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

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

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<PAGE>

ANNUAL REPORT / OCTOBER 1998

AIM GLOBAL INFRASTRUCTURE FUND

[Cover Image]

[AIM Logo appears here]

INVEST WITH DISCIPLINE-Registered Trademark-

<PAGE>

[Cover Image] L'ECLUSE DE LA MONNAIE BY PAUL SIGNAC
THROUGHOUT HISTORY, MAJOR INFRASTRUCTURE PROJECTS SUCH
AS BRIDGES, CANALS, AND ROADS HAVE BEEN VITAL TO A
NATION'S SUCCESS. NOW INFRASTRUCTURE HAS EXPANDED TO
INCLUDE TELECOMMUNICATIONS, ELECTRICITY, AND HIGH
TECHNOLOGY--THE INTANGIBLE BRICKS AND MORTAR OF THE
MODERN ECONOMY.

AIM Global Infrastructure Fund is for shareholders who seek long-term growth of
capital. The Fund invests in equity securities of companies in established and
emerging economies throughout the world that design, develop or provide products
and services necessary for creating and maintaining a country's infrastructure.

ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
- - AIM Global Infrastructure Fund (formerly GT Global Infrastructure 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 $0.11
per share for all classes.

- - When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% 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.
- - Investing in a single-sector fund may involve greater risk and potential
reward than investing in a more diversified fund.

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 index is designed to represent
the performance of all markets and does not reflect the Fund's
concentration in infrastructure industries.

- - 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.

- - 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 INFRASTRUCTURE FUND

<PAGE>

ANNUAL REPORT / CHAIRMAN'S LETTER

DEAR FELLOW SHAREHOLDER:

Chairman Photo

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.)

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,

Chairman Signature

Charles T. Bauer
Chairman

THE ABRUPT REVERSALS OF SENTIMENT DURING THIS FISCAL YEAR REINFORCE OUR
CONVICTION THAT MARKETS ARE UNPREDICTABLE IN THE SHORT TERM.

AIM GLOBAL INFRASTRUCTURE FUND

<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

FUND WEATHERS TURBULENT WORLD MARKET

GLOBAL AND DOMESTIC MARKETS WERE VOLATILE FOR MUCH OF THE REPORTING PERIOD. HOW
DID THE FUND PERFORM?
International investors endured a difficult year, including a major correction
in world equity markets during August. For the fiscal year ending October 31,
1998, the Fund's Class A shares reported a total annual return of -4.82% and
Class B shares posted a -5.31% 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
fiscal year, then screeched 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 and suffered deep currency
devaluations. Fears of a global credit crunch then spread to Latin America.
Markets there plunged as investors worried that Brazil could not sustain its
exchange rate in light of the country's increasing debt.

By the end of the fiscal year, stock markets stabilized, reassured by
falling interest rates and improvements in global economies. In a move felt
around the world, the U.S. Federal Reserve Board lowered the short-term target
federal funds rate from 5.50% to 5.00% in two steps, on September 29 and again
on October 15.

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. Brazil, one of the United States' key trade partners,
received $41 billion in loans.

WE DECREASED OUR EXPOSURE IN THE WEAKEST ECONOMIES, MOSTLY IN EMERGING MARKETS.

HOW WAS THE FUND AFFECTED?
The Fund suffered from the general weakness in emerging market equities in the
latter half of 1997. But during the first half of fiscal 1998, the Fund reported
strong performance because of its heavy weightings in European and U.S. stocks.
Its good performance ended quickly along with the market's decline in July.

The Fund's weakness near the end of the reporting period stems from its
exposure to cyclically sensitive companies such as airlines, machinery makers,
industrial components manufacturers, and construction and engineering firms.
Infrastructure companies were hit hard by investors' fears that the credit
crunch in emerging markets could spread to Europe and the United States,
possibly halting growth.

HOW DID YOU MANAGE THE FUND DURING THIS TROUBLED ENVIRONMENT?
We decreased our exposure in the weakest economies, mostly in emerging markets.
We also lessened our exposure to companies with significant sales to emerging
markets such as airlines, long- haul freight, and commodity-oriented companies.
Stocks we sold include Tranz Rail Holdings of New Zealand and Brazilian firms
Companhia Energetica de Minas Gerais and Light-Servicos de Electricidade. U.S.
stocks we sold included Alaska Air Group, Airborne Freight, and Navistar
International.

We re-deployed these assets into utility stocks because of their
defensive characteristics during volatile, uncertain mar-

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

<TABLE>
<CAPTION>
Top 10 Holdings
<S> <C>
1. Vivendi (France) 4.4%
2. Lafarge S.A. (France) 3.3
3. AES Corp. (U.S.) 3.1
4. Mannesmann AG (Germany) 3.0
5. Enron Corp. (U.S.) 2.9
6. Houston Industries, Inc. (U.S.) 2.9
7. Dominion Resources, Inc. (U.S.) 2.8
8. Endesa S.A.-ADR (Spain) 2.8
9. Telecom Italia SpA (Italy) 2.4
10. Pinnacle West Capital Corp. (U.S.) 2.2
</TABLE>

