<PAGE> 1
ANNUAL REPORT / OCTOBER 31 1999
AIM GLOBAL HEALTH CARE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
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BASKET OF APPLES BY JOHN S. BUNKER
FRESH FRUIT IS FREQUENTLY ASSOCIATED WITH HEALTH AND
WELL-BEING. USING A DISCIPLINED INVESTMENT APPROACH, AIM
GLOBAL HEALTH CARE FUND SEEKS TO INVEST IN COMPANIES THAT
BRING PRODUCTS AND SERVICES DESIGNED TO COMBAT DISEASE AND
PROMOTE HEALTH TO THE MARKETPLACE.
-------------------------------------
AIM Global Health Care Fund is for shareholders who seek growth by investing in
companies around the world involved in health-care activities or in the design,
manufacture or sale of products and services used in connection with health care
or medicine.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Health Care Fund's performance figures are historical, and they
reflect reinvestment of all distributions and changes in net asset value.
o Had expenses not been waived during the reporting period, returns would have
been lower.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and C 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 CDSC on Class C shares is 1% for the first year after purchase.
Sales charges do not apply to Advisor Class shares. The performance of the
fund's Class B, Class C, and Advisor Class shares will differ from that of
Class A shares due to differences in sales-charge structure and fund
expenses.
o The average annual total returns (including sales charges) as of 9/30/99
(the most recent calendar quarter end) were as follows: for Class A shares,
one year, 14.68%; five years, 14.64%; 10 years, 13.32%. For Class B shares,
one year, 14.78%; five years, 14.96%; inception (4/4/93), 15.46%. For Class
C shares, date sales commenced (3/1/99), -1.97%. For Advisor Class shares,
one year, 21.11%; inception (6/1/95), 18.30%.
o Because Class C shares have been offered for less than a year (since
3/1/99), the return provided is the cumulative total return that has not
been annualized.
o Beginning 3/1/99, Advisor Class shares were closed to new investors.
o 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.
o Investing in a single-sector mutual fund may involve greater risk and
potential reward than investing in a more diversified fund.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Health and Biotechnology Index represents an average of
the performance of the 10 largest health and biotechnology funds it's
tracked by Lipper Inc., an independent mutual fund performance monitor.
o The unmanaged MSCI All Country (AC) World Index is a group of global
securities traded on more than 50 markets in developed and emerging
countries tracked by Morgan Stanley Capital International.
o The unmanaged MSCI Health and Personal Care Index is a market-value-weighted
average of the performance of more than 50 securities listed on major world
stock exchanges tracked by Morgan Stanley Capital International.
o The unmanaged MSCI World Index is a group of global securities listed on
major world stock exchanges tracked by Morgan Stanley Capital International.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM GLOBAL HEALTH CARE FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on October 31, 1998, saw a market dominated by
THE FUND large-capitalization stocks and high-quality bonds,
APPEARS HERE] especially U.S. Treasuries. Ten months into 1998, two
well-known indexes of large-capitalization U.S. company
stocks, the S&P 500 and the Dow Jones Industrial Average,
were up by double digits, but the smaller-company stocks in
the Russell 2000 had lost 12.80%. Overseas, many markets
were languishing, especially in Asia, where many financial
difficulties originated in 1997.
In bond markets also, name-brand quality was the place
to be. The Lehman Corporate/Government Bond Index, which
follows intermediate and long-term government and investment-grade debt, was up
8.56%, while the Lehman High Yield Index, which tracks riskier "junk bonds," had
dropped 2.30%.
It would be easy for an investor to conclude that blue chips, whether equity
or fixed-income, were the only place to be. That investor, of course, would be
wrong.
