, all claims asserted against the AIM Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class Action Complaint for Violations of ERISA and dismissed such Complaint. The plaintiff has commenced an appeal from that decision. IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, among others, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost security holders. IFG, AIM and ADI have advised the Fund that they are providing full cooperation with respect to these inquiries. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Pending Litigation and Regulatory Inquiries described above may have on AIM, ADI or the Fund. F-16 AIM Global Growth Fund REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM International Mutual Funds 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 AIM Global Growth Fund (one of the funds constituting AIM International Mutual Funds, hereafter referred to as the "Fund") at October 31, 2006, 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 five 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP December 20, 2006 Houston, Texas F-17 AIM Global Growth Fund TAX DISCLOSURES REQUIRED FEDERAL INCOME TAX INFORMATION Of ordinary dividends paid to shareholders during the Fund's tax year ended October 31, 2006, 98.31% is eligible for the dividends received deduction for corporations. For its tax year ended October 31, 2006 the Fund designates 100%, or the maximum amount allowable, of its dividend distributions as qualified dividend income. Your actual amount of qualified dividend income for the calendar year will be reported in your Form 1099-DIV. You should consult your tax advisor regarding treatment of the amounts. TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDER For its tax year ended October 31, 2006, the Fund designates 0%, or the maximum amount allowable, of its dividend distributions as qualified interest income exempt from U.S. income tax for non-resident alien shareholders. Your actual amount of qualified interest income for the calendar year will be reported in your Form 1042-S mailing. You should consult your tax advisor regarding treatment of the amounts. The percentage of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended January 31, 2006, April 30, 2006, July 31, 2006 and October 31, 2006 are 73.97%, 72.61%, 74.13% and 73.46%, respectively. F-18 AIM Global Growth Fund TRUSTEES AND OFFICERS The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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> TRUSTEE AND/ NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) POSITION(S) HELD WITH THE 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 Trustee and Vice Chair Group Inc. (financial services holding company); Director and Vice Chairman, AMVESCAP PLC; Chairman, AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) and Trustee and Vice Chair of The AIM Family of Funds--Registered Trademark-- Formerly: President and Chief Executive Officer, A I M Management Group Inc.; Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); 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); Chief Executive Officer, AMVESCAP PLC -- Managed Products; and President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- - ------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None Trustee, President and President, A I M Management Group Inc., Principal AIM Mutual Fund Dealer Inc. (registered Executive Officer broker dealer), AIM Funds Management Inc. (registered investment advisor) and 1371 Preferred Inc. (holding company); Director and President, A I M Advisors, Inc., INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, A I M Capital Management, Inc. and A I M Distributors, Inc.; Director and Chairman, AIM Investment Services, Inc., Fund Management Company and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, AVZ Callco Inc. (holding company); AMVESCAP Inc. (holding company) and AIM Canada Holdings Inc. (holding company); Director and Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); and Manager, Powershares Capital Management LLC Formerly: President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); Chairman, AIM Canada Holdings, Inc.; Executive Vice President and Chief Operations Officer, AIM Funds Management Inc.; President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - ------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates ACE Limited (insurance company); Trustee and Chair (technology consulting company) and Captaris, Inc. (unified messaging provider) - ------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 2001 Retired Badgley Funds, Inc. (registered Trustee investment company (2 portfolios)) Formerly: Partner, law firm of Baker & McKenzie - ------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None Trustee (investment banking firm); and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation - ------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2000 Director of a number of public and None Trustee private business corporations, including the Boss Group Ltd. (private investment and management); Cortland Trust, Inc. (Chairman) (registered investment company (3 portfolios)); Annuity and Life Re (Holdings), Ltd. (insurance company); CompuDyne Corporation (provider of products and services to the public security market); and Homeowners of America Holding Corporation (property casualty company) Formerly: Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; and Director of various affiliated Volvo companies; and Director, Magellan Insurance Company - ------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff, and Discovery Global Trustee Century Group, Inc. (government affairs Education Fund (non-profit) company); and Owner, Dos Angelos Ranch, L.P. Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) - ------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered Trustee Naftalis and Frankel LLP investment company (3 portfolios)) - ------------------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series Trustee Formerly: Partner, Deloitte & Touche Funds, Inc. (21 portfolios) - ------------------------------------------------------------------------------------------------------------------------------- </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. Taylor 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. F-19 TRUSTEES AND OFFICERS--(CONTINUED) AIM Global Growth Fund The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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 - ------------------------------------------------------------------------------------------------------------------------------ OTHER OFFICERS - ------------------------------------------------------------------------------------------------------------------------------ Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A Senior Vice President and of The AIM Family of Funds--Registered Senior Officer Trademark-- Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A Senior Vice President, Chief Secretary and General Counsel, A I M Legal Officer and Secretary Management Group Inc. and A I M Advisors, Inc.; Director, Vice President and Secretary, INVESCO Distributors, Inc.; Vice President and Secretary, A I M Capital Management, Inc., AIM Investment Services, Inc., and Fund Management Company; Senior Vice President and Secretary, A I M Distributors, Inc.; Director, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; and Manager, Powershares Capital Management LLC Formerly: Chief Operating Officer, Senior Vice President, General Counsel, and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); General Counsel and Secretary, Pilgrim Baxter Value Investors (an investment adviser); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - ------------------------------------------------------------------------------------------------------------------------------ Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A Vice President PLC; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, A I M Management Group Inc. (financial services holding company); Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc. and A I M Distributors, Inc.; Vice President, AIM Investment Services, Inc. and Fund Management Company; Senior Vice President and Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - ------------------------------------------------------------------------------------------------------------------------------ Kevin M. Carome -- 1956 2003 Senior Vice President and General Vice President Counsel, AMVESCAP PLC; Director, INVESCO Funds Group, Inc.; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Director, Vice President and N/A General Counsel, Fund Management Company; Director, Senior Vice President, Secretary and General Counsel, A I M Management Group Inc. and A I M Advisors, Inc.; Director and Vice President, INVESCO Distributors, Inc.; Senior Vice President, A I M Distributors, Inc.; Vice President, A I M Capital Management, Inc. and AIM Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; Chief Executive Officer and President, INVESCO Funds Group, Inc.; and Senior Vice President, and General Counsel, Liberty Financial Companies, Inc. and Senior Vice President and General Counsel Liberty Funds Group, LLC - ------------------------------------------------------------------------------------------------------------------------------ Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A Vice President, Principal Advisors, Inc.; and Vice President, Financial Officer and Treasurer and Principal Officer of The Treasurer AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Investment Services, Inc.; and Vice President, A I M Distributors, Inc. - ------------------------------------------------------------------------------------------------------------------------------ J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A Vice President Investment Officer, A I M Advisors Inc.; Director, Chairman, Chief Executive Officer, President and Chief Investment Officer, A I M Capital Management, Inc.; Executive Vice President, A I M Management Group Inc. and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Private Asset Management, Inc.; and Chief Equity Officer, Senior Vice President and Senior Investment Officer, A I M Capital Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Karen Dunn Kelley -- 1960 2004 Director of Cash Management, Managing N/A Vice President Director and Chief Cash Management Officer, A I M Capital Management, Inc; Director and President, Fund Management Company; and Vice President, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust Only) Formerly: Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - ------------------------------------------------------------------------------------------------------------------------------ Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A Anti-Money Laundering Officer, A I M Advisors, Inc., A I M Compliance Officer Capital Management, Inc., A I M Distributors, Inc., AIM Investment Services, Inc., AIM Private Asset Management, Inc., Fund Management Company and The AIM Family of Funds--Registered Trademark-- Formerly: Manager of the Fraud Prevention Department, AIM Investment Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A Chief Compliance Officer Group Inc.; Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc.; Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc.; and Vice President, A I M Distributors, Inc., AIM Investment Services, Inc. and Fund Management Company Formerly: Global Head of Product Development, AIG-Global Investment Group, Inc.; Chief Compliance Officer and Deputy General Counsel, AIG-SunAmerica Asset Management; and Chief Compliance Officer, Chief Operating Officer and Deputy General Counsel, American General Investment Management - ------------------------------------------------------------------------------------------------------------------------------ </Table> 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 1.800.959.4246. <Table> OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers Suite 100 11 Greenway Plaza Inc. LLP Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street Houston, TX 77046-1173 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company 1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Philadelphia, PA 19103-7599 Americas New York, NY 10036-2714 </Table> F-20 [eDELIVERY GO PAPERLESS AIMinvestments.com/edelivery Graphic] REGISTER FOR EDELIVERY eDelivery is the process of receiving your fund and account If used after January 20, 2007, this report must be information via e-mail. Once your quarterly statements,tax accompanied by a Fund Performance & Commentary or by an AIM forms,fund reports,and prospectuses are available,we will Quarterly Performance Review for the most recent quarter-end. send you an e-mail notification containing links to these Mutual funds distributed by A I M Distributors, Inc. documents. For security purposes,you will need to log in to your account to view your statements and tax forms. A I M Management Group Inc. has provided leadership in the investment management industry since 1976. AIM Investment WHY SIGN UP? Services, Inc. is the transfer agent for the products and services represented by AIM Investments. AIM is a subsidiary Register for eDelivery to: of AMVESCAP PLC, one of the world's largest independent financial services companies with $450 billion in assets o reduce the amount of paper you receive. under management as of October 31, 2006. o gain access to your documents faster by not waiting for the mail. CONSIDER THE INVESTMENT OBJECTIVES,RISKS,AND CHARGES AND o view your documents online anytime at your convenience. EXPENSES CAREFULLY. FOR THIS AND OTHER INFORMATION ABOUT AIM FUNDS,OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISOR AND o save the documents to your personal computer or print READ IT CAREFULLY BEFORE INVESTING. them out for your records. HOW DO I SIGN UP? It's easy. Just follow these simple steps: 1. Log in to your account. 2. Click on the "Service Center" tab. 3. Select "Register for eDelivery" and complete the consent process. This AIM service is provided by AIM Investment Services,Inc. AIMinvestments.com GLG-AR-1 A I M Distributors,Inc. [YOUR GOALS. OUR SOLUTIONS.] --Registered Trademark-- - ------------------------------------------------------------------------------ Mutual Retirement Annuities College Separately Offshore Cash Funds Products Savings Managed Products Management Plans Accounts [AIM INVESTMENTS LOGO APPEARS HERE] - ------------------------------------------------------------------------------ --Registered Trademark-- INTERNATIONAL/ AIM INTERNATIONAL CORE EQUITY FUND GLOBAL EQUITY International/Global Blend Annual Report to Shareholders o October 31, 2006 Table of Contents Supplemental Information......... 2 Letters to Shareholders.......... 3 Performance Summary.............. 5 Management Discussion............ 5 Fund Expenses.................... 7 Long-term Fund Performance....... 8 Approval of Advisory Agreement... 10 Schedule of Investments.......... F-1 Financial Statements............. F-3 Notes to Financial Statements.... F-6 Financial Highlights............. F-13 Auditor's Report................. F-20 [COVER GLOBE IMAGE] Tax Disclosures.................. F-21 Trustees and Officers............ F-22 [AIM INVESTMENT SOLUTIONS] [GRAPHIC] [GRAPHIC] [GRAPHIC] [DOMESTIC [INTERNATIONAL/ [SECTOR EQUITY] GLOBAL EQUITY] EQUITY] [GRAPHIC] [GRAPHIC] [GRAPHIC] [FIXED [ALLOCATION [DIVERSIFIED INCOME] SOLUTIONS] PORTFOLIOS] [AIM INVESTMENTS LOGO APPEARS HERE] --Registered Trademark-- AIM International Core Equity Fund AIM INTERNATIONAL CORE EQUITY FUND SEEKS TO PROVIDE TOTAL RETURN. o Unless otherwise stated, information presented in this report is as of October 31, 2006, and is based on total net assets. ABOUT SHARE CLASSES ABOUT INDEXES USED IN THIS REPORT o Industry classifications used in this report are generally according to the o Class B shares are not available as an o The unmanaged MSCI EUROPE, AUSTRALASIA Global Industry Classification Standard, investment for retirement plans AND THE FAR EAST INDEX (the MSCI which was developed by and is the maintained pursuant to Section 401 of EAFE--Registered Trademark--) is a group exclusive property and a service mark of the Internal Revenue Code, including of foreign securities tracked by Morgan Morgan Stanley Capital International 401(k) plans, money purchase pension Stanley Capital International. Inc. and Standard & Poor's. plans and profit sharing plans. Plans that had existing accounts invested in o The unmanaged Lipper International The Fund provides a complete list of its Class B shares prior to September 30, Large-Cap Core Funds Index represents an holdings four times in each fiscal year, 2003, will continue to be allowed to average of the performance of the 10 at the quarterends. For the second and make additional purchases. largest international large-cap core fourth quarters, the lists appear in the mutual funds tracked by Lipper Inc., an Fund's semiannual and annual reports to o Class R shares are available only to independent mutual fund performance shareholders. For the first and third certain retirement plans. Please see the monitor. quarters, the Fund files the lists with prospectus for more information. the Securities and Exchange Commission o The unmanaged STANDARD & POOR'S (SEC) on Form N-Q. The most recent list o Investor Class shares are closed to COMPOSITE INDEX OF 500 STOCKS (the S&P of portfolio holdings is available at most investors. For more information on 500--Registered Trademark-- Index) is an AIMinvestments.com. From our home page, who may continue to invest in Investor index of common stocks frequently used click on Products & Performance, then Class shares, please see the prospectus. as a general measure of U.S. stock Mutual Funds, then Fund Overview. Select market performance. your Fund from the drop-down menu and PRINCIPAL RISKS OF INVESTING IN THE FUND click on Complete Quarterly Holdings. Shareholders can also look up the Fund's o Foreign securities have additional o The Fund is not managed to track the Forms N-Q on the SEC Web site at risks, including exchange rate changes, performance of any particular index, sec.gov. Copies of the Fund's Forms N-Q political and economic upheaval, the including the indexes defined here, and may be reviewed and copied at the SEC relative lack of information about these consequently, the performance of the Public Reference Room in Washington, companies, relatively low market Fund may deviate significantly from the D.C. You can obtain information on the liquidity and the potential lack of performance of the index. operation of the Public Reference Room, strict financial and accounting controls including information about duplicating and standards. o A direct investment cannot be made in fee charges, by calling 202-942-8090 or an index. Unless otherwise indicated, 800-732-0330, or by electronic request o Investing in emerging markets involves index results include reinvested at the following e-mail address: greater risks than investing in more dividends, and they do not reflect sales publicinfo@sec.gov. The SEC file numbers established markets. Risks for emerging charges. Performance of an index of for the Fund are 811-06463 and markets include risks relating to the funds reflects fund expenses; 033-44611. relatively smaller size and lesser performance of a market index does not. liquidity of these markets, high A description of the policies and inflation rates, adverse political OTHER INFORMATION procedures that the Fund uses to developments and lack of timely determine how to vote proxies relating information. o The returns shown in the management's to portfolio securities is available discussion of Fund performance are based without charge, upon request, from our o Prices of equity securities change in on net asset values calculated for Client Services department at response to many factors including the shareholder transactions. Generally 800-959-4246 or on the AIM Web site, historical and prospective earnings of accepted accounting principles require AIMinvestments.com. On the home page, the issuer, the value of its assets, adjustments to be made to the net assets scroll down and click on AIM Funds Proxy general economic conditions, interest of the Fund at period end for financial Policy. The information is also rates, investor perceptions and market reporting purposes, and as such, the net available on the SEC Web site, sec.gov. liquidity. asset values for shareholder transactions and the returns based on Information regarding how the Fund voted those net asset values may differ from proxies related to its portfolio the net asset values and returns securities during the 12 months ended reported in the Financial Highlights. June 30, 2006, is available at our Web site. Go to AIMinvestments.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov. ========================================= FUND NASDAQ SYMBOLS Class A Shares IBVAX ===================================================================================== Class B Shares IBVBX THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND Class C Shares IBVCX PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES Class R Shares IIBRX AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Investor Class Shares IIBCX ===================================================================================== ========================================= NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE AIMinvestments.com 2 AIM International Core Equity Fund Dear Shareholders of The AIM Family of Funds --Registered Trademark--: We're pleased to provide you with this report, which includes a discussion of how your Fund was managed during the review period ended October 31, 2006, and what factors affected its performance. As we approach the end of 2006, it seems likely that [TAYLOR many investors may see the value of their investments PHOTO] increase this year. Global equity markets, collectively, recorded double-digit gains for the year ended October 31, 2006, as did the U.S. stock market. Also, the investment Phillip Taylor grade bond market in the United States rose for the same period. While stock and bond markets generally enjoyed positive year-to-date returns, their performance was affected by short-term economic and geopolitical events. For example, the U.S. stock market was weak in the second quarter of 2006 when it appeared that inflation might be rising. Only after the U.S. Federal Reserve Board decided in August that inflation was contained and that short-term interest rates need not be increased--the first time it kept rates unchanged in more than two years--did equities truly surge. Short-term market fluctuations are a fact of life for all investors. At AIM Investments --Registered Trademark--, we believe that investors can do two things to deal with short-term market fluctuations: maintain a long-term investment horizon and maintain a diversified portfolio. AIM Investments can help by offering a broad product line that gives your financial advisor the necessary tools to build a portfolio that's right for you regardless of market conditions. AIM Investments offers a comprehensive range of retail mutual funds, including domestic, global and international equity funds, taxable and tax-exempt fixed-income funds, and a variety of allocation portfolios--with varied risk and return characteristics to match your needs. We maintain this extensive set of product solutions for one reason: We believe in the value of comprehensive, diversified investment portfolios. We've changed the look of our annual reports to reflect that belief. In our marketing and now our shareholder literature, we represent a fully diversified portfolio graphically as an allocation pie chart and assign each asset class a color--green for domestic equity, blue for international, orange for sector and purple for fixed income. A legend in the left column illustrates the methodology. Your report cover now shows your Fund's asset class color, plus the asset class and sub-asset class name are shown in the upper-left corner. The reason for these changes is to help you better understand where your Fund fits into your overall portfolio. AIM has a variety of investment solutions, and knowing which ones are right for your portfolio is complex. That's why we also believe in the value of a trusted financial advisor who will work with you to create an investment plan you can stick with for the long term. Your financial advisor can help allocate your portfolio appropriately and review your investments regularly to help ensure they remain suitable as your financial situation changes. While there are no guarantees with any investment program, a long-term plan that's based on your financial goals, risk tolerance and time horizon is more likely to keep you and your investments on track. OUR COMMITMENT TO YOU In the short term, the one sure thing about markets is their unpredictability. While past performance cannot guarantee comparable future results, we believe that staying invested for the long term with a thoughtful plan offers the best opportunity for weathering that unpredictability. We at AIM Investments remain committed to building enduring solutions to help you achieve your investment goals, and we're pleased you've placed your trust in us. Information about investing, the markets and your Fund is always available on our Web site, AIMinvestments.com. If you have questions about your individual account, we invite you to contact one of our highly trained client services representatives at 800-959-4246. Sincerely, /s/ PHILIP TAYLOR Philip Taylor President -- AIM Funds CEO, AIM Investments December 14, 2006 AIM Investments is a registered service mark of A I M Management Group Inc. A I M Advisors, Inc. and A I M Capital Management, Inc. are the investment advisors. A I M Distributors, Inc. is the distributor for the retail funds represented by AIM Investments. 3 AIM International Core Equity Fund Dear Fellow AIM Fund Shareholders: At our meeting at the end of June, your Board completed its comprehensive review* of each fund's advisory agreement with A I M Advisors, Inc. (AIM) to make certain your interests are being served in terms of fees, performance and operations. Looking ahead, your Board finds many reasons to be [CROCKETT positive about AIM's management and strategic direction. PHOTO] Most importantly, AIM's investment management discipline has paid off in terms of improved overall performance. We are also pleased with AIM's efforts to seek more cost-effective ways of delivering superior service. Bruce L. Crockett In addition, AIM is realizing the benefits of belonging to a leading independent global investment management organization in its parent company, AMVESCAP PLC, which is dedicated to helping people worldwide build their financial security. AMVESCAP managed approximately $450 billion globally as of October 31, 2006, operating under the AIM, INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust brands. These companies are home to an abundance of investment talent that is gradually being integrated and leveraged into centers of excellence, each focusing on a given market segment or asset class. Over the next few years, your Board will be meeting at these various centers of excellence to learn about their progress and how they may serve you through our goal of enhancing performance and reducing costs. The seven new AIM funds--which include Asian funds, structured U.S. equity funds and specialized bond funds--are an early example of the kind of opportunities the AMVESCAP organization can provide AIM clients. More information on these funds can be found on AIM's Web site. Your Board is very pleased with the overall direction and progress of the AIM Funds. We're working closely and effectively with AIM's management to continue this momentum. As always, your Board is eager to hear your views on how we might better serve you. Please send your comments in a letter addressed to me at AIM Investments, AIM Investments Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046. Sincerely, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board December 14, 2006 *To learn more about all the factors we considered before approving each fund's advisory agreement, go to the "Products & Performance" tab at the AIM Web site (AIMinvestments.com) and click on "Investment Advisory Agreement Renewals." The approval of advisory agreement information for your Fund is also included in this annual report on pages 10-11. 4 AIM International Core Equity Fund Management's discussion diversification. However, individual of Fund performance holdings are selected based on their own merits, not on projections of country or ======================================================================================= sector performance. PERFORMANCE SUMMARY MARKET CONDITIONS AND YOUR FUND Non-U.S. equity markets rallied strongly over the fiscal year ended October 31, 2006, fueled by improving economic growth prospects in Europe and Asia. U.S. Markets continued to rally in Europe, as equity markets outperformed international markets toward the end of the period; positive economic data and a high level however, international equities continued to outperform over the reporting of merger and acquisition activity period. continued to bolster investor confidence. Asian stock markets Within this environment, we are pleased to have provided shareholders with performed strongly during the period as double-digit Fund performance, considerably surpassing the 16.33% return of the well. Inflationary pressures across the U.S. market as represented by the S&P 500 Index. During the reporting period, region showed signs of weakening, and a the Fund performed essentially in line with the MSCI EAFE Index, representing general perception that the U.S. can the broad market of European, Australasian and Far Eastern stocks and the Lipper coordinate a "soft landing" for its International Large-Cap Core Funds Index, representing our peers. economy provided a positive backdrop for Asian equities. Japanese shares, though, Your Fund's long-term performance appears on pages 8 and 9. remained lackluster. Emerging markets experienced a volatile 12 month period FUND VS. INDEXES during which stocks hit record highs in Total returns, 10/31/05-10/31/06, excluding applicable sales charges. If sales many countries before correcting sharply charges were included, returns would be lower. lower in mid-2006. A combination of higher global interest rates and rising Class A Shares 26.12% levels of risk aversion accentuated the Class B Shares 25.28 sell-off in emerging markets. However, Class C Shares 25.21 most of these markets rebounded, ending Class R Shares 25.86 the period with strong positive overall Investor Class Shares 26.11 returns. MSCI EAFE Index (Broad Market and Style-specific Index) 27.52 Lipper International Large-Cap Core Funds Index (Peer Group Index) 26.44 As always, the cornerstone of our strategy continued to be our security SOURCE: LIPPER INC. selection process. In view of the kinds ======================================================================================= of stocks selected by this methodology, Fund results benefited from the HOW WE INVEST ded growth of the underlying business, improving performance of higher quality in addition to the prospect of stocks. The Fund invests primarily in the stocks valuation-based multiple expansion. of larger-capitalization foreign On an absolute basis, all industry companies with a record of stable We strive to maintain a consistent sectors had positive returns during the earnings and strong balance sheets. Our investment discipline through varying reporting period. Our stock selection research efforts target a long term market conditions and an appropriate within the information technology and horizon and return potential from the level of overall portfolio financials sectors of the market made embed- the largest contribution to the Fund's (continued) ========================================= ========================================== ========================================= PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS* By sector 1. United Kingdom 25.8% 1. Royal Bank of Scotland Group [PIE CHART] 2. Japan 19.5 PLC (United Kingdom) 3.3% 3. Netherlands 9.8 2. Novartis A.G. (Switzerland) 2.6 Industrials 7.6% 4. Switzerland 8.8 3. Nestle S.A. (Switzerland) 2.6 Telecommunication Services 7.5% 5. France 6.9 4. GlaxoSmithKline PLC Health Care 7.2% (United Kingdom) 2.6 Materials 7.2% Total Net Assets $435.86 million 5. Canon Inc. (Japan) 2.4 Information Technology 5.2% 6. Aegon N.V. (Netherlands) 2.3 Utilities 0.6% Total Number of Holdings* 65 7. Vodafone Group PLC (United Money Market Funds Plus Other Kingdom) 2.3 Assets Less Liabilities 3.3% 8. Nokia Oyj (Finland) 2.3 Financials 25.2% 9. FUJIFILM Holdings Corp. Consumer Discretionary 14.5% (Japan) 2.3 Consumer Staples 13.2% 10. HSBC Holdings PLC-ADR Energy 8.5% (United Kingdom) 2.2 The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. *Excluding money market fund holdings. ========================================= ========================================== ========================================= 5 AIM International Core Equity Fund relative results. The largest Foreign exchange was another Erik B. Granade contributor to overall performance was contributor to Fund performance. Our TNT NV, the world's first publicly exposure to the appreciating euro, [GRANADE Chartered Financial traded postal system operator and a compared with the U.S. dollar, added PHOTO] Analyst, is a portfolio leading provider of express delivery value to the Fund's overall return. manager of AIM services. The company reported solid International Core gains in revenue and earnings during the IN CLOSING Equity Fund. He began period. TNT NV also benefited from a his investment career in 1986 and has simplification in its organizational The performance of international stocks been a portfolio manager with INVESCO structure through the sale of TNT over the last several years underscores and its affiliates since 1996. He earned Logistics to Apollo Management L.P., a the investment opportunities beyond U.S. a B.A. in economics from Trinity College private equity firm. borders. Over the past fiscal year, the in Hartford, Connecticut. Fund has experienced double-digit The Fund's underweight position in returns. It would be imprudent for us to Ingrid E. Baker utilities hurt relative performance as suggest that such a level of performance utilities stocks within the MSCI EAFE is sustainable over the long term. [BAKER Chartered Financial Index performed well during the period. However, we remain committed to our PHOTO] Analyst, is a portfolio Our holdings in the health care sector disciplined strategy of selecting manager of AIM also detracted from relative returns. In holdings based on the strengths of the International Core addition, our small cash position hurt individual company and holding our Equity Fund. She began the Fund's performance versus the MSCI course through the market's varying her investment career in 1990 and joined EAFE Index in what was a rising market investment climates. INVESCO in 1999. She graduated with a environment. B.A. in international politics from We welcome any new investors who have Oberlin College and earned an M.B.A. in While only a few holdings declined joined the Fund during the reporting finance from the University of Navarra during the period, VODAFONE GROUP was period, and to all of our shareholders in Spain. among the largest detractors from the we would like to say thank you for your Fund's overall performance. Vodafone continued investment in AIM W. Lindsay Davidson Group, the world's largest wireless International Core Equity Fund. telecommunications services provider, [DAVIDSON Portfolio manager of underperformed during the period because THE VIEWS AND OPINIONS EXPRESSED IN PHOTO] AIM International Core of recent earnings disappointments and MANAGEMENT'S DISCUSSION OF FUND Equity Fund. He began challenging industry fundamentals. PERFORMANCE ARE THOSE OF A I M ADVISORS, his investment career However, we are encouraged by INC. THESE VIEWS AND OPINIONS ARE in 1974 and has served management's sale of their Japanese SUBJECT TO CHANGE AT ANY TIME BASED ON as a portfolio manager with AMVESCAP operation and believe the stock offers a FACTORS SUCH AS MARKET AND ECONOMIC PLC and its affiliates since 1984. A compelling valuation. CONDITIONS. THESE VIEWS AND OPINIONS MAY native of St. Andrews, Scotland, he NOT BE RELIED UPON AS INVESTMENT ADVICE earned his degree in economics with From a geographical perspective, all OR RECOMMENDATIONS, OR AS AN OFFER FOR A honors from Edinburgh University. international regions contributed PARTICULAR SECURITY. THE INFORMATION IS positively to the absolute results of NOT A COMPLETE ANALYSIS OF EVERY ASPECT Michele T. Garren the Fund during the reporting period. In OF ANY MARKET, COUNTRY, INDUSTRY, particular, our overweight in the SECURITY OR THE FUND. STATEMENTS OF FACT [GARREN Chartered Financial Netherlands was helpful to the relative ARE FROM SOURCES CONSIDERED RELIABLE, PHOTO] Analyst, is a portfolio return of the Fund, while our BUT A I M ADVISORS, INC. MAKES NO manager of AIM underweight position in Spain hurt REPRESENTATION OR WARRANTY AS TO THEIR International Core relative performance. COMPLETENESS OR ACCURACY. ALTHOUGH Equity Fund. She began HISTORICAL PERFORMANCE IS NO GUARANTEE her investment career in 1987 and joined Continental Europe enjoyed a low OF FUTURE RESULTS, THESE INSIGHTS MAY INVESCO in 1997. She graduated with a interest rate environment during the HELP YOU UNDERSTAND OUR INVESTMENT B.B.A. in finance from Southern Methodist period that enabled a broad range of MANAGEMENT PHILOSOPHY. University and earned an M.B.A. in companies to further improve finance from New York University. profitability and enhance global See important Fund and index competitiveness. We continued to find disclosures on the inside front cover. Kent A. Starke attractive investment opportunities across a wide spectrum of the market. In [STARKE Portfolio manager of Japan, we found several good investment PHOTO] AIM International Core opportunities at modest market Equity Fund. He began valuations. While demand for Japanese his investment career exports slowed to some extent in the in 1983 and joined reporting period, the Japanese domestic INVESCO in 1992. He has been with the economy showed signs of improvement. international equity product since its Stock selection within Japan made a inception. He earned a B.B.A. from the positive contribution to Fund results. University of Georgia and an M.S. in finance from Georgia State University. FOR A PRESENTATION OF YOUR FUND'S LONG-TERM PERFORMANCE, PLEASE SEE PAGES 8 AND 9. 