AIM INVESTMENT FUNDS, N-30D, 1999-01-08

AIM INVESTMENT FUNDS
N-30D, 1999-01-08

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<PAGE>

ANNUAL REPORT / OCTOBER 31 1998

AIM GLOBAL GROWTH & INCOME FUND

[COVER IMAGE]

[AIM LOGO APPEARS HERE]

INVEST WITH DISCIPLINE-REGISTERED TRADEMARK-

<PAGE>
[COVER IMAGE]

HEROES ON WHEELS BY JANE WOOSTER SCOTT JANE WOOSTER SCOTT'S IMAGINATIVE
PAINTING OF A CYCLING CHAMPIONSHIP CAPTURES THE SPIRIT OF AN INTERNATIONAL
CELEBRATION. LIKE SPORTS, INVESTING ALSO BRINGS THE WORLD TOGETHER, UNITING
AND ENRICHING PEOPLE THROUGHOUT THE GLOBE.

AIM Global Growth & Income Fund is for
shareholders who seek long-term capital appreciation and current income. The
Fund invests in stocks of blue chip companies and high-quality government
bonds from around the world.

ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:

- - AIM Global Growth & Income Fund (formerly GT Global Growth & Income
Fund) performance figures are historical and reflect reinvestment of
all distributions and changes in net asset value. Unless otherwise
indicated, the Fund's performance is computed at net asset value
without a sales charge.

- - During the fiscal year ended 10/31/98 the Fund paid distributions of $0.37,
$0.32, and $0.40 for Class A, B, and Advisor Class shares, respectively.

- - When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge. Class B share
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The performance of the Fund's Class B shares will differ from that
of Class A shares due to differences in sales charge structure and Fund
expenses.

- - Advisor Class shares are not sold directly to the general public and are
available only through certain employee benefit plans, financial
institutions, and other entities that have entered into specific agreements
with the Fund's Distributor. Please see the Fund's prospectus for more
complete information.

- - The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.

- - International investing presents certain risks not associated with
investing solely in the United States. These include risks relating to
fluctuations in the value of the U.S. dollar relative to the values of
other currencies, the custody arrangements made for the Fund's foreign
holdings, differences in accounting, political risks, and the lesser
degree of public information required to be provided by non-U.S.
companies.

ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:

- - The MSCI World Index is a group of unmanaged global securities tracked by
Morgan Stanley Capital International.

- - The J.P. Morgan Global Government Bond Index is a market value-weighted
average of government bonds from 13 major developed bond markets. It
includes the effect of reinvested coupons and is measured in U.S. dollars.

- - The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500)
is widely regarded by investors as representative of the stock market
in general.

- - The EAFE-REGISTERED TRADEMARK- (Europe, Australasia, and the Far East)
Index is a group of unmanaged securities. The index is compiled by Morgan
Stanley Capital International.

- - A direct investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.

MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE FDIC OR
ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

This report may be distributed only to current shareholders or to persons who
have received a current prospectus of the Fund.

AIM GLOBAL GROWTH & INCOME FUND
<PAGE>

ANNUAL REPORT / CHAIRMAN'S LETTER

[PHOTO OF CHARLES T. BAUER, CHAIRMAN OF THE BOARD OF THE FUND APPEARS HERE]

DEAR FELLOW SHAREHOLDER:

Throughout the fiscal year covered by this report, markets worldwide
vacillated between optimism that the woes in Asia would be contained and
worry that they would become a major economic drag on the U.S. and the rest
of the world. As a result, markets worldwide were especially volatile.

We understand how unnerving this year's level of volatility can be. Many
of you undoubtedly were tempted simply to exit the markets completely. Our
reaction, of course, is that you should not. The abrupt reversals of
sentiment during this fiscal year reinforce our conviction that markets are
unpredictable in the short term. Since even the best money managers cannot
know when to enter and exit a market, we think the wisest strategy is to stay
fully invested despite volatility and short-term disappointment.

MARKET RECAP

Even in a year as unsettling as this one, August was particularly
difficult. A variety of events converged to produce harsh market conditions
around the globe: the seemingly intractable downturn in Japan, Russia's
default on much of its foreign debt, and fear that Latin America could be
engulfed by the world's difficulties. Even European stocks, which had been
world market leaders, were shaken. In a global display of lost confidence,
investors flocked to securities perceived as safe and liquid. Even blue-chip
stocks went out of favor.

Fortunately, the U.S. Federal Reserve Board (the Fed) intervened. For
most of the fiscal year, the Fed had focused on the potential for inflation
in the U.S. economy. Shortly before the fiscal year ended, it shifted
direction, lowering interest rates twice to pump liquidity and confidence
into the markets and demonstrate that it would intervene to forestall a
recession. Numerous interest rate cuts in other countries followed. (After
the fiscal year closed, as this report was being written, the Fed lowered
rates a third time.)

THE FISCAL YEAR CLOSED WITH INTERNATIONAL EQUITIES RALLYING AND BONDS LOSING
SOME OF THEIR MOMENTUM.

Investors responded favorably. The fiscal year closed with international
equities rallying and bonds losing some of their momentum. In just the two
weeks between the Fed's second interest rate move on October 15 and the
October 31 close of the fiscal year, the EAFE Index gained 5.04% and the MSCI
World Index rose 4.93%. The U.S. participated strongly in the rally, with the
S&P 500 up 4.93% during the same two-week period.

However difficult this fiscal year has been, the fundamental principles
of investing remain unchanged:

- - broad portfolio diversification;

- - realistic expectations, recognizing that the potential for downturns is
always present; and

- - as always, long-term thinking.

Your financial consultant is your best resource for helping you construct a
diversified portfolio and weather turbulent markets.

YOUR FUND MANAGERS' COMMENTS

We are pleased to send you this report on your Fund's fiscal year. On the
pages that follow, your Fund's management team offers more detailed
discussion of how markets behaved, how they managed the portfolio, and what
they foresee for your Fund and the markets where it invests. We hope you find
their discussion informative. If you have any questions or comments, please
contact our Client Services department at 800-959-4246 or e-mail your inquiry
to us at [email protected]. You can access information about your account
through our AIM Investor Line at 800-246-5463 or on our Web site,
www.aimfunds.com. We often post market updates on our Web site.

We thank you for your continued participation in The AIM Family of
Funds-REGISTERED TRADEMARK-.

Sincerely,

/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman

AIM GLOBAL GROWTH & INCOME FUND
<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

GROWTH AND INCOME STRATEGY PRODUCES STELLAR PERFORMANCE

GLOBAL AND DOMESTIC MARKETS WERE VOLATILE FOR MUCH OF THE REPORTING PERIOD.
HOW DID AIM GLOBAL GROWTH & INCOME FUND PERFORM?

The Fund turned in an outstanding performance over the fiscal year ending
October 31, 1998. Class A shares reported a total annual return of 17.76%
while Class B shares reported a 16.93% total annual return.

HOW DID THE GLOBAL MARKETS PERFORM DURING THE REPORTING PERIOD?

The bull market in the United States and Europe roared in the first part of
the year, then came to an abrupt halt in the summer. Major indexes that
reached all-time highs in July plummeted by nearly 20% in August, signaling
an instant bear market. A number of events converged to create the sharp
downturn. Currency devaluations occurred in Thailand, Malaysia, Indonesia,
and Korea. A lingering recession gripped Japan. Crippled by overwhelming
debt, Russia suspended repayment of much of its foreign debt. As Russia
created a floating exchange rate for the ruble, its currency valuation
plummeted. Fears of a global credit crunch spread to Latin America, as
investors worried that Brazil could not sustain its exchange rate in light of
the country's increasing debt.

The one bright spot throughout the turmoil was the government bond market. In
the unsettled stock market environment, investors worldwide flocked to U.S.
Treasury issues because of their relative safety and liquidity. Treasury
securities soared in price, sending their yields to historic lows. For
example, the yield of the benchmark 30-year Treasury bond fell from 5.93% on
March 31, 1998, to 4.96% at the end of the reporting period--its lowest level
since the issue came into existence in 1977.

By the end of the year, stock markets stabilized. In a move felt around the
world, the Federal Reserve Board (the Fed) reassured markets by lowering the
short-term target federal funds rate. In two steps, on September 29 and again
on October 15, the rate dropped from 5.50% to 5.00%.

In late October, the Group of Seven countries--the United States, Japan,
Germany, France, Britain, Italy, and Canada--agreed with a plan to allow the
International Monetary Fund to provide $90 billion in loans to financially
troubled countries, including Brazil.