<TABLE>
<CAPTION>
Top Countries
<S> <C>
1. United States 55.4%
2. United Kingdom 9.1
3. France 7.7
4. Italy 5.5
5. Germany 5.4
6. Spain 4.3
7. Portugal 4.3
8. Finland 1.5
9. Switzerland 1.4
10. Netherlands 1.3
</TABLE>

<TABLE>
<CAPTION>
Top industries
<S> <C>
1. Energy 35.3%
2. Services 29.5
3. Capital Goods 11.2
4. Materials/Basic Industry 9.1
5. Technology 2.8
</TABLE>

The Fund's portfolio composition 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 INFRASTRUCTURE FUND

<PAGE>

ANNUAL REPORT / MANAGERS' OVERVIEW

kets. Utilities, energy, and gas production companies represented 35.3% of
the portfolio's total assets at the end of the fiscal year. Top holdings
included Enron, a U.S. gas producer and distributor, and U.S. utilities
Houston Industries, AES, and Pinnacle West Capital. Other main holdings
include European utilities Endesa of Spain and Telecom Italia SpA of Italy.
We expect to retain this high concentration in utility stocks as long as
uncertainty prevails throughout most of the other infrastructure sectors.

WHAT ARE YOUR OTHER MAJOR HOLDINGS?
Vivendi and Lafarge, both of France, are our top holdings. Vivendi operates in
three major sectors--utilities, including water distribution; communications,
including telecommunications, publishing, Internet services, and cable TV; and
property management and construction. Lafarge is the world's largest maker of
building materials, including cement, concrete, aggregates, gypsum, roofing, and
specialty products.

WHAT IS YOUR OUTLOOK FOR THE FUND?
The Fund takes a conservative approach to infrastructure investing throughout
the world. We search for areas where capital spending is strongest. Therefore,
we have been avoiding emerging market equities in favor of Europe and North
America, where we see robust infrastructure spending. The Fund's current asset
mix by geography is North America, 55%; Europe, 42%; Latin America, 1%; and
Asia, 0.2%.

We expect the Asian crises to continue to cripple many emerging market
economies. We will remain underweight in this asset class until we see
definitive signs of a re-acceleration of infrastructure spending. Barring any
significant unforeseen change in the economic out look for much of Europe and
North America, we expect to retain a high weighting in these regions with a
relatively conservative bias toward utilities and other high- quality,
conservative growth companies.

THE FUND TAKES A CONSERVATIVE APPROACH TO INFRASTRUCTURE INVESTING THROUGHOUT
THE WORLD.

WHAT IS YOUR OUTLOOK FOR GLOBAL MARKETS IN GENERAL?
We're cautiously optimistic about the coming year and have invested
conservatively. There are some positive factors influencing our outlook: the
U.S. Federal Reserve Board's actions to lower interest rates in the United
States, progress on economic reform in Japan, and the stabilization of
Brazil's currency.

Our primary concerns include the potential for global deflation and the
fact that European interest rates have not fallen much. Meanwhile, Japan's
banking system continues to look questionable, and China's economy is slowing
rapidly, increasing the potential for currency de-valuation next year.

We expect the Fund to remain somewhat defensive in the near term with a
relatively high weighting in utilities and blue chip growth companies in Europe
and the United States. We will continue to seek selective, high quality growth
stocks in the near term.

WELCOME THE EURO

Starting January 1, 1999, Europe will launch a brand new currency--the euro. At
first, only 11 countries will adopt it: Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. These
countries have met the financial and economic criteria required for membership
in the Economic and Monetary Union (EMU), and they have agreed to follow certain
monetary, exchange rate, and budgetary policies.

The changeover to the euro will take place gradually. New coins and paper
currency will not be introduced until January 2002. Until then, Spanish shoppers
will still use pesetas and the French will still use francs, but these will be
thought of simply as denominations of the euro, the same way that a quarter is a
denomination of a dollar.

A NEW BUSINESS ENVIRONMENT
The euro is expected to bring greater unity to the European business world:
price comparison of goods, services, and labor across Europe may be much easier.

Because of this price transparency, European companies may be forced to
become more competitive. An increase in merger and acquisition activity is
expected.

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. Since currency
risk may be reduced, Europe's investors can focus on credit risk. 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 prospectus for more information
about these risk factors.

SEE IMPORTANT FUND AND INDEX DISCLOSURES INSIDE FRONT COVER.

AIM GLOBAL INFRASTRUCTURE FUND

<PAGE>

ANNUAL REPORT / PERFORMANCE HISTORY

YOUR FUND'S LONG-TERM PERFORMANCE

RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL INFRASTRUCTURE FUND VS. BENCHMARK INDEX

<TABLE>
<CAPTION>
5/31/94-10/31/98

AIM Global AIM Global
Infrastructure Fund, Infrastructure Fund,
Class A Class B MSCI World Index
<S> <C> <C> <C>
In thousands
5/31/94 $9,525.00 $10,000.00 $10,000.00
7/31/94 9,992.00 10,481.00 10,165.00
10/31/94 10,392.00 10,892.00 10,492.00
1/31/95 9,567.00 10,018.00 9,987.00
4/30/95 9,625.00 10,061.00 10,998.00
7/31/95 10,750.00 11,225.00 11,650.00
10/31/95 10,092.00 10,525.00 11,544.00
1/31/96 10,725.00 11,164.00 12,524.00
4/30/96 11,742.00 12,213.00 13,118.00
7/31/96 11,650.00 12,100.00 12,736.00
10/31/96 12,008.00 12,548.00 13,488.00
1/31/97 13,248.00 13,724.00 14,192.00
4/30/97 12,732.00 13,182.00 14,538.00
7/31/97 14,639.00 15,130.00 16,960.00
10/31/97 13,134.00 13,559.00 15,814.00
1/31/98 12,890.00 13,292.00 16,752.00
4/30/98 14,485.00 14,913.00 18,831.00
7/31/98 14,044.00 14,441.00 19,014.00
10/31/98 12,502.00 12,638.00 18,295.00
</TABLE>

Past performance cannot guarantee comparable future results.