MARKETS TURN
While large-capitalization stocks continue to do very well, during 1999 markets
broadened considerably, with many investment sectors performing a complete
turnaround. Year to date by October 31, 1999, the small-cap stocks in the
Russell 2000 were back in positive territory, and the many Asian markets had
staged a comeback. The same holds true for bonds. The higher-quality Lehman
index is down 1.49% year to date through October 31, 1999, while high-yield
bonds have moved into positive returns.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by signs of
economic health in Europe and Asia, not to mention the prolonged U.S. economic
expansion. However, we are aware of how easily an investor could have been
misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio and can help assure that when you do
alter your investments, there's a logical reason for doing so. AIM believes
every investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended October 31, 1999, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative. If you have any questions or comments, we invite you to
contact us, either at our Web site, aimfunds.com, or through our Client Services
department at 800-959-4246. Information about your account is also available
through our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM GLOBAL HEALTH CARE FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND DELIVERS HEALTHY PERFORMANCE
DESPITE AILING SUB-SECTORS
AFTER YEARS OF OUTPERFORMANCE, THE HEALTH-CARE SECTOR FADED OVER THE LAST 12
MONTHS. HOW DID THE FUND PERFORM IN THIS STRUGGLING MARKET?
In spite of the industry's poor performance, AIM Global Health Care Fund
performed relatively well. In fact, at the end of October, we outperformed all
but one other diversified health-care funds in the health-care fund universe, as
defined by Lipper Inc (including those that invest across the sector, excluding
biotech funds). Overall, for the year ended October 31, 1999, the fund
significantly outperformed the Lipper Health and Biotechnology Index, which had
an average annual total return of 14.55%, as well as the MSCI Health and
Personal Care Index, which had an average annual total return of 8.38%.
The fund's average annual total returns, excluding sales charges, for the
fiscal year were 19.11% for Class A shares, 18.53% for Class B shares and 19.86%
for Advisor shares. Class C shares, which commenced sales March 1, 1999, had a
cumulative total return of 2.04%, excluding sales charges. Some capital gains
were generated this year because we reduced some long-term appreciated holdings
that were beginning to deteriorate in quality and/or had declining earnings.
WHAT WERE SOME OF THE CHALLENGES FACING THE HEALTH-CARE SECTOR DURING THE
REPORTING PERIOD?
For most of the decade, the idea of a "graying" American society and its
potential need for more and better health care had the health-care sector
thriving. Late last year, though, performance of certain sub-sectors fell off,
mainly large-cap drug stocks and certain large-cap medical device stocks.
We believe there are three key reasons why these stocks--which outperformed
for several years--struggled during the fiscal year:
Investors were moving out of growth stocks and into cyclical stocks that are
more sensitive to the economy with the hope of finding better performance. Many
health-care stocks, overvalued at the end of 1998, returned to more reasonable
valuations during the fiscal year. Concerns about political reform in Washington
hung over the industry, including a proposal to add drug benefits to Medicare,
which could force companies to sell their products more cheaply.
Changes in the Medicare reimbursement programs were also responsible for the
relatively poor performance of the health-care services sub-sector--hospitals,
nursing homes and other service providers in particular were affected.
WHICH SUB-SECTORS HELD UP DURING THE REPORTING PERIOD?
Biotech rebounded in 1999 after underperforming for a couple of years, and had a
very good year, largely because of successful new products and some industry
mergers. Also, health-care legislation typically doesn't negatively affect
biotechnology companies as much as pharmaceutical companies. Within biotech, we
still like Amgen, which is the largest biotech company in the United States and
a positive performer. Japanese drug companies, such as Yamanouchi
Pharmaceuticals, have also been strong this year.
It's important to note that we're running a very diversified health-care
fund that's spread across different industry segments, including drugs, biotech,
medical devices and medical services, so we feel we're well positioned to take
advantage of positive sub-sector trends wherever they occur.
WHAT COMPANIES DID YOU FAVOR IN THE LAST 12 MONTHS?
We have been and continue to be impressed with Visx, the company that
manufactures lasers for use in a procedure to correct eyesight. In the last 18
months, the stock has appreciated tenfold.
The laser vision-correction procedure has been approved for a couple of
years in the United States and is beginning to explode--we expect one-half
million people to undergo the procedure in 2000. Added to that, we estimate that
roughly half the population needs corrective eyewear, which makes the target
market for the procedure somewhere around 300 million eyes. Visx owns the patent
for this technology and receives a hefty fee for every procedure performed.
