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 HEALTH CARE FUND

[Cover IMAGE]

[AIM Logo APPEARS HERE]

INVEST WITH DISCIPLINE-REGISTERED TRADEMARK-

<PAGE>

[COVER IMAGE]

BASKET OF APPLES BY JOHN S. BUNKER
FRESH FRUIT IS FREQUENTLY ASSOCIATED WITH HEALTH AND WELL BEING. SIMILARLY,
THE COMPANIES REPRESENTED IN THE PORTFOLIO OF AIM GLOBAL HEALTH CARE FUND ARE
STRIVING TO IMPROVE THE HUMAN CONDITION THROUGH PRODUCTS AND SERVICES
DESIGNED TO COMBAT DISEASE AND PROLONG LIFE.

AIM Global Health Care Fund is for shareholders who seek long-term capital
appreciation by investing primarily in equity securities of health-care
companies around the world.

ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:

- - AIM Global Health Care Fund (formerly GT Global Health Care 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 $6.71
per share.

- - When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from
5% beginning at the time of purchase to 0% at the beginning of the seventh
year. The performance of the Fund's Class B shares 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.

- - Investing in a single-sector mutual fund involves greater risk and
potential reward than investing in a more diversified fund.

- - 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 Dow Jones Industrial Average (the Dow) is a price-weighted average of
30 actively traded primarily industrial stocks.

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

- - The MSCI Health and Personal Care Index is a market value-weighted average
of the performance of 55 securities listed on major world stock exchanges.

- - The Russell 2000 Stock Index is an unmanaged index generally considered
representative of small-capitalization stocks.

- - The Europe, Australasia, and the Far East Index (EAFE-Registered
Trademark-) is a group of unmanaged foreign securities tracked by Morgan
Capital International.

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

- - An 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 HEALTH CARE 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.

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

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.)

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 HEALTH CARE FUND

<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

FUND SHIFTS FOCUS TO LARGE-CAP STOCKS, PHARMACEUTICAL COMPANIES

AIM GLOBAL HEALTH CARE FUND SIGNIFICANTLY RESTRUCTURED ITS PORTFOLIO DURING
THE REPORTING PERIOD. HOW DID THE FUND PERFORM?

During the fiscal year, the Fund shifted its focus from small-cap to
large-cap stocks. The portfolio's orientation toward small-cap stocks earlier
in the reporting period took its toll on the Fund's performance as small-cap
stocks were in the grip of a bear market from mid-April through early October
1998. For the fiscal year ended October 31, 1998, total return was -4.71% for
Class A shares and -5.20% for Class B shares.

The Fund rebounded strongly during the final weeks of the fiscal year
after the restructuring of the portfolio had been completed. Class A and
Class B shares posted gains of 13.71% and 13.67%, respectively, from the
market low on October 8 through the end of the reporting period.

WHAT WERE MARKET CONDITIONS LIKE DURING THE FISCAL YEAR?

During the first half of the reporting period, markets shook off initial
concerns about the potential global impact of economic turmoil in Asia, and
both large-cap and small-cap stock indexes soared to new heights in April.
However, renewed fears about Asia's impact on the world economy halted the
rally. Small-cap stocks continued on a downward spiral that saw the Russell
2000 Index lose 36.49% of its value from April 21 to October 8.

Large-cap stocks briefly rebounded from the April downturn, and the Dow
Jones Industrial Average (the Dow) hit a record high in July. Then severe
economic dislocations in Russia and Latin America as well as Asia, combined
with political controversy in the U.S, put a damper on the performance of
large-cap stocks, too. From its high on July 17 to October 8, the Dow dropped
16.82% during a period of extreme market volatility.

Large- and small-cap issues bounced back impressively in October as stocks
posted their best percentage gains for a single month in more than 11 years.
The Federal Reserve Board (the Fed) cut interest rates at the end of
September and again in mid-October. These Fed moves, combined with
encouraging economic indicators, sparked the late rally in the stock market.

During the fiscal year, stock markets in Western Europe performed strongly
until the summer correction. Like the U.S. market, European stocks recovered
in October.

HOW DID HEALTH-CARE STOCKS FARE?

While the stocks of large-cap pharmaceutical firms and certain medical-device
companies soared, the stocks of health-care service providers, such as
hospitals and health maintenance organizations (HMOs), and of biotechnology
companies languished. Pharmaceutical companies in particular experienced
strong earnings growth because of pricing flexibility. Moreover, these firms
continued to produce a steady stream of new drugs that were enthusiastically
received by a health-conscious population.

HMOs have not been as profitable as initially anticipated. Although
medical costs have risen, HMOs have generally been unable to increase their
prices because of stiff competition. And few of the many small companies in
the biotechnology field have achieved profitability because of the
difficulties associated with successfully developing and marketing new
products.