AVERAGE ANNUAL TOTAL RETURNS
For periods ending 10/31/98, including sales charges

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Inception (5/31/94) 5.18%
3 years 5.68
1 year -9.35
</TABLE>

<TABLE>
<CAPTION>
CLASS B SHARES
<S> <C>
Inception (5/31/94) 5.44%
3 years 5.96
1 year -10.01
</TABLE>

<TABLE>
<CAPTION>
ADVISOR CLASS
<S> <C>
Inception (6/1/95) 7.22%
3 years 8.00
1 year -4.35
</TABLE>

Source: Towers Data Systems HYPO-Registered Trademark-.

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

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

ABOUT THIS CHART
The chart above compares your Fund to a benchmark index. It is intended to give
you a general idea of how your Fund performed compared to the stock market over
the period 5/31/94-10/31/98. It is important to understand the difference
between your Fund and an index. An index measures performance of a hypothetical
portfolio. A market index such as the Morgan Stanley Capital International
(MSCI) World Index is not managed, incurring no sales charges, expenses or fees.
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. In addition, it is
worth noting that the index is designed to represent the performance of all
markets and does not reflect the Fund's concentration in infrastructure
industries.

AIM GLOBAL INFRASTRUCTURE 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
versa. The chart at the right shows calen-

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 INFRASTRUCTURE FUND

<PAGE>

ANNUAL REPORT / FOR CONSIDERATION

dar-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
1987-1997

S&P 500 Index Russell 2000 Stock Index Europe-Australasia-Far
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 INFRASTRUCTURE FUND

6
<PAGE>
REPORT OF
INDEPENDENT ACCOUNTANTS

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

To the Shareholders of AIM Global Infrastructure Fund (formerly GT Global
Infrastructure 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 Infrastructure
Fund - Consolidated 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
<PAGE>
PORTFOLIO OF INVESTMENTS

October 31, 1998

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (35.3%)
AES Corp.-/- ............................................... US 48,264 $ 1,975,808 3.1
ELECTRICAL & GAS UTILITIES
Enron Corp. ................................................ US 35,001 1,846,303 2.9
GAS PRODUCTION & DISTRIBUTION
Houston Industries, Inc. ................................... US 59,000 1,832,688 2.9
ELECTRICAL & GAS UTILITIES
Dominion Resources, Inc. ................................... US 38,000 1,755,125 2.8
ELECTRICAL & GAS UTILITIES
Endesa S.A. - ADR{\/} ...................................... SPN 68,400 1,739,925 2.8
ELECTRICAL & GAS UTILITIES
Pinnacle West Capital Corp. ................................ US 32,000 1,402,000 2.2
ELECTRICAL & GAS UTILITIES
National Grid Group PLC .................................... UK 200,000 1,368,580 2.2
ELECTRICAL & GAS UTILITIES
Edison S.p.A. .............................................. ITLY 150,000 1,325,549 2.1
ELECTRICAL & GAS UTILITIES
BG PLC ..................................................... UK 200,000 1,310,022 2.1
ELECTRICAL & GAS UTILITIES
Union Electrica Fenosa S.A.-/- ............................. SPN 60,000 973,652 1.5
ELECTRICAL & GAS UTILITIES
Texas Utilities Co. ........................................ US 20,000 875,000 1.4
ELECTRICAL & GAS UTILITIES
EVN Energie-Versorgung Niederoesterreich AG ................ ASTRI 5,600 798,420 1.3
ELECTRICAL & GAS UTILITIES
Montana Power Co. .......................................... US 18,000 779,625 1.2
ELECTRICAL & GAS UTILITIES
Interstate Energy Corp. .................................... US 23,740 734,456 1.2
ELECTRICAL & GAS UTILITIES
GPU, Inc. .................................................. US 16,000 690,000 1.1
ELECTRICAL & GAS UTILITIES
Public Service Enterprise Group, Inc. ...................... US 17,000 646,000 1.0
ELECTRICAL & GAS UTILITIES
EDP-Electricidade de Portugal S.A. ......................... PORT 25,400 638,739 1.0
ELECTRICAL & GAS UTILITIES
USEC, Inc.-/- .............................................. US 39,600 579,150 0.9
ENERGY SOURCES
Viag AG .................................................... GER 800 543,774 0.9
ELECTRICAL & GAS UTILITIES
El Paso Energy Corp. ....................................... US 12,400 439,425 0.7
GAS PRODUCTION & DISTRIBUTION
Hub Power Co. .............................................. PAK 400 79 --
ELECTRICAL & GAS UTILITIES
-----------
22,254,320
-----------
Services (29.5%)
Vivendi .................................................... FR 11,982 2,737,841 4.4
CONSUMER SERVICES
Mannesmann AG .............................................. GER 19,000 1,871,186 3.0
WIRELESS COMMUNICATIONS
</TABLE>