HAVE YOU CHANGED THE WAY YOU MANAGE THE FUND AS A RESULT OF MARKET CONDITIONS?

In the first part of the year, we invested heavily in blue-chip stocks and
enjoyed the bull market run-up in the United States and Europe. When markets
turned turbulent over the summer, we increased the Fund's holdings in U.S.
Treasury, German and U.K. bonds. As of October 31, 1998, 28.3% of the
portfolio consisted of government bonds, a sector that greatly benefited from
the drop in interest rates near the end of the fiscal year.

We also increased our exposure in consumer franchises such as Cadbury
Schweppes, a British beverage company with strong brands including 7 UP, A&W
Root Beer, Canada Dry, Dr Pepper, and Squirt. In addition, the Fund increased
its investment in long-time holding Bristol-Myers Squibb, a U.S. health and
personal care company with household names such as Clairol and Excedrin.

During the summer, we reduced the Fund's financial holdings, especially in
European banks with exposure in emerging markets. At the end of the fiscal
year, the Fund's investment in financial stocks was 19.1%, compared with
32.7% as of April 30, 1998, and 28.4% on October 31, 1997.

WHY IS THE FUND SO HEAVILY INVESTED IN EUROPE?

The Fund has been bullish on European stocks for several reasons. The first
is price: European equities are trading at much lower valuations compared to
U.S. stocks. In addition, we're positioning the Fund to benefit from
structural changes as the European Economic and Monetary Union (EMU) takes
shape over the next two years. Huge opportunities exist as governments turn
over state-owned companies to private hands. We also expect consumer products
firms with strong brands to benefit from an expanding customer base.

PORTFOLIO COMPOSITION
As of 10/31/98, based on total net assets

TOP 10 EQUITY HOLDINGS

<TABLE>

<S> <C> <C>
1. Bristol-Myers Squibb Co. (U.S.) 3.9%
2. UBS AG Registered (Switzerland) 2.9
3. Cadbury Schweppes PLC (U.K.) 2.7
4. Texas Utility Co. (U.S.) 2.6
5. Royal Dutch Petroleum Co. (Netherlands) 2.3
6. Bestfoods (U.S.) 2.1
7. First Tennessee National Corp. (U.S.) 1.9
8. Royal & Sun Alliance Insurance Group PLC (U.K.) 1.9
9. Southern Co. (U.S.) 1.8
10. McGraw-Hill, Inc. (U.S.) 1.8

</TABLE>

SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.

AIM GLOBAL GROWTH & INCOME FUND

<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

We believe stable interest rates will continue to attract global
investors. Inflation is likely to drop throughout Europe as countries in the
EMU gravitate toward a single currency, the euro.

HOW WILL THE NEW CURRENCY IN EUROPE AFFECT THE FUND?

Europe will launch the euro starting January 1999. At first, only 11
countries will adopt it: Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, and Spain. The changeover will
take place gradually. New coins and paper currency will not be introduced
until January 2002. The euro is expected to bring greater unity to the
European business world. Price comparison of goods, services, and labor
across Europe will be much easier. Because of this "price transparency,"
European companies may be forced to become more competitive. Furthermore, the
equity markets are likely to become broader and more liquid, since European
companies may find it easier to attract capital across borders. Europe's
fixed-income markets could also be transformed. Eventually, the
euro-denominated debt market could be as large and liquid as that of the U.S.

The introduction of a new currency can present unique risks and
uncertainties for investors. Please see your Fund prospectus for more
information about these risk factors.

WHAT IS YOUR OUTLOOK FOR THE GLOBAL MARKETS IN GENERAL?

We're cautious about the prospects for worldwide earnings growth over the
next two years. The problems in Asia, Russia, and Latin America will not
disappear overnight. We expect slower growth, lower inflation, and falling
commodity prices. Corporate earnings growth will be harder to sustain, and we
expect them to be flat in 1999.

The drag on the U.S. and European economies may come from exports. The
question will be whether internal consumer demand will be strong enough to
offset a drop in spending from Asia, Latin America, and Eastern Europe.

Although we expect the markets to remain volatile, the Fund's investment
discipline helps it weather market uncertainties. We emphasize high-quality
blue-chip stocks with above-average dividend yields and AA or better-rated
government bonds. The Fund also is globally well diversified. Our investment
strategy positions the Fund to grow in value while providing a stable income
stream.

TOP FIXED-INCOME HOLDINGS

<TABLE>
<CAPTION>
Coupon Maturity %

<S> <C> <C> <C> <C>
1. U.S. Treasury 10.625% 8/15/15 9.0%
2. German Government Bonds 6.25 4/26/06 5.4
3. U.S. Treasury 10.375 11/15/09 5.0
4. United Kingdom Treasury 8.00 6/7/21 3.2
5. German Government Bonds 5.65 1/4/28 2.6
6. German Government Bonds 8.25 9/20/01 2.4
7. United Kingdom Treasury 4.37* 12/7/28 0.4
8. U.S. Treasury 7.625 2/15/25 0.3

</TABLE>

NUMBER OF HOLDINGS: 61

Cash Equivalent/Other Assets 3.7%
Government Notes and Bonds 28.3%
Common Stocks 68.0%
THESE PERCENTAGES WERE ATTACHED TO A PIE CHART

TOP 10 COUNTRIES

<TABLE>

<S> <C> <C>
1. United States 48.6%
2. United Kingdom 16.6
3. Germany 13.6
4. Netherlands 5.4
5. Switzerland 4.8
6. Australia 3.8
7. Belgium 2.8
8. France 2.1
9. New Zealand 1.5
10. Italy 0.8

</TABLE>

*Zero coupon bond; 4.37% is effective yield as of 10/31/98

Please keep in mind the Fund's portfolio is subject to change and there is no
assurance the Fund will continue to hold any particular security.

SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.

AIM GLOBAL GROWTH & INCOME FUND

<PAGE>

ANNUAL REPORT / PERFORMANCE HISTORY

YOUR FUND'S LONG-TERM PERFORMANCE

RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL GROWTH & INCOME FUND VS. BENCHMARK INDEXES

9/25/90--10/31/98

AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/98, including sales charges

CLASS A SHARES
<TABLE>
<S> <C>
Inception (9/25/90) 12.53%
5 years 11.12
1 Year 11.26*

</TABLE>

*17.76% excluding sales charges

CLASS B SHARES
<TABLE>
<S> <C>
Inception (10/22/92) 13.63%
5 years 11.41
1 Year 11.93*

</TABLE>

*16.93% excluding sales charges

ADVISOR CLASS

<TABLE>
<S> <C>
Inception (6/1/95) 16.90%
1 year 18.27

</TABLE>

AIM Global Growth J.P Morgan Global
& Income Fund Government Bond
Class A shares Index MSCI World Index

9/90 9,444 11,487 10,000
10/90 9,464 11,942 10,936
10/91 10,948 13,284 12,733
10/92 11,593 14,955 12,139
10/93 14,503 16,600 15,498
10/94 14,958 17,036 16,764
10/95 15,896 19,651 18,446
10/96 18,567 20,851 21,551
10/97 22,095 21,578 25,268
10/98 26,019 21,317 29,232

</TABLE>

Source: Towers Data System HYPO -REGISTERED TRADEMARK-.

Your Fund's total return includes sales charges, expenses, and management
fees. The performance of the Fund's Class B and Advisor Class shares will
differ from Class A shares due to differing fees and expenses. For Fund
performance calculations and descriptions of indexes cited on this page,
please refer to the inside front cover.

MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF
AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.

Past performance is no guarantee of comparable future results.

ABOUT THIS CHART

The chart above compares your Fund's Class A shares to benchmark indexes. It
is intended to give you a general idea of how your Fund performed compared to
the stock market over the period 9/25/90--10/31/98. It is important to
understand the difference between your Fund and these indexes. An index
measures performance of a hypothetical portfolio. A market index such as the
Morgan Stanley Capital International (MSCI) World Index is not managed and
incurs no sales charges, expenses, or fees. (Please note that the MSCI World
Index performance figures in the chart are for the period 9/30/90--10/31/98.)
If you could buy all the securities that make up a market index, you would
incur expenses that would affect the return on your investment. An index of
funds such as the J.P. Morgan Global Government Bond Index includes a number
of mutual funds grouped by management style and investment strategy. Use of
these indexes is intended to give you a general idea of how your Fund
performed compared to these benchmarks.