6 AIM International Core Equity Fund CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE mate the expenses that you paid over the The hypothetical account values and period. Simply divide your account value expenses may not be used to estimate the As a shareholder of the Fund, you incur by $1,000 (for example, an $8,600 actual ending account balance or two types of costs: (1) transaction account value divided by $1,000 = 8.6), expenses you paid for the period. You costs, which may include sales charges then multiply the result by the number may use this information to compare the (loads) on purchase payments or in the table under the heading entitled ongoing costs of investing in the Fund contingent deferred sales charges on "Actual Expenses Paid During Period" to and other funds. To do so, compare this redemptions, and redemption fees, if estimate the expenses you paid on your 5% hypothetical example with the 5% any; and (2) ongoing costs, including account during this period. hypothetical examples that appear in the management fees; distribution and/or shareholder reports of the other funds. service (12b-1) fees; and other Fund HYPOTHETICAL EXAMPLE FOR COMPARISON expenses. This example is intended to PURPOSES Please note that the expenses shown help you understand your ongoing costs in the table are meant to highlight your (in dollars) of investing in the Fund The table below also provides ongoing costs only and do not reflect and to compare these costs with ongoing information about hypothetical account any transaction costs, such as sales costs of investing in other mutual values and hypothetical expenses based charges (loads) on purchase payments, funds. The example is based on an on the Fund's actual expense ratio and contingent deferred sales charges on investment of $1,000 invested at the an assumed rate of return of 5% per year redemptions, and redemption fees, if beginning of the period and held for the before expenses, which is not the Fund's any. Therefore, the hypothetical entire period May 1, 2006, through actual return. The Fund's actual information is useful in comparing October 31, 2006. cumulative total returns at net asset ongoing costs only, and will not help value after expenses for the six months you determine the relative total costs ACTUAL EXPENSES ended October 31, 2006, appear in the of owning different funds. In addition, table "Cumulative Total Returns" on page if these transaction costs were The table below provides information 9. included, your costs would have been about actual account values and actual higher. expenses. You may use the information in this table, together with the amount you invested, to esti- ==================================================================================================================================== ACTUAL HYPOTHETICAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2) (10/31/06) PERIOD(2) RATIO A $1,000.00 $1,043.30 $ 7.98 $1,017.39 $ 7.88 1.55% B 1,000.00 1,040.00 11.83 1,013.61 11.67 2.30 C 1,000.00 1,038.60 11.82 1,013.61 11.67 2.30 R 1,000.00 1,042.00 9.26 1,016.13 9.15 1.80 Investor 1,000.00 1,042.80 7.98 1,017.39 7.88 1.55 (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value after expenses for the six months ended October 31, 2006, appear in the table "Cumulative Total Returns" on page 9. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. ==================================================================================================================================== 7 AIM International Core Equity Fund Your Fund's long-Term performance RESULTS OF A $10,000 INVESTMENT Fund data from 10/28/98, index data from 10/31/98 ==================================================================================================================================== [MOUNTAIN CHART] AIM INTERNATIONAL LIPPER INTERNATIONAL CORE EQUITY FUND MSCI EAFE LARGE-CAP CORE DATE -INVESTOR CLASS SHARES INDEX FUNDS INDEX 10/28/98 $10000 10/98 10020 $10000 $10000 11/98 10340 10512 10509 12/98 10650 10927 10790 1/99 10429 10895 10876 2/99 10109 10635 10578 3/99 10379 11079 10977 4/99 10589 11528 11495 5/99 10329 10934 11014 6/99 10680 11361 11557 7/99 10780 11698 11860 8/99 10850 11741 11945 9/99 10840 11859 11993 10/99 11199 12303 12428 11/99 11686 12731 13333 12/99 13146 13873 14993 1/00 12043 12992 14125 2/00 12486 13342 15065 3/00 12682 13859 15218 4/00 12002 13130 14298 5/00 11919 12809 14039 6/00 12620 13310 14700 7/00 12126 12752 14252 8/00 12424 12862 14441 9/00 11672 12236 13600 10/00 11497 11947 13213 11/00 11103 11499 12778 12/00 11555 11908 13318 1/01 11950 11902 13288 2/01 11239 11009 12430 3/01 10540 10276 11542 4/01 11273 10990 12271 5/01 11070 10602 11910 6/01 10686 10168 11529 7/01 10392 9983 11210 8/01 10200 9730 10982 9/01 9208 8745 9859 10/01 9228 8969 10073 11/01 9623 9299 10450 12/01 9668 9354 10610 1/02 9352 8857 10105 2/02 9566 8920 10275 3/02 10120 9445 10815 4/02 10391 9464 10836 5/02 10572 9584 10963 6/02 10154 9203 10571 7/02 9092 8294 9477 8/02 9160 8275 9492 9/02 8054 7387 8488 10/02 8303 7784 8992 11/02 8720 8137 9399 12/02 8529 7863 9066 1/03 8156 7535 8652 2/03 7930 7362 8438 3/03 7783 7218 8255 4/03 8461 7925 9024 5/03 8913 8405 9548 6/03 9026 8608 9758 7/03 9218 8817 9996 8/03 9388 9030 10240 9/03 9523 9308 10437 10/03 9998 9888 11040 11/03 10311 10108 11248 12/03 11106 10898 12031 1/04 11220 11052 12277 2/04 11492 11307 12554 3/04 11436 11370 12575 4/04 11220 11113 12183 5/04 11311 11137 12161 6/04 11696 11395 12325 7/04 11322 11025 11873 8/04 11356 11074 11971 9/04 11663 11363 12332 10/04 12083 11751 12703 11/04 12741 12553 13523 12/04 13251 13104 14097 1/05 12919 12864 13797 2/05 13537 13419 14422 3/05 13205 13082 14037 4/05 12920 12775 13713 5/05 12885 12781 13758 6/05 12988 12950 13914 7/05 13274 13347 14398 8/05 13594 13685 14854 9/05 14120 14294 15387 10/05 13766 13877 14944 11/05 14005 14216 15290 12/05 14616 14878 16049 1/06 15293 15791 17118 2/06 15305 15756 17013 3/06 15863 16275 17649 4/06 16647 17053 18475 5/06 16076 16391 17614 6/06 16028 16389 17559 7/06 16348 16552 17701 8/06 16752 17007 18195 9/06 16824 17033 18211 10/06 17355 17696 18895 ==================================================================================================================================== SOURCE: LIPPER INC. Past performance cannot guarantee This chart, which is a logarithmic comparable future results. chart, presents the fluctuations in the value of the Fund and its indexes. We The data shown in the chart include believe that a logarithmic chart is more reinvested distributions, applicable effective than other types of charts in sales charges, Fund expenses and illustrating changes in value during the management fees. Performance of an index early years shown in the chart. The of funds reflects fund expenses and vertical axis, the one that indicates management fees; performance of a market the dollar value of an investment, is index does not. Performance shown in the constructed with each segment chart and table(s) does not reflect representing a percent change in the deduction of taxes a shareholder would value of the investment. In this chart, pay on Fund distributions or sale of each segment represents a doubling, or Fund shares. Performance of the indexes 100% change, in the value of the does not reflect the effects of taxes. investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on. </Table> 8 AIM International Core Equity Fund ========================================= ========================================= ========================================= AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS As of 10/31/06, including applicable As of 9/30/06, the most recent calendar 6 months ended 10/31/06, excluding sales charges quarter-end, including applicable sales applicable sales charges charges CLASS A SHARES Class A Shares 4.33% Inception (3/28/02) 10.84% CLASS A SHARES Class B Shares 4.00 1 Year 19.21 Inception (3/28/02) 10.30% Class C Shares 3.86 1 Year 12.71 Class R Shares 4.20 CLASS B SHARES Investor Class Shares 4.28 Inception (3/28/02) 11.32% CLASS B SHARES ========================================= 1 Year 20.28 Inception (3/28/02) 10.76% 1 Year 13.31 CLASS C SHARES Inception (2/14/00) 4.20% CLASS C SHARES 5 Years 12.48 Inception (2/14/00) 3.78% 1 Year 24.21 5 Years 11.85 1 Year 17.28 Class R Shares Inception (11/24/03) 19.68% CLASS R SHARES 1 Year 25.86 Inception (11/24/03) 19.02% 1 Year 18.91 Investor Class Shares Inception (10/28/98) 7.13% INVESTOR CLASS SHARES 5 Years 13.47 Inception (10/28/98) 6.78% 1 Year 26.11 5 Years 12.81 1 Year 19.16 ========================================= ========================================= THE PERFORMANCE DATA QUOTED REPRESENT CONTINGENT DEFERRED SALES CHARGE (CDSC) THE PERFORMANCE OF THE FUND'S SHARE PAST PERFORMANCE AND CANNOT GUARANTEE FOR THE PERIOD INVOLVED. THE CDSC ON CLASSES WILL DIFFER PRIMARILY DUE TO COMPARABLE FUTURE RESULTS; CURRENT CLASS B SHARES DECLINES FROM 5% BEGINNING DIFFERENT SALES CHARGE STRUCTURES AND PERFORMANCE MAY BE LOWER OR HIGHER. AT THE TIME OF PURCHASE TO 0% AT THE CLASS EXPENSES. PLEASE VISIT AIMINVESTMENTS.COM FOR THE BEGINNING OF THE SEVENTH YEAR. THE CDSC MOST RECENT MONTH-END PERFORMANCE. ON CLASS C SHARES IS 1% FOR THE FIRST HAD THE ADVISOR NOT WAIVED FEES AND/OR PERFORMANCE FIGURES REFLECT REINVESTED YEAR AFTER PURCHASE. CLASS R SHARES DO REIMBURSED EXPENSES IN THE PAST, DISTRIBUTIONS, CHANGES IN NET ASSET VALUE NOT HAVE A FRONT-END SALES CHARGE; PERFORMANCE WOULD HAVE BEEN LOWER. AND THE EFFECT OF THE MAXIMUM SALES RETURNS SHOWN ARE AT NET ASSET VALUE AND CHARGE UNLESS OTHERWISE STATED. DO NOT REFLECT A 0.75% CDSC THAT MAY BE A REDEMPTION FEE OF 2% WILL BE IMPOSED INVESTMENT RETURN AND PRINCIPAL VALUE IMPOSED ON A TOTAL REDEMPTION OF ON CERTAIN REDEMPTIONS OR EXCHANGES OUT WILL FLUCTUATE SO THAT YOU MAY HAVE A RETIREMENT PLAN ASSETS WITHIN THE FIRST OF THE FUND WITHIN 30 DAYS OF PURCHASE. GAIN OR LOSS WHEN YOU SELL SHARES. YEAR. INVESTOR CLASS SHARES DO NOT HAVE A EXCEPTIONS TO THE REDEMPTION FEE ARE FRONT-END SALES CHARGE OR CDSC; LISTED IN THE FUND'S PROSPECTUS. CLASS A SHARE PERFORMANCE REFLECTS THE THEREFORE, PERFORMANCE SHOWN IS AT NET MAXIMUM 5.50% SALES CHARGE, AND CLASS B ASSET VALUE. AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE 9 AIM International Core Equity Fund APPROVAL OF INVESTMENT ADVISORY AGREEMENT The Board of Trustees of AIM the one and three year periods and above those of the Fund and above the total International Mutual Funds (the "Board") such median performance for the five year advisory fee rates for 134 separately oversees the management of AIM period. The Board also noted that AIM managed accounts/wrap accounts managed by International Core Equity Fund (the began serving as investment advisor to an AIM affiliate with investment "Fund") and, as required by law, the Fund in November 2003. Based on this strategies comparable to those of the determines annually whether to approve review and after taking account of all of Fund. The Board noted that AIM has agreed the continuance of the Fund's advisory the other factors that the Board to limit the Fund's total annual agreement with A I M Advisors, Inc. considered in determining whether to operating expenses, as discussed below. ("AIM"). Based upon the recommendation of continue the Advisory Agreement for the Based on this review, the Board concluded the Investments Committee of the Board, Fund, the Board concluded that no changes that the advisory fee rate for the Fund at a meeting held on June 27, 2006, the should be made to the Fund and that it under the Advisory Agreement was fair and Board, including all of the independent was not necessary to change the Fund's reasonable. trustees, approved the continuance of the portfolio management team at this time. advisory agreement (the "Advisory However, due to the Fund's o Fees relative to those of comparable Agreement") between the Fund and AIM for under-performance, the Board also funds with other advisors. The Board another year, effective July 1, 2006. concluded that it would be appropriate reviewed the advisory fee rate for the for the Board to continue to closely Fund under the Advisory Agreement. The The Board considered the factors monitor and review the performance of the Board compared effective contractual discussed below in evaluating the Fund. Although the independent written advisory fee rates at a common asset fairness and reasonableness of the evaluation of the Fund's Senior Officer level at the end of the past calendar Advisory Agreement at the meeting on June (discussed below) only considered Fund year and noted that the Fund's rate was 27, 2006 and as part of the Board's performance through the most recent below the median rate of the funds ongoing oversight of the Fund. In their calendar year, the Board also reviewed advised by other advisors with investment deliberations, the Board and the more recent Fund performance, which did strategies comparable to those of the independent trustees did not identify any not change their conclusions. Fund that the Board reviewed. The Board particular factor that was controlling, noted that AIM has agreed to limit the and each trustee attributed different o The performance of the Fund relative to Fund's total annual operating expenses, weights to the various factors. indices. The Board reviewed the as discussed below. Based on this review, performance of the Fund during the past the Board concluded that the advisory fee One responsibility of the independent one, three and five calendar years rate for the Fund under the Advisory Senior Officer of the Fund is to manage against the performance of the Lipper Agreement was fair and reasonable. the process by which the Fund's proposed International Large Cap Core Index. The management fees are negotiated to ensure Board noted that the Fund's performance o Expense limitations and fee waivers. that they are negotiated in a manner was below the performance of such Index The Board noted that AIM has which is at arms' length and reasonable. for the one year period and comparable to contractually agreed to waive fees and/or To that end, the Senior Officer must such Index for the three year five year limit expenses of the Fund through either supervise a competitive bidding periods. The Board also noted that AIM October 31, 2006 in an amount necessary process or prepare an independent written began serving as investment advisor to to limit total annual operating expenses evaluation. The Senior Officer has the Fund in November 2003. Based on this to a specified percentage of average recommended an independent written review and after taking account of all of daily net assets for each class of the evaluation in lieu of a competitive the other factors that the Board Fund. The Board considered the bidding process and, upon the direction considered in determining whether to contractual nature of this fee of the Board, has prepared such an continue the Advisory Agreement for the waiver/expense limitation and noted that independent written evaluation. Such Fund, the Board concluded that no changes it remains in effect until October 31, written evaluation also considered should be made to the Fund and that it 2006. The Board considered the effect certain of the factors discussed below. was not necessary to change the Fund's this fee waiver/expense limitation would portfolio management team at this time. have on the Fund's estimated expenses and The discussion below serves as a However, due to the Fund's concluded that the levels of fee summary of the Senior Officer's under-performance, the Board also waivers/expense limitations for the Fund independent written evaluation, as well concluded that it would be appropriate were fair and reasonable. as a discussion of the material factors for the Board to continue to closely and the conclusions with respect thereto monitor and review the performance of the o Breakpoints and economies of scale. The that formed the basis for the Board's Fund. Although the independent written Board reviewed the structure of the approval of the Advisory Agreement. After evaluation of the Fund's Senior Officer Fund's advisory fee under the Advisory consideration of all of the factors below (discussed below) only considered Fund Agreement, noting that it includes six and based on its informed business performance through the most recent breakpoints. The Board reviewed the level judgment, the Board determined that the calendar year, the Board also reviewed of the Fund's advisory fees, and noted Advisory Agreement is in the best more recent Fund performance, which did that such fees, as a percentage of the interests of the Fund and its not change their conclusions. Fund's net assets, would decrease as net shareholders and that the compensation to assets increase because the Advisory AIM under the Advisory Agreement is fair o Meetings with the Fund's portfolio Agreement includes breakpoints. The Board and reasonable and would have been managers and investment personnel. With noted that, due to the Fund's asset obtained through arm's length respect to the Fund, the Board is meeting levels at the end of the past calendar negotiations. periodically with such Fund's portfolio year and the way in which the advisory managers and/or other investment fee breakpoints have been structured, the Unless otherwise stated, information personnel and believes that such Fund has yet to benefit from the presented below is as of June 27, 2006 individuals are competent and able to breakpoints. The Board concluded that the and does not reflect any changes that may continue to carry out their Fund's fee levels under the Advisory have occurred since June 27, 2006, responsibilities under the Advisory Agreement therefore would reflect including but not limited to changes to Agreement. economies of scale at higher asset levels the Fund's performance, advisory fees, and that it was not necessary to change expense limitations and/or fee waivers. o Overall performance of AIM. The Board the advisory fee breakpoints in the considered the overall performance of AIM Fund's advisory fee schedule. o The nature and extent of the advisory in providing investment advisory and services to be provided by AIM. The Board portfolio administrative services to the o Investments in affiliated money market reviewed the services to be provided by Fund and concluded that such performance funds. The Board also took into account AIM under the Advisory Agreement. Based was satisfactory. the fact that uninvested cash and cash on such review, the Board concluded that collateral from securities lending the range of services to be provided by o Fees relative to those of clients of arrangements, if any (collectively, "cash AIM under the Advisory Agreement was AIM with comparable investment balances") of the Fund may be invested in appropriate and that AIM currently is strategies. The Board reviewed the money market funds advised by AIM providing services in accordance with the effective advisory fee rate (before pursuant to the terms of an SEC exemptive terms of the Advisory Agreement. waivers) for the Fund under the Advisory order. The Board found that the Fund may Agreement. The Board noted that this rate realize certain benefits upon investing o The quality of services to be provided was (i) below the effective advisory fee cash balances in AIM advised money market by AIM. The Board reviewed the rate (before waivers) for one variable funds, including a higher net return, credentials and experience of the insurance fund advised by AIM and offered increased liquidity, increased officers and employees of AIM who will to insurance company separate accounts diversification or decreased transaction provide investment advisory services to with investment strategies comparable to costs. The Board also found that the Fund the Fund. In reviewing the qualifications those of the Fund; (ii) above the will not receive reduced services if it of AIM to provide investment advisory effective sub-advisory fee rate for one invests its cash balances in such money services, the Board considered such collective trust fund sub-advised by an market funds. The Board noted that, to issues as AIM's portfolio and product AIM affiliate with investment strategies the extent the Fund invests uninvested review process, various back office comparable to those of the Fund, although cash in affiliated money market funds, support functions provided by AIM and the total advisory fees for such AIM has voluntarily agreed to waive a AIM's equity and fixed income trading collective investment fund were above portion of the advisory fees it receives operations. Based on the review of these those for the Fund; (iii) above the from the Fund attributable to such and other factors, the Board concluded effective sub-advisory fee rate for one investment. The Board further determined that the quality of services to be variable insurance fund sub-advised by an that the proposed securities lending provided by AIM was appropriate and that AIM affiliate and offered to insurance program and related procedures with AIM currently is providing satisfactory company separate accounts with investment respect to the lending Fund is in the services in accordance with the terms of strategies comparable to those of the best interests of the lending Fund and the Advisory Agreement. Fund, although the total advisory fees its respective shareholders. The Board for such variable insurance fund were therefore concluded that the investment o The performance of the Fund relative to above those for the Fund; and (iv) below of cash collateral received in connection comparable funds. The Board reviewed the or comparable to the total advisory fee with the securities lending program in performance of the Fund during the past rates for 169 separately managed the money market funds according to the one, three and five calendar years accounts/wrap accounts managed by an AIM procedures is in the best interests of against the performance of funds advised affiliate with investment strategies the lending Fund and its respective by other advisors with investment comparable to shareholders. strategies comparable to those of the Fund. The Board noted that the Fund's performance was below the median performance of such comparable funds for (continued) 10 AIM International Core Equity Fund o Independent written evaluation and the Board, at a meeting held on June 27, iod and comparable to such Index for the recommendations of the Fund's Senior 2006, the Board, including all of the three and five year periods. The Board Officer. The Board noted that, upon their independent trustees, approved the also noted that AIM began serving as direction, the Senior Officer of the continuance of the sub-advisory agreement investment advisor to the Fund in Fund, who is independent of AIM and AIM's (the "Sub-Advisory Agreement") between November 2003. Based on this review and affiliates, had prepared an independent INVESCO Global Asset Management (N.A.), after taking account of all of the other written evaluation in order to assist the Inc. (the "Sub-Advisor") and AIM with factors that the Board considered in Board in determining the reasonableness respect to the Fund for another year, determining whether to continue the of the proposed management fees of the effective July 1, 2006. Advisory Agreement for the Fund, the AIM Funds, including the Fund. The Board Board concluded that no changes should be noted that the Senior Officer's written The Board considered the factors made to the Fund and that it was not evaluation had been relied upon by the discussed below in evaluating the necessary to change the Fund's portfolio Board in this regard in lieu of a fairness and reasonableness of the Sub- management team at this time. However, competitive bidding process. In Advisory Agreement at the meeting on June due to the Fund's under-performance, the determining whether to continue the 27, 2006 and as part of the Board's Board also concluded that it would be Advisory Agreement for the Fund, the ongoing oversight of the Fund. In their appropriate for the Board to continue to Board considered the Senior Officer's deliberations, the Board and the closely monitor and review the written evaluation. independent trustees did not identify any performance of the Fund. Although the particular factor that was controlling, independent written evaluation of the o Profitability of AIM and its and each trustee attributed different Fund's Senior Officer (discussed below) affiliates. The Board reviewed weights to the various factors. only considered Fund performance through information concerning the profitability the most recent calendar year, the Board of AIM's (and its affiliates') investment The discussion below serves as a also reviewed more recent Fund advisory and other activities and its discussion of the material factors and performance, which did not change their financial condition. The Board considered the conclusions with respect thereto that conclusions. the overall profitability of AIM, as well formed the basis for the Board's approval as the profitability of AIM in connection of the Sub-Advisory Agreement. After o Meetings with the Fund's portfolio with managing the Fund. The Board noted consideration of all of the factors below managers and investment personnel. The that AIM's operations remain profitable, and based on its informed business Board is meeting periodically with the although increased expenses in recent judgment, the Board determined that the Fund's portfolio managers and/or other years have reduced AIM's profitability. Sub-Advisory Agreement is in the best investment personnel and believes that Based on the review of the profitability interests of the Fund and its such individuals are competent and able of AIM's and its affiliates' investment shareholders and that the compensation to to continue to carry out their advisory and other activities and its the Sub-Advisor under the Sub-Advisory responsibilities under the Sub-Advisory financial condition, the Board concluded Agreement is fair and reasonable. Agreement. that the compensation to be paid by the Fund to AIM under its Advisory Agreement Unless otherwise stated, information o Overall performance of the Sub-Advisor. was not excessive. presented below is as of June 27, 2006 The Board considered the overall and does not reflect any changes that may performance of the Sub-Advisor in o Benefits of soft dollars to AIM. The have occurred since June 27, 2006, providing investment advisory services to Board considered the benefits realized by including but not limited to changes to the Fund and concluded that such AIM as a result of brokerage transactions the Fund's performance. performance was satisfactory. executed through "soft dollar" arrangements. Under these arrangements, o The nature and extent of the advisory o Fees relative to those of clients of brokerage commissions paid by the Fund services to be provided by the the Sub-Advisor with comparable and/or other funds advised by AIM are Sub-Advisor. The Board reviewed the investment strategies. The Board reviewed used to pay for research and execution services to be provided by the the sub-advisory fee rate for the Fund services. This research may be used by Sub-Advisor under the Sub-Advisory under the Sub-Advisory Agreement and the AIM in making investment decisions for Agreement. Based on such review, the sub-advisory fees paid thereunder. The the Fund. The Board concluded that such Board concluded that the range of Board noted that this rate was (i) below arrangements were appropriate. services to be provided by the the sub-advisory fee rate for a variable Sub-Advisor under the Sub-Advisory insurance fund sub-advised by the o AIM's financial soundness in light of Agreement was appropriate and that the Sub-Advisor and offered to insurance the Fund's needs. The Board considered Sub-Advisor currently is providing company separate accounts with investment whether AIM is financially sound and has services in accordance with the terms of strategies comparable to those of the the resources necessary to perform its the Sub-Advisory Agreement. Fund; and (ii) below or comparable to the obligations under the Advisory Agreement, total advisory fee rates for 26 and concluded that AIM has the financial o The quality of services to be provided separately managed accounts/wrap accounts resources necessary to fulfill its by the Sub-Advisor. The Board reviewed managed by the Sub-Advisor with obligations under the Advisory Agreement. the credentials and experience of the investment strategies comparable to those officers and employees of the Sub-Advisor of the Fund and above the total advisory o Historical relationship between the who will provide investment advisory fee rates for 277 separately managed Fund and AIM. In determining whether to services to the Fund. Based on the review accounts/wrap accounts managed by the continue the Advisory Agreement for the of these and other factors, the Board Sub-Advisor with investment strategies Fund, the Board also considered the prior concluded that the quality of services to comparable to those of the Fund. The relationship between AIM and the Fund, as be provided by the Sub-Advisor was Board noted that AIM has agreed to limit well as the Board's knowledge of AIM's appropriate, and that the Sub-Advisor the Fund's total annual operating operations, and concluded that it was currently is providing satisfactory expenses. The Board also considered the beneficial to maintain the current services in accordance with the terms of services to be provided by the Sub- relationship, in part, because of such the Sub-Advisory Agreement. Advisor pursuant to the Sub-Advisory knowledge. The Board also reviewed the Agreement and the services to be provided general nature of the non-investment o The performance of the Fund relative to by AIM pursuant to the Advisory advisory services currently performed by comparable funds. The Board reviewed the Agreement, as well as the allocation of AIM and its affiliates, such as performance of the Fund during the past fees between AIM and the Sub-Advisor administrative, transfer agency and one, three and five calendar years pursuant to the Sub-Advisory Agreement. distribution services, and the fees against the performance of funds advised The Board noted that the sub-advisory received by AIM and its affiliates for by other advisors with investment fees have no direct effect on the Fund or performing such services. In addition to strategies comparable to those of the its shareholders, as they are paid by AIM reviewing such services, the trustees Fund. The Board noted that the Fund's to the Sub-Advisor, and that AIM and the also considered the organizational performance was below the median Sub-Advisor are affiliates. Based on this structure employed by AIM and its performance of such comparable funds for review, the Board concluded that the affiliates to provide those services. the one and three year periods and above sub-advisory fee rate under the Based on the review of these and other such median performance for the five year Sub-Advisory Agreement was fair and factors, the Board concluded that AIM and period. The Board also noted that AIM reasonable. its affiliates were qualified to continue began serving as investment advisor to to provide non-investment advisory the Fund in November 2003. Based on this o Profitability of AIM and its services to the Fund, including review and after taking account of all of affiliates. The Board reviewed administrative, transfer agency and the other factors that the Board information concerning the profitability distribution services, and that AIM and considered in determining whether to of AIM's (and its affiliates') investment its affiliates currently are providing continue the Advisory Agreement for the advisory and other activities and its satisfactory non-investment advisory Fund, the Board concluded that no changes financial condition. The Board considered services. should be made to the Fund and that it the overall profitability of AIM, as well was not necessary to change the Fund's as the profitability of AIM in connection o Other factors and current trends. The portfolio management team at this time. with managing the Fund. The Board noted Board considered the steps that AIM and However, due to the Fund's that AIM's operations remain profitable, its affiliates have taken over the last under-performance, the Board also although increased expenses in recent several years, and continue to take, in concluded that it would be appropriate years have reduced AIM's profitability. order to improve the quality and for the Board to continue to closely Based on the review of the profitability efficiency of the services they provide monitor and review the performance of the of AIM's and its affiliates' investment to the Funds in the areas of investment Fund. Although the independent written advisory and other activities and its performance, product line evaluation of the Fund's Senior Officer financial condition, the Board concluded diversification, distribution, fund (discussed below) only considered Fund that the compensation to be paid by the operations, shareholder services and performance through the most recent Fund to AIM under its Advisory Agreement compliance. The Board concluded that calendar year, the Board also reviewed was not excessive. these steps taken by AIM have improved, more recent Fund performance, which did and are likely to continue to improve, not change their conclusions. o The Sub-Advisor's financial soundness the quality and efficiency of the in light of the Fund's needs. The Board services AIM and its affiliates provide o The performance of the Fund relative to considered whether the Sub-Advisor is to the Fund in each of these areas, and indices. The Board reviewed the financially sound and has the resources support the Board's approval of the performance of the Fund during the past necessary to perform its obligations continuance of the Advisory Agreement for one, three and five calendar years under the Sub-Advisory Agreement, and the Fund. against the performance of the Lipper concluded that the Sub-Advisor has the International Large Cap Core Index. The financial resources necessary to fulfill APPROVAL OF SUB-ADVISORY AGREEMENT Board noted that the Fund's performance its obligations under the Sub-Advisory The Board oversees the management of was below the performance of such Index Agreement. the Fund and, as required by law, for the one year per- determines annually whether to approve the continuance of the Fund's sub-advisory agreement. Based upon the recommendation of the Investments Committee of 11 Supplement to Annual Report dated 10/31/06 AIM International Core Equity Fund =================================== Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS NOT For periods ended 10/31/06 INDICATIVE OF FUTURE RESULTS. MORE RECENT The following information has been prepared to RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. provide Institutional Class shareholders with Inception (4/30/04) 19.70% ALL RETURNS ASSUME REINVESTMENT OF a performance overview specific to their 1 Year 26.86 DISTRIBUTIONS AT NAV. INVESTMENT RETURN AND holdings. Institutional Class shares are 6 Months* 4.60 PRINCIPAL VALUE WILL FLUCTUATE SO YOUR offered exclusively to institutional SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR investors, including defined contribution =================================== LESS THAN THEIR ORIGINAL COST. SEE FULL plans that meet certain criteria. REPORT FOR INFORMATION ON COMPARATIVE AVERAGE ANNUAL TOTAL RETURNS BENCHMARKS. PLEASE CONSULT YOUR FUND For periods ended 9/30/06, most PROSPECTUS FOR MORE INFORMATION. FOR THE MOST recent calendar quarter-end CURRENT MONTH-END PERFORMANCE, PLEASE CALL 800-451-4246 OR VISIT AIMINVESTMENTS.COM. Inception (4/30/04) 18.91% 1 Year 19.84 6 Months* 6.42 *Cumulative total return that has not been annualized =================================== INSTITUTIONAL CLASS SHARES HAVE NO SALES CHARGE; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE (NAV). PERFORMANCE OF INSTITUTIONAL CLASS SHARES WILL DIFFER FROM PERFORMANCE OF OTHER SHARE CLASSES PRIMARILY DUE TO DIFFERING SALES CHARGES AND CLASS EXPENSES. A REDEMPTION FEE OF 2% WILL BE IMPOSED ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF THE FUND WITHIN 30 DAYS OF PURCHASE. EXCEPTIONS TO THE REDEMPTION FEE ARE LISTED IN THE FUND'S PROSPECTUS. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES IN THE PAST, PERFORMANCE WOULD HAVE BEEN LOWER. ============================================== NASDAQ SYMBOL IBVIX ============================================== Over for information on your Fund's expenses. ================================================================================ THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. ================================================================================ FOR INSTITUTIONAL INVESTOR USE ONLY This material is for institutional investor use only and may not be quoted, reproduced or shown to the public, nor used in written form as sales literature for public use. [YOUR GOALS. OUR SOLUTIONS.] [AIM INVESTMENTS LOGO APPEARS HERE] AIMINVESTMENTS.COM I-ICE-INS-1 A I M Distributors, Inc. --REGISTERED TRADEMARK-- --REGISTERED TRADEMARK-- Information about your Fund's expenses Calculating your ongoing Fund expenses Example divide your account value by $1,000 The hypothetical account values and expenses (for example, an $8,600 account may not be used to estimate the actual ending As a shareholder of the Fund, you incur value divided by $1,000 = 8.6), account balance or expenses you paid for the ongoing costs, including management fees and then multiply the result by the period. You may use this information to other Fund expenses. This example is intended number in the table under the compare the ongoing costs of investing in the to help you understand your ongoing costs (in heading entitled "Actual Expenses Fund and other funds. To do so, compare this dollars) of investing in the Fund and to Paid During Period" to estimate the 5% hypothetical example with the 5% compare these costs with ongoing costs of expenses you paid on your account hypothetical examples that appear in the investing in other mutual funds. The example during this period. shareholder reports of the other funds. is based on an investment of $1,000 invested at the beginning of the period and held for Hypothetical example for comparison Please note that the expenses shown in the the entire period May 1, 2006, through October purposes table are meant to highlight your ongoing 31, 2006. costs only. Therefore, the hypothetical The table below also provides information is useful in comparing ongoing Actual expenses information about hypothetical costs only, and will not help you determine account values and hypothetical the relative total costs of owning different The table below provides information about expenses based on the Fund's actual funds. actual account values and actual expenses. You expense ratio and an assumed rate may use the information in this table, of return of 5% per year before together with the amount you invested, to expenses, which is not the Fund's estimate the expenses that you paid over the actual return. The Fund's actual period. Simply cumulative total return after expenses for the six months ended October 31, 2006, appears in the table on the front of this supplement. ==================================================================================================================================== HYPOTHETICAL ACTUAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2) (10/31/06) PERIOD(2) RATIO Institutional $1,000.00 $1,046.00 $4.95 $1,020.37 $4.89 0.96% (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total return after expenses for the six months ended October 31, 2006, appears in the table on the front of this supplement. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. ==================================================================================================================================== AIMINVESTMENTS.COM I-ICE-INS-1 A I M Distributors, Inc. AIM International Core Equity Fund SCHEDULE OF INVESTMENTS October 31, 2006 <Table> <Caption> SHARES VALUE - ------------------------------------------------------------------------ FOREIGN STOCKS & OTHER EQUITY INTERESTS-96.68% AUSTRALIA-1.38% National Australia Bank Ltd. (Diversified Banks)(a)(b) 204,400 $ 6,018,336 ======================================================================== BELGIUM-0.87% Belgacom S.A. (Integrated Telecommunication Services)(b) 92,600 3,789,172 ======================================================================== CANADA-1.37% BCE Inc. (Integrated Telecommunication Services)(b) 115,608 3,264,250 - ------------------------------------------------------------------------ EnCana Corp. (Oil & Gas Exploration & Production) 57,100 2,712,339 ======================================================================== 5,976,589 ======================================================================== CHINA-0.61% China Life Insurance Co., Ltd.