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

8
<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>
Services (Continued)
Telecom Italia SpA - Di Risp ............................... ITLY 300,000 $ 1,519,597 2.4
TELEPHONE NETWORKS
SBC Communications ......................................... US 29,000 1,343,063 2.1
TELEPHONE - REGIONAL/LOCAL
Portugal Telecom S.A. - ADR{\/} ............................ PORT 28,000 1,323,000 2.1
TELEPHONE NETWORKS
Bell Atlantic Corp. ........................................ US 22,000 1,168,750 1.9
TELEPHONE - REGIONAL/LOCAL
MCI WorldCom, Inc.-/- ...................................... US 20,000 1,105,000 1.8
TELEPHONE NETWORKS
Comair Holdings, Inc. ...................................... US 32,300 1,061,863 1.7
TRANSPORTATION - AIRLINES
Swisscom AG-/- ............................................. SWTZ 2,671 905,056 1.4
TELEPHONE NETWORKS
Tele-Communications, Inc. "A"-/- ........................... US 20,000 842,500 1.3
CABLE TELEVISION
Equant N.V.-/- {\/} ........................................ NETH 18,880 826,000 1.3
TELEPHONE NETWORKS
Brisa-Auto Estradas de Portugal S.A. ....................... PORT 16,000 744,230 1.2
TRANSPORTATION - ROAD & RAIL
Canadian National Railway Co. .............................. CAN 12,800 639,378 1.0
TRANSPORTATION - ROAD & RAIL
Aeroporti di Roma SpA ...................................... ITLY 96,000 600,615 1.0
TRANSPORTATION - AIRLINES
Deutsche Lufthansa AG ...................................... GER 20,000 435,019 0.7
TRANSPORTATION - AIRLINES
AirTouch Communications, Inc.-/- ........................... US 7,100 397,600 0.6
WIRELESS COMMUNICATIONS
AMR Corp.-/- ............................................... US 5,700 381,900 0.6
TRANSPORTATION - AIRLINES
Stagecoach Holdings PLC .................................... UK 96,000 372,628 0.6
TRANSPORTATION - ROAD & RAIL
RailWorks Corp.-/- ......................................... US 23,700 157,013 0.2
TRANSPORTATION - ROAD & RAIL
China Telecom (Hong Kong) Ltd.-/- .......................... HK 80,000 150,300 0.2
WIRELESS COMMUNICATIONS
Hellenic Telecommunication Organization S.A. (OTE) ......... GREC 11 250 --
TELEPHONE NETWORKS
-----------
18,582,789
-----------
Capital Goods (11.2%)
Kaufman and Broad Home Corp. ............................... US 42,000 1,199,625 1.9
CONSTRUCTION
Gulfstream Aerospace Corp.-/- .............................. US 25,000 1,106,250 1.8
AEROSPACE/DEFENSE
General Electric Co. PLC ................................... UK 122,500 978,647 1.6
AEROSPACE/DEFENSE
Nokia Oyj "A" - ADR{\/} .................................... FIN 10,000 930,625 1.5
TELECOM EQUIPMENT
</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>
Capital Goods (Continued)
United Technologies Corp. .................................. US 7,000 $ 666,750 1.1
AEROSPACE/DEFENSE
Tellabs, Inc.-/- ........................................... US 12,000 660,000 1.0
TELECOM EQUIPMENT
MAN AG ..................................................... GER 1,500 489,396 0.8
MACHINERY & ENGINEERING
British Aerospace PLC ...................................... UK 65,000 483,395 0.8
AEROSPACE/DEFENSE
Boeing Co. ................................................. US 9,700 363,750 0.6
AEROSPACE/DEFENSE
L-3 Communications Holdings, Inc.-/- ....................... US 1,300 55,900 0.1
AEROSPACE/DEFENSE
-----------
6,934,338
-----------
Materials/Basic Industry (9.1%)
Lafarge S.A. ............................................... FR 20,000 2,045,483 3.3
BUILDING MATERIALS & COMPONENTS
Martin Marietta Materials, Inc. ............................ US 25,000 1,226,563 1.9
MISC. MATERIALS & COMMODITIES
La Cementos Nacional, C.A. - 144A GDR{.} {\/} .............. ECDR 5,975 687,125 1.1
CEMENT
Hanson PLC - ADR{\/} ....................................... UK 16,000 565,000 0.9
BUILDING MATERIALS & COMPONENTS
CRH PLC .................................................... UK 38,000 553,756 0.9
BUILDING MATERIALS & COMPONENTS
Suez Cement Co. - Reg S GDR{c} {\/} ........................ EGPT 22,000 324,500 0.5
CEMENT
Centex Corp. ............................................... US 9,400 314,900 0.5
BUILDING MATERIALS & COMPONENTS
-----------
5,717,327
-----------
Technology (2.8%)
Cisco Systems, Inc.-/- ..................................... US 17,250 1,086,750 1.7
NETWORKING
Tekelec-/- ................................................. US 40,000 717,500 1.1
TELECOM TECHNOLOGY
-----------
1,804,250
----------- -----