AIM GLOBAL GROWTH & INCOME FUND

<PAGE>

ANNUAL REPORT / FOR CONSIDERATION

WHY STAYING FULLY INVESTED HAS BEEN THE WISEST COURSE

When the stock market turns volatile, many investors feel the impulse to pull
their money out of mutual funds. The question then becomes when to get back
in. Trying to guess the answer could be very costly.

No one, not even expert market watchers, can consistently predict what
the market will do next. That's why AIM funds stay fully invested even in a
down market, and we encourage investors to do the same.

For long-term investing, the stock market historically has offered the
highest returns. For example, the Standard & Poor's Composite Index of 500
Stocks (S&P 500) has reported an annualized total return of 13.15% for the 50
years ending October 31, 1998. Those were five decades of wars, recessions,
and political upheaval.

If you pull your money out whenever markets decline, you could miss some
of the market's best days. In August 1998, investors withdrew $11 billion
from U.S. mutual funds. Chances are, many of those investors did not put
their money back into the market in time for the October rally. In fact,
October 1998 turned out to be the strongest month for the Dow Jones
Industrial Average in 11 years.

For international investors, here's another way to look at market
timing: If you had invested a hypothetical $10,000 in the Europe,
Australasia, and Far East Index tracked by Morgan Stanley Capital
International on October 31, 1978, your money would have grown to $103,110 by
October 31, 1998. That's an average annual total return of 12.37%. But
suppose that during that 20-year period, there were times when you decided to
get out of the market. If you missed the market's two best months, your
return would have fallen to 10.83%, and your investment would be worth
$78,214. If you had missed the market's five best months, your return would
have dropped to 9.01% and your investment would be worth $56,149.

The more you try to time the market, the greater your chances of missing
its biggest single-day gains. Keep focused on your financial goals and
remember that time, not timing, is key to successful investing. Now may be a
good time to visit your financial adviser to talk about your portfolio.
Remember:

- think long-term
- diversify your investments
- avoid market timing
- maintain realistic expectations

PENALTY FOR MISSING THE MARKET
MSCI EAFE INDEX
Average annual total returns, 20 years ended 10/31/98

[Graphic Data]

12.37% 10.83% 9.01% 7.89% 6.81% 4.38%

Fully Miss the
Invested Miss the 2 Miss the 5 Miss the 7 Miss the 9 14 Best
240 Months Best Months Best Months Best Months Best Months Months

Past performance is no guarantee of comparable future results.

The EAFE -REGISTERED TRADEMARK- (Europe, Australasia, and the Far East) Index
is a group of unmanaged foreign securities. The index is compiled by Morgan
Stanley Capital International. Source: Lipper Analytical Services, Inc.

AIM GLOBAL GROWTH & INCOME FUND

<PAGE>

ANNUAL REPORT / FOR CONSIDERATION

TAKE A CLOSER LOOK AT MARKET INDEXES

You step into your car after work and hear the radio announcer say, "The
market was down 200 points today." Instantly you start to worry. But should
you? The question is, what exactly is "the market"? And how are your
investments going to be affected by it? You need the facts, and fast. Market
indexes are a good place to start. They can help you gauge how your
investments are performing.

"The market" actually is much broader than newspapers and
television reports make it out to be. The media often
report movements in the Dow Jones Industrial Average (the
Dow) as indicative of the market as a whole. But the Dow
is made up of just 30 stocks; the U.S. market is made up
of more than 12,000 stocks traded on the New York Stock Exchange,
regional exchanges, and over the counter. The Dow only
measures the performance of the largest American
companies.

If you're like most investors, you've got a range of investments across
market segments, not just blue-chip stocks. The best way to compare your
investments to their peers in the marketplace is to find the right index. An
index measures the performance of a particular group of stocks. But keep in
mind, there is rarely a perfect match between the stocks in a mutual fund and
the stocks in an index.

Indexes and funds have different purposes. Mutual funds select stocks
based on their past performance or future potential. Indexes pick stocks
based on their ability to act as reliable measuring tools. For example, index
makers for the S&P 500 look for actively traded, widely owned stocks that
reflect the active stock market.

There are other important differences between a fund and an index. You
cannot invest directly in an index. Because indexes are unmanaged, they incur
no sales charges, expenses, or fees. Even if you bought all the securities
making up an index, your transaction expenses would lower your investment
returns.

As you follow the various indexes, you'll notice that their tracks often
diverge. When large-caps are up, small-caps or overseas stocks are down-and
vice

THE USUAL INDEXES

THE DOW JONES INDUSTRIAL AVERAGE

WHAT IT IS: In its 102-year history, the Dow always has focused on the
largest, most successful U.S. companies. The types of firms in the index have
changed drastically over the years--from the cotton companies of the 19th
century to the computer icons of the 20th. The 30 stocks now in the Dow
include household names such as International Business Machines Corp., Boeing
Co., McDonald's Corp., and Walt Disney Co.

WHAT IT TELLS YOU: While stocks in the Dow make up about 20% of the value of
all U.S. stocks, the index leaves out many sectors of the market. For most
mutual fund investors, the Dow is an inadequate and often inappropriate
measure of comparison. Use it to check the pulse of American big business,
but look elsewhere for a more inclusive market view.

S&P 500

WHAT IT IS: The S&P 500 (Standard & Poor's Composite Index of 500 Stocks) is
often used as a gauge of the whole market. But it measures only 500 stocks in
the large-capitalization portion of the U.S. stock market. Included in the
index are Apple Computer, Hilton Hotels, NIKE Inc., and Pennzoil Co.

WHAT IT TELLS YOU: The S&P 500 is useful for evaluating a fund that invests
in large-capitalization U.S. stocks. It's a poor gauge for others funds, such
as a small-cap aggressive growth fund.

Keep in mind that the S&P 500 is very concentrated. The top 50 companies
represent half the S&P 500's assets. For the past few years, the total return
of the S&P 500 has been unusually high, but much of this performance can be
attributed to just a few stocks in the index. Most mutual funds are more
diversified than this index.

NASDAQ COMPOSITE INDEX

WHAT IT IS: The NASDAQ (National Association of Securities Dealers Automated
Quotation system) Composite Index measures the performance of all NASDAQ
domestic and foreign stocks. Often associated with the over-the-counter
market, the index also includes some exchange-listed stocks. More than 5,300
stocks are in the NASDAQ Composite Index.

What it tells you: Many consider NASDAQ a barometer for small- and mid-cap
stocks. However, the index is market-value weighted--each company's stock
affects the index in proportion to that company's market value. Large-cap
technology stocks such as Microsoft, Intel, and Dell Computer dominate it.

The NASDAQ is not a good measure of small- and mid-cap stock performance. It
basically tells you how large-cap technology stocks are doing. It is not a
suitable index for most mutual funds.

AIM GLOBAL GROWTH & INCOME FUND

<PAGE>

ANNUAL REPORT / FOR CONSIDERATION

versa. The chart at the right shows calendar-year returns for two domestic
and one foreign equity index for the decade 12/31/87 through 12/31/97. The
market segments often move out of synch, and performance leadership often
rotates from one segment to another.

By positioning your investments strategically in various market segments,
you're less likely to miss out on the peaks, and you'll be more protected
from the valleys. Remember, patience is the key. If you jump in and out of
investments, you could miss out on some of the market's best moments. See
your financial adviser to build a diversified portfolio suited to fluctuating
markets.

DIVERGING INDEXES

Total Return per
Calendar Year S&P 500 Index Europe-Australasia-Far Russell 2000 Stock Index
1987--1997 with Monthly Dividends East Index with Dividends*

<S> <C> <C> <C>
12/88 16.55% 25.02% 28.59%
12/89 31.64 16.26 10.8
12/90 -3.09 19.48 23.2
12/91 30.41 46.04 12.5
12/92 7.61 18.41 11.85
12/93 10.06 18.88 32.94
12/94 1.32 -1.82 8.06
12/95 37.54 28.45 11.55
12/96 22.95 16.49 6.36
12/97 33.35 22.36 2.06

</TABLE>

Past performance is no guarantee of future investment results.

*International investing presents risks not associated with investing solely
in the United States. These include risks relating to fluctuation in the
value of the U.S. dollar, custody arrangements made for a Fund's foreign
holdings, differences in accounting, political risks, and the lesser degree
of public information required to be provided by non-U.S. companies.

A FEW MORE INDEXES

S&P 400

WHAT IT IS: The Standard & Poor's 400 Mid-Cap Index is a relatively new index
that dates to 1981 and measures performance of 400 stocks in the
mid-capitalization sector of the domestic stock market. Companies in the
index include America Online, Inc., CompuWare Corp., Starbucks Corp., and
Office Depot. As of July 31, the median market capitalization in the S&P 400
was approximately $1.8 billion, but some stocks in the index have
capitalizations as large as $5 billion.