WE ARE PARTICULARLY OPTIMISTIC ABOUT THE PROSPECTS FOR HEALTH-CARE STOCKS.
THE DEMAND FOR MEDICAL SERVICES AND PRODUCTS IS LIKELY TO REMAIN CONSTANT,
REGARDLESS OF ECONOMIC TRENDS.

HOW DID YOU MANAGE THE FUND DURING THE FISCAL YEAR?

We restructured the Fund's portfolio to more closely reflect the composition
of its benchmark, the Morgan Stanley Capital International (MSCI) Health and
Personal Care Index, which has performed strongly in recent years. For the
fiscal year ended October 31, 1998, the MSCI Health and Personal Care Index
posted a total return of 22.09%.

The Fund's focus was shifted from small-cap to large-cap stocks. At the
end of the reporting period, large-cap stocks made up about 80% of the Fund's
holdings as opposed to about 40% earlier in the fiscal year. Since our last
report six months ago, we increased our holdings in pharmaceutical company
stocks from 20% to more than 62% of the portfolio. At the same time, we
reduced our stake in medical technology and supply stocks, which includes
medical device companies, from nearly 52% to less than 12% of the portfolio.
We also reduced biotechnology stocks from 12% to about 4% of the Fund's
holdings.

Additionally, we increased the Fund's foreign exposure from about 10% to
20% of the portfolio. The Fund's primary for-

SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.

AIM GLOBAL HEALTH CARE FUND

<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

eign holdings were in the developed markets of Europe.

At this time, we expect the Fund to become 55% to 70% invested in
companies in the MSCI Health and Personal Care Index and 30% to 45% invested
in companies not in the index. Our goal in managing the Fund is to outperform
the index on a consistent basis.

WHAT PHARMACEUTICAL COMPANIES DID YOU FIND ATTRACTIVE?

Warner-Lambert Co., the Fund's largest holding, is currently among the
fastest-growing large pharmaceutical companies in the U.S. The company is
benefiting from the success of Lipitor, a cholesterol-reduction drug, and
Rezulin, which is used in the treatment of diabetes. Merck & Co., Inc., the
second largest holding in the portfolio, is a leading drug manufacturer in
the U.S. Its wide range of products include anti-cholesterol drugs Zocor and
Mevacor, as well as Vasoctec and Prinivil, both used to combat hypertension.

TheraTech, Inc., offers products for a wide variety of conditions,
including Alora for osteoporosis. Bristol Myers Squibb Co. focuses its
efforts on cardiovascular treatments as well as anti-cancer and
cholesterol-reducing drugs.

Like Warner-Lambert, Co., Shering-Plough Corp., is one of the fastest
growing drug companies. Its products include Claritin, used to combat
allergies. The Fund's foreign holdings included Novartis AG, the Swiss
pharmaceutical company which makes prescription and generic drugs, contact
lenses, and ophthalmic medications.

WHAT COMPANIES DID YOU LIKE IN OTHER HEALTH-CARE SECTORS?

Visx, Inc., markets a laser system used to correct various vision disorders,
including nearsightedness, while Guidant Corp. develops and sells products
used for cardiac rhythm management. These two medical technology and supply
companies have experienced strong earnings growth. Amgen Inc., one of the
largest companies in the biotechnology field, markets therapeutic products
for blood-cell production, inflammation, and soft-tissue repair.

WHAT IS YOUR OUTLOOK?

At the close of the fiscal year, the climate was favorable for stocks in the
U.S. and Europe. Inflation and interest rates were low, and economic growth
was continuing at a healthy pace. In late October, the Group of Seven
nations--the U.S., the United Kingdom, Canada, Germany, Italy, France, and
Japan--approved a plan designed to prop up financial markets in developing
nations. That plan allows the International Monetary Fund to provide loans to
financially troubled countries before foreign investors pull out.

We are particularly optimistic about the prospects for health-care stocks.
The demand for medical services and products is likely to remain constant,
regardless of economic trends. Moreover, the segment of population more than
50 years old constitutes the fastest-growing age bracket in developed
countries. The growth of this segment of the population is likely to boost
demand for health-care products and services.

TOP 10 COUNTRIES

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

<TABLE>
<S> <C> <C>
1. United States 78.2%
2. United Kingdom 6.8
3. Switzerland 6.7
4. Japan 3.0
5. Sweden 2.1
6. France 1.3
7. Germany 0.9
8. Netherlands 0.6
9. Belgium 0.2
10. Mexico 0.1
</TABLE>

TOP 10 EQUITY HOLDINGS

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

<TABLE>
<S> <C> <C>
1. Warner-Lambert Co. (United States) 7.9%
2. Merck & Co., Inc. (United States) 6.9
3. TheraTeck, Inc. (United States) 5.8
4. Bristol Myers Squibb Co. (United States) 5.1
5. Schering-Plough Corp. (United States) 4.4
6. Zeneca Group PLC-ADR (United Kingdom) 3.8
7. Novartis (Switzerland) 3.4
8. Johnson & Johnson (United States) 3.3
9. Guidant Corp. (United States) 3.2
10. Visx, Inc. (United States) 3.1
</TABLE>

Keep in mind, the Fund's portfolio composition is subject to change, and
there is no assurance the Fund will continue to hold any security.

SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.

AIM GLOBAL HEALTH CARE FUND

<PAGE>

ANNUAL REPORT / PERFORMANCE HISTORY

YOUR FUND'S LONG-TERM PERFORMANCE

RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL HEALTH CARE FUND, CLASS A SHARES, VS. BENCHMARK INDEXES

8/7/89--10/31/98

<TABLE>
<CAPTION>
AIM Global Health MSCI Health and MSCI World Index
Care Fund Personal Care Index
Class A shares
<C> <S> <C> <C>
08/7/89 $9,525 $10,000 $10,000
10/31/89 9,858 9,704 9,800
10/31/90 10,718 8,658 8,744
10/31/91 16,527 10,081 10,181
10/31/92 15,058 9,611 9,706
10/31/93 15,412 12,271 12,392
10/31/94 16,970 13,273 13,404
10/31/95 20,329 14,604 14,749
10/31/96 25,034 17,063 17,232
10/31/97 32,134 20,006 20,204
10/31/98 30,620 23,144 23,715
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS

As of 10/31/98 including sales charges

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Inception (8/7/89) 12.89%
5 Years 13.61
1 Year -9.25*

CLASS B SHARES
Inception (4/1/93) 15.19%
5 Years 13.91
1 Year -8.75**

ADVISOR CLASS (no sales charge)
Inception (6/1/95) 18.44
1 Year -4.28
</TABLE>

*-4.71% excluding sales charges
**-5.20% excluding sales charges

Sources: Towers Data Systems HYPO-Registered Trademark- and Bloomberg.

Your Fund's total return includes sales charges, expenses, and management
fees. The performance of Class B and Advisor Class shares will differ from
that of 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 cannot guarantee comparable future results.

ABOUT THIS CHART

The chart compares your Fund's Class A shares to benchmark indexes. Your
Fund's total return is shown with a sales charge and includes Fund expenses
and management fees. It is important to understand differences between your
Fund and these indexes. An index measures performance of a hypothetical
portfolio. Market indexes such as the MSCI World Index and the MSCI Health
and Personal Care Index are not managed, incurring no sales charges,
expenses, or fees. If you could buy all the securities that make up a market
index, you wold incur expenses that would affect your investment's return.
Use of these indexes is intended to give you a general idea of how your Fund
performed compared to the stock market. Performance for the MSCI World Index
is for the period from 8/31/89 to 10/31/98.

AIM GLOBAL HEALTH CARE FUND

4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

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

To the Shareholders of AIM Global Health Care Fund (formerly GT Global Health
Care 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 Health Care 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

5
<PAGE>
PORTFOLIO OF INVESTMENTS

October 31, 1998

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Pharmaceuticals (62.3%)
Warner-Lambert Co. ........................................ US 467,800 $ 36,663,821 7.9
Merck & Co., Inc. ......................................... US 236,400 31,973,100 6.9
TheraTech, Inc.{::} -/- ................................... US 1,905,000 27,027,188 5.8
Bristol Myers Squibb Co. .................................. US 215,700 23,848,331 5.1
Schering-Plough Corp. ..................................... US 198,500 20,420,688 4.4
Zeneca Group PLC - ADR{\/} ................................ UK 451,500 17,608,500 3.8
Novartis AG ............................................... SWTZ 8,744 15,750,303 3.4
Johnson & Johnson ......................................... US 189,100 15,411,650 3.3
Roche Holding AG .......................................... SWTZ 1,251 14,591,614 3.2
Glaxo Wellcome PLC - ADR{\/} .............................. UK 220,600 13,732,350 3.0
Mylan Laboratories ........................................ US 321,500 11,071,656 2.4
Astra AB - ADR{\/} ........................................ SWDN 596,100 9,798,394 2.1
Abbott Laboratories ....................................... US 179,400 8,420,588 1.8
Sanofi S.A. ............................................... FR 32,430 5,080,235 1.1
Takeda Chemical Industries ................................ JPN 154,000 5,015,985 1.1
Bergen Brunswig Corp. "A" ................................. US 98,700 4,817,794 1.0
Pharmacia & Upjohn, Inc. .................................. US 82,000 4,340,875 0.9
Akzo Nobel N.V.: .......................................... NETH -- -- 0.8
Common .................................................. -- 64,750 2,516,784 --
ADR{\/} ................................................. -- 28,000 1,106,000 --
Barr Laboratories, Inc.-/- ................................ US 105,500 3,606,781 0.8
Altana AG ................................................. GER 30,000 2,030,089 0.4
Allergan, Inc. ............................................ US 32,000 1,998,000 0.4
Taisho Pharmaceuticals .................................... JPN 50,000 1,340,667 0.3
Yamanouchi Pharmaceutical ................................. JPN 46,000 1,320,385 0.3
Sankyo Co., Ltd. .......................................... JPN 57,000 1,288,329 0.3
Schering AG ............................................... GER 8,540 1,007,195 0.2
Chugai Pharmaceutical Co., Ltd. ........................... JPN 108,000 983,843 0.2
UCB S.A. .................................................. BEL 150 876,244 0.2
Merck KGaA-/- ............................................. GER 20,880 857,858 0.2
Daiichi Pharmaceutical Co., Ltd. .......................... JPN 39,000 651,899 0.1
Spiros Development Corporation II, Inc. - Units-/-{=} ..... US 59,000 634,250 0.1
Eisai Co., Ltd. ........................................... JPN 40,000 628,395 0.1
Banyu Pharmaceutical Co., Ltd. ............................ JPN 36,000 612,272 0.1
Ares-Serono Group "B" ..................................... SWTZ 389 584,677 0.1
Rohto Pharmaceutical Co., Ltd. ............................ JPN 76,000 552,561 0.1
Kyowa Hakko Kogyo Co., Ltd. ............................... JPN 69,000 391,372 0.1
Teva Pharmaceutical Industries Ltd. - ADR{\/} ............. ISRL 8,700 343,106 0.1
Shionogi & Co., Ltd. ...................................... JPN 44,000 324,820 0.1
Kissei Pharmaceutical ..................................... JPN 14,000 206,824 0.1
------------
289,435,423
------------
Medical Technology & Supplies (11.9%)
Guidant Corp. ............................................. US 191,500 14,649,750 3.2
Visx, Inc.-/- ............................................. US 291,200 14,596,400 3.2
Arterial Vascular Engineering, Inc.-/- .................... US 386,000 11,869,500 2.6
AVECOR Cardiovascular, Inc.{::} -/- ....................... US 527,000 5,566,438 1.2
</TABLE>