TOTAL EQUITY INVESTMENTS (cost $44,438,182) .................. 55,293,024 87.9
----------- -----
</TABLE>

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

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

October 31, 1998

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (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 $5,070,000 U.S. Treasury Notes, 6.50% due
5/15/05 (market value of collateral is $5,810,321,
including accrued interest). (cost $5,694,000) ............ $ 5,694,000 9.1
----------- -----

TOTAL INVESTMENTS (cost $50,132,182) * ....................... 60,987,024 97.0
Other Assets and Liabilities ................................. 1,890,613 3.0
----------- -----

NET ASSETS ................................................... $62,877,637 100.0
----------- -----
----------- -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $50,132,182 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 11,779,031
Unrealized depreciation: (924,189)
-------------
Net unrealized appreciation: $ 10,854,842
-------------
-------------
</TABLE>

Abbreviations:
ADR--American Depositary Receipt
GDR--Global 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 & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Austria (ASTRI/ATS) .................. 1.3 1.3
Canada (CAN/CAD) ..................... 1.0 1.0
Ecuador (ECDR/ECS) ................... 1.1 1.1
Egypt (EGPT/EGP) ..................... 0.5 0.5
Finland (FIN/FIM) .................... 1.5 1.5
France (FR/FRF) ...................... 7.7 7.7
Germany (GER/DEM) .................... 5.4 5.4
Hong Kong (HK/HKD) ................... 0.2 0.2
Italy (ITLY/ITL) ..................... 5.5 5.5
Netherlands (NETH/NLG) ............... 1.3 1.3
Portugal (PORT/PTE) .................. 4.3 4.3
Spain (SPN/ESP) ...................... 4.3 4.3
Switzerland (SWTZ/CHF) ............... 1.4 1.4
United Kingdom (UK/GBP) .............. 9.1 9.1
United States (US/USD) ............... 43.3 12.1 55.4
------ ----- -----
Total ............................... 87.9 12.1 100.0
------ ----- -----
------ ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $62,877,637.

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

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

October 31, 1998

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1998
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ------------ -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 2,117,189 1.63655 11/27/98 $ (21,456)
Deutsche Marks.......................... 604,912 1.67875 11/27/98 9,230
Deutsche Marks.......................... 483,929 1.74405 11/27/98 25,227
French Francs........................... 2,525,704 5.47050 12/8/98 (33,477)
-------------- --------------
Total Contracts to Buy (Payable amount
$5,752,210).......................... 5,731,734 (20,476)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 9.12%.

CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,206,030 1.78600 11/27/98 (238,505)
French Francs........................... 2,525,704 5.76105 12/8/98 (95,591)
-------------- --------------
Total Contracts to Sell (Receivable
amount $5,397,638)................... 5,731,734 (334,096)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 9.12%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ (354,572)
--------------
--------------
</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 $50,132,182) (Note 1)............................ $60,987,024
U.S. currency................................................................... $ 187
Foreign currencies (cost $1,246,112)............................................ 1,222,705 1,222,892
---------
Receivable for securities sold............................................................. 2,900,604
Dividends and dividend withholding tax reclaims receivable................................. 71,072
Unamortized organizational costs (Note 1).................................................. 5,980
Receivable for Fund shares sold............................................................ 3,337
Interest and miscellaneous receivable...................................................... 2,860
----------
Total assets............................................................................. 65,193,769
----------
Liabilities:
Payable for securities purchased........................................................... 1,353,704
Payable for open forward foreign currency contracts, net (Note 1).......................... 354,572
Payable for Fund shares repurchased........................................................ 271,106
Payable for service and distribution expenses (Note 2)..................................... 91,358
Payable for transfer agent fees (Note 2)................................................... 73,036
Payable for printing and postage expenses.................................................. 54,875
Payable for professional fees.............................................................. 42,068
Payable for investment management and administration fees (Note 2)......................... 25,654
Payable for registration and filing fees................................................... 23,067
Payable for custodian fees................................................................. 11,419
Payable for Trustees' fees and expenses (Note 2)........................................... 3,587
Payable for fund accounting fees (Note 2).................................................. 1,541
Other accrued expenses..................................................................... 10,045
----------
Total liabilities........................................................................ 2,316,032
Minority interest (Notes 1 & 2)............................................................ 100
----------
Net assets................................................................................... $62,877,637
----------
----------
Class A:
Net asset value and redemption price per share ($23,531,410 DIVIDED BY 1,659,002 shares
outstanding)................................................................................ $ 14.18
----------
----------
Maximum offering price per share (100/95.25 of $14.18) *..................................... $ 14.89
----------
----------
Class B:+
Net asset value and offering price per share ($32,349,296 DIVIDED BY 2,333,106 shares
outstanding)................................................................................ $ 13.87
----------
----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($6,996,931 DIVIDED
BY 483,874 shares outstanding).............................................................. $ 14.46
----------
----------
Net assets consist of:
Paid in capital (Note 4)................................................................... $47,321,830
Undistributed net investment income........................................................ 147,120
Accumulated net realized gain on investments and foreign currency transactions............. 4,932,520
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies................................................................................ (378,675)
Net unrealized appreciation of investments................................................. 10,854,842
----------
Total -- representing net assets applicable to capital shares outstanding.................... $62,877,637
----------
----------
<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.