WHAT IT TELLS YOU: If your fund invests primarily in mid-caps, this is one of
the best benchmarks to use. But keep in mind that the index may include
companies smaller or larger than the ones in your fund.

RUSSELL 2000 INDEX

WHAT IT IS: The Russell 2000 Index measures the performance of small-cap
stocks. A total of 2,000 U.S. companies are represented in the index,
including such well-known firms as Bally Total Fitness, Bethlehem Steel,
Coca-Cola Bottling Co., and Coors Brewing Co. The index, which is
cap-weighted, represents about 10% of the U.S. stock market. More than 900 of
the stocks in the Russell 2000 trade on either the New York Stock Exchange or
the American Stock Exchange.

WHAT IT TELLS YOU: The Russell 2000 Index is a very good indicator of
small-cap stock performance. It is a true small-cap index with the market
value of companies represented in this index ranging from $171.7 million to
$1.1 billion. Many mutual funds investing in small-cap stocks use the Russell
2000 as their benchmark index.

THE EUROPE, AUSTRALASIA, AND FAR EAST INDEX (EAFE)

WHAT IT IS: The EAFE consists of approximately 1,600 foreign stocks tracked
by Morgan Stanley Capital International (MSCI). They are listed on stock
exchanges in 20 developed countries. Stocks are chosen to reflect 60% of the
market capitalization of each country and of each major industry group.

WHAT IT TELLS YOU: As international investing has grown, a need has arisen to
measure global stock-market performance. The EAFE fulfills this need for
developed markets in Europe, Australia and the Far East. It is frequently
used as a benchmark for mutual funds investing in stocks in these markets.
MSCI also has developed indexes for specific countries and regions and for
emerging markets. Since your fund's country allocation may be different from
EAFE, you may need to look at a more specific index.

An index is not an investment product available for purchase. An index
measures the performance of a hypothetical portfolio. An index is not
managed, incurring no sales charges, expenses, or fees. If you could buy all
the securities that make up a particular index, you would incur expenses that
would affect the return on your investment.

AIM GLOBAL GROWTH & INCOME FUND

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

- --------------------------------------------------------------------------------

To the Shareholders of AIM Global Growth & Income Fund (formerly GT Global
Growth & Income Fund) and Board of Trustees of AIM Investment Funds (formerly
G.T. Investment Funds, Inc.):

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the AIM Global Growth & Income Fund
at October 31, 1998, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. 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 generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP

BOSTON, MASSACHUSETTS
DECEMBER 18, 1998

8
<PAGE>
PORTFOLIO OF INVESTMENTS

October 31, 1998

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (19.1%)
UBS AG - Registered ....................................... SWTZ 84,259 $ 23,108,090 2.9
BANKS-MONEY CENTER
First Tennessee National Corp. ............................ US 490,800 15,552,225 1.9
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 1,621,400 14,838,645 1.9
INSURANCE - MULTI-LINE
First Union Corp. (N.C.) .................................. US 232,000 13,456,000 1.7
BANKS-REGIONAL
ING Groep N.V. ............................................ NETH 266,878 12,916,678 1.6
OTHER FINANCIAL
American General Corp. .................................... US 170,000 11,645,000 1.4
INSURANCE-LIFE
CGU PLC ................................................... UK 694,750 11,001,855 1.4
INSURANCE - MULTI-LINE
National Australia Bank Ltd. .............................. AUSL 674,825 8,941,431 1.1
BANKS-MONEY CENTER
Commonwealth Bank of Australia ............................ AUSL 713,000 8,863,481 1.1
BANKS-MONEY CENTER
Lloyds TSB Group PLC ...................................... UK 688,428 8,494,490 1.1
BANKS-MONEY CENTER
National Westminster Bank PLC ............................. UK 471,800 7,964,634 1.0
BANKS-MONEY CENTER
IKB Deutsche Industriebank AG ............................. GER 394,000 7,808,108 1.0
BANKS-REGIONAL
Credit Suisse Group ....................................... SWTZ 49,300 7,579,156 1.0
BANKS-MONEY CENTER
Fortis AG ................................................. BEL -- -- --
OTHER FINANCIAL
CVG-/- .................................................. -- 34,440 241,967 --
Strip VVPR-/- ........................................... -- 34,440 1,008 --
------------
152,412,768
------------
Consumer Non-Durables (16.1%)
Cadbury Schweppes PLC ..................................... UK 1,381,800 21,153,539 2.7
FOOD
Bestfoods ................................................. US 300,000 16,350,000 2.1
FOOD
Avon Products, Inc. ....................................... US 364,000 14,446,250 1.8
PERSONAL CARE/COSMETICS
Reckitt & Colman PLC ...................................... UK 833,093 14,398,278 1.8
HOUSEHOLD PRODUCTS
Philip Morris Cos., Inc. .................................. US 255,000 13,036,875 1.6
TOBACCO AND FOOD
Diageo PLC ................................................ UK 1,094,559 11,811,788 1.5
BEVERAGES - ALCOHOLIC
Anheuser-Busch Cos., Inc. ................................. US 188,371 11,196,301 1.4
BEVERAGES - ALCOHOLIC
Pernod Ricard ............................................. FR 158,720 10,574,284 1.3
BEVERAGES - ALCOHOLIC
</TABLE>

The accompanying notes are an integral part of the financial statements.

9
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)

October 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Foster's Brewing Group Ltd. ............................... AUSL 3,500,000 $ 8,596,875 1.1
BEVERAGES - ALCOHOLIC
Brown-Forman Corp. "B" .................................... US 93,600 6,358,950 0.8
BEVERAGES - ALCOHOLIC
------------
127,923,140
------------
Energy (15.2%)
Texas Utilities Co. ....................................... US 470,000 20,562,500 2.6
ELECTRICAL & GAS UTILITIES
Royal Dutch Petroleum Co. ................................. NETH 371,840 17,956,938 2.3
OIL
Southern Co. .............................................. US 520,000 14,657,500 1.8
ELECTRICAL & GAS UTILITIES
Exxon Corp. ............................................... US 182,600 13,010,250 1.6
ENERGY SOURCES
Electrabel S.A. ........................................... BEL 34,760 12,821,311 1.6
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................... US 162,600 12,306,788 1.6
ENERGY SOURCES
Reunies Electrobel & Tractebel S.A. ....................... BEL 57,935 9,667,140 1.2
ELECTRICAL & GAS UTILITIES
RWE AG .................................................... GER 134,620 7,304,015 0.9
ENERGY EQUIPMENT & SERVICES
PG&E Corp. ................................................ US 220,000 6,696,250 0.8
ELECTRICAL & GAS UTILITIES
Elf Aquitaine ............................................. FR 52,475 6,075,486 0.8
OIL
------------
121,058,178
------------
Services (12.7%)
McGraw-Hill, Inc. ......................................... US 162,000 14,569,875 1.8
BROADCASTING & PUBLISHING
Bell Atlantic Corp. ....................................... US 250,000 13,281,250 1.7
TELEPHONE - REGIONAL/LOCAL
Telecom Corporation of New Zealand Ltd.: .................. NZ -- -- 1.5
TELEPHONE NETWORKS
Common .................................................. -- 2,614,200 10,721,872 --
ADR{\/} ................................................. -- 38,000 1,254,000 --
Deutsche Telekom AG ....................................... GER 380,000 10,359,253 1.3
TELEPHONE NETWORKS
Dun & Bradstreet Corp. .................................... US 309,800 8,790,575 1.1
BROADCASTING & PUBLISHING
Koninklijke KPN N.V. ...................................... NETH 220,005 8,551,431 1.1
TELEPHONE NETWORKS
Reuters Group PLC ......................................... UK 716,181 7,369,103 0.9
BROADCASTING & PUBLISHING
Swisscom AG-/- ............................................ SWTZ 20,820 7,054,762 0.9
TELEPHONE NETWORKS
Telecom Italia SpA ........................................ ITLY 900,000 6,508,791 0.8
TELEPHONE NETWORKS
</TABLE>

The accompanying notes are an integral part of the financial statements.