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

6
<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>
Medical Technology & Supplies (Continued)
Waters Corp.-/- ........................................... US 62,000 $ 4,557,000 1.0
Becton, Dickinson & Co. ................................... US 34,300 1,444,888 0.3
Safeskin Corp. ............................................ US 43,500 962,438 0.2
Beiersdorf AG ............................................. GER 8,684 519,434 0.1
Essilor International ..................................... FR 660 267,389 0.1
------------
54,433,237
------------
Biotechnology (3.9%)
Amgen, Inc.-/- ............................................ US 177,300 13,929,131 3.0
Biogen, Inc.-/- ........................................... US 46,500 3,231,750 0.7
The Perkin-Elmer Corp. .................................... US 7,100 598,619 0.1
Enzon, Inc. Preferred-/- .................................. US 16,000 217,920 0.1
------------
17,977,420
------------
Health Care Services (2.5%)
Allegiance Corp. .......................................... US 250,500 9,315,469 2.0
AmeriSource Health Corp. "A"-/- ........................... US 44,500 2,333,469 0.5
------------
11,648,938
------------
Consumer Services (0.4%)
Stewart Enterprises, Inc. "A" ............................. US 66,000 1,522,125 0.3
The Uni-Charm Corp. ....................................... JPN 5,400 245,961 0.1
------------
1,768,086
------------
Personal Care/Cosmetics (0.1%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 204,000 597,684 0.1
------------ -----

TOTAL EQUITY INVESTMENTS (cost $331,814,548) ................ 375,860,788 81.1
------------ -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Rhone-Poulenc Warrants, expire 11/5/01 (cost $32,137) ..... FR 190,736 669,707 0.1
------------ -----
PHARMACEUTICALS
<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 $49,370,000 U.S. Treasury Notes, 5.625%
due 12/31/99 (market value of collateral is $51,000,346,
including accrued interest) ............................. 50,000,000 10.8
Dated October 30, 1998 with State Street Bank & Trust Co.,
due November 2, 1998, for an effective yield of 5.30%,
collateralized by $24,860,000 U.S. Treasury Notes, 5.375%
due 01/31/00 (market value of collateral is $25,505,067,
including accrued interest) ............................. 25,000,000 5.4
</TABLE>

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

7
<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 $12,655,000 U.S Treasury Notes, 7.75%
due 01/31/00 (market value of collateral is $13,419,539,
including accrued interest) ............................. $ 13,154,000 2.8
------------ -----

TOTAL REPURCHASE AGREEMENTS (cost $88,154,000) .............. 88,154,000 19.0
------------ -----

TOTAL INVESTMENTS (cost $420,000,685) * .................... 464,684,495 100.2
Other Assets and Liabilities ................................ (947,150) (0.2)
------------ -----