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 $181,399)............................... $1,666,460
Interest income............................................................................ 396,324
Securities lending income.................................................................. 45,192
----------
Total investment income.................................................................. 2,107,976
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 822,356
Service and distribution expenses: (Note 2)
Class A....................................................................... $ 157,270
Class B....................................................................... 451,823 609,093
---------
Transfer agent fees (Note 2)............................................................... 300,290
Professional fees.......................................................................... 93,695
Printing and postage expenses.............................................................. 73,214
Registration and filing fees............................................................... 72,670
Custodian fees............................................................................. 39,785
Fund accounting fees (Note 2).............................................................. 22,640
Trustees' fees and expenses (Note 2)....................................................... 13,870
Amortization of organization costs (Note 1)................................................ 10,300
Other expenses............................................................................. 6,446
----------
Total expenses before reductions......................................................... 2,064,359
----------
Expenses reimbursed by A I M Advisors, Inc. (Note 2)................................... (193,053)
Expense reductions (Note 5)............................................................ (7,816)
----------
Total net expenses....................................................................... 1,863,490
----------
Net investment income........................................................................ 244,486
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments................................................ 4,932,911
Net realized loss on foreign currency transactions.............................. (76,810)
---------
Net realized gain during the year........................................................ 4,856,101
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies.......................................................... (333,974)
Net change in unrealized appreciation of investments............................ (7,919,952)
---------
Net unrealized depreciation during the year.............................................. (8,253,926)
----------
Net realized and unrealized loss on investments and foreign currencies....................... (3,397,825)
----------
Net decrease in net assets resulting from operations......................................... $(3,153,339)
----------
----------
</TABLE>

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

14
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED OCTOBER
OCTOBER 31, 31,
1998 1997
----------- ----------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)................................................... $ 244,486 $ (405,469)
Net realized gain on investments and foreign currency transactions............. 4,856,101 778,612
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... (333,974) (116,926)
Net change in unrealized appreciation (depreciation) of investments............ (7,919,952) 8,647,635
----------- ----------
Net increase (decrease) in net assets resulting from operations.............. (3,153,339) 8,903,852
----------- ----------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.......................................... (275,162) (1,943,050)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.......................................... (454,982) (2,733,339)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments.......................................... (39,917) (17,129)
----------- ----------
Total distributions.......................................................... (770,061) (4,693,518)
----------- ----------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............................... 15,304,011 44,324,471
Decrease from capital shares repurchased....................................... (46,522,033) (42,934,337)
----------- ----------
Net increase (decrease) from capital share transactions...................... (31,218,022) 1,390,134
----------- ----------
Total increase (decrease) in net assets.......................................... (35,141,422) 5,600,468
Net assets:
Beginning of year.............................................................. 98,019,059 92,418,591
----------- ----------
End of year *.................................................................. $62,877,637 $98,019,059
----------- ----------
----------- ----------
* Includes undistributed net investment income of............................. $ 147,120 $ --
----------- ----------
----------- ----------
</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.

<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
MAY 31, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------------------- OPERATIONS) TO
1998 (d) 1997 (d) 1996 (d) 1995 OCTOBER 31, 1994
---------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 15.01 $ 14.42 $ 12.11 $ 12.47 $ 11.43
---------- ---------- ---------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... 0.07* (0.01) (0.03) (0.03) ** 0.01* * *
Net realized and unrealized gain
(loss) on investments................ (0.79) 1.32 2.34 (0.33) 1.03
---------- ---------- ---------- ---------- -----------------
Net increase (decrease) from
investment operations.............. (0.72) 1.31 2.31 (0.36) 1.04
---------- ---------- ---------- ---------- -----------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.11) (0.72) -- -- --
---------- ---------- ---------- ---------- -----------------
Total distributions................. (0.11) (0.72) -- -- --
---------- ---------- ---------- ---------- -----------------
Net asset value, end of period.......... $ 14.18 $ 15.01 $ 14.42 $ 12.11 $ 12.47
---------- ---------- ---------- ---------- -----------------
---------- ---------- ---------- ---------- -----------------

Total investment return (c)............. (4.82)% 9.38% 19.08% (2.89)% 9.10% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 23,531 $ 38,281 $ 38,397 $ 36,241 $ 23,615
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement (Notes 2 & 5).......... 0.52% (0.09)% (0.19)% (0.32)% 0.41% (a)
Without expense reductions and
reimbursement........................ 0.28% (0.17)% (0.30)% (0.58)% (0.47)% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement (Notes 2 & 5).......... 1.99% 2.00% 2.14% 2.36% 2.40% (a)
Without expense reductions and
reimbursement........................ 2.23% 2.08% 2.25% 2.62% 3.28% (a)
Portfolio turnover rate++............... 96% 41% 41% 45% 18%
</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.
* Before reimbursement the net investment income per share would have
been reduced by $0.03 for Class A shares, $0.03 for Class B shares,
and $0.04 for Advisor Class shares.
* * Before reimbursement the net investment income per share would have
been reduced by $0.03 for Class A shares, $0.03 for Class B shares,
and $0.02 for Advisor Class shares.
* * * Before reimbursement the net investment income per share would have
been reduced by $0.02 for Class A and Class B from May 31, 1994 to
October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rates are calculated on the basis of the Portfolio
as a whole without distinguishing between the classes of shares
issued.