10
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)

October 31, 1998

TOTAL EQUITY INVESTMENTS (cost $365,036,400) ................ 541,312,106 68.0
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (28.3%)
Germany (10.4%)
Deutschland Republic:
6.25% due 4/26/06 ..................................... DEM 62,840,000 43,157,651 5.4
5.625% due 1/4/28 ..................................... DEM 32,375,000 20,814,596 2.6
8.25% due 9/20/01 ..................................... DEM 27,700,000 18,856,619 2.4
United Kingdom (3.6%)
United Kingdom Treasury:
8% due 6/7/21 ......................................... GBP 10,920,000 25,684,015 3.2
(effective yield 4.37%) due 12/7/28 {=} ............... GBP 6,500,000 2,764,289 0.4
United States (14.3%)
United States Treasury:
10.625% due 8/15/15 ................................... USD 44,500,000 71,338,078 9.0
10.375% due 11/15/09 .................................. USD 31,000,000 40,163,163 5.0
7.625% due 2/15/25 .................................... USD 2,100,000 2,762,402 0.3
------------
Total Government & Government Agency Obligations (cost
$215,000,367) .............................................. 225,540,813
------------ -----

TOTAL FIXED INCOME INVESTMENTS (cost $215,000,367) .......... 225,540,813 28.3
------------ -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Societe Generale Banque put warrants due 11/15/99 Tractebel
(cost $0) ................................................ BEL 11,587 3,053 --
------------ -----
BANKS-MONEY CENTER
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENTS (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 30, 1998, with State Street Bank & Trust Co.,
due November 2, 1998, for an effective yield of 5.30%,
collateralized by $23,860,000 U.S. Treasury Notes, 6.75%
due 4/30/00 (market value of collateral is $25,500,375,
including accrued interest). ............................ 25,000,000 3.1
</TABLE>

The accompanying notes are an integral part of the financial statements.

11
<PAGE>
PORTFOLIO OF INVESTMENTS (cont'd)

October 31, 1998

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENTS (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 30, 1998, with State Street Bank & Trust Co.,
due November 2, 1998, for an effective yield of 5.30%,
collateralized by $360,000 U.S. Treasury Bonds, 11.25% due
2/15/15 (market value of collateral is $611,477, including
accrued interest). ...................................... $ 597,000 0.1
------------ -----

TOTAL REPURCHASE AGREEMENTS (cost $25,597,000) .............. 25,597,000 3.2
------------ -----

TOTAL INVESTMENTS (cost $605,633,767) * .................... 792,452,972 99.5
Other Assets and Liabilities ................................ 4,372,266 0.5
------------ -----

NET ASSETS .................................................. $796,825,238 100.0
------------ -----
------------ -----
</TABLE>

- --------------

-/- Non-income producing security.
{\/} U.S. currency denominated.
{=} Zero coupon bond.
* For Federal income tax purposes, cost is $607,048,328 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 189,396,722
Unrealized depreciation: (3,992,078)
-------------
Net unrealized appreciation: $ 185,404,644
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depositary Receipt

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The Fund's Portfolio of Investments at October 31, 1998, was concentrated in the
following countries:

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 3.8 3.8
Belgium (BEL/BEF) .................... 2.8 2.8
France (FR/FRF) ...................... 2.1 2.1
Germany (GER/DEM) .................... 3.2 10.4 13.6
Italy (ITLY/ITL) ..................... 0.8 0.8
Netherlands (NETH/NLG) ............... 5.4 5.4
New Zealand (NZ/NZD) ................. 1.5 1.5
Switzerland (SWTZ/CHF) ............... 4.8 4.8
United Kingdom (UK/GBP) .............. 13.0 3.6 16.6
United States (US/USD) ............... 30.6 14.3 3.7 48.6
------ ----- --- -----
Total ............................... 68.0 28.3 3.7 100.0
------ ----- --- -----
------ ----- --- -----
</TABLE>

- --------------

{d} Percentages indicated are based on net assets of $796,825,238.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
OCTOBER 31, 1998

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACT TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ------------ -------- --------------
<S> <C> <C> <C> <C>
British Pounds.......................... 55,676,804 0.60285 1/29/99 $ 224,756
-------------- --------------
Total Contract to Sell (Receivable
amount $55,901,560).................. 55,676,804 224,756
-------------- --------------
THE VALUE OF CONTRACT TO SELL AS
PERCENTAGE OF NET ASSETS IS 6.99%.
Total Open Forward Currency
Contract............................. $ 224,756
--------------
--------------
</TABLE>

- ----------------
See Note 1 of Notes to the Financial Statements.

The accompanying notes are an integral part of the financial statements.

12
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1998

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $605,633,767) (Note 1)................................. $792,452,972
U.S. currency.................................................................................... 136
Interest receivable.............................................................................. 5,521,680
Dividends and dividend withholding tax reclaims receivable....................................... 1,924,096
Receivable for securities sold................................................................... 1,287,673
Receivable for Fund shares sold.................................................................. 782,800
Receivable for open forward foreign currency contracts (Note 1).................................. 224,756
-----------
Total assets................................................................................... 802,194,113
-----------
Liabilities:
Payable for Fund shares repurchased.............................................................. 1,596,936
Payable for securities purchased................................................................. 1,559,592
Payable for service and distribution expenses (Note 2)........................................... 1,168,454
Payable for investment management and administration fees (Note 2)............................... 634,873
Payable for transfer agent fees (Note 2)......................................................... 182,161
Payable for printing and postage expenses........................................................ 104,124
Payable for custodian fees....................................................................... 44,676
Payable for professional fees.................................................................... 39,377
Payable for registration and filing fees......................................................... 18,504
Payable for fund accounting fees (Note 2)........................................................ 9,251
Payable for Trustees' fees and expenses (Note 2)................................................. 8,979
Other accrued expenses........................................................................... 1,948
-----------
Total liabilities.............................................................................. 5,368,875
-----------
Net assets......................................................................................... $796,825,238
-----------
-----------
Class A:
Net asset value and redemption price per share ($306,278,696 DIVIDED BY 33,081,644 shares
outstanding)...................................................................................... $ 9.26
-----------
-----------
Maximum offering price per share (100/94.50 of $9.26) *............................................ $ 9.80
-----------
-----------
Class B:+
Net asset value and offering price per share ($483,307,176 DIVIDED BY 52,248,436 shares
outstanding)...................................................................................... $ 9.25
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($7,239,366 DIVIDED BY
782,121 shares outstanding)....................................................................... $ 9.26
-----------
-----------
Net assets consist of:
Paid in capital (Note 4)......................................................................... $467,573,561
Accumulated net realized gain on investments and foreign currency transactions................... 142,061,286
Net unrealized appreciation on translation of assets and liabilities in foreign currencies....... 371,186
Net unrealized appreciation of investments....................................................... 186,819,205
-----------
Total -- representing net assets applicable to capital shares outstanding.......................... $796,825,238
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>

The accompanying notes are an integral part of the financial statements.

13
<PAGE>
STATEMENT OF OPERATIONS

Year ended October 31, 1998

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,274,284)............................ $15,652,077
Interest income........................................................................... 12,405,553
Securities lending income................................................................. 670,939
-----------
Total investment income................................................................. 28,728,569
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 7,885,054
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 1,090,317
Class B.................................................................... 4,987,749 6,078,066
-----------
Transfer agent fees (Note 2).............................................................. 1,254,000
Custodian fees............................................................................ 451,000
Printing and postage expenses............................................................. 385,825
Fund accounting fees (Note 2)............................................................. 210,440
Professional fees......................................................................... 136,000
Registration and filing fees.............................................................. 55,955
Trustees' fees and expenses (Note 2)...................................................... 20,150
Other expenses (Note 1)................................................................... 223,249
-----------
Total expenses before reductions........................................................ 16,699,739
-----------
Expense reductions (Note 5)........................................................... (40,023)
-----------
Total net expenses...................................................................... 16,659,716
-----------
Net investment income....................................................................... 12,068,853
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 150,980,039
Net realized loss on foreign currency transactions........................... (4,238,589)
-----------
Net realized gain during the year....................................................... 146,741,450
Net change in unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currencies....................................... 2,776,067
Net change in unrealized appreciation (depreciation) of investments.......... (32,685,753)
-----------
Net unrealized depreciation during the year............................................. (29,909,686)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 116,831,764
-----------
Net increase in net assets resulting from operations........................................ $128,900,617
-----------
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

14
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------
1998 1997
------------ ------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income....................................................... $ 12,068,853 $ 16,790,846
Net realized gain on investments and foreign currency transactions.......... 146,741,450 24,005,528
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................... 2,776,067 (4,059,448)
Net change in unrealized appreciation (depreciation) of investments......... (32,685,753) 84,674,909
------------ ------------
Net increase in net assets resulting from operations...................... 128,900,617 121,411,835
------------ ------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.................................................. (4,583,653) (7,733,156)
From net realized gain on investments....................................... (8,368,465) (757,327)
Class B:
Distributions to shareholders: (Note 1)
From net investment income.................................................. (4,410,176) (9,266,887)
From net realized gain on investments....................................... (13,388,382) (907,529)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.................................................. (100,933) (125,777)
From net realized gain on investments....................................... (131,267) (12,318)
------------ ------------
Total distributions....................................................... (30,982,876) (18,802,994)
------------ ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............................ 548,028,420 426,976,337
Decrease from capital shares repurchased.................................... (601,598,746) (450,361,754)
------------ ------------
Net decrease from capital share transactions.............................. (53,570,326) (23,385,417)
------------ ------------
Total increase in net assets.................................................. 44,347,415 79,223,424
Net assets:
Beginning of year........................................................... 752,477,823 673,254,399
------------ ------------
End of year *............................................................... $796,825,238 $752,477,823
------------ ------------
------------ ------------
* Includes undistributed net investment income............................... $ -- $ --
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

15
<PAGE>
FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.