NET ASSETS .................................................. $463,737,345 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
{::} See Note 6 of Notes to Financial Statements.
{\/} U.S. currency denominated.
{=} Each unit consists of one callable common share of Spiros
Development Corp. II and one warrant to purchase 0.25 shares of
Dura Pharmaceuticals.
* For Federal income tax purposes, cost is $420,372,604 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 50,843,304
Unrealized depreciation: (6,531,413)
-------------
Net unrealized appreciation: $ 44,311,891
-------------
-------------
</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}
-------------------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Belgium (BEL/BEF) .................... 0.2 0.2
France (FR/FRF) ...................... 1.2 0.1 1.3
Germany (GER/DEM) .................... 0.9 0.9
Israel (ISRL/ILS) .................... 0.1 0.1
Japan (JPN/JPY) ...................... 3.0 3.0
Mexico (MEX/MXN) ..................... 0.1 0.1
Netherlands (NETH/NLG) ............... 0.6 0.6
Sweden (SWDN/SEK) .................... 2.1 2.1
Switzerland (SWTZ/CHF) ............... 6.7 6.7
United Kingdom (UK/GBP) .............. 6.8 6.8
United States (US/USD) ............... 59.4 18.8 78.2
------ ----- ----- -----
Total ............................... 81.1 0.1 18.8 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $463,737,345.

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

8
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1998

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

<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $331,846,685) (Note 1)........................... $376,530,495
Repurchase agreement, at value and cost.................................................... 88,154,000
U.S. currency.................................................................. $ 847
Foreign currencies (cost $3,392,812)........................................... 3,389,063 3,389,910
----------
Receivable for Fund shares sold............................................................ 2,221,492
Dividends and dividend withholding tax reclaims receivable................................. 304,733
Interest receivable........................................................................ 25,956
Receivable for securities sold............................................................. 25,936
------------
Total assets............................................................................. 470,652,522
------------
Liabilities:
Payable for securities purchased........................................................... 3,023,243
Payable for Fund shares repurchased........................................................ 2,659,446
Payable for service and distribution expenses (Note 2)..................................... 400,127
Payable for investment management and administration fees (Note 2)......................... 359,240
Payable for transfer agent fees (Note 2)................................................... 260,984
Payable for printing and postage expenses.................................................. 75,851
Payable for professional fees.............................................................. 53,436
Payable for registration and filing fees................................................... 26,393
Payable for Trustees' fees and expenses (Note 2)........................................... 13,176
Payable for custodian fees................................................................. 11,138
Payable for fund accounting fees (Note 2).................................................. 10,655
Other accrued expenses..................................................................... 21,488
------------
Total liabilities........................................................................ 6,915,177
------------
Net assets................................................................................... $463,737,345
------------
------------
Class A:
Net asset value and redemption price per share ($357,534,099 DIVIDED BY 17,744,660 shares
outstanding)................................................................................ $ 20.15
------------
------------
Maximum offering price per share (100/95.25 of $20.15) *..................................... $ 21.15
------------
------------
Class B:+
Net asset value and offering price per share ($100,311,077 DIVIDED BY 5,178,631 shares
outstanding)................................................................................ $ 19.37
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($5,892,169 DIVIDED
BY 286,128 shares outstanding).............................................................. $ 20.59
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................................................... $420,849,043
Accumulated net realized loss on investments and foreign currency transactions............. (1,759,592)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies................................................................................ (35,916)
Net unrealized appreciation of investments................................................. 44,683,810
------------
Total -- representing net assets applicable to capital shares outstanding.................... $463,737,345
------------
------------
<FN>
- --------------
* On sales of $50,000 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.

9
<PAGE>
STATEMENT OF OPERATIONS

Year ended October 31, 1998

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

<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income........................................................................... $ 2,459,834
Dividend income (net of foreign withholding tax of $41,675)............................... 1,970,384
Securities lending income................................................................. 127,509
-----------
Total investment income................................................................. 4,557,727
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 5,149,191
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 2,017,811
Class B.................................................................... 1,188,118 3,205,929
-----------
Transfer agent fees (Note 2).............................................................. 1,228,300
Printing and postage expenses............................................................. 284,550
Fund accounting fees (Note 2)............................................................. 142,357
Professional fees......................................................................... 126,582
Registration and filing fees.............................................................. 73,000
Custodian fees............................................................................ 40,625
Trustees' fees and expenses (Note 2)...................................................... 21,594
Other expenses............................................................................ 29,939
-----------
Total expenses before reductions........................................................ 10,302,067
-----------
Expense reductions (Note 5)........................................................... (45,003)
-----------
Total net expenses...................................................................... 10,257,064
-----------
Net investment loss......................................................................... (5,699,337)
-----------
Net realized and unrealized loss on investments and foreign currencies: (Note
1)
Net realized gain on investments............................................. 108,367
Net realized loss on foreign currency transactions........................... (913,909)
-----------
Net realized loss during the year....................................................... (805,542)
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... 221,096
Net change in unrealized appreciation of investments......................... (18,766,554)
-----------
Net unrealized depreciation during the year............................................. (18,545,458)
-----------
Net realized and unrealized loss on investments and foreign currencies...................... (19,351,000)
-----------
Net decrease in net assets resulting from operations........................................ $(25,050,337)
-----------
-----------
</TABLE>