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

16
<PAGE>
FINANCIAL HIGHLIGHTS (cont'd)

<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
MAY 31, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------------------- OPERATIONS) TO
1998 (d) 1997 (d) 1996 (d) 1995 OCTOBER 31, 1994
---------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.75 $ 14.24 $ 12.03 $ 12.45 $ 11.43
---------- ---------- ---------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... --* (0.09) (0.09) (0.09) ** (0.01) * * *
Net realized and unrealized gain
(loss) on investments................ (0.77) 1.32 2.30 (0.33) 1.03
---------- ---------- ---------- ---------- -----------------
Net increase (decrease) from
investment operations.............. (0.77) 1.23 2.21 (0.42) 1.02
---------- ---------- ---------- ---------- -----------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.11) (0.72) -- -- --
---------- ---------- ---------- ---------- -----------------
Total distributions................. (0.11) (0.72) -- -- --
---------- ---------- ---------- ---------- -----------------
Net asset value, end of period.......... $ 13.87 $ 14.75 $ 14.24 $ 12.03 $ 12.45
---------- ---------- ---------- ---------- -----------------
---------- ---------- ---------- ---------- -----------------

Total investment return (c)............. (5.31)% 8.83% 18.37% (3.37)% 8.92% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 32,349 $ 57,199 $ 53,678 $ 50,181 $ 30,954
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement (Notes 2 & 5).......... 0.02% (0.59)% (0.69)% (0.82)% (0.09)% (a)
Without expense reductions and
reimbursement........................ (0.22)% (0.67)% (0.80)% (1.08)% (0.97)% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement (Notes 2 & 5).......... 2.49% 2.50% 2.64% 2.86% 2.90% (a)
Without expense reductions and
reimbursement........................ 2.73% 2.58% 2.75% 3.12% 3.78% (a)
Portfolio turnover rate++............... 96% 41% 41% 45% 18%
</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 (d) 1995
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 15.23 $ 14.52 $ 12.14 $ 12.00
----------- ----------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.16* 0.05 0.04 0.02* *
Net realized and unrealized gain
(loss) on investments................ (0.82) 1.38 2.34 0.12
----------- ----------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.66) 1.43 2.38 0.14
----------- ----------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.11) (0.72) -- --
----------- ----------- ---------- -------------
Total distributions................. (0.11) (0.72) -- --
----------- ----------- ---------- -------------
Net asset value, end of period.......... $ 14.46 $ 15.23 $ 14.52 $ 12.14
----------- ----------- ---------- -------------
----------- ----------- ---------- -------------

Total investment return (c)............. (4.35)% 10.10% 19.60% 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 6,997 $ 2,539 $ 344 $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement (Notes 2 & 5).......... 1.02% 0.41% 0.31% 0.18%(a)
Without expense reductions and
reimbursement........................ 0.78% 0.33% 0.20% (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement (Notes 2 & 5).......... 1.49% 1.50% 1.64% 1.86%(a)
Without expense reductions and
reimbursement........................ 1.73% 1.58% 1.75% 2.12%(a)
Portfolio turnover rate++............... 96% 41% 41% 45%
</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 Infrastructure Fund (the "Fund"), formerly GT Global Infrastructure
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 invests substantially all of its investable assets in Global
Infrastructure Portfolio, (the "Portfolio"). The Portfolio is organized as a
subtrust of Global Investment Portfolio, a Delaware business trust and is
registered under the 1940 Act as an open-end management investment company.

The Portfolio has investment objectives, policies, and limitations substantially
identical to those of its corresponding Fund. Therefore, the financial
statements of the Fund and Portfolio have been presented on a consolidated
basis, and represent all activities of both the Fund and Portfolio. Through
October 31, 1998, all of the shares of beneficial interest of the Portfolio were
owned by either the Fund or A I M Advisors, Inc. (the "Manager"), which has a
nominal ($100) investment in the Portfolio.

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 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 and Portfolio 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 Portfolio 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 Portfolio 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
Portfolio'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 Portfolio, it is the
Portfolio'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 Portfolio
under each agreement at its maturity.

19
<PAGE>
(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 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 Portfolio as an unrealized gain or loss. When
the Forward Contract is closed, the Portfolio 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 Portfolio's "Statement of Assets and Liabilities".
The Portfolio 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
Portfolio 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 Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio'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
Portfolio 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 Portfolio
can write options only on a covered basis, which, for a call, requires that the
Portfolio hold the underlying security and, for a put, requires the Portfolio 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 Portfolio 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 Portfolio for the purchase of a call or put option is
included in the Portfolio'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 Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio 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
Portfolio 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
Portfolio 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 Portfolio 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 Portfolio 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
Portfolio 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
Portfolio 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 Portfolio 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 Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio 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 Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Portfolio 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 Portfolio 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 Portfolio to
subsequently invest at less advantageous prices.