CLASS A
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1998 (d) 1997 (d) 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.21 $ 7.11 $ 6.35 $ 6.21 $ 6.29
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.17 0.21 0.22 0.24 0.22
Net realized and unrealized gain
(loss) on investments................ 1.25 1.12 0.82 0.13 (0.03)
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 1.42 1.33 1.04 0.37 0.19
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.13) (0.21) (0.24) (0.22) (0.21)
From net realized gain on
investments.......................... (0.24) (0.02) (0.04) (0.01) (0.06)
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.37) (0.23) (0.28) (0.23) (0.27)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.26 $ 8.21 $ 7.11 $ 6.35 $ 6.21
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

Total investment return (c)............. 17.76% 19.01% 16.80% 6.27% 3.14%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 306,279 $ 292,528 $ 286,203 $ 284,069 $ 317,847
Ratio of net investment income to
average net assets..................... 1.87% 2.74% 3.17% 3.85% 3.30%
Ratio of expenses to average net assets:
With expense reductions (Note 5)...... 1.64% 1.50% 1.59% 1.70% 1.67%
Without expense reductions............ 1.65% 1.64% 1.66% 1.74% N/A
Portfolio turnover rate++............... 92% 50% 39% 83% 117%
</TABLE>

- ----------------

(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the class of shares issued.
N/A Not Applicable.

The accompanying notes are an integral part of the financial statements.

16
<PAGE>
FINANCIAL HIGHLIGHTS (cont'd)

CLASS B
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1998 (d) 1997 (d) 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.21 $ 7.11 $ 6.35 $ 6.21 $ 6.29
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.11 0.16 0.17 0.20 0.18
Net realized and unrealized gain
(loss) on investments................ 1.25 1.13 0.82 0.13 (0.03)
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 1.36 1.29 0.99 0.33 0.15
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.08) (0.17) (0.20) (0.18) (0.17)
From net realized gain on
investments.......................... (0.24) (0.02) (0.03) (0.01) (0.06)
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.32) (0.19) (0.23) (0.19) (0.23)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.25 $ 8.21 $ 7.11 $ 6.35 $ 6.21
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

Total investment return (c)............. 16.93% 18.28% 16.06% 5.57% 2.48%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 483,307 $ 456,893 $ 383,966 $ 356,796 $ 359,242
Ratio of net investment income to
average net assets..................... 1.22% 2.09% 2.52% 3.20% 2.65%
Ratio of expenses to average net assets:
With expense reductions (Note 5)...... 2.29% 2.15% 2.24% 2.35% 2.32%
Without expense reductions............ 2.30% 2.29% 2.31% 2.39% N/A
Portfolio turnover rate++............... 92% 50% 39% 83% 117%
</TABLE>

- ----------------

The accompanying notes are an integral part of the financial statements.

17
<PAGE>
FINANCIAL HIGHLIGHTS (cont'd)

<TABLE>
<CAPTION>
ADVISOR CLASS+
---------------------------------------------------
JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO
------------------------------------ OCTOBER 31,
1998 (d) 1997 (d) 1996 1995
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.20 $ 7.10 $ 6.35 $ 6.24
----------- ----------- ---------- -------------
Income from investment operations:
Net investment income................. 0.21 0.23 0.23 0.11
Net realized and unrealized gain
(loss) on investments................ 1.25 1.13 0.82 0.13
----------- ----------- ---------- -------------
Net increase from investment
operations......................... 1.46 1.36 1.05 0.24
----------- ----------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.16) (0.24) (0.26) (0.13)
From net realized gain on
investments.......................... (0.24) (0.02) (0.04) --
----------- ----------- ---------- -------------
Total distributions................. (0.40) (0.26) (0.30) (0.13)
----------- ----------- ---------- -------------
Net asset value, end of period.......... $ 9.26 $ 8.20 $ 7.10 $ 6.35
----------- ----------- ---------- -------------
----------- ----------- ---------- -------------

Total investment return (c)............. 18.27% 19.23% 17.19% 3.83%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,239 $ 3,057 $ 3,085 $ 944
Ratio of net investment income to
average net assets..................... 2.22% 3.09% 3.52% 4.20%(a)
Ratio of expenses to average net assets:
With expense reductions (Note 5)...... 1.29% 1.15% 1.24% 1.35%(a)
Without expense reductions............ 1.30% 1.29% 1.31% 1.39%(a)
Portfolio turnover rate++............... 92% 50% 39% 83%
</TABLE>

- ----------------

The accompanying notes are an integral part of the financial statements.

18
<PAGE>
NOTES TO
FINANCIAL STATEMENTS
October 31, 1998

- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Global Growth & Income Fund (the "Fund"), formerly GT Global Growth & Income
Fund, is a separate series of AIM Investment Funds (the "Trust"), formerly GT
Investment Funds, Inc. The Trust is organized as a Delaware business trust and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Trust has
thirteen series of shares in operation, each series corresponding to a distinct
portfolio of investments.

The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.

(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.

Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. ("the
Manager") to be the primary market.

Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Fund deems it appropriate, prices obtained for the day of valuation from a bond
pricing service will be used. Short-term investments with a maturity of 60 days
or less are valued at amortized cost adjusted for foreign exchange translation
and market fluctuations, if any.

Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.

Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.

(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.

The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.

(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.

(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract

19
<PAGE>
fluctuates with changes in currency exchange rates. The Forward Contract is
marked-to-market daily and the change in market value is recorded by the Fund as
an unrealized gain or loss. When the Forward Contract is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. Forward Contracts
involve market risk in excess of the amounts shown in the Fund's "Statement of
Assets and Liabilities." The Fund could be exposed to risk if a counter party is
unable to meet the terms of the contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.

(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying security
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid securities in an amount not less than the exercise price or
otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock or
bond market and to fluctuations in currency values or interest rates.

The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.

The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.

(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock or bond
market and to fluctuations in currency values or interest rates.

(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.

(H) PORTFOLIO SECURITIES LOANED
At October 31, 1998, stocks with an aggregate value of $50,614,150 were on loan
to brokers. The loans were secured by cash collateral of $52,108,865. For the
year ended October 31, 1998, the Fund received fees of $670,939.

For international securities, cash collateral is received by the Fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Fund against loaned securities in an amount at least equal to
102% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. The cash

20
<PAGE>
collateral is invested in a securities lending trust which consists of a
portfolio of high quality short duration securities whose average effective
duration is restricted to 120 days or less.

(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.

(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.

(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investment of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.

(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.

(M) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult. At the end of the year, restricted
securities, if any, (excluding 144A issues), are shown at the end of the Fund's
Portfolio of Investments.

(O) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with each of BankBoston and State Street Bank and
Trust Company. The arrangements with the banks allow the Fund and certain other
Funds to borrow, on a first come, first serve basis, an aggregate maximum amount
of $250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of
each Fund's total assets. On October 31, 1998, the Fund had no loans
outstanding.

For the year ended October 31, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
for the Fund was $9,315,595, with a weighted average interest rate of 6.35%.
Interest expense for the Fund for the year ended October 31, 1998, was $207,044,
and is included in "Other Expenses" on the Statement of Operations.