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

10
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment loss....................................................... $ (5,699,337) $ (6,665,748)
Net realized gain (loss) on investments and foreign currency
transactions............................................................. (805,542) 153,599,307
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. 221,096 (569,426)
Net change in unrealized appreciation (depreciation) of investments....... (18,766,554) 1,308,779
---------------- ----------------
Net increase (decrease) in net assets resulting from operations......... (25,050,337) 147,672,912
---------------- ----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... (110,820,788) (34,613,411)
In excess of net realized gain on investments............................. (211,033) --
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... (34,067,362) (8,701,491)
In excess of net realized gain on investments............................. (64,874) --
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... (1,789,552) (57,488)
In excess of net realized gain on investments............................. (3,408) --
---------------- ----------------
Total distributions..................................................... (146,957,017) (43,372,390)
---------------- ----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 785,847,410 1,007,452,632
Decrease from capital shares repurchased.................................. (776,444,828) (1,062,045,275)
---------------- ----------------
Net increase (decrease) from capital share transactions................. 9,402,582 (54,592,643)
---------------- ----------------
Total increase (decrease) in net assets..................................... (162,604,772) 49,707,879
Net assets:
Beginning of year......................................................... 626,342,117 576,634,238
---------------- ----------------
End of year *............................................................. $ 463,737,345 $ 626,342,117
---------------- ----------------
---------------- ----------------
* Includes undistributed net investment income............................. -- $ --
---------------- ----------------
---------------- ----------------
</TABLE>

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

11
<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 (d) 1995 1994 (d)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 27.98 $ 23.60 $ 21.84 $ 19.60 $ 17.86
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.21) (0.25) (0.17) (0.15) (0.22)
Net realized and unrealized gain
(loss) on investments................ (0.91) 6.48 4.79 3.73 2.02
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (1.12) 6.23 4.62 3.58 1.80
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (6.70) (1.85) (2.86) (1.34) --
In excess of net realized gain on
investments.......................... (0.01) -- -- -- (0.06)
---------- ---------- ---------- ---------- ----------
Total distributions................. (6.71) (1.85) (2.86) (1.34) (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 20.15 $ 27.98 $ 23.60 $ 21.84 $ 19.60
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

Total investment return (c)............. (4.71)% 28.36% 23.14% 19.79% 10.11%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 357,534 $ 472,083 $ 467,861 $ 426,380 $ 438,940
Ratio of net investment loss to average
net assets:
With expense reductions (Note 5)...... (0.97)% (1.00)% (0.71)% (0.72)% (1.23)%
Without expense reductions............ (0.98)% (1.03)% (0.75)% (0.78)% N/A
Ratio of expenses to average net assets:
With expense reductions (Note 5)...... 1.83% 1.77% 1.80% 1.85% 1.98%
Without expense reductions............ 1.84% 1.80% 1.84% 1.91% N/A
Portfolio turnover rate++............... 187% 149% 157% 99% 64%
</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 classes of shares issued.
N/A Not Applicable.

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

12
<PAGE>
FINANCIAL HIGHLIGHTS (cont'd)

CLASS B
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1998 (d) 1997 (d) 1996 (d) 1995 1994 (d)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 27.27 $ 23.15 $ 21.56 $ 19.46 $ 17.80
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.30) (0.37) (0.27) (0.25) (0.32)
Net realized and unrealized gain
(loss) on investments................ (0.89) 6.34 4.72 3.69 2.02
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (1.19) 5.97 4.45 3.44 1.70
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (6.70) (1.85) (2.86) (1.34) --
In excess of net realized gain on
investments.......................... (0.01) -- -- -- (0.04)
---------- ---------- ---------- ---------- ----------
Total distributions................. (6.71) (1.85) (2.86) (1.34) (0.04)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 19.37 $ 27.27 $ 23.15 $ 21.56 $ 19.46
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

Total investment return (c)............. (5.20)% 27.75% 22.59% 19.17% 9.55%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 100,311 $ 147,440 $ 107,622 $ 70,740 $ 39,100
Ratio of net investment loss to average
net assets:
With expense reductions (Note 5)...... (1.47)% (1.50)% (1.21)% (1.22)% (1.73)%
Without expense reductions............ (1.48)% (1.53)% (1.25)% (1.28)% N/A
Ratio of expenses to average net assets:
With expense reductions (Note 5)...... 2.33% 2.27% 2.30% 2.35% 2.48%
Without expense reductions............ 2.34% 2.30% 2.34% 2.41% N/A
Portfolio turnover rate++............... 187% 149% 157% 99% 64%
</TABLE>

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

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

13
<PAGE>
FINANCIAL HIGHLIGHTS (cont'd)