-ADR (Life & Health Insurance)(b) 31,700 2,679,601 ======================================================================== DENMARK-1.38% Danske Bank A.S. (Diversified Banks)(a) 143,400 6,011,045 ======================================================================== FINLAND-5.38% Nokia Oyj (Communications Equipment)(a) 498,964 9,917,468 - ------------------------------------------------------------------------ Stora Enso Oyj-Class R (Paper Products)(b) 340,400 5,509,074 - ------------------------------------------------------------------------ UPM-Kymmene Oyj (Paper Products)(a)(b) 316,400 8,010,264 ======================================================================== 23,436,806 ======================================================================== FRANCE-6.88% Compagnie Generale des Etablissements Michelin- Class B (Tires & Rubber)(a)(b) 86,522 7,052,401 - ------------------------------------------------------------------------ Credit Agricole S.A. (Diversified Banks)(a)(b) 145,600 6,170,209 - ------------------------------------------------------------------------ Societe Generale-ADR (Diversified Banks)(c) 125,779 4,180,429 - ------------------------------------------------------------------------ Thomson (Consumer Electronics)(a) 278,400 4,814,422 - ------------------------------------------------------------------------ Total S.A.-ADR (Integrated Oil & Gas) 114,300 7,788,402 ======================================================================== 30,005,863 ======================================================================== GERMANY-2.86% BASF A.G. (Diversified Chemicals) 74,885 6,600,718 - ------------------------------------------------------------------------ Bayerische Motoren Werke A.G. (Automobile Manufacturers)(a) 102,400 5,877,169 ======================================================================== 12,477,887 ======================================================================== HONG KONG-2.05% Cheung Kong (Holdings) Ltd. (Real Estate Management & Development)(a) 341,000 3,706,721 - ------------------------------------------------------------------------ Hutchison Whampoa Ltd. (Industrial Conglomerates)(a)(b) 592,100 5,249,008 ======================================================================== 8,955,729 ======================================================================== </Table> <Table> <Caption> SHARES VALUE - ------------------------------------------------------------------------ ITALY-1.84% Eni S.p.A-ADR (Integrated Oil & Gas)(b) 132,446 $ 8,040,797 ======================================================================== JAPAN-19.45% Canon Inc. (Office Electronics)(a) 198,800 10,575,340 - ------------------------------------------------------------------------ East Japan Railway Co. (Railroads)(a) 623 4,355,562 - ------------------------------------------------------------------------ FUJIFILM Holdings Corp. (Photographic Products) 265,400 9,848,456 - ------------------------------------------------------------------------ Kao Corp. (Household Products) 137,000 3,596,139 - ------------------------------------------------------------------------ Nippon Telegraph and Telephone Corp. (Integrated Telecommunication Services) 1,003 5,051,190 - ------------------------------------------------------------------------ NOK Corp. (Auto Parts & Equipment)(a)(b) 189,400 4,941,508 - ------------------------------------------------------------------------ Nomura Holdings, Inc. (Investment Banking & Brokerage)(b) 332,300 5,867,159 - ------------------------------------------------------------------------ Seven & I Holdings Co., Ltd. (Food Retail)(a)(b) 199,900 6,381,471 - ------------------------------------------------------------------------ Shin-Etsu Chemical Co., Ltd. (Specialty Chemicals)(a) 98,300 6,441,617 - ------------------------------------------------------------------------ SMC Corp. (Industrial Machinery)(a) 40,700 5,555,229 - ------------------------------------------------------------------------ Sony Corp.-ADR (Consumer Electronics) 224,370 9,194,683 - ------------------------------------------------------------------------ Takeda Pharmaceutical Co. Ltd. (Pharmaceuticals)(a) 137,400 8,798,377 - ------------------------------------------------------------------------ Toyota Motor Corp. (Automobile Manufacturers)(a) 70,400 4,155,284 ======================================================================== 84,762,015 ======================================================================== MEXICO-2.01% Fomento Economico Mexicano, S.A. de C.V.-ADR (Soft Drinks) 37,200 3,596,868 - ------------------------------------------------------------------------ Telefonos de Mexico S.A. de C.V.-Series L-ADR (Integrated Telecommunication Services) 195,100 5,148,689 ======================================================================== 8,745,557 ======================================================================== NETHERLANDS-9.75% Aegon N.V. (Life & Health Insurance)(a) 555,200 10,191,327 - ------------------------------------------------------------------------ Heineken N.V. (Brewers)(a) 170,700 7,734,486 - ------------------------------------------------------------------------ ING Groep N.V.-ADR (Other Diversified Financial Services) 136,300 6,042,179 - ------------------------------------------------------------------------ Koninklijke (Royal) Philips Electronics N.V.-New York Shares (Consumer Electronics) 112,200 3,907,926 - ------------------------------------------------------------------------ TNT N.V. (Air Freight & Logistics)(a) 247,400 9,512,260 - ------------------------------------------------------------------------ Unilever N.V. (Packaged Foods & Meats)(a)(b) 207,992 5,126,876 ======================================================================== 42,515,054 ======================================================================== NORWAY-0.57% Statoil A.S.A. (Integrated Oil & Gas)(a) 97,400 2,471,896 ======================================================================== SOUTH KOREA-2.87% Kookmin Bank (Diversified Banks)(a) 57,400 4,549,071 - ------------------------------------------------------------------------ Korea Electric Power Corp.-ADR (Electric Utilities) 126,500 2,502,170 - ------------------------------------------------------------------------ KT Corp.-ADR (Integrated Telecommunication Services) 243,000 5,438,340 ======================================================================== 12,489,581 ======================================================================== </Table> F-1 AIM International Core Equity Fund <Table> <Caption> SHARES VALUE - ------------------------------------------------------------------------ SPAIN-1.05% Repsol YPF, S.A.-ADR (Integrated Oil & Gas) 136,200 $ 4,555,890 ======================================================================== SWEDEN-1.27% Nordea Bank A.B. (Diversified Banks) 402,200 5,541,249 ======================================================================== SWITZERLAND-8.79% Credit Suisse Group (Diversified Capital Markets)(a) 122,200 7,362,439 - ------------------------------------------------------------------------ Nestle S.A. (Packaged Foods & Meats)(a) 33,010 11,269,375 - ------------------------------------------------------------------------ Novartis A.G. (Pharmaceuticals)(a) 188,960 11,463,285 - ------------------------------------------------------------------------ Zurich Financial Services A.G. (Multi-Line Insurance)(a) 33,214 8,198,170 ======================================================================== 38,293,269 ======================================================================== TAIWAN-0.52% Taiwan Semiconductor Manufacturing Co. Ltd.- ADR (Semiconductors) 235,568 2,285,009 ======================================================================== UNITED KINGDOM-25.78% Anglo American PLC (Diversified Metals & Mining)(a) 110,000 4,978,310 - ------------------------------------------------------------------------ BAE Systems PLC (Aerospace & Defense)(a) 1,074,000 8,588,360 - ------------------------------------------------------------------------ BP PLC (Integrated Oil & Gas)(a) 592,700 6,620,949 - ------------------------------------------------------------------------ Cadbury Schweppes PLC (Packaged Foods & Meats)(a) 431,400 4,338,313 - ------------------------------------------------------------------------ Diageo PLC (Distillers & Vintners) 383,800 7,101,542 - ------------------------------------------------------------------------ GlaxoSmithKline PLC (Pharmaceuticals)(a) 418,500 11,150,138 - ------------------------------------------------------------------------ HSBC Holdings PLC-ADR (Diversified Banks)(b) 102,200 9,757,034 - ------------------------------------------------------------------------ Kingfisher PLC (Home Improvement Retail)(a) 1,378,114 6,917,763 - ------------------------------------------------------------------------ Lloyds TSB Group PLC (Diversified Banks)(a) 854,732 9,118,321 - ------------------------------------------------------------------------ Morrison (William) Supermarkets PLC (Food Retail)(a) 1,665,100 8,182,041 - ------------------------------------------------------------------------ </Table> <Table> <Caption> SHARES VALUE - ------------------------------------------------------------------------ UNITED KINGDOM-(CONTINUED) Reed Elsevier PLC (Publishing)(a) 563,700 $ 6,413,712 - ------------------------------------------------------------------------ Royal Bank of Scotland Group PLC (Diversified Banks) 401,900 14,320,916 - ------------------------------------------------------------------------ Royal Dutch Shell PLC-ADR (Integrated Oil & Gas) 67,650 4,709,793 - ------------------------------------------------------------------------ Vodafone Group PLC (Wireless Telecommunication Services)(a) 3,950,250 10,156,724 ======================================================================== 112,353,916 ======================================================================== Total Foreign Stocks & Other Equity Interests (Cost $313,458,694) 421,405,261 ======================================================================== MONEY MARKET FUNDS-4.50% Liquid Assets Portfolio-Institutional Class(d) 9,805,775 9,805,775 - ------------------------------------------------------------------------ Premier Portfolio-Institutional Class(d) 9,805,776 9,805,776 ======================================================================== Total Money Market Funds (Cost $19,611,551) 19,611,551 ======================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities loaned)-101.18% (Cost $333,070,245) 441,016,812 ======================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED MONEY MARKET FUNDS-9.72% Premier Portfolio-Institutional Class(d)(e) 42,344,459 42,344,459 ======================================================================== Total Money Market Funds (purchased with cash collateral from securities loaned) (Cost $42,344,459) 42,344,459 ======================================================================== TOTAL INVESTMENTS-110.90% (Cost $375,414,704) 483,361,271 ======================================================================== OTHER ASSETS LESS LIABILITIES-(10.90)% (47,502,161) ======================================================================== NET ASSETS-100.00% $435,859,110 ________________________________________________________________________ ======================================================================== </Table> Investment Abbreviations: <Table> ADR - American Depositary Receipt </Table> Notes to Schedule of Investments: (a) In accordance with the procedures established by the Board of Trustees, the foreign security is fair valued using adjusted closing market prices. The aggregate value of these securities at October 31, 2006 was $268,375,247, which represented 61.57% of the Fund's Net Assets. See Note 1A. (b) All or a portion of this security was out on loan at October 31, 2006. (c) In accordance with the procedures established by the Board of Trustees, security fair valued based on an evaluated quote provided by an independent pricing service. The value of this security at October 31, 2006 represented 0.96% of the Fund's Net Assets. See Note 1A. (d) The money market fund and the Fund are affiliated by having the same investment advisor. See Note 3. (e) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 7. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-2 AIM International Core Equity Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 2006 <Table> ASSETS: Investments, at value (cost $313,458,694)* $421,405,261 - ----------------------------------------------------------- Investments in affiliated money market funds (cost $61,956,010) 61,956,010 =========================================================== Total investments (cost $375,414,704) 483,361,271 =========================================================== Foreign currencies, at value (cost $42,318) 43,687 - ----------------------------------------------------------- Receivables for: Investments sold 611,414 - ----------------------------------------------------------- Fund shares sold 1,217,971 - ----------------------------------------------------------- Dividends 859,534 - ----------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 54,136 - ----------------------------------------------------------- Other assets 61,984 =========================================================== Total assets 486,209,997 ___________________________________________________________ =========================================================== LIABILITIES: Payables for: Investments purchased 6,937,882 - ----------------------------------------------------------- Fund shares reacquired 602,680 - ----------------------------------------------------------- Trustee deferred compensation and retirement plans 68,380 - ----------------------------------------------------------- Collateral upon return of securities loaned 42,344,459 - ----------------------------------------------------------- Accrued distribution fees 98,348 - ----------------------------------------------------------- Accrued trustees' and officer's fees and benefits 1,582 - ----------------------------------------------------------- Accrued transfer agent fees 171,695 - ----------------------------------------------------------- Accrued operating expenses 125,861 =========================================================== Total liabilities 50,350,887 =========================================================== Net assets applicable to shares outstanding $435,859,110 ___________________________________________________________ =========================================================== NET ASSETS CONSIST OF: Shares of beneficial interest $313,135,553 - ----------------------------------------------------------- Undistributed net investment income 6,836,461 - ----------------------------------------------------------- Undistributed net realized gain from investment securities and foreign currencies 7,962,707 - ----------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 107,924,389 =========================================================== $435,859,110 ___________________________________________________________ =========================================================== NET ASSETS: Class A $118,943,310 ___________________________________________________________ =========================================================== Class B $ 31,817,970 ___________________________________________________________ =========================================================== Class C $ 42,905,522 ___________________________________________________________ =========================================================== Class R $ 3,560,211 ___________________________________________________________ =========================================================== Investor Class $ 44,673,579 ___________________________________________________________ =========================================================== Institutional Class $193,958,518 ___________________________________________________________ =========================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 8,236,071 ___________________________________________________________ =========================================================== Class B 2,225,777 ___________________________________________________________ =========================================================== Class C 3,068,039 ___________________________________________________________ =========================================================== Class R 247,195 ___________________________________________________________ =========================================================== Investor Class 3,056,791 ___________________________________________________________ =========================================================== Institutional Class 13,336,686 ___________________________________________________________ =========================================================== Class A: Net asset value per share $ 14.44 - ----------------------------------------------------------- Offering price per share (Net asset value of $14.44 divided by 94.50%) $ 15.28 ___________________________________________________________ =========================================================== Class B: Net asset value and offering price per share $ 14.30 ___________________________________________________________ =========================================================== Class C: Net asset value and offering price per share $ 13.98 ___________________________________________________________ =========================================================== Class R: Net asset value and offering price per share $ 14.40 ___________________________________________________________ =========================================================== Investor Class: Net asset value and offering price per share $ 14.61 ___________________________________________________________ =========================================================== Institutional Class: Net asset value and offering price per share $ 14.54 ___________________________________________________________ =========================================================== </Table> * At October 31, 2006, securities with an aggregate value of $40,738,594 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-3 AIM International Core Equity Fund STATEMENT OF OPERATIONS For the year ended October 31, 2006 <Table> INVESTMENT INCOME: Dividends (net of foreign withholding tax of $826,274) $11,289,993 - ------------------------------------------------------------------------- Dividends from affiliated money market funds (includes securities lending income of $254,140) 863,909 ========================================================================= Total investment income 12,153,902 ========================================================================= EXPENSES: Advisory fees 2,687,175 - ------------------------------------------------------------------------- Administrative services fees 132,407 - ------------------------------------------------------------------------- Custodian fees 200,947 - ------------------------------------------------------------------------- Distribution fees: Class A 257,181 - ------------------------------------------------------------------------- Class B 305,704 - ------------------------------------------------------------------------- Class C 418,528 - ------------------------------------------------------------------------- Class R 15,911 - ------------------------------------------------------------------------- Investor Class 112,810 - ------------------------------------------------------------------------- Transfer agent fees -- A, B, C, R and Investor 722,363 - ------------------------------------------------------------------------- Transfer agent fees -- Institutional 4,329 - ------------------------------------------------------------------------- Trustees' and officer's fees and benefits 22,890 - ------------------------------------------------------------------------- Other 372,069 ========================================================================= Total expenses 5,252,314 ========================================================================= Less: Fees waived, expenses reimbursed and expense offset arrangements (36,603) ========================================================================= Net expenses 5,215,711 ========================================================================= Net investment income 6,938,191 ========================================================================= REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 16,192,992 - ------------------------------------------------------------------------- Foreign currencies (55,245) ========================================================================= 16,137,747 ========================================================================= Change in net unrealized appreciation (depreciation) of: Investment securities 56,784,455 - ------------------------------------------------------------------------- Foreign currencies (19,429) ========================================================================= 56,765,026 ========================================================================= Net gain from investment securities and foreign currencies 72,902,773 ========================================================================= Net increase in net assets resulting from operations $79,840,964 _________________________________________________________________________ ========================================================================= </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-4 AIM International Core Equity Fund STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2006 and 2005 <Table> <Caption> 2006 2005 - ------------------------------------------------------------------------------------------ OPERATIONS: Net investment income $ 6,938,191 $ 2,705,118 - ------------------------------------------------------------------------------------------ Net realized gain from investment securities and foreign currencies 16,137,747 14,120,296 - ------------------------------------------------------------------------------------------ Change in net unrealized appreciation of investment securities and foreign currencies 56,765,026 11,675,372 ========================================================================================== Net increase in net assets resulting from operations 79,840,964 28,500,786 ========================================================================================== Distributions to shareholders from net investment income: Class A (731,123) (445,320) - ------------------------------------------------------------------------------------------ Class B (35,039) (16,207) - ------------------------------------------------------------------------------------------ Class C (49,960) (65,085) - ------------------------------------------------------------------------------------------ Class R (16,148) (14,030) - ------------------------------------------------------------------------------------------ Investor Class (374,945) (314,265) - ------------------------------------------------------------------------------------------ Institutional Class (1,065,839) (244,538) ========================================================================================== Total distributions from net investment income (2,273,054) (1,099,445) ========================================================================================== Distributions to shareholders from net realized gains: Class A (2,971,061) -- - ------------------------------------------------------------------------------------------ Class B (925,031) -- - ------------------------------------------------------------------------------------------ Class C (1,298,901) -- - ------------------------------------------------------------------------------------------ Class R (86,696) -- - ------------------------------------------------------------------------------------------ Investor Class (1,442,500) -- - ------------------------------------------------------------------------------------------ Institutional Class (2,602,060) -- ========================================================================================== Total distributions from net realized gains (9,326,249) -- ========================================================================================== Decrease in net assets resulting from distributions (11,599,303) (1,099,445) ========================================================================================== Share transactions-net: Class A 9,027,954 20,388,288 - ------------------------------------------------------------------------------------------ Class B (2,838,085) 1,779,734 - ------------------------------------------------------------------------------------------ Class C (3,200,313) (2,982,997) - ------------------------------------------------------------------------------------------ Class R 327,397 207,566 - ------------------------------------------------------------------------------------------ Investor Class (11,306,234) (3,117,007) - ------------------------------------------------------------------------------------------ Institutional Class 96,065,128 52,077,505 ========================================================================================== Net increase in net assets resulting from share transactions 88,075,847 68,353,089 ========================================================================================== Net increase in net assets 156,317,508 95,754,430 ========================================================================================== NET ASSETS: Beginning of year 279,541,602 183,787,172 ========================================================================================== End of year (including undistributed net investment income of $6,836,461 and $2,223,232, respectively) $435,859,110 $279,541,602 __________________________________________________________________________________________ ========================================================================================== </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-5 AIM International Core Equity Fund NOTES TO FINANCIAL STATEMENTS October 31, 2006 NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM International Core Equity Fund (the "Fund") is a series portfolio of AIM International Mutual Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The Fund currently consists of 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. The Fund's investment objective is to provide total return. 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 or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are recorded at amortized cost which approximates value. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures. 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 unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. 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. Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the realized and unrealized net gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund's net asset value and, accordingly, they reduce the Fund's total returns. These transaction costs are not considered operating expenses and are not reflected in net F-6 AIM International Core Equity Fund investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the advisor. 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. COUNTRY DETERMINATION -- For the purposes of making investment selection decisions and presentation in the Schedule of Investments, AIM may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer's securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America unless otherwise noted. D. 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 treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. E. 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 to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. F. 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 and other shareholder recordkeeping 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. G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to taxation. Actual results could differ from those estimates. H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) 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. K. 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. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The Fund could be exposed to risk, which may be in excess of the amount reflected in the Statement of Assets and Liabilities, if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F-7 AIM International Core Equity Fund NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust 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 based on the annual rate of the Fund's average daily net assets as follows: <Table> <Caption> AVERAGE NET ASSETS RATE - -------------------------------------------------------------------- First $500 million 0.75% - -------------------------------------------------------------------- Next $500 million 0.65% - -------------------------------------------------------------------- Next $1 billion 0.55% - -------------------------------------------------------------------- Next $2 billion 0.45% - -------------------------------------------------------------------- Next $2 billion 0.40% - -------------------------------------------------------------------- Next $2 billion 0.375% - -------------------------------------------------------------------- Over $8 billion 0.35% ___________________________________________________________________ ==================================================================== </Table> Under the terms of a master sub-advisory agreement between AIM and INVESCO Global Asset Management (N.A.), Inc. ("IGAM"), AIM pays IGAM 40% of the amount of AIM's compensation on the sub-advised assets. 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 on investments by the Fund in such affiliated money market funds (excluding investments made in affiliated money market funds with cash collateral from securities loaned by the fund). Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors. For the year ended October 31, 2006, AIM waived advisory fees of $2,860. At the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended October 31, 2006, AMVESCAP reimbursed expenses of the Fund in the amount of $2,097. 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. Pursuant to such agreement, for the year ended October 31, 2006, AIM was paid $132,407. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency and shareholder services to the Fund and reimburse AIS for certain expenses incurred by AIS in the course of providing such services. AIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by AIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended October 31, 2006, the Fund paid AIS $722,363 for Class A, Class B, Class C, Class R and Investor Class shares and $4,329 for Institutional Class shares. The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Investor Class and Institutional 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 Investor Class shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% 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 Investor Class shares. Of the Rule 12b-1 payments, up to 0.25% of the average daily net assets of the Class A, Class B, Class C, Class R or Investor Class shares may be paid to furnish continuing personal shareholder services to 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. National Association of Securities Dealers ("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, 2006, the Class A, Class B, Class C, Class R and Investor Class shares paid $257,181, $305,704, $418,528, $15,911 and $112,810, 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 the year ended October 31, 2006, ADI advised the Fund that it retained $32,725 in front-end sales commissions from the sale of Class A shares and $60, $15,044, $2,016 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed on redemptions by shareholders. Certain officers and trustees of the Trust are officers and directors of AIM, AIS, IGAM and/or ADI. F-8 AIM International Core Equity Fund NOTE 3--INVESTMENTS IN AFFILIATES The Fund is permitted, pursuant to procedures approved by the Board of Trustees, to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the year ended October 31, 2006. INVESTMENTS OF DAILY AVAILABLE CASH BALANCES: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio- Institutional Class $ -- $ 24,345,766 $ (14,539,991) $ -- $ 9,805,775 $114,854 $ -- - ---------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio- Institutional Class 10,682,350 91,733,267 (92,609,841) -- 9,805,776 494,915 -- ================================================================================================================================== Subtotal $10,682,350 $116,079,033 $(107,149,832) $ -- $19,611,551 $609,769 $ -- ================================================================================================================================== </Table> INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME* GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio- Institutional Class $17,969,344 $296,468,425 $(272,093,310) $ -- $42,344,459 $254,140 $ -- ================================================================================================================================== Total Investments in Affiliates $28,651,694 $412,547,458 $(379,243,142) $ -- $61,956,010 $863,909 $ -- __________________________________________________________________________________________________________________________________ ================================================================================================================================== </Table> * Net of compensation to counterparties. NOTE 4--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions, (ii) custodian credits which result from periodic overnight cash balances at the custodian and (iii) a one time custodian fee credit to be used to offset future custodian fees. For the year ended October 31, 2006, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $31,646. NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee and Officer of the Fund who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended October 31, 2006, the Fund paid legal fees of $4,721 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 6--BORROWINGS Pursuant to an exemptive order from the Securities and Exchange Commission, 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. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. 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. The Fund is a participant in an uncommitted unsecured revolving 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 F-9 AIM International Core Equity Fund parties to the credit facility 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 year ended October 31, 2006, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility. Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and AIM, not to exceed the contractually agreed upon rate. NOTE 7--PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities having a market value up to 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 received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. At October 31, 2006, securities with an aggregate value of $40,738,594 were on loan to brokers. The loans were secured by cash collateral of $42,344,459 received by the Fund and subsequently invested in an affiliated money market fund. For the year ended October 31, 2006, the Fund received dividends on cash collateral investments of $254,140 for securities lending transactions, which are net of compensation to counterparties. NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND COMPONENTS OF NET ASSETS DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the years ended October 31, 2006 and 2005 was as follows: <Table> <Caption> 2006 2005 - --------------------------------------------------------------------------------------- Distributions paid from: Ordinary income $ 2,273,053 $1,099,445 - --------------------------------------------------------------------------------------- Long-term capital gain 9,326,249 -- ======================================================================================= Total distributions $11,599,302 $1,099,445 _______________________________________________________________________________________ ======================================================================================= </Table> TAX COMPONENTS OF NET ASSETS: As of October 31, 2006, the components of net assets on a tax basis were as follows: <Table> <Caption> 2006 - ---------------------------------------------------------------------------- Undistributed ordinary income $ 6,889,415 - ---------------------------------------------------------------------------- Undistributed long-term gain 12,947,660 - ---------------------------------------------------------------------------- Unrealized appreciation -- investments 102,939,436 - ---------------------------------------------------------------------------- Temporary book/tax differences (52,954) - ---------------------------------------------------------------------------- Shares of beneficial interest 313,135,553 ============================================================================ Total net assets $435,859,110 ____________________________________________________________________________ ============================================================================ </Table> The difference between book-basis and tax-basis unrealized appreciation (depreciation) 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 (depreciation) difference is attributable primarily to losses on wash sales. The tax-basis unrealized appreciation (depreciation) on investments amount includes appreciation (depreciation) on foreign currencies of $(22,178). 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 trustee deferral of compensation and retirement plan expenses. The Fund utilized $1,952,495 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund does not have a capital loss carryforward as of October 31, 2006. F-10 AIM International Core Equity Fund NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2006 was $152,147,824 and $73,775,713, respectively. <Table> <Caption> UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS - ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $106,591,128 - ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (3,629,514) ============================================================================== Net unrealized appreciation of investment securities $102,961,614 ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $380,399,657. </Table> NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions and excise taxes, on October 31, 2006, undistributed net investment income was decreased by $51,908, undistributed net realized gain was increased by $55,245 and shares of beneficial interest decreased by $3,337. This reclassification had no effect on the net assets of the Fund. F-11 AIM International Core Equity Fund NOTE 11--SHARE INFORMATION The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Investor Class and Institutional Class. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Class B shares and Class C shares are sold with CDSC. Class R shares, Investor Class shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. <Table> <Caption> CHANGES IN SHARES OUTSTANDING - ---------------------------------------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------------------- 2006(A) 2005 -------------------------- -------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------------------------- Sold: Class A 2,476,080 $ 32,810,606 3,683,711 $ 42,067,093 - ---------------------------------------------------------------------------------------------------------------------- Class B 530,328 6,955,718 852,397 9,660,234 - ---------------------------------------------------------------------------------------------------------------------- Class C 515,105 6,479,610 557,708 6,173,726 - ---------------------------------------------------------------------------------------------------------------------- Class R 89,852 1,172,231 106,097 1,214,679 - ---------------------------------------------------------------------------------------------------------------------- Investor Class 909,006 12,172,868 1,014,202 11,703,395 - ---------------------------------------------------------------------------------------------------------------------- Institutional Class 8,082,609 107,556,717 4,608,700 52,821,822 ====================================================================================================================== Issued as reinvestment of dividends: Class A 288,276 3,493,900 36,718 407,568 - ---------------------------------------------------------------------------------------------------------------------- Class B 75,293 909,546 1,231 13,623 - ---------------------------------------------------------------------------------------------------------------------- Class C 103,472 1,223,041 2,955 32,029 - ---------------------------------------------------------------------------------------------------------------------- Class R 8,484 102,828 1,222 13,563 - ---------------------------------------------------------------------------------------------------------------------- Investor Class 142,263 1,745,569 25,955 291,470 - ---------------------------------------------------------------------------------------------------------------------- Institutional Class 301,885 3,667,899 21,991 244,538 ====================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 210,167 2,787,360 175,673 2,004,370 - ---------------------------------------------------------------------------------------------------------------------- Class B (211,697) (2,787,360) (176,720) (2,004,370) ====================================================================================================================== Reacquired:(b) Class A (2,305,587) (30,063,912) (2,090,118) (24,090,743) - ---------------------------------------------------------------------------------------------------------------------- Class B (609,499) (7,915,989) (517,865) (5,889,753) - ---------------------------------------------------------------------------------------------------------------------- Class C (851,815) (10,902,964) (828,056) (9,188,752) - ---------------------------------------------------------------------------------------------------------------------- Class R (71,945) (947,662) (88,020) (1,020,676) - ---------------------------------------------------------------------------------------------------------------------- Investor Class (1,897,509) (25,224,671) (1,305,798) (15,111,872) - ---------------------------------------------------------------------------------------------------------------------- Institutional Class (1,147,534) (15,159,488) (86,215) (988,855) ====================================================================================================================== 6,637,234 $ 88,075,847 5,995,768 $ 68,353,089 ______________________________________________________________________________________________________________________ ====================================================================================================================== </Table> (a) There is one entity that is a record owner of more than 5% of the outstanding shares of the Fund and it owns 8% of the outstanding shares of the Fund. ADI has an agreement with this entity to sell Fund shares. The Fund, AIM and/or AIM affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially. In addition, 41% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by AIM. (b) Amount is net of redemption fees of $3,904, $1,190, $1,631, $118, $1,829 and $4,303 for Class A, Class B, Class C, Class R, Investor Class and Institutional Class shares, respectively, the year ended October 31, 2006 and $3,047, $1,166, $1,676, $106, $2,104 and $1,366 for Class A, Class B, Class C, Class R, Investor Class and Institutional Class shares, respectively, the year ended October 31, 2005. NOTE 12--NEW ACCOUNTING STANDARD In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions for FIN 48 are effective for fiscal years beginning after December 15, 2006. Management is currently assessing the impact of FIN 48, if any, on the Fund's financial statements and intends for the Fund to adopt the FIN 48 provisions during 2007. F-12 AIM International Core Equity Fund 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 ------------------------------------------------------------ MARCH 28, 2002 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ------------------------------------------- OCTOBER 31, 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.90 $ 10.52 $ 8.74 $ 7.31 $ 8.96 - -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.25(a) 0.14(a) 0.09(a) 0.07(a) 0.01(b) - -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 2.77 1.32 1.72 1.39 (1.66) ========================================================================================================================== Total from investment operations 3.02 1.46 1.81 1.46 (1.65) ========================================================================================================================== Less distributions: Dividends from net investment income (0.10) (0.08) (0.03) (0.03) -- - -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.38) -- -- -- -- ========================================================================================================================== Total distributions (0.48) (0.08) (0.03) (0.03) -- ========================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 ========================================================================================================================== Net asset value, end of period $ 14.44 $ 11.90 $ 10.52 $ 8.74 $ 7.31 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(c) 26.12% 13.89% 20.78% 19.96% (18.42)% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $118,943 $90,022 $60,603 $2,033 $ 2,944 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets 1.52%(d) 1.56% 1.84%(e) 1.87% 1.48%(f) ========================================================================================================================== Ratio of net investment income to average net assets 1.88%(d) 1.20% 0.94% 0.91% 0.47%(f) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(g) 21% 21% 69% 51% 44% __________________________________________________________________________________________________________________________ ========================================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) The net investment income per share was calculated after permanent book tax differences, such as net operating losses, which were reclassified from accumulated net investment income to paid in capital. Had net investment income per share been calculated using the current method, which is before reclassification of net operating losses, net investment income per share would have been $0.00 for the period ended October 31, 2002. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (d) Ratios are based on average daily net assets of $102,872,310. (e) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 1.86% for the year ended October 31, 2004. (f) Annualized. (g) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. F-13 AIM International Core Equity Fund NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS B ----------------------------------------------------------- MARCH 28, 2002 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ------------------------------------------ OCTOBER 31, 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.79 $ 10.43 $ 8.72 $ 7.31 $ 8.96 - ------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) 0.14 0.06 0.02 0.00 (0.01)(b) - ------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 2.76 1.31 1.71 1.43 (1.64) ========================================================================================================================= Total from investment operations 2.90 1.37 1.73 1.43 (1.65) ========================================================================================================================= Less distributions: Dividends from net investment income (0.01) (0.01) (0.02) (0.02) -- - ------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.38) -- -- -- -- ========================================================================================================================= Total distributions (0.39) (0.01) (0.02) (0.02) -- ========================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 ========================================================================================================================= Net asset value, end of period $ 14.30 $ 11.79 $ 10.43 $ 8.72 $ 7.31 _________________________________________________________________________________________________________________________ ========================================================================================================================= Total return(c) 25.28% 13.11% 19.92% 19.50% (18.42)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $31,818 $28,785 $23,812 $ 573 $ 84 _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratio of expenses to average net assets 2.27%(d) 2.25% 2.53%(e) 2.75%(e) 2.60%(f) ========================================================================================================================= Ratio of net investment income (loss) to average net assets 1.13%(d) 0.51% 0.25% 0.03% (0.14)%(f) _________________________________________________________________________________________________________________________ ========================================================================================================================= Portfolio turnover rate(g) 21% 21% 69% 51% 44% _________________________________________________________________________________________________________________________ ========================================================================================================================= </Table> (a) Calculated using average shares outstanding. (b) The net investment income (loss) per share was calculated after permanent book tax differences, such as net operating losses, which were reclassified from accumulated net investment income (loss) to paid in capital. Had net investment income (loss) per share been calculated using the current method, which is before reclassification of net operating losses, net investment income (loss) per share would have remained the same for the period ended October 31, 2002. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (d) Ratios are based on average daily net assets of $30,570,453. (e) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 2.57% and 4.13% for the years ended October 31, 2004 and October 31, 2003, respectively. (f) Annualized. (g) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. F-14 AIM International Core Equity Fund NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS C ----------------------------------------------------- YEAR ENDED OCTOBER 31, ----------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.54 $ 10.22 $ 8.53 $ 7.16 $ 8.06 - ------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.14(a) 0.06(a) 0.04(a) 0.00(a) (0.02)(b) - ------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 2.69 1.28 1.67 1.37 (0.88) =================================================================================================================== Total from investment operations 2.83 1.34 1.71 1.37 (0.90) =================================================================================================================== Less distributions: Dividends from net investment income (0.01) (0.02) (0.02) -- -- - ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.38) -- -- -- -- =================================================================================================================== Total distributions (0.39) (0.02) (0.02) -- -- =================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 =================================================================================================================== Net asset value, end of period $ 13.98 $ 11.54 $ 10.22 $ 8.53 $ 7.16 ___________________________________________________________________________________________________________________ =================================================================================================================== Total return(c) 25.22% 13.11% 20.13% 19.13% (11.17)% ___________________________________________________________________________________________________________________ =================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $42,906 $38,108 $36,490 $2,608 $ 1,115 ___________________________________________________________________________________________________________________ =================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.27%(d) 2.25% 2.41% 2.75% 2.75% - ------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.27%(d) 2.25% 2.46% 4.14% 3.52% =================================================================================================================== Ratio of net investment income (loss) to average net assets 1.13%(d) 0.51% 0.37% 0.03% (0.43)% ___________________________________________________________________________________________________________________ =================================================================================================================== Portfolio turnover rate 21% 21% 69% 51% 44% ___________________________________________________________________________________________________________________ =================================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) The net investment income (loss) per share was calculated after permanent book tax differences, such as net operating losses, which were reclassified from accumulated net investment income (loss) to paid in capital. Had net investment income (loss) per share been calculated using the current method, which is before reclassification of net operating losses, net investment income (loss) per share would have been $(0.03) for the year ended October 31, 2002. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (d) Ratios are based on average daily net assets of $41,852,808. F-15 AIM International Core Equity Fund NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS R ------------------------------------ NOVEMBER 24, 2003 YEAR ENDED (DATE SALES OCTOBER 31, COMMENCED) TO ------------------- OCTOBER 31, 2006 2005 2004 - -------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.87 $10.51 $ 8.90 - -------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.21 0.12 0.08 - -------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 2.77 1.31 1.56 ================================================================================================== Total from investment operations 2.98 1.43 1.64 ================================================================================================== Less distributions: Dividends from net investment income (0.07) (0.07) (0.03) - -------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.38) -- -- ================================================================================================== Total distributions (0.45) (0.07) (0.03) ================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 ================================================================================================== Net asset value, end of period $14.40 $11.87 $10.51 __________________________________________________________________________________________________ ================================================================================================== Total return(b) 25.86% 13.64% 18.49% __________________________________________________________________________________________________ ================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $3,560 $2,622 $2,118 __________________________________________________________________________________________________ ================================================================================================== Ratio of expenses to average net assets 1.77%(c) 1.75% 1.91%(d)(e) ================================================================================================== Ratio of net investment income to average net assets 1.63%(c) 1.01% 0.87%(d) __________________________________________________________________________________________________ ================================================================================================== Portfolio turnover rate(f) 21% 21% 69% __________________________________________________________________________________________________ ================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $3,182,195. (d) Annualized. (e) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 1.93% (annualized) for the period ended October 31, 2004. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. F-16 AIM International Core Equity Fund NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> INVESTOR CLASS ------------------------------------------------------ YEAR ENDED OCTOBER 31, ------------------------------------------------------ 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.04 $ 10.64 $ 8.83 $ 7.35 $ 8.17 - -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.25(a) 0.15(a) 0.09(a) 0.06(a) 0.05(b) - -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 2.80 1.33 1.75 1.44 (0.87) ==================================================================================================================== Total from investment operations 3.05 1.48 1.84 1.50 (0.82) ==================================================================================================================== Less distributions: Dividends from net investment income (0.10) (0.08) (0.03) (0.02) -- - -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.38) -- -- -- -- ==================================================================================================================== Total distributions (0.48) (0.08) (0.03) (0.02) -- ==================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 ==================================================================================================================== Net asset value, end of period $ 14.61 $ 12.04 $ 10.64 $ 8.83 $ 7.35 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(c) 26.11% 13.92% 20.84% 20.42% (10.04)% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $44,674 $46,988 $44,345 $46,920 $40,620 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets 1.52%(d) 1.50% 1.84%(e) 2.00%(e) 1.99% ==================================================================================================================== Ratio of net investment income to average net assets 1.88%(d) 1.26% 0.94% 0.78% 0.42% ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate 21% 21% 69% 51% 44% ____________________________________________________________________________________________________________________ ==================================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) The net investment income per share was calculated after permanent book tax differences, such as net operating losses, which were reclassified from accumulated net investment income to paid in capital. Had net investment income per share been calculated using the current method, which is before reclassification of net operating losses, net investment income per share would have been $0.04 for the year ended October 31, 2002. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. (d) Ratios are based on average daily net assets of $45,124,156. (e) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 1.89% and 2.26% for the years ended October 31, 2004 and October 31, 2003, respectively. F-17 AIM International Core Equity Fund NOTE 13--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> INSTITUTIONAL CLASS ---------------------------------------- APRIL 30, 2004 YEAR ENDED (DATE SALES OCTOBER 31, COMMENCED) TO ---------------------- OCTOBER 31, 2006 2005 2004 - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 11.97 $ 10.56 $ 9.78 - ------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income(a) 0.33 0.21 0.09 - ------------------------------------------------------------------------------------------------------ Net gains on securities (both realized and unrealized) 2.78 1.32 0.69 ====================================================================================================== Total from investment operations 3.11 1.53 0.78 ====================================================================================================== Less distributions: Dividends from net investment income (0.16) (0.12) -- - ------------------------------------------------------------------------------------------------------ Distributions from net realized gains (0.38) -- -- ====================================================================================================== Total distributions (0.54) (0.12) -- ====================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 ====================================================================================================== Net asset value, end of period $ 14.54 $ 11.97 $ 10.56 ______________________________________________________________________________________________________ ====================================================================================================== Total return(b) 26.86% 14.53% 7.97% ______________________________________________________________________________________________________ ====================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $193,959 $73,018 $16,421 ______________________________________________________________________________________________________ ====================================================================================================== Ratio of expenses to average net assets 0.95%(c) 0.98% 1.07%(d) ====================================================================================================== Ratio of net investment income to average net assets 2.45%(c) 1.78% 1.71%(d) ______________________________________________________________________________________________________ ====================================================================================================== Portfolio turnover rate(e) 21% 21% 69% ______________________________________________________________________________________________________ ====================================================================================================== </Table> (a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $134,688,062. (d) Annualized. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. NOTE 14--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including the Securities and Exchange Commission ("SEC"), the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, AIM and ADI created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by AIM, which was done pursuant to the terms of the settlement. These two fair funds may increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading that also may have harmed applicable AIM Funds. These two fair funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. Management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these two fair funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future. At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. PENDING LITIGATION AND REGULATORY INQUIRIES On August 30, 2005, the West Virginia Office of the State Auditor -Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes findings of fact that AIM and ADI entered into certain arrangements permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that AIM and ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or capped by statute. F-18 AIM International Core Equity Fund NOTE 14--LEGAL PROCEEDINGS--(CONTINUED) Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging: - that the defendants permitted improper market timing and related activity in the AIM Funds; - that certain AIM Funds inadequately employed fair value pricing; - that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans; and - that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions (all the claims in this category of lawsuits were dismissed with prejudice by the court on September 29, 2006, except for the Section 36(b) claim which was dismissed with leave to amend to plead it properly as a derivative claim). These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees. All lawsuits based on allegations of market timing, late trading and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court, all claims asserted against the AIM Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class Action Complaint for Violations of ERISA and dismissed such Complaint. The plaintiff has commenced an appeal from that decision. IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, among others, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost security holders. IFG, AIM and ADI have advised the Fund that they are providing full cooperation with respect to these inquiries. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Pending Litigation and Regulatory Inquiries described above may have on AIM, ADI or the Fund. F-19 AIM International Core Equity Fund REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM International Mutual Funds and Shareholders of AIM International Core Equity 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 AIM International Core Equity Fund (one of the funds constituting AIM International Mutual Funds, hereafter referred to as the "Fund") at October 31, 2006, 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 periods indicated, 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP December 20, 2006 Houston, Texas F-20 AIM International Core Equity Fund TAX DISCLOSURES REQUIRED FEDERAL INCOME TAX INFORMATION Of ordinary dividends paid to shareholders during the Fund's tax year ended October 31, 2006, 0% is eligible for the dividends received deduction for corporations. The Fund distributed long-term capital gains of $9,326,249 for the Fund's tax year ended October 31, 2006. For its tax year ended October 31, 2006, the Fund designates 100%, or the maximum amount allowable, of its dividend distributions as qualified dividend income. Your actual amount of qualified dividend income for the calendar year will be reported in your Form 1099-DIV. You should consult your tax advisor regarding treatment of the amounts. TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS The percentage of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended January 31, 2006, April 30, 2006, July 31, 2006 and October 31, 2006 are 99.82%, 99.85%, 99.89% and 99.84%, respectively. F-21 AIM International Core Equity Fund TRUSTEES AND OFFICERS The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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> TRUSTEE AND/ NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) POSITION(S) HELD WITH THE 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 Trustee and Vice Chair Group Inc. (financial services holding company); Director and Vice Chairman, AMVESCAP PLC; Chairman, AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) and Trustee and Vice Chair of The AIM Family of Funds--Registered Trademark-- Formerly: President and Chief Executive Officer, A I M Management Group Inc.; Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); 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); Chief Executive Officer, AMVESCAP PLC -- Managed Products; and President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- - ------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None Trustee, President and President, A I M Management Group Inc., Principal AIM Mutual Fund Dealer Inc. (registered Executive Officer broker dealer), AIM Funds Management Inc. (registered investment advisor) and 1371 Preferred Inc. (holding company); Director and President, A I M Advisors, Inc., INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, A I M Capital Management, Inc. and A I M Distributors, Inc.; Director and Chairman, AIM Investment Services, Inc., Fund Management Company and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, AVZ Callco Inc. (holding company); AMVESCAP Inc. (holding company) and AIM Canada Holdings Inc. (holding company); Director and Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); and Manager, Powershares Capital Management LLC Formerly: President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); Chairman, AIM Canada Holdings, Inc.; Executive Vice President and Chief Operations Officer, AIM Funds Management Inc.; President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - ------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates ACE Limited (insurance company); Trustee and Chair (technology consulting company) and Captaris, Inc. (unified messaging provider) - ------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 2001 Retired Badgley Funds, Inc. (registered Trustee investment company (2 portfolios)) Formerly: Partner, law firm of Baker & McKenzie - ------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None Trustee (investment banking firm); and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation - ------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2000 Director of a number of public and None Trustee private business corporations, including the Boss Group Ltd. (private investment and management); Cortland Trust, Inc. (Chairman) (registered investment company (3 portfolios)); Annuity and Life Re (Holdings), Ltd. (insurance company); CompuDyne Corporation (provider of products and services to the public security market); and Homeowners of America Holding Corporation (property casualty company) Formerly: Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; and Director of various affiliated Volvo companies; and Director, Magellan Insurance Company - ------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff, and Discovery Global Trustee Century Group, Inc. (government affairs Education Fund (non-profit) company); and Owner, Dos Angelos Ranch, L.P. Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) - ------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered Trustee Naftalis and Frankel LLP investment company (3 portfolios)) - ------------------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series Trustee Formerly: Partner, Deloitte & Touche Funds, Inc. (21 portfolios) - ------------------------------------------------------------------------------------------------------------------------------- </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. Taylor 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. F-22 TRUSTEES AND OFFICERS--(CONTINUED) AIM International Core Equity Fund The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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 - ------------------------------------------------------------------------------------------------------------------------------ OTHER OFFICERS - ------------------------------------------------------------------------------------------------------------------------------ Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A Senior Vice President and of The AIM Family of Funds--Registered Senior Officer Trademark-- Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A Senior Vice President, Chief Secretary and General Counsel, A I M Legal Officer and Secretary Management Group Inc. and A I M Advisors, Inc.; Director, Vice President and Secretary, INVESCO Distributors, Inc.; Vice President and Secretary, A I M Capital Management, Inc., AIM Investment Services, Inc., and Fund Management Company; Senior Vice President and Secretary, A I M Distributors, Inc.; Director, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; and Manager, Powershares Capital Management LLC Formerly: Chief Operating Officer, Senior Vice President, General Counsel, and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); General Counsel and Secretary, Pilgrim Baxter Value Investors (an investment adviser); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - ------------------------------------------------------------------------------------------------------------------------------ Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A Vice President PLC; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, A I M Management Group Inc. (financial services holding company); Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc. and A I M Distributors, Inc.; Vice President, AIM Investment Services, Inc. and Fund Management Company; Senior Vice President and Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - ------------------------------------------------------------------------------------------------------------------------------ Kevin M. Carome -- 1956 2003 Senior Vice President and General Vice President Counsel, AMVESCAP PLC; Director, INVESCO Funds Group, Inc.; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Director, Vice President and N/A General Counsel, Fund Management Company; Director, Senior Vice President, Secretary and General Counsel, A I M Management Group Inc. and A I M Advisors, Inc.; Director and Vice President, INVESCO Distributors, Inc.; Senior Vice President, A I M Distributors, Inc.; Vice President, A I M Capital Management, Inc. and AIM Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; Chief Executive Officer and President, INVESCO Funds Group, Inc.; and Senior Vice President, and General Counsel, Liberty Financial Companies, Inc. and Senior Vice President and General Counsel Liberty Funds Group, LLC - ------------------------------------------------------------------------------------------------------------------------------ Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A Vice President, Principal Advisors, Inc.; and Vice President, Financial Officer and Treasurer and Principal Officer of The Treasurer AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Investment Services, Inc.; and Vice President, A I M Distributors, Inc. - ------------------------------------------------------------------------------------------------------------------------------ J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A Vice President Investment Officer, A I M Advisors Inc.; Director, Chairman, Chief Executive Officer, President and Chief Investment Officer, A I M Capital Management, Inc.; Executive Vice President, A I M Management Group Inc. and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Private Asset Management, Inc.; and Chief Equity Officer, Senior Vice President and Senior Investment Officer, A I M Capital Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Karen Dunn Kelley -- 1960 2004 Director of Cash Management, Managing N/A Vice President Director and Chief Cash Management Officer, A I M Capital Management, Inc; Director and President, Fund Management Company; and Vice President, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust Only) Formerly: Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - ------------------------------------------------------------------------------------------------------------------------------ Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A Anti-Money Laundering Officer, A I M Advisors, Inc., A I M Compliance Officer Capital Management, Inc., A I M Distributors, Inc., AIM Investment Services, Inc., AIM Private Asset Management, Inc., Fund Management Company and The AIM Family of Funds--Registered Trademark-- Formerly: Manager of the Fraud Prevention Department, AIM Investment Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A Chief Compliance Officer Group Inc.; Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc.; Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc.; and Vice President, A I M Distributors, Inc., AIM Investment Services, Inc. and Fund Management Company Formerly: Global Head of Product Development, AIG-Global Investment Group, Inc.; Chief Compliance Officer and Deputy General Counsel, AIG-SunAmerica Asset Management; and Chief Compliance Officer, Chief Operating Officer and Deputy General Counsel, American General Investment Management - ------------------------------------------------------------------------------------------------------------------------------ </Table> 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 1.800.959.4246. <Table> OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR 11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers INVESCO Global Asset Suite 100 11 Greenway Plaza Inc. LLP Management (N.A.), Inc. Houston, TX Suite 100 11 Greenway Plaza 1201 Louisiana Street One Midtown Plaza 77046-1173 Houston, TX 77046-1173 Suite 100 Suite 2900 1360 Peachtree Street, Houston, TX 77046-1173 Houston, TX 77002-5678 N.E. Suite 100 Atlanta, GA 30309-3262 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and Andrews & Ingersoll, Kramer, Levin, Naftalis Services, Inc. Trust Company LLP & Frankel LLP P.O. Box 4739 225 Franklin Street 1735 Market Street, 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 51st Floor Americas Philadelphia, PA New York, NY 10036-2714 19103-7599 </Table> F-23 [eDelivery GO PAPERLESS AIMinvestments.com/edelivery Graphic] REGISTER FOR eDELIVERY eDelivery is the process of receiving your fund and account If used after January 20, 2007, this report must be information via e-mail. Once your quarterly statements, tax accompanied by a Fund Performance & Commentary or by an AIM forms, fund reports, and prospectuses are available, we will Quarterly Performance Review for the most recent quarter-end. send you an e-mail notification containing links to these Mutual funds distributed by A I M Distributors, Inc. documents. For security purposes, you will need to log in to your account to view your statements and tax forms. A I M Management Group Inc. has provided leadership in the investment management industry since 1976. AIM Investment WHY SIGN UP? Services, Inc. is the transfer agent for the products and services represented by AIM Investments. AIM is a subsidiary Register for eDelivery to: of AMVESCAP PLC, one of the world's largest independent financial services companies with $450 billion in assets o reduce the amount of paper you receive. under management as of October 31, 2006. o gain access to your documents faster by not waiting for the mail. CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY. FOR THIS AND OTHER INFORMATION ABOUT AIM o view your documents online anytime at your convenience. FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISOR AND READ IT CAREFULLY BEFORE INVESTING. o save the documents to your personal computer or print them out for your records. HOW DO I SIGN UP? It's easy. Just follow these simple steps: 1. Log in to your account. 