2. RELATED PARTIES
A I M Advisors, Inc. (the "Manager"), an indirect wholly-owned subsidiary of
AMVESCAP PLC, is the Fund's investment manager and administrator and INVESCO
(NY), Inc., (formerly, Chancellor LGT Asset Management, Inc.) is the Fund's
investment sub-advisor and sub-administrator. As of the close of business on May
29, 1998, Liechtenstein Global Trust AG ("LGT"), the former indirect parent
organization of Chancellor LGT Asset Management, Inc. ("Chancellor LGT")
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included Chancellor LGT and
certain other affiliates. As a result of this transaction, Chancellor LGT was
renamed INVESCO (NY), Inc., and is now an indirect wholly-owned subsidiary of
AMVESCAP PLC. A I M Distributors, Inc. ("AIM Distributors"), a wholly-owned
subsidiary of the Manager, became the Fund's distributor as of the close of
business on May 29, 1998. The Trust was reorganized from a Maryland corporation
into a Delaware business trust on September 8, 1998. Finally, as of the close of
business on September 4, 1998, A I M Fund Services, Inc. ("AFS"), an affiliate
of the Manager and AIM Distributors, replaced GT Global Investor Services, Inc.
("GT Services") as the transfer agent of the Fund.

The Fund pays investment management and administration fees to the Manager at
the annualized rate of 0.975% on the first $500 million of average daily net
assets of the Fund; 0.95% on the next $500 million; 0.925% on the next $500
million and 0.90% on amounts thereafter. These fees are computed daily and paid
monthly.

AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.

Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors collects the sales charges imposed on sales of
Class A shares, and reallows a portion of such charges to dealers through which
the sales are made. For the year ended October 31, 1998, AIM Distributors and GT
Global retained sales charges of $27,462 and $29,395, respectively. Purchases of
Class A shares exceeding $1,000,000 may be subject to a contingent deferred
sales charge ("CDSC") upon redemption, in accordance with the Fund's current
prospectus. GT Global collected CDSCs for the year ended October 31, 1998 of
$1,692. AIM Distributors also makes

21
<PAGE>
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.

Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors, from its own resources, pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. For the year ended October 31, 1998, AIM Distributors and GT
Global collected CDSCs in the amount of $451,820 and $721,075, respectively. In
addition, AIM Distributors makes ongoing shareholder servicing and trail
commission payments to dealers whose clients hold Class B shares.

For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for GT Global's expenditures incurred in providing services as distributor.
All expenses for which GT Global was reimbursed under the Class A Plan would
have been incurred within one year of such reimbursement.

For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for GT Global's
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continued in effect.

Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares. Under the Class B Plan, the Fund
compensates AIM Distributors at an annualized rate of 1.00% of the average daily
net assets of the Fund's Class B shares.

The Class A Plan and the Class B Plan (together, the "Plans") are designed to
compensate AIM Distributors for certain promotional and other sales-related
costs, and to implement a dealer incentive program that provides for periodic
payments to selected dealers who furnish continuing personal shareholder
services to their customers who purchase and own Class A and Class B shares of
the Fund. Payments also can be directed by AIM Distributors to financial
institutions who have entered into service agreements with respect to Class A
and Class B shares of the Fund and who provide continuing personal services to
their customers who own Class A and Class B shares of the Fund. The service fees
payable to selected financial institutions are calculated at the annual rate of
0.25% of the average daily net asset value of those Fund shares that are held in
such institution's customers' accounts that were purchased on or after a
prescribed date set forth in the Plans.

The Manager and AIM Distributors voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 1.75%, 2.40%, and 1.40% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.

Effective as of the close of business September 4, 1998, the Fund, pursuant to a
transfer agency and service agreement, has agreed to pay A I M Fund Services,
Inc. ("AFS") an annualized fee of $24.85 per shareholder accounts that are open
during any monthly period (this fee includes all out-of-pocket expenses), and an
annualized fee of $0.70 per shareholder account that is closed during any
monthly period. Both fees shall be billed by AFS monthly in arrears on a
prorated basis of 1/12 of the annualized fee for all such accounts.

For the period November 1, 1997 to September 4, 1998, GT Services, an affiliate
of the Manager and AIM Distributors, was the transfer agent of the Fund. For
performing shareholder servicing, reporting, and general transfer agent
services, GT Services received an annual maintenance fee of $17.50 per account,
a new account fee of $4.00 per account, a per transaction fee of $1.75 for all
transactions other than exchanges and a per exchange fee of $2.25. GT Services
also was reimbursed by the Fund for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.

The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived based on
the aggregate net assets of the funds which comprise the following investment
companies: AIM Growth Series, AIM Investment Funds, AIM Investment Portfolios,
AIM Series Trust, G.T. Global Variable Investment Series and G.T. Global
Variable Investment Trust. The fee is calculated at the rate of 0.03% of the
first $5 billion of assets and 0.02% to the assets in excess of

22
<PAGE>
$5 billion. An amount is allocated to and paid by each such fund based on its
relative average daily net assets.

The Trust pays each Trustee who is not an employee, officer or director of the
Manager, or any other affiliated company, $5,000 per year plus $300 for each
meeting of the board or any committee thereof attended by the Trustee.

3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1998, purchases and sales of investment
securities by the Fund, other than short-term investments and U.S. government
obligations, aggregated $438,460,594 and $579,200,900, respectively. Purchases
and sales of U.S. government obligations were $293,744,805 and $240,337,698,
respectively, for the year ended October 31, 1998.

4. CAPITAL SHARES
At October 31, 1998, there were 6,000,000,000 shares of the Trust's common stock
authorized, at $0.0001 par value. Of this amount, 400,000,000 were classified as
shares of the AIM Global Telecommunications Fund; 400,000,000 were classified as
shares of AIM Global Government Income Fund; 200,000,000 were classified as
shares of AIM Global Health Care Fund; 200,000,000 were classified as shares of
AIM Strategic Income Fund; 200,000,000 were classified as shares of AIM
Developing Markets Fund; 200,000,000 were classified as shares of GT Global
Currency Fund (inactive); 200,000,000 were classified as shares of AIM Global
Growth & Income Fund; 200,000,000 were classified as shares of GT Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of AIM Latin
American Growth Fund; 200,000,000 were classified as shares of AIM Emerging
Markets Fund; 200,000,000 were classified as shares of AIM Emerging Markets Debt
Fund; 200,000,000 were classified as shares of AIM Global Financial Services
Fund; 200,000,000 were classified as shares of AIM Global Resources Fund;
200,000,000 were classified as shares of AIM Global Infrastructure Fund;
200,000,000 were classified as shares of AIM Global Consumer Products and
Services Fund. The shares of each of the foregoing series of the Trusts were
divided equally into two classes, designated Class A and Class B common stock.
With respect to the issuance of Advisor Class shares, 100,000,000 shares were
classified as shares of each of the fifteen series of the Trusts and designated
as Advisor Class common stock. 1,100,000,000 shares remain unclassified.
Transactions in capital shares of the Fund were as follows:

CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
------------------------ -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 40,631,419 $363,947,180 37,585,791 $289,617,397
Shares issued in connection with reinvestment of
distributions................................................. 1,294,169 11,189,344 935,467 7,161,559
----------- ----------- ----------- ------------
41,925,588 375,136,524 38,521,258 296,778,956
Shares repurchased.............................................. (44,464,914) (400,082,759) (43,156,190) (332,338,391)
----------- ----------- ----------- ------------
Net decrease.................................................... (2,539,326) $(24,946,235) (4,634,932) $(35,559,435)
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------

<CAPTION>
CLASS B
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 12,852,707 $115,998,695 12,634,686 $ 97,336,518
Shares issued in connection with reinvestment of
distributions................................................. 1,736,739 14,930,372 1,087,287 8,343,350
----------- ----------- ----------- ------------
14,589,446 130,929,067 13,721,973 105,679,868
Shares repurchased.............................................. (17,992,943) (162,624,547) (12,063,889) (93,059,122)
----------- ----------- ----------- ------------
Net increase (decrease)......................................... (3,403,497) $(31,695,480) 1,658,084 $ 12,620,746
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
<CAPTION>
ADVISOR CLASS
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 4,670,023 $41,740,705 3,177,501 $ 24,442,634
Shares issued in connection with reinvestment of
distributions................................................. 25,259 222,124 9,792 74,879
----------- ----------- ----------- ------------
4,695,282 41,962,829 3,187,293 24,517,513
Shares repurchased.............................................. (4,285,866) (38,891,440) (3,248,879) (24,964,241)
----------- ----------- ----------- ------------
Net increase (decrease)......................................... 409,416 $ 3,071,389 (61,586) $ (446,728)
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
</TABLE>

5. EXPENSE REDUCTIONS
The Manager directed certain portfolio trades to brokers who then paid a portion
of the Fund's expenses. For the year ended October 31, 1998, the Fund's expenses
were reduced by $40,023 under these arrangements.