<TABLE>
<CAPTION>
ADVISOR CLASS+
----------------------------------------------------
JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO
------------------------------------- OCTOBER 31,
1998 (d) 1997 (d) 1996 (d) 1995
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 28.34 $ 23.77 $ 21.88 $ 18.66
----------- ----------- ----------- -------------
Income from investment operations:
Net investment loss................... (0.10) (0.12) (0.05) (0.02)
Net realized and unrealized gain
(loss) on investments................ (0.94) 6.54 4.80 3.24
----------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. (1.04) 6.42 4.75 3.22
----------- ----------- ----------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (6.70) (1.85) (2.86) --
In excess of net realized gain on
investments.......................... (0.01) -- -- --
----------- ----------- ----------- -------------
Total distributions................. (6.71) (1.85) (2.86) --
----------- ----------- ----------- -------------
Net asset value, end of period.......... $ 20.59 $ 28.34 $ 23.77 $ 21.88
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------

Total investment return (c)............. (4.28)% 29.00% 23.82% 17.10(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,892 $ 6,819 $ 1,152 $ 539
Ratio of net investment loss to average
net assets:
With expense reductions (Note 5)...... (0.47)% (0.50)% (0.21)% (0.22)%(a)
Without expense reductions............ (0.48)% (0.53)% (0.25)% (0.28)%(a)
Ratio of expenses to average net assets:
With expense reductions (Note 5)...... 1.33% 1.27% 1.30% 1.35%(a)
Without expense reductions............ 1.34% 1.30% 1.34% 1.41%(a)
Portfolio turnover rate++............... 187% 149% 157% 99%(a)
</TABLE>

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

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

14
<PAGE>
NOTES TO
FINANCIAL STATEMENTS
October 31, 1998

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

1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Global Health Care Fund (the "Fund"), formerly, GT Global Health Care Fund,
is a separate series of AIM Investment Funds (the "Trust"), formerly G.T.
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 an 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 except that 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
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments are valued at
amortized cost adjusted for foreign exchange translation and market fluctuation,
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 or 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

15
<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 amount 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, unless a quotation from only one
broker is available, in which case only that broker's price will be used. 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 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 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 its 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 $65,970,926 were on loan
to brokers. The loans were secured by cash collateral of $67,591,665 received by
the Fund. For the year ended October 31, 1998, the Fund received fees of
$127,509.

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 the 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

16
<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 intended 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, unrealized appreciation of securities held, or excise tax on income and
capital gains. The Fund currently has a capital loss carryforward of $1,387,673
which expires in 2006.

(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
investments of domestic origin. The Fund's investment in emerging market
countries may involve greater risks than investments in more developed markets
and the price 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.

In addition, the Fund's policy of concentrating its investments in companies in
the health care industry subject the Fund to greater risk than a fund that is
more diversified.

(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.

(N) 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
the Fund's total assets. At 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)
was $2,447,333, with a weighted average interest rate of 6.39%. Interest expense
for the year ended October 31, 1998 was $2,605 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. 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. A I M Distributors, Inc. ("AIM
Distributors"), a wholly-owned subsidiary of the Manager, is 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") 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 $8,771 and $15,832, 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. AIM Distributors and GT Global collected CDSCs for the year ended
October 31, 1998 of $26 and $207, respectively. AIM Distributors also makes
ongoing shareholder

17
<PAGE>
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 $169,183 and $341,707, 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 0.50% 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 0.50% 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 fnancial
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
expense) to the maximum annual rate of 2.00%, 2.50%, and 1.50% 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 paid 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

18
<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 U.S. government obligations and short-term
investments, aggregated $896,895,873 and $1,049,291,456, respectively. For the
year ended October 31, 1998, there were no purchases and sales of U.S.
government obligations.

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 Trust's 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 Trust's 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...................................................... 24,980,706 $526,818,779 31,631,342 $772,292,073
Shares issued in connection with reinvestment of distributions... 4,212,044 87,484,194 1,208,813 27,043,227
----------- ------------ ----------- ------------
29,192,750 614,302,973 32,840,155 799,335,300
Shares repurchased............................................... (28,318,023) (599,732,573) (35,792,763) (876,621,319)
----------- ------------ ----------- ------------
Net increase (decrease).......................................... 874,727 $ 14,570,400 (2,952,608) $(77,286,019)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------

<CAPTION>
CLASS B
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 3,933,442 $ 81,783,021 6,206,431 $152,327,079
Shares issued in connection with reinvestment of distributions... 1,393,872 27,961,083 321,688 7,045,104
----------- ------------ ----------- ------------
5,327,314 109,744,104 6,528,119 159,372,183
Shares repurchased............................................... (5,554,950) (115,825,819) (5,770,947) (142,017,878)
----------- ------------ ----------- ------------
Net increase (decrease).......................................... (227,636) $ (6,081,715) 757,172 $ 17,354,305
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
ADVISOR CLASS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 2,760,416 $ 60,020,116 1,865,809 $ 48,687,774
Shares issued in connection with reinvestment of distributions... 84,210 1,780,217 2,543 57,375
----------- ------------ ----------- ------------
2,844,626 61,800,333 1,868,352 48,745,149
Shares repurchased............................................... (2,799,107) (60,886,436) (1,676,189) (43,406,078)
----------- ------------ ----------- ------------
Net increase..................................................... 45,519 $ 913,897 192,163 $ 5,339,071
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>

5. EXPENSE REDUCTIONS
The Manager has 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 $45,003 under these arrangements.