(H) PORTFOLIO SECURITIES LOANED
At October 31, 1998, stocks with an aggregate value of $9,982,375 were on loan
to brokers. The loans were secured by cash collateral of $10,007,255 received by
the Portfolio. For the year ended October 31, 1998, the Fund received fees of
$45,192.

For international securities, cash collateral is received by the Portfolio
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 Portfolio 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 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.

20
<PAGE>
(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.

(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 Portfolio and timing differences.

(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $51,500. These expenses
are being amortized on a straightline basis over a five-year period.

(L) 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 Portfolio'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 Portfolio's policy of concentrating its investments in
companies in the infrastructure industry subject the Portfolio to greater risk
than a fund that is more diversified.

(M) INDEXED SECURITIES
The Portfolio 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.

(N) RESTRICTED SECURITIES
The Portfolio 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
the Fund's total assets. There were no loans throughout the year. On October 31,
1998, the Fund had no loans outstanding.

2. RELATED PARTIES
A I M Advisors, Inc. (the "Manager"), an indirect wholly-owned subsidiary of
AMVESCAP PLC, is the Fund's and Portfolio'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, and the Portfolio was reorganized from a New York common law trust 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 the Manager administration fees at the annualized rate of 0.25% of
such Fund's average daily net assets. The Portfolio pays investment management
and administration fees to the Manager at the annualized rate of 0.725% on the
first $500 million of average daily net assets of the Portfolio; 0.70% on the
next $500 million; 0.675% on the next $500 million; and 0.65% 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 $1,469 and $3,607, 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 no CDSCs for the year ended
October 31, 1998. AIM Distributors also makes 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 $108,570 and $244,354, 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

21
<PAGE>
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 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
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 and Portfolio. 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 $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 Portfolio, other than U.S. government obligations and
short-term investments, aggregated $73,625,025 and $110,306,469, respectively.
For the year ended October 31, 1998, there were no purchases and sales of U.S.
government obligations.

22
<PAGE>
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................................................. 127,344 $ 1,959,159 1,282,535 $ 19,272,428
Shares issued in connection with reinvestment of
distributions............................................. 16,842 254,490 123,795 1,776,449
----------- ------------ ----------- ------------
144,186 2,213,649 1,406,330 21,048,877
Shares repurchased.......................................... (1,036,046) (15,749,628) (1,518,962) (23,157,570)
----------- ------------ ----------- ------------
Net decrease................................................ (891,860) $(13,535,979) (112,632) $ (2,108,693)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------

CLASS B
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................. 378,526 $ 5,629,835 1,233,796 $ 18,394,879
Shares issued in connection with reinvestment of
distributions............................................. 24,629 365,775 164,966 2,337,575
----------- ------------ ----------- ------------
403,155 5,995,610 1,398,762 20,732,454
Shares repurchased.......................................... (1,949,017) (28,654,028) (1,288,192) (19,574,097)
----------- ------------ ----------- ------------
Net increase (decrease)..................................... (1,545,862) $(22,658,418) 110,570 $ 1,158,357
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>

ADVISOR CLASS
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................. 454,559 $ 7,054,949 154,643 $ 2,526,548
Shares issued in connection with reinvestment of
distributions............................................. 2,594 39,803 1,147 16,592
----------- ------------ ----------- ------------
457,153 7,094,752 155,790 2,543,140
Shares repurchased.......................................... (139,981) (2,118,377) (12,773) (202,670)
----------- ------------ ----------- ------------
Net increase................................................ 317,172 $ 4,976,375 143,017 $ 2,340,470
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>

5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Portfolio's expenses. For the year ended October 31, 1998, the
Portfolio's expenses were reduced by $7,816 under these arrangements.

23
<PAGE>
6. 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 approve the conversion of the portfolios in which certain Funds invest
to Delaware business trusts.

(7) 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>
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 Pledging Assets.........................................................
(4)(i) Elimination of Fundamental Restriction on Investments in Oil, Gas and Mineral Leases and Programs.................
(5) Approval of an agreement and plan of conversion and termination with respect to the Company.......................
(6) Approval of the conversion of the portfolios in which certain Funds invest........................................
(7) Ratification of the selection of Coopers and Lybrand L.L.P., 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) 2,456,601 64,860 710,610*
(2)(b) 2,435,836 77,094 719,142*
(3)
1,010,727 35,515 74,004
1,450,391 37,959 123,720
(4)(a) 2,406,080 95,041 730,950*
(4)(b) 2,406,080 95,041 730,950*
(4)(c) 2,406,080 95,041 730,950*
(4)(d) 2,406,080 95,041 730,950*
(4)(e) 2,406,080 95,041 730,950*
(4)(f) 2,406,080 95,041 730,950*
(4)(g) 2,406,080 95,041 730,950*
(4)(h) 2,406,080 95,041 730,950*
(4)(i) 2,406,080 95,041 730,950*
(5) 190,027,470 6,362,084 94,055,040*
(6) 2,429,777 61,704 740,590*
(7)
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
$1,670,060 as capital gain dividends for the fiscal year ended October 31, 1998.

Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 100%
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

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-

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)

AIM 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.

(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 nancial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.