2. Click on the "Service Center" tab. 3. Select "Register for eDelivery" and complete the consent process. This AIM service is provided by AIM Investment Services, Inc. AIMinvestments.com I-ICE-AR-1 A I M Distributors, Inc. [YOUR GOALS. OUR SOLUTIONS.]--Registered Trademark-- - ------------------------------------------------------------------------------ Mutual Retirement Annuities College Separately Offshore Cash Funds Products Savings Managed Products Management [AIM INVESTMENTS LOGO APPEARS HERE HERE] Plans Accounts --Registered Trademark-- - ------------------------------------------------------------------------------ INTERNATIONAL/ AIM International GLOBAL EQUITY Growth Fund International/Global Equity Annual Report to Shareholders o October 31, 2006 Table of Contents Supplemental Information ......... 2 Letters to Shareholders .......... 3 Performance Summary .............. 5 Management Discussion ............ 5 Fund Expenses .................... 7 Long-term Fund Performance ....... 8 Approval of Advisory Agreement ... 10 Schedule of Investments .......... F-1 Financial Statements ............. F-4 Notes to Financial Statements .... F-6 Financial Highlights ............. F-13 Auditor's Report ................. F-17 Tax Disclosures .................. F-18 [COVER GLOBE IMAGE] Trustees and Officers ............ F-19 [AIM INVESTMENT SOLUTIONS] [GRAPHIC] [GRAPHIC] [GRAPHIC] [DOMESTIC [INTERNATIONAL/ [SECTOR EQUITY] GLOBAL EQUITY] EQUITY] [GRAPHIC] [GRAPHIC] [GRAPHIC] [FIXED [ALLOCATION [DIVERSIFIED INCOME] SOLUTIONS] PORTFOLIOS] [AIM INVESTMENTS LOGO APPEARS HERE] --Registered Trademark-- AIM International Growth Fund AIM INTERNATIONAL GROWTH FUND SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of October 31, 2006, and is based on total net assets. ABOUT SHARE CLASSES o The unmanaged MSCI Europe, Australasia o Industry classifications used in this and the Far East (the MSCI EAFE--Registered report are generally according to the o Class B shares are not available as an Trademark--) Growth Index is a subset of Global Industry Classification Standard, investment for retirement plans the unmanaged MSCI EAFE--Registered which was developed by and is the maintained pursuant to Section 401 of the Trademark--), which represents the exclusive property and a service mark of Internal Revenue Code, including 401(k) performance of foreign stocks tracked by Morgan Stanley Capital International Inc. plans, money purchase pension plans and Morgan Stanley Capital International. The profit sharing plans. Plans that had Growth portion measures performance of The Fund provides a complete list of its existing accounts invested in Class B companies with higher price/earnings ratios holdings four times in each fiscal year, shares prior to September 30, 2003, will and higher forecasted growth values. at the quarter-ends. For the second and continue to be allowed to make additional fourth quarters, the lists appear in the purchases. o The unmanaged LIPPER INTERNATIONAL Fund's semiannual and annual reports to MULTI-CAP GROWTH FUNDS INDEX represents shareholders. For the first and third o Class R shares are available only to an average of the performance of the 10 quarters, the Fund files the lists with certain retirement plans. Please see the largest international the Securities and Exchange Commission prospectus for more information. multi-capitalization growth funds tracked (SEC) on Form N-Q. The most recent list by Lipper Inc., an independent mutual of portfolio holdings is available at PRINCIPAL RISKS OF INVESTING IN THE FUND fund performance monitor. AIMinvestments.com. From our home page, click on Products & Performance, then o Foreign securities have additional o The Fund is not managed to track the Mutual Funds, then Fund Overview. Select risks, including exchange rate changes, performance of any particular index, your Fund from the drop-down menu and political and economic upheaval, the including the indexes defined here, and click on Complete Quarterly Holdings. relative lack of information about these consequently, the performance of the Fund Shareholders can also look up the Fund's companies, relatively low market may deviate significantly from the Forms N-Q on the SEC Web site at sec.gov. liquidity and the potential lack of performance of the index. Copies of the Fund's Forms N-Q may be strict financial and accounting controls reviewed and copied at the SEC Public and standards. o A direct investment cannot be made in Reference Room in Washington, D.C. You an index. Unless otherwise indicated, can obtain information on the operation o Investing in emerging markets involves index results include reinvested of the Public Reference Room, including greater risks than investing in more dividends, and they do not reflect sales information about duplicating fee established markets. Risks for emerging charges. Performance of an index of funds charges, by calling 202-942-8090 or markets include risks relating to the reflects fund expenses; performance of a 800-732-0330, or by electronic request at relatively smaller size and lesser market index does not. the following e-mail address: liquidity of these markets, high publicinfo@sec.gov. The SEC file numbers inflation rates, adverse political OTHER INFORMATION for the Fund are 811-06463 and 033-44611. developments and lack of timely information. o The returns shown in the management's A description of the policies and discussion of Fund performance are based procedures that the Fund uses to o Prices of equity securities change in on net asset values calculated for determine how to vote proxies relating to response to many factors including the shareholder transactions. Generally portfolio securities is available without historical and prospective earnings of accepted accounting principles require charge, upon request, from our Client the issuer, the value of its assets, adjustments to be made to the net assets Services department at 800-959-4246 or on general economic conditions, interest of the Fund at period end for financial the AIM Web site, AIMinvestments.com. On rates, investor perceptions and market reporting purposes, and as such, the net the home page, scroll down and click on liquidity. asset values for shareholder transactions AIM Funds Proxy Policy. The information and the returns based on those net asset is also available on the SEC Web site, ABOUT INDEXES USED IN THIS REPORT values may differ from the net asset sec.gov. values and returns reported in the o The unmanaged MSCI EUROPE, AUSTRALASIA Financial Highlights. Information regarding how the Fund voted and the FAR EAST INDEX (the MSCI proxies related to its portfolio EAFE--Registered Trademark--) is a group securities during the 12 months ended of foreign securities tracked by Morgan June 30, 2006, is available at our Web Stanley Capital International. site. Go to AIMinvestments.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC Web site, sec.gov. ========================================= ====================================================================================== FUND NASDAQ SYMBOLS THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES Class A Shares AIIEX AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class B Shares AIEBX Class C Shares AIECX ====================================================================================== Class R Shares AIERX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE ========================================= AIMInvestments.com 2 AIM International Growth Fund Dear Shareholders of The AIM Family of Funds--Registered Trademark--: [TAYLOR We're pleased to provide you with this report, which includes PHOTO] a discussion of how your Fund was managed during the review period ended October 31, 2006, and what factors affected its performance. As we approach the end of 2006, it seems likely that many Philip Taylor investors may see the value of their investments increase this year. Global equity markets, collectively, recorded double-digit gains for the year ended October 31, 2006, as did the U.S. stock market. Also, the investment grade bond market in the United States rose for the same period. While stock and bond markets generally enjoyed positive year-to-date returns, their performance was affected by short-term economic and geopolitical events. For example, the U.S. stock market was weak in the second quarter of 2006 when it appeared that inflation might be rising. Only after the U.S. Federal Reserve Board decided in August that inflation was contained and that short-term interest rates need not be increased--the first time it kept rates unchanged in more than two years--did equities truly surge. Short-term market fluctuations are a fact of life for all investors. At AIM Investments--Registered Trademark--, we believe that investors can do two things to deal with short-term market fluctuations: maintain a long-term investment horizon and maintain a diversified portfolio. AIM Investments can help by offering a broad product line that gives your financial advisor the necessary tools to build a portfolio that's right for you regardless of market conditions. AIM Investments offers a comprehensive range of retail mutual funds, including domestic, global and international equity funds, taxable and tax-exempt fixed-income funds, and a variety of allocation portfolios--with varied risk and return characteristics to match your needs. We maintain this extensive set of product solutions for one reason: We believe in the value of comprehensive, diversified investment portfolios. We've changed the look of our annual reports to reflect that belief. In our marketing and now our shareholder literature, we represent a fully diversified portfolio graphically as an allocation pie chart and assign each asset class a color--green for domestic equity, blue for international, orange for sector and purple for fixed income. A legend in the left column illustrates the methodology. Your report cover now shows your Fund's asset class color, plus the asset class and sub-asset class name are shown in the upper-left corner. The reason for these changes is to help you better understand where your Fund fits into your overall portfolio. AIM has a variety of investment solutions, and knowing which ones are right for your portfolio is complex. That's why we also believe in the value of a trusted financial advisor who will work with you to create an investment plan you can stick with for the long term. Your financial advisor can help allocate your portfolio appropriately and review your investments regularly to help ensure they remain suitable as your financial situation changes. While there are no guarantees with any investment program, a long-term plan that's based on your financial goals, risk tolerance and time horizon is more likely to keep you and your investments on track. OUR COMMITMENT TO YOU In the short term, the one sure thing about markets is their unpredictability. While past performance cannot guarantee comparable future results, we believe that staying invested for the long term with a thoughtful plan offers the best opportunity for weathering that unpredictability. We at AIM Investments remain committed to building enduring solutions to help you achieve your investment goals, and we're pleased you've placed your trust in us. Information about investing, the markets and your Fund is always available on our Web site, AIMinvestments.com. If you have questions about your individual account, we invite you to contact one of our highly trained client services representatives at 800-959-4246. Sincerely, /s/ PHILIP TAYLOR Philip Taylor President -- AIM Funds CEO, AIM Investments December 14, 2006 AIM Investments is a registered service mark of A I M Management Group Inc. A I M Advisors, Inc. and A I M Capital Management, Inc. are the investment advisors. A I M Distributors, Inc. is the distributor for the retail funds represented by AIM Investments. 3 AIM International Growth Fund Dear Fellow AIM Fund Shareholders: At our meeting at the end of June, your Board completed its [CROCKETT comprehensive review* of each fund's advisory agreement with PHOTO] A I M Advisors, Inc. (AIM) to make certain your interests are being served in terms of fees, performance and operations. Looking ahead, your Board finds many reasons to be positive about AIM's management and strategic direction. Most Bruce L. Crockett importantly, AIM's investment management discipline has paid off in terms of improved overall performance. We are also pleased with AIM's efforts to seek more cost-effective ways of delivering superior service. In addition, AIM is realizing the benefits of belonging to a leading independent global investment management organization in its parent company, AMVESCAP PLC, which is dedicated to helping people worldwide build their financial security. AMVESCAP managed approximately $450 billion globally as of October 31, 2006, operating under the AIM, INVESCO, AIM Trimark, INVESCO PERPETUAL and Atlantic Trust brands. These companies are home to an abundance of investment talent that is gradually being integrated and leveraged into centers of excellence, each focusing on a given market segment or asset class. Over the next few years, your Board will be meeting at these various centers of excellence to learn about their progress and how they may serve you through our goal of enhancing performance and reducing costs. The seven new AIM funds--which include Asian funds, structured U.S. equity funds and specialized bond funds--are an early example of the kind of opportunities the AMVESCAP organization can provide AIM clients. More information on these funds can be found on AIM's Web site. Your Board is very pleased with the overall direction and progress of the AIM Funds. We're working closely and effectively with AIM's management to continue this momentum. As always, your Board is eager to hear your views on how we might better serve you. Please send your comments in a letter addressed to me at AIM Investments, AIM Investments Tower, 11 Greenway Plaza, Suite 100, Houston TX 77046. Sincerely, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board December 14, 2006 *To learn more about all the factors we considered before approving each fund's advisory agreement, go to the "Products & Performance" tab at the AIM Web site (AIMinvestments.com) and click on "Investment Advisory Agreement Renewals." The approval of advisory agreement information for your Fund is also included in this annual report on pages 10--11. 4 AIM International Growth Fund Management's discussion stock when: of Fund performance o A company's fundamentals deteriorate, =================================================================================== or it posts disappointing earnings. PERFORMANCE SUMMARY o A stock's price seems overvalued. Global equity markets rallied strongly over the fiscal year ended October 31, o A more attractive opportunity becomes 2006. Within this environment, we are pleased to once again have provided available. shareholders with double-digit Fund performance. As the chart illustrates, your Fund, excluding applicable sales charges, outperformed both its broad market and MARKET CONDITIONS AND YOUR FUND style-specific benchmarks. We attribute our comparative success to strong stock selection in Europe and Asia. Our relatively larger exposure to emerging market Markets continued to rally in Europe, as stocks, which outperformed during the period, provided a competitive advantage positive economic data and strong company as well. earnings, continued to bolster investor confidence. Asian stock markets also Your Fund's long-term performance appears on pages 8 and 9. performed strongly during the period. Inflationary pressures across the region FUND VS. INDEXES showed signs of weakening and a general perception that the United States can Total returns, 10/31/05--10/31/06, excluding applicable sales charges. If sales coordinate a "soft landing" for its charges were included, returns would be lower. economy provided a positive backdrop for Asian equities. Japanese shares, though, Class A Shares 29.73% remained lackluster. Emerging markets Class B Shares 28.80 experienced a volatile 12 month period Class C Shares 28.78 during which stocks hit record highs in Class R Shares 29.37 many countries before correcting sharply MSCI EAFE Index (Broad Market Index) 27.52 lower from early May onward. A MSCI EAFE Growth Index (Style-Specific Index) 24.04 combination of higher global interest Lipper International Multi-Cap Growth Funds Index (Peer Group Index) 28.51 rates and an unwinding of leverage amid rising levels of risk aversion SOURCE: LIPPER INC. accentuated the sell-off in illiquid emerging market securities. However, most =================================================================================== of these markets bounced back from July onward ending the period with strong HOW WE INVEST these attributes. positive overall returns. When selecting stocks for your Fund, we While research responsibilities within Fund performance was broad-based with employ a disciplined investment strategy the portfolio management team are focused all major regions registering double that emphasizes fundamental research, by region and market capitalization, such digit positive returns for the fiscal supported by both quantitative analysis as large- or mid/small-cap, we select year. Our largest regional allocation and portfolio construction techniques. investments for the Fund by using a remains in European stocks. Strong stock Our "EQV" (Earnings, Quality, Valuation) "bottom-up" investment approach. We selection across multiple markets strategy focuses primarily on identifying construct the Fund primarily on a (including France, Germany, Switzerland, quality companies that have experienced, stock-by-stock basis focusing on the and the United Kingdom) helped us or exhibit the potential for, accelerated strengths of individual companies rather outperform our style-specific benchmark or above average earnings growth but than sectors, countries or market-cap in Europe, although we continued to whose prices do not fully reflect trends. underweight our We believe disciplined sell decisions (continued) are key to successful investing. We consider selling a ========================================= ========================================= ========================================= PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS* By sector 1. Japan 14.4% 1. BNP Paribas (France) 2.1% [PIE CHART] 2. United Kingdom 9.9 2. Syngenta A.G. (Switzerland) 1.9 Information Technology 10.0% 3. France 9.6 3. Vinci S.A. (France) 1.9 Energy 7.7% 4. Switzerland 8.7 4. UBS A.G. (Switzerland) 1.9 Health Care 6.2% 5. Germany 8.5 5. Canon Inc. (Japan) 1.7 Materials 5.3% 6. Roche Holding A.G. Telecommunication Services 2.0% Total Net Assets $2.65 billion (Switzerland) 1.7 Utilities 1.0% 7. Infosys Technologies Ltd. Money Market Funds Plus Total Number of Holdings* 101 (India) 1.6 Other Assets Less Liabilities 7.0% 8. Total S.A. (France) 1.6 Financials 21.9% 9. Anglo Irish Bank Corp. PLC Consumer Discretionary 16.7% (Ireland) 1.5 Industrials 11.5% 10. Porsche A.G.-Pfd. (Germany) 1.5 Consumer Staples 10.7% The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. *Excluding money market fund holdings. ========================================= ========================================= ========================================= 5 AIM International Growth Fund exposure to the region. This allocation lending and consumer finance is growing Clas G. Olsson strategy should not be construed as a bias rapidly and generating strong returns. [OLSSON Senior portfolio against European stocks--indeed, we BNP is also expanding abroad both in PHOTO] manager and head of continue to find very compelling emerging markets, the US and recently AIM's International investment opportunities there--but acquired BNL in Italy. The management Investment Management rather an indication of our flexibility in team have a great track-record of Unit, is lead portfolio seeking investment opportunities across efficiently allocating capital and manager of AIM international markets, both developed and delivered strong returns with relatively International Growth Fund with respect to emerging. The Fund's emerging markets low risk. The strong conviction made a the Fund's investments in Europe and exposure is limited to less than 20%. top holding that is trading at an Canada. Mr. Olsson joined AIM in 1994. attractive valuation. Mr. Olsson became a commissioned naval For instance, our holdings in emerging officer at the Royal Swedish Naval markets such as India, Mexico and China In contrast, the Fund's underweight Academy in 1988. He also earned a B.B.A. (countries not represented in the EAFE exposure to the materials sector was a from The University of Texas at Austin. benchmarks) gave the Fund a competitive detractor to performance, but strong edge. These markets continued to be stock selection within this sector helped Barrett K. Sides underpinned by positive news on the the Fund perform inline with its [SIDES Senior portfolio macroeconomic front and in most cases style-specific index over the fiscal PHOTO] manager, is lead were further supported by attractive year. portfolio manager of valuations. Relative performance was also AIM International aided by a continued underweight in The Fund also benefited from its Growth Fund with Japan. Despite improving fundamentals we large/mid-cap flexibility which enabled respect to the Fund's believe valuations in Japanese equities us to invest in several attractive, investments in Asia Pacific and Latin remained less attractive versus other under-followed mid-cap stocks. Foreign America. He joined AIM in 1990. Mr. Sides markets in the region. Favorable stock exchange was another contributor to Fund graduated with a B.S. in economics from selection within this market, despite performance. As we do not typically hedge Bucknell University. He also earned an lack luster macroeconomic fundamentals, currencies--we buy stocks in their local M.B.A. in international business from the contributed positively to relative return currency and then translate that value University of St. Thomas. as well. back into dollars for the Fund--foreign currency appreciation provided a boost to Shuxin Cao Though we outperformed our Fund performance. Our exposure to the [CAO Chartered Financial style-specific index across most markets, strong euro added value to your Fund's PHOTO] Analyst, is a portfolio select holdings in Hungary (OTP Bank) and overall return. manager of AIM South Africa (Telkom SA) which were International Growth negatively impacted by uncertainties in IN CLOSING Fund. He joined AIM in the political arena, detracted from 1997. Mr. Cao graduated comparative results. Underlying Over the past 12 months, the Fund has from Tianjin Foreign Language Institute fundamentals continued to remain strong experienced strong double-digit returns. with a B.A. in English. He also earned a in these companies, however, and in some It would be imprudent for us to suggest M.B.A. from Texas A&M University and is a instances we added on the weakness. that such a level of performance is certified public accountant. sustainable over the long term. Beyond regional diversity, sector Regardless of macro-economic trends, the Matthew W. Dennis performance was also broad-based with Fund maintained a disciplined strategy of [DENNIS Chartered Financial every sector registering double-digit selecting attractive investment PHOTO] Analyst, is a portfolio returns for the period. Our bottom-up opportunities based on its "EQV" manager of AIM investment approach, focusing on investment strategy. International Growth strengths of individual companies as Fund. He joined AIM in opposed to attractive sectors, enabled us We welcome any new investors who have 2000. Mr. Dennis to outperform our style-specific index joined the Fund during the reporting graduated with a B.A. in economics from across almost all sectors, with top period, and to all of our shareholders we The University of Texas at Austin. He contributors coming from the Fund's would like to say thank you for your also earned an M.S. in Finance from Texas information technology, financials, continued investment in AIM International A&M University. industrials and consumer discretionary Growth Fund. holdings. French financial giant BNP Jason T. Holzer PARIBAS and French construction company THE VIEWS AND OPINIONS EXPRESSED IN [HOLZER Chartered Financial Vinci were all top contributors for the MANAGEMENT'S DISCUSSION OF FUND PHOTO] Analyst, is a portfolio period. Each company displayed attractive PERFORMANCE ARE THOSE OF A I M ADVISORS, manager of AIM combinations of key characteristics we INC. THESE VIEWS AND OPINIONS ARE SUBJECT International Growth look for when buying a stock for the TO CHANGE AT ANY TIME BASED ON FACTORS Fund. He joined AIM in fund--strong earnings growth, high SUCH AS MARKET AND ECONOMIC CONDITIONS. 1996. He earned a B.A. quality and trading at a reasonable THESE VIEWS AND OPINIONS MAY NOT BE in quantitative economics and an M.S. in valuation (EQV). RELIED UPON AS INVESTMENT ADVICE OR engineering economic systems from RECOMMENDATIONS, OR AS AN OFFER FOR A Stanford University. BNP Paribas, a holding in the Fund PARTICULAR SECURITY. THE INFORMATION IS since 1997, is one of Europe's largest NOT A COMPLETE ANALYSIS OF EVERY ASPECT Assisted by the Asia Pacific/Latin banks and a good example of what we look OF ANY MARKET, COUNTRY, INDUSTRY, America Team and Europe/Canada Team for in an investment. It's the leading SECURITY OR THE FUND. STATEMENTS OF FACT French bank operating in a strong ARE FROM SOURCES CONSIDERED RELIABLE, BUT FOR A PRESENTATION OF YOUR FUND'S domestic market where mortgage A I M ADVISORS, INC. MAKES NO LONG-TERM PERFORMANCE, PLEASE SEE PAGES 8 REPRESENTATION OR WARRANTY AS TO THEIR AND 9. COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT PHILOSOPHY. See Important Fund and index disclosures on the inside front cover. 6 Aim International Growth Fund Calculating your ongoing Fund expenses EXAMPLE mate the expenses that you paid over the The hypothetical account values and period. Simply divide your account value expenses may not be used to estimate the As a shareholder of the Fund, you incur by $1,000 (for example, an $8,600 account actual ending account balance or expenses two types of costs: (1) transaction value divided by $1,000 = 8.6), then you paid for the period. You may use this costs, which may include sales charges multiply the result by the number in the information to compare the ongoing costs (loads) on purchase payments or table under the heading entitled "Actual of investing in the Fund and other funds. contingent deferred sales charges on Expenses Paid During Period" to estimate To do so, compare this 5% hypothetical redemptions, and redemption fees, if any; the expenses you paid on your account example with the 5% hypothetical examples and (2) ongoing costs, including during this period. that appear in the shareholder reports of management fees; distribution and/or the other funds. service (12b-1) fees; and other Fund HYPOTHETICAL EXAMPLE FOR expenses. This example is intended to COMPARISON PURPOSES Please note that the expenses shown in help you understand your ongoing costs the table are meant to highlight your (in dollars) of investing in the Fund and The table below also provides information ongoing costs only and do not reflect any to compare these costs with ongoing costs about hypothetical account values and transaction costs, such as sales charges of investing in other mutual funds. The hypothetical expenses based on the Fund's (loads) on purchase payments, contingent example is based on an investment of actual expense ratio and an assumed rate deferred sales charges on redemptions, $1,000 invested at the beginning of the of return of 5% per year before expenses, and redemption fees, if any. Therefore, period and held for the entire period May which is not the Fund's actual return. the hypothetical information is useful in 1, 2006, through October 31, 2006. The Fund's actual cumulative total comparing ongoing costs only, and will returns at net asset value after expenses not help you determine the relative total ACTUAL EXPENSES for the six months ended October 31, costs of owning different funds. In 2006, appear in the table "Cumulative addition, if these transaction costs were The table below provides information Total Returns" on page 9. included, your costs would have been about actual account values and actual higher. expenses. You may use the information in this table, together with the amount you invested, to esti- ==================================================================================================================================== ACTUAL HYPOTHETICAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2) (10/31/06) PERIOD(2) RATIO A $1,000.00 $1,031.90 $7.73 $1,017.59 $7.68 1.51% B 1,000.00 1,028.30 11.55 1,013.81 11.47 2.26 C 1,000.00 1,028.20 11.55 1,013.81 11.47 2.26 R 1,000.00 1,030.60 9.01 1,016.33 8.94 1.76 (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total returns at net asset value after expenses for the six months ended October 31, 2006, appear in the table "Cumulative Total Returns" on page 9. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. ==================================================================================================================================== 7 AIM International Growth Fund Your Fund's long-term performance RESULTS OF A $10,000 INVESTMENT Index dta from 3/31/92, Fund data from 4/7/92 ==================================================================================================================================== [MOUNTAIN CHART] Date AIM International Growth Fund MSCI EAFE MSCI EAFE -Class A Shares Index Growth Index 3/31/92 $10000 $10000 4/92 $9710 10047 9777 5/92 10293 10720 10508 6/92 10185 10211 10042 7/92 9796 9950 9884 8/92 9959 10574 10658 9/92 9775 10365 10437 10/92 9602 9822 9895 11/92 9634 9914 10034 12/92 9702 9965 10046 1/93 9723 9964 9955 2/93 9940 10265 10239 3/93 10524 11160 10966 4/93 11034 12219 11852 5/93 11369 12477 12201 6/93 11142 12282 12091 7/93 11445 12712 12444 8/93 12289 13399 13079 9/93 12420 13097 12760 10/93 13189 13501 13163 11/93 12810 12320 11872 12/93 14144 13210 12572 1/94 14739 14327 13517 2/94 14284 14287 13415 3/94 13525 13672 12755 4/94 13981 14252 13281 5/94 13851 14170 13126 6/94 13633 14370 13251 7/94 14154 14509 13367 8/94 14555 14852 13670 9/94 14197 14384 13214 10/94 14630 14863 13584 11/94 13762 14149 12973 12/94 13670 14238 13140 1/95 12892 13691 12636 2/95 13220 13651 12632 3/95 13705 14503 13426 4/95 14134 15048 14020 5/95 14460 14869 13859 6/95 14709 14608 13572 7/95 15521 15518 14437 8/95 15204 14926 13830 9/95 15486 15217 14146 10/95 15396 14808 13764 11/95 15453 15220 14143 12/95 15913 15833 14635 1/96 16295 15898 14645 2/96 16631 15952 14696 3/96 16920 16291 15049 4/96 17465 16764 15413 5/96 17545 16456 15091 6/96 17905 16549 15144 7/96 17024 16065 14654 8/96 17419 16100 14668 9/96 17895 16528 15070 10/96 17825 16359 14945 11/96 18659 17010 15423 12/96 18929 16791 15142 1/97 18882 16203 14511 2/97 19097 16468 14735 3/97 18943 16528 14823 4/97 18895 16615 14971 5/97 20029 17697 15851 6/97 21069 18673 16773 7/97 21892 18975 17174 8/97 20007 17558 15849 9/97 21726 18541 16897 10/97 19864 17116 15298 11/97 19876 16942 15265 12/97 20011 17089 15461 1/98 20203 17871 16160 2/98 21581 19018 17232 3/98 22960 19603 17465 4/98 23295 19758 17640 5/98 23715 19662 17516 6/98 23739 19811 17758 7/98 24147 20012 17838 8/98 20802 17533 15922 9/98 20264 16995 15474 10/98 21078 18767 17044 11/98 21953 19728 17868 12/98 22697 20507 18894 1/99 22965 20446 18993 2/99 21916 19959 18376 3/99 22282 20792 18625 4/99 23001 21634 18815 5/99 22159 20520 17998 6/99 23573 21320 18695 7/99 24049 21954 19054 8/99 24073 22034 19161 9/99 24598 22256 19465 10/99 26502 23090 20508 11/99 30003 23892 22010 12/99 35200 26036 24460 1/00 32771 24382 23084 2/00 36074 25038 24364 3/00 34959 26009 24821 4/00 32138 24640 23181 5/00 30200 24038 21745 6/00 31580 24978 22521 7/00 30794 23931 21110 8/00 31998 24139 21334 9/00 29352 22963 19922 10/00 27338 22421 19001 11/00 25034 21580 18124 12/00 26153 22347 18464 1/01 26535 22336 18412 2/01 23536 20661 16542 3/01 21886 19284 15397 4/01 23140 20624 16452 5/01 22800 19896 15789 6/01 22554 19083 15022 7/01 22035 18735 14658 8/01 21244 18261 13989 9/01 19228 16411 12665 10/01 19691 16831 13169 11/01 19910 17452 13845 12/01 20304 17555 13926 1/02 19486 16623 13175 2/02 19732 16739 13352 3/02 20562 17726 13922 4/02 20589 17762 13933 5/02 20820 17987 13961 6/02 20384 17271 13601 7/02 18395 15566 12151 8/02 18408 15530 12057 9/02 16473 13863 11008 10/02 17290 14608 11630 11/02 17589 15271 11972 12/02 17412 14757 11694 1/03 16745 14141 11115 2/03 16514 13816 10876 3/03 16268 13545 10761 4/03 17236 14873 11693 5/03 18258 15774 12297 6/03 18639 16155 12511 7/03 18747 16546 12675 8/03 19047 16946 12907 9/03 19483 17468 13344 10/03 20750 18557 14111 11/03 21132 18969 14441 12/03 22252 20451 15435 1/04 22962 20740 15736 2/04 23588 21219 16034 3/04 23520 21339 16047 4/04 23014 20856 15648 5/04 23191 20900 15608 6/04 23532 21385 15817 7/04 22782 20691 15174 8/04 22959 20782 15191 9/04 23846 21325 15566 10/04 24788 22052 16087 11/04 26314 23559 17195 12/04 27459 24592 17924 1/05 27009 24141 17510 2/05 28222 25184 18212 3/05 27581 24551 17765 4/05 26748 23974 17422 5/05 26967 23986 17474 6/05 27636 24304 17614 7/05 28808 25049 18151 8/05 29776 25682 18672 9/05 30484 26826 19458 10/05 29503 26042 18926 11/05 30580 26679 19283 12/05 32268 27921 20303 1/06 34739 29635 21554 2/06 34479 29569 21309 3/06 35482 30544 22133 4/06 37090 32003 23140 5/06 35205 30760 22161 6/06 35149 30758 22190 7/06 35494 31062 22293 8/06 36633 31916 22831 9/06 36812 31966 22703 10/06 38294 33209 23476 ==================================================================================================================================== SOURCE: LIPPER INC. Past performance cannot guarantee This chart, which is a logarithmic comparable future results. chart, presents the fluctuations in the value of the Fund and its indexes. We The data shown in the chart include believe that a logarithmic chart is more reinvested distributions, applicable effective than other types of charts in sales charges, Fund expenses and illustrating changes in value during the management fees. Index results include early years shown in the chart. The reinvested dividends, but they do not vertical axis, the one that indicates the reflect sales charges. Performance of an dollar value of an investment, is index of funds reflects fund expenses and constructed with each segment management fees; performance of a market representing a percent change in the index does not. Performance shown in the value of the investment. In this chart, chart and table(s) does not reflect each segment represents a doubling, or deduction of taxes a shareholder would 100% change, in the value of the pay on Fund distributions or sale of Fund investment. In other words, the space shares. Performance of the indexes does between $5,000 and $10,000 is the same not reflect the effects of taxes. size as the space between $10,000 and $20,000, and so on. 8 AIM International Growth Fund ========================================= ========================================= ========================================= AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS As of 10/31/06, including applicable As of 9/30/06, the most recent calendar 6 months ended 10/31/06, excluding sales charges quarter-end, including applicable sales applicable sales charges charges CLASS A SHARES Class A Shares 3.19% Inception (4/7/92) 9.66% CLASS A SHARES Class B Shares 2.83 10 Years 7.34 Inception (4/7/92) 9.42% Class C Shares 2.82 5 Years 12.94 10 Years 6.88 Class R Shares 3.06 1 Year 22.59 5 Years 12.60 1 Year 14.13 ========================================= CLASS B SHARES Inception (9/15/94) 7.77% CLASS B SHARES 10 Years 7.31 Inception (9/15/94) 7.48% 5 Years 13.18 10 Years 6.85 1 Year 23.80 5 Years 12.82 1 Year 14.85 CLASS C SHARES Inception (8/4/97) 5.68% CLASS C SHARES 5 Years 13.42 Inception (8/4/97) 5.29% 1 Year 27.78 5 Years 13.07 1 Year 18.83 CLASS R SHARES 10 Years 7.68% CLASS R SHARES 5 Years 13.89 10 Years 7.22% 1 Year 29.37 5 Years 13.56 1 Year 20.44 ========================================= ========================================= CLASS R SHARES' INCEPTION DATE IS JUNE 3, PERFORMANCE FIGURES REFLECT REINVESTED 1% FOR THE FIRST YEAR AFTER PURCHASE. 2002. RETURNS SINCE THAT DATE ARE DISTRIBUTIONS, CHANGES IN NET ASSET VALUE CLASS R SHARES DO NOT HAVE A FRONT-END HISTORICAL RETURNS. ALL OTHER RETURNS ARE AND THE EFFECT OF THE MAXIMUM SALES SALES CHARGE; RETURNS SHOWN ARE AT NET BLENDED RETURNS OF HISTORICAL CLASS R CHARGE UNLESS OTHERWISE STATED INVESTMENT ASSET VALUE AND DO NOT REFLECT A 0.75% SHARE PERFORMANCE AND RESTATED CLASS A RETURN AND PRINCIPAL VALUE WILL FLUCTUATE CDSC THAT MAY BE IMPOSED ON A TOTAL SHARE PERFORMANCE (FOR PERIODS PRIOR TO SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN REDEMPTION OF RETIREMENT PLAN ASSETS THE INCEPTION DATE OF CLASS R SHARES) AT YOU SELL SHARES. WITHIN THE FIRST YEAR. NET ASSET VALUE, ADJUSTED TO REFLECT THE HIGHER RULE 12b-1 FEES APPLICABLE TO CLASS A SHARE PERFORMANCE REFLECTS THE THE PERFORMANCE OF THE FUND'S SHARE CLASS R SHARES. CLASS A SHARES' INCEPTION MAXIMUM 5.50% SALES CHARGE, AND CLASS B CLASSES WILL DIFFER PRIMARILY DUE TO IS APRIL 7, 1992. AND CLASS C SHARE PERFORMANCE REFLECTS DIFFERENT SALES CHARGE STRUCTURES AND THE APPLICABLE CONTINGENT DEFERRED SALES CLASS EXPENSES. THE PERFORMANCE DATA QUOTED REPRESENT CHARGE (CDSC) FOR THE PERIOD INVOLVED. PAST PERFORMANCE AND CANNOT GUARANTEE THE CDSC ON CLASS B SHARES DECLINES FROM A REDEMPTION FEE OF 2% WILL BE IMPOSED COMPARABLE FUTURE RESULTS; CURRENT 5% BEGINNING AT THE TIME OF PURCHASE TO ON CERTAIN REDEMPTIONS OR EXCHANGES OUT PERFORMANCE MAY BE LOWER OR HIGHER. 0% AT THE BEGINNING OF THE SEVENTH YEAR. OF THE FUND WITHIN 30 DAYS OF PURCHASE. PLEASE VISIT AIMINVESTMENTS.COM FOR THE THE CDSC ON CLASS C SHARES IS EXCEPTIONS TO THE REDEMPTION FEE ARE MOST RECENT MONTH-END PERFORMANCE. LISTED IN THE FUND'S PROSPECTUS. 