6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies by the Fund at October 31, 1998, amounted to
$32,593,626, at value.

19
<PAGE>
Transactions with affiliated companies for the year are as follows:

<TABLE>
<CAPTION>
PURCHASES SALES NET REALIZED DIVIDEND
COST PROCEEDS GAIN (LOSS) INCOME
---------- ----------- ------------ --------
<S> <C> <C> <C> <C>
AVECOR Cardiovascular........................ $ 951,984 $ 1,158,394 $ (660,045) --
TheraTech, Inc............................... -- 2,219,055 (1,305,046) --
</TABLE>

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, 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>
TRUSTEE/MATTER
---------------------------------------------------------------------------------------------------------------
<S> <C>
(1) C. Derek Anderson..............................................................................................
Frank S. Bayley................................................................................................
William J. Guilfoyle...........................................................................................
Arthur C. Patterson............................................................................................
Ruth H. Quigley................................................................................................
(2)(a) Approval of investment management and administration contract..................................................
(2)(b) Approval of sub-advisory and sub-administration contract.......................................................
(3) Approval of replacement Rule 12b-1 plans of distribution
CLASS A SHARES.................................................................................................
CLASS B SHARES.................................................................................................
(4)(a) Modification of Fundamental Restriction on Portfolio Diversification...........................................
(4)(b) Modification of Fundamental Restriction on Issuing Senior Securities and Borrowing Money.......................
(4)(c) Modification of Fundamental Restriction on Making Loans........................................................
(4)(d) Modification of Fundamental Restriction on Underwriting Securities.............................................
(4)(e) Modification of Fundamental Restriction on Real Estate Investments.............................................
(4)(f) Modification of Fundamental Restriction on Investing in Commodities............................................
(4)(g) Elimination of Fundamental Restriction on Margin Transactions..................................................
(4)(h) Elimination of Fundamental Restriction on Investing in Illiquid Securities.....................................
(4)(i) Elimination of Fundamental Restriction on Pledging Assets......................................................
(4)(j) Elimination of Fundamental Restriction on Investment in Oil, Gas and Mineral Leases and Programs...............
(4)(k) Elimination of Fundamental Restriction on Investing for the Purpose of Control.................................
(4)(l) Elimination of Fundamental Restriction on Investing in Securities of Companies That Have Been in Operation for
Less than Three Years........................................................................................
(4)(m) Elimination of Fundamental Restriction on Selling Securities Short.............................................
(4)(n) Approval of New Fundamental Investment Policy Regarding Investment of All of Each Fund's Assets in an Open-End
Fund.........................................................................................................
(5) Approval of an agreement and plan of conversion and termination with respect to the Trust......................
(6) Ratification of the selection of Coopers and Lybrand, now known as PricewaterhouseCoopers LLP, as the Trust's
Independent Public Accountants...............................................................................

<CAPTION>
VOTES WITHHELD/
VOTES FOR AGAINST ABSTENTIONS
--------------- ------------ --------------
<S> <C> <C> <C>
(1) 191,685,088 N/A 13,123,292
191,766,811 N/A 13,041,568
191,828,959 N/A 12,979,420
191,845,270 N/A 12,963,109
191,869,887 N/A 12,938,492
(2)(a) 10,036,876 377,037 3,286,380*
(2)(b) 9,924,807 438,232 3,337,254*
(3)
9,243,174 408,228 848,675
2,844,133 91,446 203,388
(4)(a) 9,785,679 486,780 3,427,834*
(4)(b) 9,785,679 486,780 3,427,834*
(4)(c) 9,785,679 486,780 3,427,834*
(4)(d) 9,785,524 486,935 3,427,834*
(4)(e) 9,785,679 486,780 3,427,834*
(4)(f) 9,784,205 488,254 3,427,834*
(4)(g) 9,785,524 486,935 3,427,834*
(4)(h) 9,782,717 489,742 3,427,824
(4)(i) 9,785,524 486,935 3,427,834*
(4)(j) 9,785,679 486,780 3,427,834*
(4)(k) 9,785,549 486,910 3,427,834*
(4)(l)
9,784,035 488,424 3,427,834*
(4)(m) 9,781,946 490,513 3,427,834*
(4)(n)
9,785,300 487,159 3,427,834*
(5) 190,027,469 6,362,084 94,055,040*
(6)
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
$34,293,657 as capital gain dividends for the fiscal year ended October 31,
1998.

20
<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

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>

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.

THE AIM FAMILY OF FUNDS-Registered Trademark-

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
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.

GHC-AR-1