6. SUBSEQUENT EVENT (UNAUDITED)
Effective December 14, 1998, sub-advisory and sub-administration responsibility
for the Fund was transferred from INVESCO (NY), Inc. to INVESCO Asset Management
Ltd., another indirect wholly-owned subsidiary of AMVESCAP PLC. A I M Advisors,
Inc. will continue to serve as the manager and administrator of the Fund. The
transfer will not change the fees paid by A I M Advisors, Inc. for sub-advisory
services and will not change the nature of the sub-advisory services provided to
the Fund or the personnel providing such services.

23
<PAGE>
7. PROXY RESULTS (UNAUDITED)
The Special Meeting of Shareholders of the G.T. Investment Funds, Inc., now
known as AIM Investment Funds (the "Trust"), was held on May 20, 1998 at the
Trust's offices, 50 California Street, 26th Floor, San Francisco, California.
The meeting was held for the following purposes:

(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson, Ruth H. Quigley.

(2) To approve a new Investment Management and Administration Contract and
Sub-Advisory and Sub-Administration Contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").

(3) To approve replacement Rule 12b-1 plans of distribution with respect to
Class A and B Shares of the Fund.

(4) To approve changes to the fundamental investment restrictions of the Fund.

(5) To approve an agreement and plan of conversion and termination for the
Trust.

(6) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.

The results of the proxy solicitation on the above matters were as follows:

<TABLE>
<CAPTION>
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
(1) C. Derek Anderson........................................... 191,685,088 N/A 13,123,292
Frank S. Bayley............................................. 191,766,811 N/A 13,041,568
William J. Guilfoyle........................................ 191,828,959 N/A 12,979,420
Arthur C. Patterson......................................... 191,845,270 N/A 12,963,109
Ruth H. Quigley............................................. 191,869,887 N/A 12,938,492
(2)(a) Approval of investment management and administration
contract................................................... 39,225,701 1,056,645 13,378,967*
(2)(b) Approval of sub-advisory and sub-administration contract.... 38,944,404 1,186,043 13,530,866*
(3) Approval of replacement Rule 12b-1 plans of distribution
CLASS A SHARES.............................................. 18,231,511 633,604 1,624,850
CLASS B SHARES.............................................. 29,206,760 734,958 2,693,335
(4)(a) Modification of Fundamental Restriction on Concentration.... 38,595,526 1,334,363 13,731,424*
(4)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 38,602,220 1,327,669 13,731,424*
(4)(c) Modification of Fundamental Restriction on Making Loans..... 38,604,739 1,325,150 13,731,424*
(4)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 38,604,247 1,325,642 13,731,424*
(4)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 38,605,220 1,324,669 13,731,424*
(4)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 38,588,769 1,341,120 13,731,424*
(4)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 38,586,718 1,343,171 13,731,424*
(4)(h) Elimination of Fundamental Restriction on Investing in
Illiquid Securities........................................ 38,596,890 1,332,999 13,731,424*
(4)(i) Elimination of Fundamental Restriction on Pledging Assets... 38,591,039 1,338,850 13,731,424*
(4)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 38,603,432 1,326,457 13,731,424*
(4)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 38,602,458 1,327,431 13,731,424*
(4)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in which Officers and Board Members
of Each Company and its Affiliates own Securities.......... 38,593,114 1,336,775 13,731,424*
(4)(m) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 38,590,154 1,339,735 13,731,424*
(5) Approval of an agreement and plan of conversion and
termination with respect to the Trust...................... 190,027,469 6,362,084 94,055,040*
(6) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
Independent Public Accountants............................. 191,358,779 2,114,168 11,333,063
</TABLE>

- ------------------------
* Includes Broker Non-Votes

- ------------------------
FEDERAL TAX INFORMATION (UNAUDITED):

Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$41,888,115 as capital gain dividends for the fiscal year ended October 31,
1998.

Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 41.37%
of ordinary income dividends paid (including short-term capital gain
distributions, if any) by the Fund as income qualifying for the dividends
received deduction for corporations for the fiscal year ended October 31, 1998.

24
<PAGE>

BOARD OF TRUSTEES

C. Derek Anderson
President, Plantagenet Capital
Management, LLC (an investment
partnership); Chief Executive Officer,
Plantagenet Holdings, Ltd.
(an investment banking firm)

Frank S. Bayley
Partner, law firm of
Baker & McKenzie

Robert H. Graham
President and Chief Executive Officer,
A I M Management Group Inc.

Arthur C. Patterson
Managing Partner, Accel Partners
(a venture capital firm)

Ruth H. Quigley
Private Investor

OFFICERS

Robert H. Graham
Chairman and President

Helge K. Lee
Vice President & Secretary

Dana R. Sutton
Vice President & Assistant Treasurer

Kenneth W. Chancey
Vice President &
Principal Accounting Officer

John J. Arthur
Vice President

Melville B. Cox
Vice President

Gary T. Crum
Vice President

Carol F. Relihan
Vice President

David P. Hess
Assistant Secretary

Nancy L. Martin
Assistant Secretary

Ofelia M. Mayo
Assistant Secretary

Kathleen J. Pflueger
Assistant Secretary

Samuel D. Sirko
Assistant Secretary

Pamela Ruddock
Assistant Treasurer

Paul Wozniak
Assistant Treasurer

OFFICE OF THE FUND

11 Greenway Plaza
Suite 100
Houston, TX 77046

INVESTMENT MANAGER

A I M Advisors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046

SUB-ADVISOR

INVESCO Asset Management Ltd.
11 Devonshire Square
London EC2M 4YR
England

TRANSFER AGENT

A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739

CUSTODIAN

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110

COUNSEL TO THE FUND

Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800

COUNSEL TO THE TRUSTEES

Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071

DISTRIBUTOR

A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046

AUDITORS

PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109

<PAGE>

THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-

A I M MANAGEMENT GROUP INC. HAS PROVIDED LEADERSHIP IN THE MUTUAL FUND
INDUSTRY SINCE 1976 AND MANAGED APPROXIMATELY $91 BILLION IN ASSETS FOR MORE
THAN 5.5 MILLION SHAREHOLDERS, INCLUDING INDIVIDUAL INVESTORS, CORPORATE
CLIENTS, AND FINANCIAL INSTITUTIONS, AS OF SEPTEMBER 30, 1998.

THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK- IS DISTRIBUTED NATIONWIDE, AND
AIM TODAY IS THE 11TH-LARGEST MUTUAL FUND COMPLEX IN THE U.S. IN ASSETS UNDER
MANAGEMENT, ACCORDING TO STRATEGIC INSIGHT, AN INDEPENDENT MUTUAL FUND
MONITOR.

GROWTH FUNDS

AIM Aggressive Growth Fund(1)
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM Mid Cap Equity Fund(2),(A)
AIM Select Growth Fund(3)
AIM Small Cap Growth Fund(2),(B)
AIM Small Cap Opportunities Fund
AIM Value Fund
AIM Weingarten Fund

GROWTH & INCOME FUNDS

AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Basic Value Fund(2),(C)
AIM Charter Fund

INCOME FUNDS

AIM Floating Rate Fund(2)
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund

TAX-FREE INCOME FUNDS

AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund

MONEY MARKET FUNDS

AIM Dollar Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund

INTERNATIONAL GROWTH FUNDS

AIM Advisor International Value Fund
AIM Asian Growth Fund
AIM Developing Markets Fund(2)
AIM Emerging Markets Fund(2)
AIM Europe Growth Fund(2)
AIM European Development Fund
AIM International Equity Fund
AIM International Growth Fund(2)
AIM Japan Growth Fund(2)
AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)

GLOBAL GROWTH FUNDS

<PAGE>

AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Worldwide Growth Fund(2)

Global Growth & Income Funds

AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund

GLOBAL INCOME FUNDS

AIM Emerging Markets Debt Fund(2),(D)
AIM Global Government Income Fund(2)
AIM Global Income Fund
AIM Strategic Income Fund(2)

THEME FUNDS

AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM Global Trends Fund(2),(E)

(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former
GT Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select
Growth Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed
AIM Mid Cap Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund
was renamed AIM Small Cap Growth Fund. (C) On September 8, 1998, AIM America
Value Fund was renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM
Global High Income Fund was renamed AIM Emerging Markets Debt Fund. (E) On
September 8, 1998, AIM New Dimension Fund was renamed AIM Global Trends Fund.
For more complete information about any AIM Fund(s), including sales charges
and expenses, ask your financial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.

GGI-AR-1