9 AIM International Growth Fund Approval of Investment Advisory Agreement The Board of Trustees of AIM on such review, the Board concluded that o Meetings with the Fund's portfolio International Mutual Funds (the "Board") the range of services to be provided by managers and investment personnel. With oversees the management of AIM AIM under the Advisory Agreement was respect to the Fund, the Board is meeting International Growth Fund (the "Fund") appropriate and that AIM currently is periodically with such Fund's portfolio and, as required by law, determines providing services in accordance with the managers and/or other investment annually whether to approve the terms of the Advisory Agreement. personnel and believes that such continuance of the Fund's advisory individuals are competent and able to agreement with A I M Advisors, Inc. o The quality of services to be provided continue to carry out their ("AIM"). Based upon the recommendation of by AIM. The Board reviewed the responsibilities under the Advisory the Investments Committee of the Board, credentials and experience of the Agreement. at a meeting held on June 27, 2006, the officers and employees of AIM who will Board, including all of the independent provide investment advisory services to o Overall performance of AIM. The Board trustees, approved the continuance of the the Fund. In reviewing the qualifications considered the overall performance of AIM advisory agreement (the "Advisory of AIM to provide investment advisory in providing investment advisory and Agreement") between the Fund and AIM for services, the Board considered such portfolio administrative services to the another year, effective July 1, 2006. issues as AIM's portfolio and product Fund and concluded that such performance review process, various back office was satisfactory. The Board considered the factors support functions provided by AIM and discussed below in evaluating the AIM's equity and fixed income trading o Fees relative to those of clients of fairness and reasonableness of the operation. Based on the review of these AIM with comparable investment Advisory Agreement at the meeting on June and other factors, the Board concluded strategies. The Board reviewed the 27, 2006 and as part of the Board's that the quality of services to be effective advisory fee rate (before ongoing oversight of the Fund. In their provided by AIM was appropriate and that waivers) for the Fund under the Advisory deliberations, the Board and the AIM currently is providing satisfactory Agreement. The Board noted that this rate independent trustees did not identify any services in accordance with the terms of was (i) above the effective advisory fee particular factor that was controlling, the Advisory Agreement. rate (before waivers) for one variable and each trustee attributed different insurance fund advised by AIM and offered weights to the various factors. o The performance of the Fund relative to to insurance company separate accounts comparable funds. The Board reviewed the with investment strategies comparable to One responsibility of the independent performance of the Fund during the past those of the Fund; (ii) above the Senior Officer of the Fund is to manage one, three and five calendar years effective sub-advisory fee rate for one the process by which the Fund's proposed against the performance of funds advised Canadian mutual fund advised by an AIM management fees are negotiated to ensure by other advisors with investment affiliate and sub-advised by AIM with that they are negotiated in a manner strategies comparable to those of the investment strategies comparable to those which is at arms' length and reasonable. Fund. The Board noted that the Fund's of the Fund, although the total advisory To that end, the Senior Officer must performance in such periods was above the fees for such Canadian mutual fund were either supervise a competitive bidding median performance of such comparable above those for the Fund; (iii) above the process or prepare an independent written funds. Based on this review and after effective sub-advisory fee rates for two evaluation. The Senior Officer has taking account of all of the other variable insurance funds sub-advised by recommended an independent written factors that the Board considered in an AIM affiliate and offered to insurance evaluation in lieu of a competitive determining whether to continue the company separate accounts with investment bidding process and, upon the direction Advisory Agreement for the Fund, the strategies comparable to those of the of the Board, has prepared such an Board concluded that no changes should be Fund, although the total advisory fees independent written evaluation. Such made to the Fund and that it was not for one such variable insurance fund were written evaluation also considered necessary to change the Fund's portfolio above those for the Fund; and (iv) above certain of the factors discussed below. management team at this time. Although the total advisory fee rates for 11 In addition, as discussed below, the the independent written evaluation of the separately managed accounts/wrap accounts Senior Officer made a recommendation to Fund's Senior Officer (discussed below) managed by an AIM affiliate with the Board in connection with such written only considered Fund performance through investment strategies comparable to those evaluation. the most recent calendar year, the Board of the Fund. The Board noted that AIM has also reviewed more recent Fund agreed to waive advisory fees of the The discussion below serves as a performance, which did not change their Fund, as discussed below. Based on this summary of the Senior Officer's conclusions. review, the Board concluded that the independent written evaluation and advisory fee rate for the Fund under the recommendation to the Board in connection o The performance of the Fund relative to Advisory Agreement was fair and therewith, as well as a discussion of the indices. The Board reviewed the reasonable. material factors and the conclusions with performance of the Fund during the past respect thereto that formed the basis for one, three and five calendar years o Fees relative to those of comparable the Board's approval of the Advisory against the performance of the Lipper funds with other advisors. The Board Agreement. After consideration of all of International Multi-Cap Growth Index. The reviewed the advisory fee rate for the the factors below and based on its Board noted that the Fund's performance Fund under the Advisory Agreement. The informed business judgment, the Board was comparable to the performance of such Board compared effective contractual determined that the Advisory Agreement is Index for the one and three year periods advisory fee rates at a common asset in the best interests of the Fund and its above such Index for the five year level at the end of the past calendar shareholders and that the compensation to period. Based on this review and after year and noted that the Fund's rate was AIM under the Advisory Agreement is fair taking account of all of the other comparable to the median rate of the and reasonable and would have been factors that the Board considered in funds advised by other advisors with obtained through arm's length determining whether to continue the investment strategies comparable to those negotiations. Advisory Agreement for the Fund, the of the Fund that the Board reviewed. The Board concluded that no changes should be Board noted that AIM has agreed to waive Unless otherwise stated, information made to the Fund and that it was not advisory fees of the Fund, as discussed presented below is as of June 27, 2006 necessary to change the Fund's portfolio below. Based on this review, the Board and does not reflect any changes that may management team at this time. Although concluded that the advisory fee rate for have occurred since June 27, 2006, the independent written evaluation of the the Fund under the Advisory Agreement was including but not limited to changes to Fund's Senior Officer (discussed below) fair and reasonable. the Fund's performance, advisory fees, only considered Fund performance through expense limitations and/or fee waivers. the most recent calendar year, the Board o Expense limitations and fee waivers. also reviewed more recent Fund The Board noted that AIM has o The nature and extent of the advisory performance, which did not change their contractually agreed to waive advi- services to be provided by AIM. The Board conclusions. reviewed the services to be provided by (continued) AIM under the Advisory Agreement. Based 10 AIM International Growth Fund sory fees of the Fund through December concluded that the investment of cash o Historical relationship between the 31, 2009 to the extent necessary so that collateral received in connection with Fund and AIM. In determining whether to the advisory fees payable by the Fund do the securities lending program in the continue the Advisory Agreement for the not exceed a specified maximum advisory money market funds according to the Fund, the Board also considered the prior fee rate, which maximum rate includes procedures is in the best interests of relationship between AIM and the Fund, as breakpoints and is based on net asset the lending Fund and its respective well as the Board's knowledge of AIM's levels. The Board considered the shareholders. operations, and concluded that it was contractual nature of this fee waiver and beneficial to maintain the current noted that it remains in effect until o Independent written evaluation and relationship, in part, because of such December 31, 2009. The Board considered recommendations of the Fund's Senior knowledge. The Board also reviewed the the effect this fee waiver would have on Officer. The Board noted that, upon their general nature of the non-investment the Fund's estimated expenses and direction, the Senior Officer of the advisory services currently performed by concluded that the levels of fee Fund, who is independent of AIM and AIM's AIM and its affiliates, such as waivers/expense limitations for the Fund affiliates, had prepared an independent administrative, transfer agency and were fair and reasonable. written evaluation in order to assist the distribution services, and the fees Board in determining the reasonableness received by AIM and its affiliates for o Breakpoints and economies of scale. The of the proposed management fees of the performing such services. In addition to Board reviewed the structure of the AIM Funds, including the Fund. The Board reviewing such services, the trustees Fund's advisory fee under the Advisory noted that the Senior Officer's written also considered the organizational Agreement, noting that it includes one evaluation had been relied upon by the structure employed by AIM and its breakpoint. The Board reviewed the level Board in this regard in lieu of a affiliates to provide those services. of the Fund's advisory fees, and noted competitive bidding process. In Based on the review of these and other that such fees, as a percentage of the determining whether to continue the factors, the Board concluded that AIM and Fund's net assets, have decreased as net Advisory Agreement for the Fund, the its affiliates were qualified to continue assets increased because the Advisory Board considered the Senior Officer's to provide non-investment advisory Agreement includes a breakpoint. The written evaluation and the recommendation services to the Fund, including Board noted that AIM has contractually made by the Senior Officer to the Board administrative, transfer agency and agreed to waive advisory fees of the Fund that the Board consider whether the distribution services, and that AIM and through December 31, 2009 to the extent advisory fee waivers for certain equity its affiliates currently are providing necessary so that the advisory fees AIM Funds, including the Fund, should be satisfactory non-investment advisory payable by the Fund do not exceed a simplified. The Board concluded that it services. specified maximum advisory fee rate, would be advisable to consider this issue which maximum rate includes breakpoints and reach a decision prior to the o Other factors and current trends. The and is based on net asset levels. The expiration date of such advisory fee Board considered the steps that AIM and Board concluded that the Fund's fee waivers. its affiliates have taken over the last levels under the Advisory Agreement several years, and continue to take, in therefore reflect economies of scale and o Profitability of AIM and its order to improve the quality and that it was not necessary to change the affiliates. The Board reviewed efficiency of the services they provide advisory fee breakpoints in the Fund's information concerning the profitability to the Funds in the areas of investment advisory fee schedule. of AIM's (and its affiliates') investment performance, product line advisory and other activities and its diversification, distribution, fund o Investments in affiliated money market financial condition. The Board considered operations, shareholder services and funds. The Board also took into account the overall profitability of AIM, as well compliance. The Board concluded that the fact that uninvested cash and cash as the profitability of AIM in connection these steps taken by AIM have improved, collateral from securities lending with managing the Fund. The Board noted and are likely to continue to improve, arrangements, if any (collectively, "cash that AIM's operations remain profitable, the quality and efficiency of the balances") of the Fund may be invested in although increased expenses in recent services AIM and its affiliates provide money market funds advised by AIM years have reduced AIM's profitability. to the Fund in each of these areas, and pursuant to the terms of an SEC exemptive Based on the review of the profitability support the Board's approval of the order. The Board found that the Fund may of AIM's and its affiliates' investment continuance of the Advisory Agreement for realize certain benefits upon investing advisory and other activities and its the Fund. cash balances in AIM advised money market financial condition, the Board concluded funds, including a higher net return, that the compensation to be paid by the increased liquidity, increased Fund to AIM under its Advisory Agreement diversification or decreased transaction was not excessive. costs. The Board also found that the Fund will not receive reduced services if it o Benefits of soft dollars to AIM. The invests its cash balances in such money Board considered the benefits realized by market funds. The Board noted that, to AIM as a result of brokerage transactions the extent the Fund invests uninvested executed through "soft dollar" cash in affiliated money market funds, arrangements. Under these arrangements, AIM has voluntarily agreed to waive a brokerage commissions paid by the Fund portion of the advisory fees it receives and/or other funds advised by AIM are from the Fund attributable to such used to pay for research and execution investment. The Board noted that, to the services. This research may be used by extent the Fund invests in affiliated AIM in making investment decisions for money market funds, AIM has voluntarily the Fund. The Board concluded that such agreed to waive a portion of the advisory arrangements were appropriate. fees it receives from the Fund attributable to such investment. The o AIM's financial soundness in light of Board further determined that the the Fund's needs. The Board considered proposed securities lending program and whether AIM is financially sound and has related procedures with respect to the the resources necessary to perform its lending Fund is in the best interests of obligations under the Advisory Agreement, the lending Fund and its respective and concluded that AIM has the financial shareholders. The Board therefore resources necessary to fulfill its obligations under the Advisory Agreement. 11 Supplement to Annual Report dated 10/31/06 AIM International Growth Fund =================================== Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS NOT For periods ended 10/31/06 INDICATIVE OF FUTURE RESULTS. MORE RECENT The following information has been prepared to RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. provide Institutional Class shareholders with Inception (3/15/02) 15.00% ALL RETURNS ASSUME REINVESTMENT OF a performance overview specific to their 1 Year 30.32 DISTRIBUTIONS AT NAV. INVESTMENT RETURN AND holdings. Institutional Class shares are 6 Months* 3.44 PRINCIPAL VALUE WILL FLUCTUATE SO YOUR offered exclusively to institutional SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR investors, including defined contribution =================================== LESS THAN THEIR ORIGINAL COST. SEE FULL plans that meet certain criteria. REPORT FOR INFORMATION ON COMPARATIVE AVERAGE ANNUAL TOTAL RETURNS BENCHMARKS. PLEASE CONSULT YOUR FUND For periods ended 9/30/06, most PROSPECTUS FOR MORE INFORMATION. FOR THE MOST recent calendar quarter-end CURRENT MONTH-END PERFORMANCE, PLEASE CALL 800-451-4246 OR VISIT AIMINVESTMENTS.COM. Inception (3/15/02) 14.32% 1 Year 21.36 6 Months* 3.98 *Cumulative total return that has not been annualized =================================== INSTITUTIONAL CLASS SHARES HAVE NO SALES CHARGE; THEREFORE, PERFORMANCE IS AT NAV. PERFORMANCE OF INSTITUTIONAL CLASS SHARES WILL DIFFER FROM PERFORMANCE OF OTHER SHARE CLASSES PRIMARILY DUE TO DIFFERING SALES CHARGES AND CLASS EXPENSES. A REDEMPTION FEE OF 2% WILL BE IMPOSED ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF THE FUND WITHIN 30 DAYS OF PURCHASE. EXCEPTIONS TO THE REDEMPTION FEE ARE LISTED IN THE FUND'S PROSPECTUS. ============================================== NASDAQ SYMBOL AIEVX ============================================== Over for information on your Fund's expenses. ================================================================================ THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. ================================================================================ FOR INSTITUTIONAL INVESTOR USE ONLY This material is for institutional investor use only and may not be quoted, reproduced or shown to the public, nor used in written form as sales literature for public use. [YOUR GOALS. OUR SOLUTIONS.] [AIM INVESTMENTS LOGO APPEARS HERE] AIMINVESTMENTS.COM IGR-INS-1 A I M Distributors, Inc. --REGISTERED TRADEMARK-- --REGISTERED TRADEMARK-- Information about your Fund's expenses Calculating your ongoing Fund expenses Example divide your account value by $1,000 The hypothetical account values and (for example, an $8,600 account expenses may not be used to estimate the As a shareholder of the Fund, you incur value divided by $1,000 = 8.6), actual ending account balance or expenses you ongoing costs, including management fees and then multiply the result by the paid for the period. You may use this other Fund expenses. This example is intended number in the table under the information to compare the ongoing costs of to help you understand your ongoing costs (in heading entitled "Actual Expenses investing in the Fund and other funds. To do dollars) of investing in the Fund and to Paid During Period" to estimate the so, compare this 5% hypothetical example with compare these costs with ongoing costs of expenses you paid on your account the 5% hypothetical examples that appear in investing in other mutual funds. The example during this period. the shareholder reports of the other funds. is based on an investment of $1,000 invested at the beginning of the period and held for Hypothetical example for comparison Please note that the expenses shown in the entire period May 1, 2006, through October purposes the table are meant to highlight your ongoing 31, 2006. costs only. Therefore, the hypothetical The table below also provides information is useful in comparing ongoing Actual expenses information about hypothetical costs only, and will not help you determine account values and hypothetical the relative total costs of owning different The table below provides information about expenses based on the Fund's actual funds. actual account values and actual expenses. You expense ratio and an assumed rate may use the information in this table, of return of 5% per year before together with the amount you invested, to expenses, which is not the Fund's estimate the expenses that you paid over the actual return. The Fund's actual period. Simply cumulative total return after expenses for the six months ended October 31, 2006, appears in the table on the front of this supplement. ==================================================================================================================================== HYPOTHETICAL ACTUAL (5% ANNUAL RETURN BEFORE EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (5/1/06) (10/31/06)(1) PERIOD(2) (10/31/06) PERIOD(2) RATIO Institutional $1,000.00 $1,034.40 $5.54 1,019.76 $5.50 1.08% (1) The actual ending account value is based on the actual total return of the Fund for the period May 1, 2006, through October 31, 2006, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. The Fund's actual cumulative total return after expenses for the six months ended October 31, 2006, appears in the table on the front of this supplement. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period. ==================================================================================================================================== AIMINVESTMENTS.COM IGR-INS-1 A I M Distributors, Inc. AIM International Growth Fund SCHEDULE OF INVESTMENTS October 31, 2006 <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- FOREIGN COMMON STOCKS & OTHER EQUITY INTERESTS-89.29% AUSTRALIA-2.55% BHP Billiton Ltd. (Diversified Metals & Mining)(a) 1,545,300 $ 32,875,389 - -------------------------------------------------------------------------- Brambles Industries Ltd. (Diversified Commercial & Professional Services)(a)(b) 1,851,693 17,824,533 - -------------------------------------------------------------------------- QBE Insurance Group Ltd. (Property & Casualty Insurance)(a) 877,500 16,708,737 ========================================================================== 67,408,659 ========================================================================== BELGIUM-2.32% InBev N.V. (Brewers) 671,400 37,825,393 - -------------------------------------------------------------------------- KBC Groep N.V. (Diversified Banks)(a) 216,004 23,557,253 ========================================================================== 61,382,646 ========================================================================== BRAZIL-0.46% All America Latina Logistica (Railroads)(c) 1,394,600 12,177,922 ========================================================================== CANADA-4.39% Canadian National Railway Co. (Railroads) 516,900 24,631,825 - -------------------------------------------------------------------------- Canadian Natural Resources Ltd. (Oil & Gas Exploration & Production) 407,200 21,199,644 - -------------------------------------------------------------------------- EnCana Corp. (Oil & Gas Exploration & Production) 299,800 14,240,967 - -------------------------------------------------------------------------- Manulife Financial Corp. (Life & Health Insurance) 701,804 22,816,287 - -------------------------------------------------------------------------- Suncor Energy, Inc. (Integrated Oil & Gas) 432,800 33,249,310 ========================================================================== 116,138,033 ========================================================================== CHINA-1.02% Industrial and Commercial Bank of China- Class H (Diversified Banks)(Acquired 10/20/06; Cost $1,680,590)(d)(e) 4,220,000 1,888,289 - -------------------------------------------------------------------------- Ping An Insurance (Group) Co. of China Ltd.- Class H (Life & Health Insurance)(a) 7,215,000 25,065,795 ========================================================================== 26,954,084 ========================================================================== DENMARK-0.96% Novo Nordisk A.S.-Class B (Pharmaceuticals)(a) 338,006 25,502,335 ========================================================================== FRANCE-9.59% Axa (Multi-Line Insurance)(a) 692,122 26,306,219 - -------------------------------------------------------------------------- BNP Paribas (Diversified Banks)(a) 513,587 56,416,184 - -------------------------------------------------------------------------- Capgemini S.A. (IT Consulting & Other Services)(a) 319,352 18,122,711 - -------------------------------------------------------------------------- Sanofi-Aventis (Pharmaceuticals)(a) 294,062 24,976,517 - -------------------------------------------------------------------------- Societe Generale (Diversified Banks)(a) 217,700 36,071,590 - -------------------------------------------------------------------------- Total S.A. (Integrated Oil & Gas)(a) 628,956 42,802,842 - -------------------------------------------------------------------------- Vinci S.A. (Construction & Engineering)(a) 437,960 49,302,080 ========================================================================== 253,998,143 ========================================================================== </Table> <Table> SHARES VALUE - -------------------------------------------------------------------------- <Caption> GERMANY-5.89% Bayer A.G. (Diversified Chemicals)(a)(b) 382,490 $ 19,226,129 - -------------------------------------------------------------------------- Commerzbank A.G. (Diversified Banks)(a) 884,394 31,369,191 - -------------------------------------------------------------------------- Continental A.G. (Tires & Rubber)(a) 152,800 17,065,595 - -------------------------------------------------------------------------- MAN A.G. (Industrial Machinery)(a) 323,270 28,700,424 - -------------------------------------------------------------------------- Merck KGaA (Pharmaceuticals) 180,386 19,017,467 - -------------------------------------------------------------------------- Puma A.G. Rudolf Dassler Sport (Footwear) 79,389 28,152,000 - -------------------------------------------------------------------------- Siemens A.G. (Industrial Conglomerates) 137,307 12,355,251 ========================================================================== 155,886,057 ========================================================================== GREECE-0.98% OPAP S.A. (Casinos & Gaming)(a) 726,490 25,870,382 ========================================================================== HONG KONG-1.23% Esprit Holdings Ltd. (Apparel Retail)(a) 2,024,000 19,588,868 - -------------------------------------------------------------------------- Hutchison Whampoa Ltd. (Industrial Conglomerates)(a) 1,469,000 13,022,787 ========================================================================== 32,611,655 ========================================================================== HUNGARY-0.77% OTP Bank Nyrt. (Diversified Banks) 583,129 20,499,794 ========================================================================== INDIA-2.76% Housing Development Finance Corp. Ltd. (Thrifts & Mortgage Finance)(a) 474,536 15,388,646 - -------------------------------------------------------------------------- Infosys Technologies Ltd. (IT Consulting & Other Services)(a) 928,576 43,150,453 - -------------------------------------------------------------------------- Maruti Udyog Ltd. (Automobile Manufacturers)(a) 672,332 14,428,206 ========================================================================== 72,967,305 ========================================================================== INDONESIA-0.56% PT Telekomunikasi Indonesia-Series B (Integrated Telecommunication Services)(a) 16,000,000 14,721,588 ========================================================================== IRELAND-2.37% Anglo Irish Bank Corp. PLC (Diversified Banks)(a) 2,278,540 40,856,859 - -------------------------------------------------------------------------- CRH PLC (Construction Materials) 622,411 21,997,332 ========================================================================== 62,854,191 ========================================================================== ISRAEL-0.79% Teva Pharmaceutical Industries Ltd.-ADR (Pharmaceuticals) 632,278 20,846,206 ========================================================================== ITALY-1.45% Eni S.p.A. (Integrated Oil & Gas)(a)(b) 1,272,749 38,516,930 ========================================================================== JAPAN-14.37% AEON Co., Ltd. (Hypermarkets & Super Centers) 733,400 17,164,202 - -------------------------------------------------------------------------- Canon Inc. (Office Electronics)(a) 849,400 45,184,576 - -------------------------------------------------------------------------- Denso Corp. (Auto Parts & Equipment)(a) 349,100 13,259,755 - -------------------------------------------------------------------------- FANUC Ltd. (Industrial Machinery)(a) 375,600 32,571,718 - -------------------------------------------------------------------------- </Table> F-1 AIM International Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- JAPAN-(CONTINUED) Hitachi High-Technologies Corp. (Trading Companies & Distributors)(a) 645,100 $ 19,172,677 - -------------------------------------------------------------------------- Hoya Corp. (Electronic Equipment Manufacturers)(a) 748,200 28,768,774 - -------------------------------------------------------------------------- IBIDEN Co., Ltd. (Electronic Equipment Manufacturers)(a) 455,000 23,701,193 - -------------------------------------------------------------------------- JSR Corp. (Specialty Chemicals)(a) 643,400 16,060,452 - -------------------------------------------------------------------------- Keyence Corp. (Electronic Equipment Manufacturers)(a) 82,800 18,313,243 - -------------------------------------------------------------------------- Matsushita Electric Industrial Co., Ltd. (Consumer Electronics)(a) 1,237,000 25,722,589 - -------------------------------------------------------------------------- Mizuho Financial Group, Inc. (Diversified Banks)(a) 896 6,951,639 - -------------------------------------------------------------------------- Mizuho Financial Group, Inc. (Diversified Banks)(Acquired 10/24/05; Cost $9,401,000)(a)(d) 1,564 12,134,334 - -------------------------------------------------------------------------- Nissan Motor Co., Ltd. (Automobile Manufacturers)(a) 2,288,200 27,382,791 - -------------------------------------------------------------------------- ORIX Corp. (Consumer Finance) 112,900 31,807,304 - -------------------------------------------------------------------------- Suzuki Motor Corp. (Automobile Manufacturers)(a) 792,000 22,471,464 - -------------------------------------------------------------------------- Toyota Motor Corp. (Automobile Manufacturers)(a) 621,800 36,701,074 - -------------------------------------------------------------------------- Yamaha Motor Co., Ltd. (Motorcycle Manufacturers)(a) 110,000 2,994,308 ========================================================================== 380,362,093 ========================================================================== MEXICO-2.35% America Movil S.A. de C.V.-Series L-ADR (Wireless Telecommunication Services) 622,400 26,682,288 - -------------------------------------------------------------------------- Grupo Televisa S.A.-ADR (Broadcasting & Cable TV) 628,500 15,511,380 - -------------------------------------------------------------------------- Wal-Mart de Mexico S.A. de C.V.-Series V (Hypermarkets & Super Centers) 5,741,800 19,966,372 ========================================================================== 62,160,040 ========================================================================== NETHERLANDS-1.57% Heineken Holding N.V. (Brewers)(a) 525,879 20,564,656 - -------------------------------------------------------------------------- ING Groep N.V. (Other Diversified Financial Services)(a) 472,540 20,936,361 ========================================================================== 41,501,017 ========================================================================== NORWAY-0.97% Petroleum Geo-Services A.S.A. (Oil & Gas Equipment & Services)(a)(e) 440,000 25,754,841 ========================================================================== RUSSIA-0.57% LUKOIL-ADR (Integrated Oil & Gas)(a) 184,400 15,019,550 ========================================================================== SINGAPORE-1.27% Keppel Corp. Ltd. (Industrial Conglomerates)(a) 1,941,000 19,658,161 - -------------------------------------------------------------------------- United Overseas Bank Ltd. (Diversified Banks)(a) 1,240,000 14,084,587 ========================================================================== 33,742,748 ========================================================================== </Table> <Table> SHARES VALUE - -------------------------------------------------------------------------- <Caption> SOUTH AFRICA-1.12% Standard Bank Group Ltd. (Diversified Banks)(a) 1,490,561 $ 17,491,657 - -------------------------------------------------------------------------- Telkom South Africa Ltd. (Integrated Telecommunication Services)(a) 653,600 12,127,756 ========================================================================== 29,619,413 ========================================================================== SOUTH KOREA-2.95% Hynix Semiconductor Inc. (Semiconductors)(e) 98,570 3,577,896 - -------------------------------------------------------------------------- Hyundai Heavy Industries Co., Ltd. (Construction & Farm Machinery & Heavy Trucks)(a) 85,000 12,433,557 - -------------------------------------------------------------------------- Hyundai Motor Co. (Automobile Manufacturers) 196,040 15,937,873 - -------------------------------------------------------------------------- Kookmin Bank (Diversified Banks)(a) 199,990 15,849,628 - -------------------------------------------------------------------------- Samsung Electronics Co., Ltd. (Electronic Equipment Manufacturers)(a) 46,690 30,246,088 ========================================================================== 78,045,042 ========================================================================== SPAIN-3.01% ACS, Actividades de Construccion y Servicios, S.A. (Construction & Engineering) 383,216 19,237,001 - -------------------------------------------------------------------------- Banco Santander Central Hispano S.A. (Diversified Banks)(a) 1,518,310 26,263,193 - -------------------------------------------------------------------------- Industria de Diseno Textil, S.A. (Apparel Retail)(a) 713,195 34,082,212 ========================================================================== 79,582,406 ========================================================================== SWEDEN-1.57% Atlas Copco A.B.-Class A (Industrial Machinery)(a) 832,600 24,304,509 - -------------------------------------------------------------------------- Swedish Match A.B. (Tobacco)(a) 1,078,700 17,239,271 ========================================================================== 41,543,780 ========================================================================== SWITZERLAND-8.72% Compagnie Financiere Richemont A.G.-Class A (Apparel, Accessories & Luxury Goods)(a)(f) 751,160 37,091,397 - -------------------------------------------------------------------------- Credit Suisse Group (Diversified Capital Markets)(a) 372,185 22,423,810 - -------------------------------------------------------------------------- Nestle S.A. (Packaged Foods & Meats)(a) 82,630 28,209,283 - -------------------------------------------------------------------------- Roche Holding A.G. (Pharmaceuticals)(a) 251,112 43,884,164 - -------------------------------------------------------------------------- Syngenta A.G. (Fertilizers & Agricultural Chemicals)(a)(e) 311,990 50,341,533 - -------------------------------------------------------------------------- UBS A.G. (Diversified Capital Markets)(a) 819,303 48,862,651 ========================================================================== 230,812,838 ========================================================================== TAIWAN-1.98% Hon Hai Precision Industry Co., Ltd. (Electronic Manufacturing Services)(a) 3,589,740 23,116,827 - -------------------------------------------------------------------------- MediaTek Inc. (Semiconductors)(a) 1,818,300 17,633,104 - -------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. Ltd. (Semiconductors)(a) 6,409,320 11,719,946 ========================================================================== 52,469,877 ========================================================================== TURKEY-0.86% Akbank T.A.S. (Diversified Banks)(a) 4,014,806 22,814,530 ========================================================================== </Table> F-2 AIM International Growth Fund <Table> <Caption> SHARES VALUE - -------------------------------------------------------------------------- UNITED KINGDOM-9.89% Aviva PLC (Multi-Line Insurance)(a) 1,592,840 $ 23,505,973 - -------------------------------------------------------------------------- Capita Group PLC (Human Resource & Employment Services)(a) 1,859,900 19,098,561 - -------------------------------------------------------------------------- Enterprise Inns PLC (Restaurants)(a) 935,600 19,217,328 - -------------------------------------------------------------------------- Imperial Tobacco Group PLC (Tobacco) 1,054,322 37,347,463 - -------------------------------------------------------------------------- Informa PLC (Publishing)(a) 2,475,748 25,791,630 - -------------------------------------------------------------------------- International Power PLC (Independent Power Producers & Energy Traders)(a) 4,212,100 26,883,769 - -------------------------------------------------------------------------- Reckitt Benckiser PLC (Household Products)(a) 715,030 31,079,748 - -------------------------------------------------------------------------- Shire PLC (Pharmaceuticals)(a) 1,609,100 29,382,874 - -------------------------------------------------------------------------- Tesco PLC (Food Retail) 3,733,203 28,022,203 - -------------------------------------------------------------------------- WPP Group PLC (Advertising)(a) 1,681,209 21,524,236 ========================================================================== 261,853,785 ========================================================================== Total Foreign Common Stocks & Other Equity Interests (Cost $1,420,478,461) 2,363,617,890 ========================================================================== FOREIGN PREFERRED STOCKS-3.73% BRAZIL-1.16% Companhia de Bebidas das Americas -Pfd.-ADR (Brewers) 393,700 17,188,942 - -------------------------------------------------------------------------- Petroleo Brasileiro S.A. Pfd.-ADR (Integrated Oil & Gas) 168,700 13,657,952 ========================================================================== 30,846,894 ========================================================================== GERMANY-2.57% Henkel KGaA -Pfd. (Household Products) 211,500 28,331,045 - -------------------------------------------------------------------------- Porsche A.G. -Pfd. (Automobile Manufacturers) 34,055 39,706,282 ========================================================================== 68,037,327 ========================================================================== Total Foreign Preferred Stocks (Cost $63,273,772) 98,884,221 ========================================================================== </Table> <Table> SHARES VALUE - -------------------------------------------------------------------------- <Caption> MONEY MARKET FUNDS-5.83% Liquid Assets Portfolio-Institutional Class(g) 77,178,022 $ 77,178,022 - -------------------------------------------------------------------------- Premier Portfolio-Institutional Class(g) 77,178,022 77,178,022 ========================================================================== Total Money Market Funds (Cost $154,356,044) 154,356,044 ========================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities loaned)-98.85% (Cost $1,638,108,277) 2,616,858,155 ========================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED MONEY MARKET FUNDS-2.70% Liquid Assets Portfolio-Institutional Class(g)(h) 71,397,200 71,397,200 ========================================================================== Total Money Market Funds (purchased with cash collateral from securities loaned) (Cost $71,397,200) 71,397,200 ========================================================================== TOTAL INVESTMENTS-101.55% (Cost $1,709,505,477) 2,688,255,355 ========================================================================== OTHER ASSETS LESS LIABILITIES-(1.55%) (41,025,611) ========================================================================== NET ASSETS-100.00% $2,647,229,744 __________________________________________________________________________ ========================================================================== </Table> Investment Abbreviations: <Table> ADR - American Depositary Receipt Pfd. - Preferred </Table> Notes to Schedule of Investments: (a) In accordance with the procedures established by the Board of Trustees, the foreign security is fair valued using adjusted closing market prices. The aggregate value of these securities at October 31, 2006 was $1,857,466,221, which represented 70.17% of the Fund's Net Assets. See Note 1A. (b) All or a portion of this security was out on loan at October 31, 2006. (c) Each unit represents one common share and four preferred shares. (d) 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 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 value of these securities at October 31, 2006 was $14,022,623, which represented 0.53% of the Fund's Net Assets. Unless otherwise indicated, these securities are not considered to be illiquid. (e) Non-income producing security. (f) Each unit represents one A bearer share in the company and one bearer share participation certificate in Richemont S.A. (g) The money market fund and the Fund are affiliated by having the same investment advisor. See Note 3. (h) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 8. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-3 AIM International Growth Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 2006 <Table> ASSETS: Investments, at value (cost $1,483,752,233)* $2,462,502,111 - ------------------------------------------------------------ Investments in affiliated money market funds (cost $225,753,244) 225,753,244 ============================================================ Total investments (cost $1,709,505,477) 2,688,255,355 ============================================================ Foreign currencies, at value (cost $22,800,256) 22,885,894 - ------------------------------------------------------------ Receivables for: Investments sold 29,268,764 - ------------------------------------------------------------ Fund shares sold 17,600,704 - ------------------------------------------------------------ Dividends 4,767,613 - ------------------------------------------------------------ Investment for trustee deferred compensation and retirement plans 133,876 - ------------------------------------------------------------ Other assets 76,933 ============================================================ Total assets 2,762,989,139 ____________________________________________________________ ============================================================ LIABILITIES: Payables for: Investments purchased 34,593,120 - ------------------------------------------------------------ Fund shares reacquired 6,418,174 - ------------------------------------------------------------ Trustee deferred compensation and retirement plans 285,548 - ------------------------------------------------------------ Collateral upon return of securities loaned 71,397,200 - ------------------------------------------------------------ Accrued distribution fees 768,615 - ------------------------------------------------------------ Accrued trustees' and officer's fees and benefits 3,676 - ------------------------------------------------------------ Accrued transfer agent fees 1,830,430 - ------------------------------------------------------------ Accrued operating expenses 462,632 ============================================================ Total liabilities 115,759,395 ============================================================ Net assets applicable to shares outstanding $2,647,229,744 ____________________________________________________________ ============================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $1,664,573,307 - ------------------------------------------------------------ Undistributed net investment income 4,574,538 - ------------------------------------------------------------ Undistributed net realized gain (loss) from investment securities and foreign currencies (787,677) - ------------------------------------------------------------ Unrealized appreciation of investment securities and foreign currencies 978,869,576 ============================================================ $2,647,229,744 ____________________________________________________________ ============================================================ NET ASSETS: Class A $1,908,452,563 ____________________________________________________________ ============================================================ Class B $ 247,939,106 ____________________________________________________________ ============================================================ Class C $ 183,360,161 ____________________________________________________________ ============================================================ Class R $ 19,069,916 ____________________________________________________________ ============================================================ Institutional Class $ 288,407,998 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 68,520,893 ____________________________________________________________ ============================================================ Class B 9,595,734 ____________________________________________________________ ============================================================ Class C 7,090,228 ____________________________________________________________ ============================================================ Class R 691,541 ____________________________________________________________ ============================================================ Institutional Class 10,204,242 ____________________________________________________________ ============================================================ Class A: Net asset value per share $ 27.85 - ------------------------------------------------------------ Offering price per share (Net asset value of $27.85 divided by 94.50%) $ 29.47 ____________________________________________________________ ============================================================ Class B: Net asset value and offering price per share $ 25.84 ____________________________________________________________ ============================================================ Class C: Net asset value and offering price per share $ 25.86 ____________________________________________________________ ============================================================ Class R: Net asset value and offering price per share $ 27.58 ____________________________________________________________ ============================================================ Institutional Class: Net asset value and offering price per share $ 28.26 ____________________________________________________________ ============================================================ </Table> * At October 31, 2006, securities with an aggregate value of $68,061,560 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-4 AIM International Growth Fund STATEMENT OF OPERATIONS For the year ended October 31, 2006 <Table> INVESTMENT INCOME: Dividends (net of foreign withholding tax of $4,256,251) $ 42,389,022 - -------------------------------------------------------------------------- Dividends from affiliated money market funds (includes securities lending income of $1,108,333) 5,463,832 - -------------------------------------------------------------------------- Interest 29,277 ========================================================================== Total investment income 47,882,131 ========================================================================== EXPENSES: Advisory fees 21,456,671 - -------------------------------------------------------------------------- Administrative services fees 492,708 - -------------------------------------------------------------------------- Custodian fees 2,291,181 - -------------------------------------------------------------------------- Distribution fees: Class A 4,223,101 - -------------------------------------------------------------------------- Class B 2,625,081 - -------------------------------------------------------------------------- Class C 1,645,959 - -------------------------------------------------------------------------- Class R 68,984 - -------------------------------------------------------------------------- Transfer agent fees -- A, B, C and R 5,344,380 - -------------------------------------------------------------------------- Transfer agent fees -- Institutional 92,563 - -------------------------------------------------------------------------- Trustees' and officer's fees and benefits 71,407 - -------------------------------------------------------------------------- Other 786,375 ========================================================================== Total expenses 39,098,410 ========================================================================== Less: Fees waived, expenses reimbursed and expense offset arrangements (1,270,131) ========================================================================== Net expenses 37,828,279 ========================================================================== Net investment income 10,053,852 ========================================================================== REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities (includes net gains from securities sold to affiliates of $134,350) 205,626,329 - -------------------------------------------------------------------------- Foreign currencies (709,773) ========================================================================== 204,916,556 ========================================================================== Change in net unrealized appreciation of: Investment securities 363,735,223 - -------------------------------------------------------------------------- Foreign currencies 314,197 ========================================================================== 364,049,420 ========================================================================== Net gain from investment securities and foreign currencies 568,965,976 ========================================================================== Net increase in net assets resulting from operations $579,019,828 __________________________________________________________________________ ========================================================================== </Table> See accompanying Notes to Financial Statements which are an integral part of the financial statements. F-5 AIM International Growth Fund STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 2006 and 2005 <Table> <Caption> 2006 2005 - ---------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 10,053,852 $ 7,558,877 - ---------------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 204,916,556 167,072,543 - ---------------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities and foreign currencies 364,049,420 146,980,078 ============================================================================================== Net increase in net assets resulting from operations 579,019,828 321,611,498 ============================================================================================== Distributions to shareholders from net investment income: Class A (11,764,093) -- - ---------------------------------------------------------------------------------------------- Class B (247,654) -- - ---------------------------------------------------------------------------------------------- Class C (134,689) -- - ---------------------------------------------------------------------------------------------- Class R (52,557) -- - ---------------------------------------------------------------------------------------------- Institutional Class (1,745,195) -- ============================================================================================== Decrease in net assets resulting from distributions (13,944,188) -- ============================================================================================== Share transactions-net: Class A 48,312,933 (86,426,188) - ---------------------------------------------------------------------------------------------- Class B (67,603,740) (100,538,960) - ---------------------------------------------------------------------------------------------- Class C 11,602,717 (4,637,039) - ---------------------------------------------------------------------------------------------- Class R 7,287,308 5,654,245 - ---------------------------------------------------------------------------------------------- Institutional Class 145,451,503 79,580,219 ============================================================================================== Net increase (decrease) in net assets resulting from share transactions 145,050,721 (106,367,723) ============================================================================================== Net increase in net assets 710,126,361 215,243,775 ============================================================================================== NET ASSETS: Beginning of year 1,937,103,383 1,721,859,608 ============================================================================================== End of year (including undistributed net investment income of $4,574,538 and $9,174,647, respectively) $2,647,229,744 $1,937,103,383 ______________________________________________________________________________________________ ============================================================================================== </Table> NOTES TO FINANCIAL STATEMENTS October 31, 2006 NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM International Growth Fund (the "Fund") is a series portfolio of AIM International Mutual Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. 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. The Fund's investment objective is to provide long-term growth of capital. 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 or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). F-6 AIM International Growth Fund Investments in open-end registered investment companies and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in closed-end registered investment companies that trade on an exchange are valued at the last sales price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes 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 specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations having 60 days or less to maturity and commercial paper are recorded at amortized cost which approximates value. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs and domestic and foreign index futures. 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 unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. 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. Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the realized and unrealized net gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund's net asset value and, accordingly, they reduce the Fund's total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the advisor. 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. COUNTRY DETERMINATION -- For the purposes of making investment selection decisions and presentation in the Schedule of Investments, AIM may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer's securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America unless otherwise noted. D. 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 treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. E. 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 to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. F. 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. F-7 AIM International Growth Fund Transfer agency fees and expenses and other shareholder recordkeeping 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. G. ACCOUNTING ESTIMATES -- 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 including estimates and assumptions related to taxation. Actual results could differ from those estimates. H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each Trustee, officer, employee or other agent of the Trust (including the Trust's investment manager) is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, including exchanges of shares held less than 30 days. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. 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 (i) sales of foreign currencies, (ii) currency gains or losses realized between the trade and settlement dates on securities transactions, and (iii) 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. K. 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. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The Fund could be exposed to risk, which may be in excess of the amount reflected in the Statement of Assets and Liabilities, if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust 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 based on the annual rate of the Fund's average daily net assets as follows: <Table> <Caption> AVERAGE NET ASSETS RATE - ------------------------------------------------------------------- First $1 billion 0.95% - ------------------------------------------------------------------- Over $1 billion 0.90% __________________________________________________________________ =================================================================== </Table> Through December 31, 2009, AIM has contractually agreed to waive advisory fees to the extent necessary so that the advisory fees payable by the Fund (based on the Fund's average daily net assets) do not exceed the annual rate of: <Table> <Caption> AVERAGE NET ASSETS RATE - -------------------------------------------------------------------- First $250 million 0.935% - -------------------------------------------------------------------- Next $250 million 0.91% - -------------------------------------------------------------------- Next $500 million 0.885% - -------------------------------------------------------------------- Next $1.5 billion 0.86% - -------------------------------------------------------------------- Next $2.5 billion 0.835% - -------------------------------------------------------------------- Next $2.5 billion 0.81% - -------------------------------------------------------------------- Next $2.5 billion 0.785% - -------------------------------------------------------------------- Over $10 billion 0.76% ___________________________________________________________________ ==================================================================== </Table> F-8 AIM International Growth Fund 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 on investments by the Fund in such affiliated money market funds (excluding investments made in affiliated money market funds with cash collateral from securities loaned by the fund). Voluntary fee waivers or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors. For the year ended October 31, 2006, AIM waived advisory fees of $1,013,311. At the request of the Trustees of the Trust, AMVESCAP PLC ("AMVESCAP") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended October 31, 2006, AMVESCAP reimbursed expenses of the Fund in the amount of $5,179. 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. Pursuant to such agreement, for the year ended October 31, 2006, AIM was paid $492,708. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AIS") a fee for providing transfer agency and shareholder services to the Fund and reimburse AIS for certain expenses incurred by AIS in the course of providing such services. AIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by AIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended October 31, 2006, the Fund paid AIS $5,344,380 for Class A, Class B, Class C and Class R share classes and $92,563 for Institutional Class shares. The Trust has entered into master distribution agreements with A I M Distributors, Inc. ("ADI") to serve as the distributor for the Class A, Class B, Class C, Class R and Institutional 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 and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI compensation at the annual rate of 0.25% 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 the Rule 12b-1 payments, up to 0.25% of the average daily net assets of the Class A, Class B, Class C or Class R shares may be paid to furnish continuing personal shareholder services to 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. National Association of Securities Dealers ("NASD") Rules 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, 2006, the Class A, Class B, Class C and Class R shares paid $4,223,101, $2,625,081, $1,645,959 and $68,984, 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, 2006, ADI advised the Fund that it retained $215,123 in front-end sales commissions from the sale of Class A shares and $6,777, $102,688, $10,775 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed on redemptions by shareholders. Certain officers and trustees of the Trust are officers and directors of AIM, AIS and/or ADI. NOTE 3--INVESTMENTS IN AFFILIATES The Fund is permitted, pursuant to procedures approved by the Board of Trustees, to invest daily available cash balances and cash collateral from securities lending transactions in affiliated money market funds. The Fund and the money market funds below have the same investment advisor and therefore, are considered to be affiliated. The tables below show the transactions in and earnings from investments in affiliated money market funds for the year ended October 31, 2006. INVESTMENTS OF DAILY AVAILABLE CASH BALANCES: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio- Institutional Class $ 8,233,242 $ 326,088,689 $ (257,143,909) $ -- $ 77,178,022 $2,175,012 $ -- - ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio- Institutional Class -- 151,256,118 (74,078,096) -- 77,178,022 982,690 -- - ----------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio- Institutional Class 8,233,242 232,111,878 (240,345,120) -- -- 1,197,797 -- =================================================================================================================================== Subtotal $16,466,484 $ 709,456,685 $ (571,567,125) $ -- $154,356,044 $4,355,499 $ -- =================================================================================================================================== </Table> F-9 AIM International Growth Fund INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS: <Table> <Caption> CHANGE IN UNREALIZED VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND REALIZED FUND 10/31/05 AT COST FROM SALES (DEPRECIATION) 10/31/06 INCOME* GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio- Institutional Class $80,692,180 $ 812,595,366 $ (821,890,346) $ -- $ 71,397,200 $1,108,333 $ -- =================================================================================================================================== Total Investments in Affiliates $97,158,664 $1,522,052,051 $(1,393,457,471) $ -- $225,753,244 $5,463,832 $ -- =================================================================================================================================== </Table> * Net of compensation to counterparties. NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS The Fund is permitted to purchase or sell securities from or to certain other AIM Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment advisor (or affiliated investment advisors), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended October 31, 2006, the Fund engaged in securities sales of $480,162, which resulted in net realized gains of $134,350, and securities purchases of $621,278. NOTE 5--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions, (ii) custodian credits which result from periodic overnight cash balances at the custodian and (iii) a one time custodian fee credit to be used to offset future custodian fees. For the year ended October 31, 2006, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $251,641. NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to pay remuneration to each Trustee and Officer of the Fund who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended October 31, 2006, the Fund paid legal fees of $11,317 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 7--BORROWINGS Pursuant to an exemptive order from the Securities and Exchange Commission, 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. A loan will be secured by collateral if the Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total assets. 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. The Fund is a participant in an uncommitted unsecured revolving 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 credit facility 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 year ended October 31, 2006, the Fund did not borrow or lend under the interfund lending facility or borrow under the uncommitted unsecured revolving credit facility. Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and AIM, not to exceed the contractually agreed upon rate. F-10 AIM International Growth Fund NOTE 8--PORTFOLIO SECURITIES LOANED The Fund may lend portfolio securities having a market value up to 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 received in connection with these loans is invested in short-term money market instruments or affiliated money market funds. 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. 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. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. At October 31, 2006, securities with an aggregate value of $68,061,560 were on loan to brokers. The loans were secured by cash collateral of $71,397,200 received by the Fund and subsequently invested in an affiliated money market fund. For the year ended October 31, 2006, the Fund received dividends on cash collateral investments of $1,108,333 for securities lending transactions, which are net of compensation to counterparties. NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the years ended October 31, 2006 and 2005 was as follows: <Table> <Caption> 2006 2005 - ----------------------------------------------------------------------------------- Distributions paid from ordinary income $13,944,188 $ -- ___________________________________________________________________________________ =================================================================================== </Table> TAX COMPONENTS OF NET ASSETS: As of October 31, 2006, the components of net assets on a tax basis were as follows: <Table> <Caption> 2006 - ------------------------------------------------------------------------------ Undistributed ordinary income $ 16,112,686 - ------------------------------------------------------------------------------ Undistributed long-term gain 8,856,958 - ------------------------------------------------------------------------------ Unrealized appreciation -- investments 966,924,545 - ------------------------------------------------------------------------------ Temporary book/tax differences (245,138) - ------------------------------------------------------------------------------ Capital loss carryforward (8,992,614) - ------------------------------------------------------------------------------ Shares of beneficial interest 1,664,573,307 ============================================================================== Total net assets $2,647,229,744 ______________________________________________________________________________ ============================================================================== </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 losses on wash sales and the recognition for tax purposes of unrealized gains on passive foreign investment companies. The tax-basis unrealized appreciation on investments amount includes appreciation on foreign currencies of $119,699. 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 trustee deferral of compensation and retirement plan expenses. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. Under these limitation rules, the Fund is limited as of October 31, 2006 to utilizing $2,997,538 of capital loss carryforward in the fiscal year ended October 31, 2007. The Fund utilized $196,528,664 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of October 31, 2006 which expires as follows: <Table> <Caption> CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------- October 31, 2009 $8,992,614 _____________________________________________________________________________ ============================================================================= </Table> * Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. F-11 AIM International Growth Fund NOTE 10--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2006 was $819,858,253 and $817,647,399, respectively. <Table> <Caption> UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS - ------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $973,446,998 - ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (6,642,152) ============================================================================== Net unrealized appreciation of investment securities $966,804,846 ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $1,721,450,509. </Table> NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions, on October 31, 2006, undistributed net investment income was decreased by $709,773, undistributed net realized gain (loss) was increased by $709,773. This reclassification had no effect on the net assets of the Fund. NOTE 12--SHARE INFORMATION The Fund currently offers five different classes of shares: Class A, Class B, Class C, Class R and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Class B shares and Class C shares are sold with CDSC. Class R shares and Institutional Class shares are sold at net asset value. Under certain circumstances, Class A shares and Class R shares are subject to CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. <Table> <Caption> CHANGES IN SHARES OUTSTANDING - -------------------------------------------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, ------------------------------------------------------------ 2006(A) 2005 ---------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Sold: Class A 20,023,461 $ 508,901,335 18,721,536 $ 381,380,192 - -------------------------------------------------------------------------------------------------------------------------- Class B 1,759,658 41,010,698 1,993,930 37,701,226 - -------------------------------------------------------------------------------------------------------------------------- Class C 2,223,947 52,255,874 1,776,272 33,816,769 - -------------------------------------------------------------------------------------------------------------------------- Class R 526,544 13,301,803 434,539 9,047,454 - -------------------------------------------------------------------------------------------------------------------------- Institutional Class 7,388,888 188,974,656 3,991,792 84,280,029 ========================================================================================================================== Issued as reinvestment of dividends: Class A 474,942 11,104,143 -- -- - -------------------------------------------------------------------------------------------------------------------------- Class B 10,471 228,576 -- -- - -------------------------------------------------------------------------------------------------------------------------- Class C 5,781 126,326 -- -- - -------------------------------------------------------------------------------------------------------------------------- Class R 2,275 52,557 -- -- - -------------------------------------------------------------------------------------------------------------------------- Institutional Class 73,779 1,743,391 -- -- ========================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,897,188 48,211,014 3,692,644 75,387,488 - -------------------------------------------------------------------------------------------------------------------------- Class B (2,039,154) (48,211,014) (3,962,574) (75,387,488) ========================================================================================================================== Reacquired:(b) Class A (20,780,282) (519,903,559) (26,448,370) (543,193,868) - -------------------------------------------------------------------------------------------------------------------------- Class B (2,587,157) (60,632,000) (3,320,218) (62,852,698) - -------------------------------------------------------------------------------------------------------------------------- Class C (1,725,709) (40,779,483) (2,020,119) (38,453,808) - -------------------------------------------------------------------------------------------------------------------------- Class R (243,304) (6,067,052) (164,354) (3,393,209) - -------------------------------------------------------------------------------------------------------------------------- Institutional Class (1,760,837) (45,266,544) (217,170) (4,699,810) ========================================================================================================================== 5,250,491 $ 145,050,721 (5,522,092) $(106,367,723) __________________________________________________________________________________________________________________________ ========================================================================================================================== </Table> (a) There is one entity that is a record owner of more than 5% of the outstanding shares of the Fund and it owns 28% of the outstanding shares of the Fund. ADI has an agreement with this entity to sell Fund shares. The Fund, AIM and/or AIM affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, AIM and/or AIM affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned F-12 AIM International Growth Fund beneficially. In addition, 5% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by AIM. (b) Amount is net of redemption fees of $35,530, $5,504, $3,463, $290 and $4,187 for Class A, Class B, Class C, Class R and Institutional Class shares, respectively, the year ended October 31, 2006 and $14,834, $2,960, $1,319, $47 and $445 for Class A, Class B, Class C, Class R and Institutional Class shares, respectively, the year ended October 31, 2005. NOTE 13--NEW ACCOUNTING STANDARD In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions for FIN 48 are effective for fiscal years beginning after December 15, 2006. Management is currently assessing the impact of FIN 48, if any, on the Fund's financial statements and intends for the Fund to adopt the FIN 48 provisions during 2007. NOTE 14--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, --------------------------------------------------------------------- 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 21.63 $ 18.16 $ 15.23 $ 12.69 $ 14.45 - --------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) 0.14 0.11 0.05 0.01 (0.03) - --------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 6.26 3.36 2.90 2.53 (1.73) ================================================================================================================================= Total from investment operations 6.40 3.47 2.95 2.54 (1.76) ================================================================================================================================= Less dividends from net investment income (0.18) -- (0.02) -- -- ================================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ================================================================================================================================= Net asset value, end of period $ 27.85 $ 21.63 $ 18.16 $ 15.23 $ 12.69 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Total return(b) 29.73% 19.11% 19.40% 20.02% (12.18)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $1,908,453 $1,447,049 $1,288,548 $1,117,420 $1,093,344 _________________________________________________________________________________________________________________________________ ================================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.54%(c) 1.69% 1.70% 1.74% 1.70% - --------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.58%(c) 1.74% 1.74% 1.82% 1.74% ================================================================================================================================= Ratio of net investment income (loss) to average net assets 0.53%(c) 0.54% 0.27% 0.09% (0.21)% _________________________________________________________________________________________________________________________________ ================================================================================================================================= Portfolio turnover rate 37% 37% 54% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $1,689,240,372. F-13 AIM International Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS B ----------------------------------------------------------- YEAR ENDED OCTOBER 31, ----------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 20.08 $ 16.99 $ 14.32 $ 12.02 $ 13.78 - ------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) (0.05) (0.03) (0.07) (0.08) (0.12) - ------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.83 3.12 2.74 2.38 (1.64) ========================================================================================================================= Total from investment operations 5.78 3.09 2.67 2.30 (1.76) ========================================================================================================================= Less dividends from net investment income (0.02) -- -- -- -- ========================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ========================================================================================================================= Net asset value, end of period $ 25.84 $ 20.08 $ 16.99 $ 14.32 $ 12.02 _________________________________________________________________________________________________________________________ ========================================================================================================================= Total return(b) 28.80% 18.19% 18.64% 19.14% (12.77)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $247,939 $250,056 $301,380 $360,671 $401,288 _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.29%(c) 2.41% 2.40% 2.44% 2.40% - ------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.33%(c) 2.46% 2.44% 2.52% 2.44% ========================================================================================================================= Ratio of net investment income (loss) to average net assets (0.22)%(c) (0.18)% (0.43)% (0.61)% (0.91)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Portfolio turnover rate 37% 37% 54% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $262,508,129. <Table> <Caption> CLASS C ----------------------------------------------------------- YEAR ENDED OCTOBER 31, ----------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 20.10 $ 17.00 $ 14.33 $ 12.03 $ 13.79 - ------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) (0.05) (0.03) (0.07) (0.08) (0.12) - ------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 5.83 3.13 2.74 2.38 (1.64) ========================================================================================================================= Total from investment operations 5.78 3.10 2.67 2.30 (1.76) ========================================================================================================================= Less dividends from net investment income (0.02) -- -- -- -- ========================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ========================================================================================================================= Net asset value, end of period $ 25.86 $ 20.10 $ 17.00 $ 14.33 $ 12.03 _________________________________________________________________________________________________________________________ ========================================================================================================================= Total return(b) 28.78% 18.24% 18.63% 19.12% (12.76)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $183,360 $132,387 $116,136 $113,965 $114,070 _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.29%(c) 2.41% 2.40% 2.44% 2.40% - ------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.33%(c) 2.46% 2.44% 2.52% 2.44% ========================================================================================================================= Ratio of net investment income (loss) to average net assets (0.22)%(c) (0.18)% (0.43)% (0.61)% (0.91)% _________________________________________________________________________________________________________________________ ========================================================================================================================= Portfolio turnover rate 37% 37% 54% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. (c) Ratios are based on average daily net assets of $164,595,930. F-14 AIM International Growth Fund NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED) <Table> <Caption> CLASS R --------------------------------------------------------- JUNE 3, 2002 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ---------------------------------------- OCTOBER 31, 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 21.43 $18.04 $15.14 $12.69 $ 15.27 - ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) 0.07 0.07 0.01 (0.01) (0.02) - ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 6.21 3.32 2.89 2.46 (2.56) ======================================================================================================================= Total from investment operations 6.28 3.39 2.90 2.45 (2.58) ======================================================================================================================= Less dividends from net investment income (0.13) -- -- -- -- ======================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- ======================================================================================================================= Net asset value, end of period $ 27.58 $21.43 $18.04 $15.14 $ 12.69 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) 29.41% 18.79% 19.15% 19.31% (16.90)% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $19,070 $8,700 $2,450 $ 867 $ 49 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.79%(c) 1.91% 1.90% 1.94% 1.89%(d) - ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.83%(c) 1.96% 1.94% 2.02% 1.93%(d) ======================================================================================================================= Ratio of net investment income (loss) to average net assets 0.28%(c) 0.32% 0.07% (0.11)% (0.40)%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(e) 37% 37% 54% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $13,796,880. (d) Annualized. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. <Table> <Caption> INSTITUTIONAL CLASS ------------------------------------------------------------- MARCH 15, 2002 (DATE SALES YEAR ENDED OCTOBER 31, COMMENCED) TO ------------------------------------------- OCTOBER 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 21.97 $ 18.34 $ 15.37 $12.73 $ 15.09 - --------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.25 0.25 0.15 0.09 0.03 - --------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 6.35 3.38 2.93 2.55 (2.39) =========================================================================================================================== Total from investment operations 6.60 3.63 3.08 2.64 (2.36) =========================================================================================================================== Less dividends from net investment income (0.31) -- (0.11) -- -- - --------------------------------------------------------------------------------------------------------------------------- Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- -- =========================================================================================================================== Net asset value, end of period $ 28.26 $ 21.97 $ 18.34 $15.37 $ 12.73 ___________________________________________________________________________________________________________________________ =========================================================================================================================== Total return(b) 30.32% 19.79% 20.15% 20.74% (15.64)% ___________________________________________________________________________________________________________________________ =========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $288,408 $98,912 $13,345 $ 79 $ 74 ___________________________________________________________________________________________________________________________ =========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.08%(c) 1.07% 1.13% 1.17% 1.16%(d) - --------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.12%(c) 1.12% 1.17% 1.21% 1.20%(d) =========================================================================================================================== Ratio of net investment income to average net assets 0.99%(c) 1.16% 0.84% 0.66% 0.33%(d) ___________________________________________________________________________________________________________________________ =========================================================================================================================== Portfolio turnover rate(e) 37% 37% 54% 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 as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $198,377,723. (d) Annualized. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. F-15 AIM International Growth Fund NOTE 15--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), AIM and A I M Distributors, Inc. ("ADI") (the distributor of the retail AIM Funds) reached final settlements with certain regulators, including the Securities and Exchange Commission ("SEC"), the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, AIM and ADI created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by AIM, which was done pursuant to the terms of the settlement. These two fair funds may increase as a result of contributions from third parties who reach final settlements with the SEC or other regulators to resolve allegations of market timing and/or late trading that also may have harmed applicable AIM Funds. These two fair funds will be distributed in accordance with a methodology to be determined by AIM's independent distribution consultant, in consultation with AIM and the independent trustees of the AIM Funds and acceptable to the staff of the SEC. Management of AIM and the Fund are unable to estimate the impact, if any, that the distribution of these two fair funds may have on the Fund or whether such distribution will have an impact on the Fund's financial statements in the future. At the request of the trustees of the AIM Funds, AMVESCAP PLC ("AMVESCAP"), the parent company of IFG and AIM, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. PENDING LITIGATION AND REGULATORY INQUIRIES On August 30, 2005, the West Virginia Office of the State Auditor - -Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The WVASC makes findings of fact that AIM and ADI entered into certain arrangements permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that AIM and ADI violated the West Virginia securities laws. The WVASC orders AIM and ADI to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or capped by statute. Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or related entities and individuals, depending on the lawsuit, alleging: - that the defendants permitted improper market timing and related activity in the AIM Funds; - that certain AIM Funds inadequately employed fair value pricing; - that the defendants charged excessive advisory and/or distribution fees and failed to pass on to shareholders the perceived savings generated by economies of scale and that the defendants adopted unlawful distribution plans; and - that the defendants improperly used the assets of the AIM Funds to pay brokers to aggressively promote the sale of the AIM Funds over other mutual funds and that the defendants concealed such payments from investors by disguising them as brokerage commissions (all the claims in this category of lawsuits were dismissed with prejudice by the court on September 29, 2006, except for the Section 36(b) claim which was dismissed with leave to amend to plead it properly as a derivative claim). These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and ERISA, negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid, an accounting of all fund-related fees, commissions and soft dollar payments, restitution of all commissions and fees paid, and prospective relief in the form of reduced fees. All lawsuits based on allegations of market timing, late trading and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various AIM- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants; and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in AMVESCAP's 401(k) plan. Based on orders issued by the MDL Court, all claims asserted against the AIM Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the Consolidated Amended Fund Derivative Complaint. On September 15, 2006, the MDL Court granted the AMVESCAP defendants' motion to dismiss the Amended Class Action Complaint for Violations of ERISA and dismissed such Complaint. The plaintiff has commenced an appeal from that decision. IFG, AIM, ADI and/or related entities and individuals have received inquiries from numerous regulators in the form of subpoenas or other oral or written requests for information and/or documents related to one or more of the following issues, among others, some of which concern one or more AIM Funds: market timing activity, late trading, fair value pricing, excessive or improper advisory and/or distribution fees, mutual fund sales practices, including revenue sharing and directed-brokerage arrangements, investments in securities of other registered investment companies, contractual plans, issues related to Section 529 college savings plans and procedures for locating lost security holders. IFG, AIM and ADI have advised the Fund that they are providing full cooperation with respect to these inquiries. Regulatory actions and/or additional civil lawsuits related to these or other issues may be filed against the AIM Funds, IFG, AIM and/or related entities and individuals in the future. At the present time, management of AIM and the Fund are unable to estimate the impact, if any, that the outcome of the Pending Litigation and Regulatory Inquiries described above may have on AIM, ADI or the Fund. F-16 AIM International Growth Fund REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM International Mutual Funds 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 AIM International Growth Fund (one of the funds constituting AIM International Mutual Funds, hereafter referred to as the "Fund") at October 31, 2006, 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 periods indicated, 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP December 20, 2006 Houston, Texas F-17 AIM International Growth Fund TAX DISCLOSURES Of ordinary dividends paid to shareholders during the Fund's tax year ended October 31, 2006, 0.00% is eligible for the dividends received deduction for corporations. For its tax year ended October 31, 2006, the Fund designates 100%, or the maximum amount allowable, of its dividend distributions as qualified dividend income. Your actual amount of qualified dividend income for the calendar year will be reported in your Form 1099-DIV. You should consult your tax advisor regarding treatment of the amounts. TAX INFORMATION FOR NON-RESIDENT ALIEN SHAREHOLDERS For its tax year ended October 31, 2006, the Fund designates 0.00%, or the maximum amount allowable, of its dividend distributions as qualified interest income exempt from U.S. income tax for non-resident alien shareholders. Your actual amount of qualified interest income for the calendar year will be reported in your Form 1042-S mailing. You should consult your tax advisor regarding treatment of the amounts. The percentage of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended January 31, 2006, April 30, 2006, July 31, 2006 and October 31, 2006, are 99.87%, 99.86%, 99.90% and 99.81%, respectively. F-18 AIM International Growth Fund TRUSTEES AND OFFICERS The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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> TRUSTEE AND/ NAME, YEAR OF BIRTH AND OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) POSITION(S) HELD WITH THE 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 Trustee and Vice Chair Group Inc. (financial services holding company); Director and Vice Chairman, AMVESCAP PLC; Chairman, AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) and Trustee and Vice Chair of The AIM Family of Funds--Registered Trademark-- Formerly: President and Chief Executive Officer, A I M Management Group Inc.; Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); 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); Chief Executive Officer, AMVESCAP PLC -- Managed Products; and President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- - ------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Director, Chief Executive Officer and None Trustee, President and President, A I M Management Group Inc., Principal AIM Mutual Fund Dealer Inc. (registered Executive Officer broker dealer), AIM Funds Management Inc. (registered investment advisor) and 1371 Preferred Inc. (holding company); Director and President, A I M Advisors, Inc., INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, A I M Capital Management, Inc. and A I M Distributors, Inc.; Director and Chairman, AIM Investment Services, Inc., Fund Management Company and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, AVZ Callco Inc. (holding company); AMVESCAP Inc. (holding company) and AIM Canada Holdings Inc. (holding company); Director and Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); and Manager, Powershares Capital Management LLC Formerly: President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); Chairman, AIM Canada Holdings, Inc.; Executive Vice President and Chief Operations Officer, AIM Funds Management Inc.; President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - ------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 1992 Chairman, Crockett Technology Associates ACE Limited (insurance company); Trustee and Chair (technology consulting company) and Captaris, Inc. (unified messaging provider) - ------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 2001 Retired Badgley Funds, Inc. (registered Trustee investment company (2 portfolios)) Formerly: Partner, law firm of Baker & McKenzie - ------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None Trustee (investment banking firm); and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation - ------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2000 Director of a number of public and None Trustee private business corporations, including the Boss Group Ltd. (private investment and management); Cortland Trust, Inc. (Chairman) (registered investment company (3 portfolios)); Annuity and Life Re (Holdings), Ltd. (insurance company); CompuDyne Corporation (provider of products and services to the public security market); and Homeowners of America Holding Corporation (property casualty company) Formerly: Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; and Director of various affiliated Volvo companies; and Director, Magellan Insurance Company - ------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff, and Discovery Global Trustee Century Group, Inc. (government affairs Education Fund (non-profit) company); and Owner, Dos Angelos Ranch, L.P. Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) - ------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 1991 Partner, law firm of Kramer Levin Cortland Trust, Inc. (registered Trustee Naftalis and Frankel LLP investment company (3 portfolios)) - ------------------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - ------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Director, Mainstay VP Series Trustee Formerly: Partner, Deloitte & Touche Funds, Inc. (21 portfolios) - ------------------------------------------------------------------------------------------------------------------------------- </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. Taylor 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. F-19 TRUSTEES AND OFFICERS--(CONTINUED) AIM International Growth Fund The address of each trustee and officer of AIM International Mutual Funds (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 109 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 - ------------------------------------------------------------------------------------------------------------------------------ OTHER OFFICERS - ------------------------------------------------------------------------------------------------------------------------------ Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer N/A Senior Vice President and of The AIM Family of Funds--Registered Senior Officer Trademark-- Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - ------------------------------------------------------------------------------------------------------------------------------ John M. Zerr -- 1962 2006 Director, Senior Vice President, N/A Senior Vice President, Chief Secretary and General Counsel, A I M Legal Officer and Secretary Management Group Inc. and A I M Advisors, Inc.; Director, Vice President and Secretary, INVESCO Distributors, Inc.; Vice President and Secretary, A I M Capital Management, Inc., AIM Investment Services, Inc., and Fund Management Company; Senior Vice President and Secretary, A I M Distributors, Inc.; Director, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; and Manager, Powershares Capital Management LLC Formerly: Chief Operating Officer, Senior Vice President, General Counsel, and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); General Counsel and Secretary, Pilgrim Baxter Value Investors (an investment adviser); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - ------------------------------------------------------------------------------------------------------------------------------ Lisa O. Brinkley -- 1959 2004 Global Compliance Director, AMVESCAP N/A Vice President PLC; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, A I M Management Group Inc. (financial services holding company); Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc. and A I M Distributors, Inc.; Vice President, AIM Investment Services, Inc. and Fund Management Company; Senior Vice President and Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - ------------------------------------------------------------------------------------------------------------------------------ Kevin M. Carome -- 1956 2003 Senior Vice President and General Vice President Counsel, AMVESCAP PLC; Director, INVESCO Funds Group, Inc.; and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Director, Vice President and N/A General Counsel, Fund Management Company; Director, Senior Vice President, Secretary and General Counsel, A I M Management Group Inc. and A I M Advisors, Inc.; Director and Vice President, INVESCO Distributors, Inc.; Senior Vice President, A I M Distributors, Inc.; Vice President, A I M Capital Management, Inc. and AIM Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary of The AIM Family of Funds--Registered Trademark--; Chief Executive Officer and President, INVESCO Funds Group, Inc.; and Senior Vice President, and General Counsel, Liberty Financial Companies, Inc. and Senior Vice President and General Counsel Liberty Funds Group, LLC - ------------------------------------------------------------------------------------------------------------------------------ Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M N/A Vice President, Principal Advisors, Inc.; and Vice President, Financial Officer and Treasurer and Principal Officer of The Treasurer AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Investment Services, Inc.; and Vice President, A I M Distributors, Inc. - ------------------------------------------------------------------------------------------------------------------------------ J. Philip Ferguson -- 1945 2005 Senior Vice President and Chief N/A Vice President Investment Officer, A I M Advisors Inc.; Director, Chairman, Chief Executive Officer, President and Chief Investment Officer, A I M Capital Management, Inc.; Executive Vice President, A I M Management Group Inc. and Vice President of The AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, AIM Private Asset Management, Inc.; and Chief Equity Officer, Senior Vice President and Senior Investment Officer, A I M Capital Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Karen Dunn Kelley -- 1960 2004 Director of Cash Management, Managing N/A Vice President Director and Chief Cash Management Officer, A I M Capital Management, Inc; Director and President, Fund Management Company; and Vice President, A I M Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust Only) Formerly: Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - ------------------------------------------------------------------------------------------------------------------------------ Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance N/A Anti-Money Laundering Officer, A I M Advisors, Inc., A I M Compliance Officer Capital Management, Inc., A I M Distributors, Inc., AIM Investment Services, Inc., AIM Private Asset Management, Inc., Fund Management Company and The AIM Family of Funds--Registered Trademark-- Formerly: Manager of the Fraud Prevention Department, AIM Investment Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------ Todd L. Spillane -- 1958 2006 Senior Vice President, A I M Management N/A Chief Compliance Officer Group Inc.; Senior Vice President and Chief Compliance Officer, A I M Advisors, Inc.; Chief Compliance Officer of The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, A I M Capital Management, Inc.; and Vice President, A I M Distributors, Inc., AIM Investment Services, Inc. and Fund Management Company Formerly: Global Head of Product Development, AIG-Global Investment Group, Inc.; Chief Compliance Officer and Deputy General Counsel, AIG-SunAmerica Asset Management; and Chief Compliance Officer, Chief Operating Officer and Deputy General Counsel, American General Investment Management - ------------------------------------------------------------------------------------------------------------------------------ </Table> 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 1.800.959.4246. <Table> OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers Suite 100 11 Greenway Plaza Inc. LLP Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana Street Houston, TX 77046-1173 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Ballard Spahr INDEPENDENT TRUSTEES AIM Investment State Street Bank and Andrews & Ingersoll, LLP Kramer, Levin, Naftalis Services, Inc. Trust Company 1735 Market Street, 51st & Frankel LLP P.O. Box 4739 225 Franklin Street Floor 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Philadelphia, PA 19103-7599 Americas New York, NY 10036-2714 </Table> F-20 [eDELIVERY GO PAPERLESS AIMinvestments.com/edelivery Graphic] REGISTER FOR EDELIVERY eDelivery is the process of receiving your fund and account If used after January 20, 2007, this report must be information via e-mail. Once your quarterly statements, tax accompanied by a Fund Performance & Commentary or by an AIM forms, fund reports, and prospectuses are available, we will Quarterly Performance Review for the most recent quarter-end. send you an e-mail notification containing links to these Mutual funds distributed by A I M Distributors, Inc. documents. For security purposes, you will need to log in to your account to view your statements and tax forms. A I M Management Group Inc. has provided leadership in the investment management industry since 1976. AIM Investment WHY SIGN UP? Services, Inc. is the transfer agent for the products and services represented by AIM Investments. AIM is a subsidiary Register for eDelivery to: of AMVESCAP PLC, one of the world's largest independent financial services companies with $450 billion in assets under o reduce the amount of paper you receive. management as of October 31, 2006. o gain access to your documents faster by not waiting for the CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND mail. EXPENSES CAREFULLY. FOR THIS AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISOR AND o view your documents online anytime at your convenience. READ IT CAREFULLY BEFORE INVESTING. o save the documents to your personal computer or print them out for your records. HOW DO I SIGN UP? It's easy. Just follow these simple steps: 1. Log in to your account. 2. Click on the "Service Center" tab. 3. Select "Register for eDelivery" and complete the consent process. This AIM service is provided by AIM Investment Services, Inc. AIMinvestments.com IGR-AR-1 A I M Distributors, Inc. [YOUR GOALS. OUR SOLUTIONS.]--Registered Trademark-- - ---------------------------------------------------------------------------------------------- Mutual Retirement Annuities College Separately Offshore Cash Funds Products Savings Managed Products Management Plans Accounts - ---------------------------------------------------------------------------------------------- [AIM INVESTMENTS LOGO APPEARS HERE] --Registered Trademark-- ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, the Registrant had adopted a code of ethics (the "Code") that applies to the Registrant's principal executive officer ("PEO") and principal financial officer ("PFO"). The Code was amended in September, 2006, to (i) remove individuals listed in Exhibit A and any references to Exhibit A thus allowing for future flexibility and (ii) remove ambiguities found in the second paragraph of Section III. 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 Raymond Stickel, Jr. Mr. Stickel is "independent" within the meaning of that term as used in Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. FEES BILLED BY PWC RELATED TO THE REGISTRANT PWC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows: Percentage of Fees Percentage of Fees Billed Applicable to Billed Applicable to Non-Audit Services Non-Audit Services Provided for fiscal Provided for fiscal Fees Billed for year end 2006 Pursuant Fees Billed for Services year end 2005 Pursuant Services Rendered to to Waiver of Rendered to the to Waiver of the Registrant for Pre-Approval Registrant for fiscal Pre-Approval fiscal year end 2006 Requirement(1) year end 2005 Requirement(1) -------------------- ---------------------- ------------------------ ---------------------- Audit Fees $232,608 N/A $230,419 N/A Audit-Related Fees(2) $ 0 0% $ 10,000 0% Tax Fees(3) $ 47,560 0% $ 56,095 0% All Other Fees $ 0 0% $ 0 0% -------- -------- Total Fees $280,168 0% $296,514 0% ======== ======== PWC billed the Registrant aggregate non-audit fees of $47,560 for the fiscal year ended 2006, and $66,095 for the fiscal year ended 2005, for non-audit services rendered to the Registrant. - ---------- (1) With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant to PWC during a fiscal year; and (iii) such services are promptly approved by the Registrant's Audit Committee prior to the completion of the audit by the Audit Committee. (2) Audit-Related Fees for the fiscal year end October 31, 2005 includes fees billed for completing agreed-upon procedures related to fund mergers. (3) Tax Fees for the fiscal year end October 31, 2006 includes fees billed for reviewing tax returns. Tax fees for fiscal year end October 31, 2005 includes fees billed for reviewing tax returns and consultation services. FEES BILLED BY PWC RELATED TO AIM AND AIM AFFILIATES PWC billed AIM Advisors, Inc. ("AIM"), the Registrant's adviser, and any entity controlling, controlled by or under common control with AIM that provides ongoing services to the Registrant ("AIM Affiliates") aggregate fees for pre-approved non-audit services rendered to AIM and AIM Affiliates for the last two fiscal years as follows: Fees Billed for Fees Billed for Non-Audit Services Non-Audit Services Rendered to AIM and AIM Percentage of Fees Billed Rendered to AIM and AIM Percentage of Fees Billed Affiliates for fiscal Applicable to Non-Audit Affiliates for fiscal Applicable to Non-Audit year end 2006 That Were Services Provided for year end 2005 That Were Services Provided for Required fiscal year end 2006 Required fiscal year end 2005 to be Pre-Approved Pursuant to Waiver of to be Pre-Approved Pursuant to Waiver of by the Registrant's Pre-Approval by the Registrant's Pre-Approval Audit Committee Requirement(1) Audit Committee Requirement(1) ----------------------- ------------------------- ----------------------- ------------------------- Audit-Related Fees $0 0% $0 0% Tax Fees $0 0% $0 0% All Other Fees $0 0% $0 0% --- --- Total Fees(2) $0 0% $0 0% === === - ---------- (1) With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant, AIM and AIM Affiliates to PWC during a fiscal year; and (iii) such services are promptly approved by the Registrant's Audit Committee prior to the completion of the audit by the Audit Committee. (2) Including the fees for services not required to be pre-approved by the registrant's audit committee, PWC billed AIM and AIM Affiliates aggregate non-audit fees of $0 for the fiscal year ended 2006, and $0 for the fiscal year ended 2005, for non-audit services rendered to AIM and AIM Affiliates. The Audit Committee also has considered whether the provision of non-audit services that were rendered to AIM and AIM Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PWC's independence. PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND PROCEDURES As adopted by the Audit Committees of the AIM Funds (the "Funds") Last Amended September 18, 2006 STATEMENT OF PRINCIPLES Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission ("SEC") ("Rules"), the Audit Committees of the Funds' (the "Audit Committee") Board of Trustees (the "Board") are responsible for the appointment, compensation and oversight of the work of independent accountants (an "Auditor"). As part of this responsibility and to assure that the Auditor's independence is not impaired, the Audit Committees pre-approve the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds' investment adviser and to affiliates of the adviser that provide ongoing services to the Funds ("Service Affiliates") if the services directly impact the Funds' operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations. Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committees ("general pre-approval") or require the specific pre-approval of the Audit Committees ("specific pre-approval"). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committees. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committees before payment is made. The Audit Committees will also consider the impact of additional fees on the Auditor's independence when determining whether to approve any additional fees for previously pre-approved services. The Audit Committees will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee. The term of any general pre-approval runs from the date of such pre-approval through September 30th of the following year, unless the Audit Committees consider a different period and state otherwise. The Audit Committees will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations. The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committees in fulfilling their responsibilities. DELEGATION The Audit Committees may from time to time delegate pre-approval authority to one or more of its members who are Independent Trustees. All decisions to pre-approve a service by a delegated member shall be reported to the Audit Committee at its next quarterly meeting. AUDIT SERVICES The annual audit services engagement terms will be subject to specific pre-approval of the Audit Committees. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds' financial statements. The Audit Committee will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditor's qualifications and independence. In addition to the annual Audit services engagement, the Audit Committees may grant either general or specific pre-approval of other audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings. NON-AUDIT SERVICES The Audit Committees may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committees believe that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC's Rules on auditor independence, and otherwise conforms to the Audit Committee's general principles and policies as set forth herein. AUDIT-RELATED SERVICES "Audit-related services" are assurance and related services that are reasonably related to the performance of the audit or review of the Fund's financial statements or that are traditionally performed by the independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as "Audit services"; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; and agreed-upon procedures related to mergers, compliance with ratings agency requirements and interfund lending activities. TAX SERVICES "Tax services" include, but are not limited to, the review and signing of the Funds' federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Funds' Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy. No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims. Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committee pre-approval of permissible Tax services, the Auditor shall: 1. Describe in writing to the Audit Committees, which writing may be in the form of the proposed engagement letter: a. The scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the Fund, relating to the service; and b. Any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor and any person (other than the Fund) with respect to the promoting, marketing, or recommending of a transaction covered by the service; 2. Discuss with the Audit Committees the potential effects of the services on the independence of the Auditor; and 3. Document the substance of its discussion with the Audit Committees. ALL OTHER AUDITOR SERVICES The Audit Committees may pre-approve non-audit services classified as "All other services" that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy. PRE-APPROVAL FEE LEVELS OR ESTABLISHED AMOUNTS Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committees. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committees at the quarterly Audit Committees meeting and will require specific approval by the Audit Committees before payment is made. The Audit Committee will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services. PROCEDURES On an annual basis, A I M Advisors, Inc. ("AIM") will submit to the Audit Committees for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request. Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committees will be submitted to the Funds' Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committees. The Audit Committees will be informed at the next quarterly scheduled Audit Committees meeting of any such services for which the Auditor rendered an invoice and whether such services and fees had been pre-approved and if so, by what means. Each request to provide services that require specific approval by the Audit Committees shall be submitted to the Audit Committees jointly by the Fund's Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the policies and procedures and the SEC Rules. Each request to provide tax services under either the general or specific pre-approval of the Audit Committees will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committees the potential effects of the services on the Auditor's independence and will document the substance of the discussion. Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committees for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied. On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services. The Audit Committees have designated the Funds' Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds' Treasurer will report to the Audit Committee on a periodic basis as to the results of such monitoring. Both the Funds' Treasurer and management of AIM will immediately report to the chairman of the Audit Committee any breach of these policies and procedures that comes to the attention of the Funds' Treasurer or senior management of AIM. EXHIBIT 1 TO PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND PROCEDURES CONDITIONALLY PROHIBITED NON-AUDIT SERVICES (NOT PROHIBITED IF THE FUND CAN REASONABLY CONCLUDE THAT THE RESULTS OF THE SERVICE WOULD NOT BE SUBJECT TO AUDIT PROCEDURES IN CONNECTION WITH THE AUDIT OF THE FUND'S FINANCIAL STATEMENTS) - Bookkeeping or other services related to the accounting records or financial statements of the audit client - Financial information systems design and implementation - Appraisal or valuation services, fairness opinions, or contribution-in-kind reports - Actuarial services - Internal audit outsourcing services CATEGORICALLY PROHIBITED NON-AUDIT SERVICES - Management functions - Human resources - Broker-dealer, investment adviser, or investment banking services - Legal services - Expert services unrelated to the audit - Any service or product provided for a contingent fee or a commission - Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance - Tax services for persons in financial reporting oversight roles at the Fund - Any other service that the Public Company Oversight Board determines by regulation is impermissible. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None ITEM 11. CONTROLS AND PROCEDURES. (a) As of December 14, 2006, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant's disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act"), as amended. Based on that evaluation, the Registrant's officers, including the PEO and PFO, concluded that, as of December 14, 2006, the Registrant's disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure. (b) There have been no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. 12(a)(1) Code of Ethics. 12(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. 12(a)(3) Not applicable. 12(b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AIM International Mutual Funds By: /s/ PHILIP A. TAYLOR --------------------------------- Philip A. Taylor Principal Executive Officer Date: January 5, 2007 Pursuant to the requirements of the Securities and 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. By: /s/ PHILIP A. TAYLOR --------------------------------- Philip A. Taylor Principal Executive Officer Date: January 5, 2007 By: /s/ SIDNEY M. DILGREN --------------------------------- Sidney M. Dilgren Principal Financial Officer Date: January 5, 2007 EXHIBIT INDEX 12(a)(1) Code of Ethics. 12(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. 12(a)(3) Not applicable. 12(b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.