Companies that want to get into the market with a new laser will have to license
the patents from Visx and pay royalties, so as long as
TOTAL RETURNS
as of 10/31/98--10/31/99,
excluding sales charges
<TABLE>
<CAPTION>
Bar Chart
================================================================================
<S> <C>
Class A Shares 19.11
Class B Shares 18.53
Advisor Class Shares 19.86
MSCI H&PC Index 8.38
================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM GLOBAL HEALTH CARE FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
the patents are in place, Visx should continue to grow.
We also haven't abandoned large-company drug stocks--we consider their
underperformance last year a short-term slump. Some of the big companies are
facing losing their patents this year, which definitely affects performance--but
on the bright side for the fund, it means some big names are trading bargain at
prices, such as Merck and Eli Lilly. Those stocks have historically traded at
between a 10% and a 50% premium to the market. Now the average premium for the
group is below 10%.
Other large-cap pharmaceutical companies actually performed well during the
fiscal year and continue to do so. One of our top holdings this fiscal year,
Warner-Lambert, has a franchise for its cholesterol-lowering medication
Lipitor--that should boost the company's performance in the upcoming year.
A key point to remember about health-care stocks is that the drug industry
has only a few major players for each category of drug, so the competition is
limited--that allows consistently high profit margins. The growth is low risk,
so as a long-term growth investment, the pharmaceutical industry is hard to
beat.
ARE THERE ANY SURPRISES IN STORE FOR NEXT YEAR?
We think health care, including pharmaceuticals, should perform well in 2000. We
don't expect proposed Medicare reforms to affect the drug group overly, in spite
of investor sentiment. We've seen this happen before--everyone sells drug stocks
in fear of government reforms, but what's passed in Congress never seems to
affect drug companies as negatively as investors expect.
As noted, medical services had a very difficult year, especially service
providers such as hospitals, but we think these stocks have bottomed out and
there's a lot of potential in some of them. The fundamentals are lacking in many
of these companies, and they still must resolve Medicare issues and
reimbursement cuts, but they're very inexpensive--and a good bargain for the
foreseeable future. We also look for biotech to continue performing well.
While health care on the whole has underperformed the overall stock market
this year, the long-term fundamentals of most of the health-care companies we're
interested in are as strong as ever. Now that the valuations are much more
reasonable for many of the big-name companies than they were a year ago, we
expect a stronger relative performance the coming year. Health care is
traditionally a recession-resistant, stable growth industry, so we look for the
companies we invest in to continue showing respectable earnings growth--even if
global markets slow down.
<TABLE>
<CAPTION>
===================================================================================================
TOP 10 INDUSTRIES TOP 10 EQUITY HOLDINGS
As of 10/31/99, based on total net assets As of 10/31/99, based on total net assets
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Warner-Lambert Co. 12.08% 1. Health Care (Diversified) 18.49%
2. Amgen, Inc. 9.14 2. Health Care (Medical Products & Services) 17.95
3. PacifiCare Health Systems 5.97 3. Health Care (Drugs--Major Pharmaceuticals) 13.65
4. United Healthcare Corp. 5.74 4. Health Care (Managed Care) 13.21
5. Bristol-Myers Squibb Co. 5.31 5. Health Care (Drugs--Generic & Other) 12.06
6. Schering-Plough Corp. 4.81 6. Biotechnology 9.59
7. VISX, Inc. 4.73 7. Electronics (Instrumentation) 2.86
8. Medtronic, Inc. 4.68 8. Insurance (Life/Health) 0.82
9. Merck & Co., Inc. 4.64 9. Health Care (Long-Term Care) 0.79
10. Guidant Corp. 4.18 10. Insurance (Multi-Line) 0.65
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
===================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM GLOBAL HEALTH CARE FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL HEALTH CARE FUND VS. BENCHMARK INDEXES
8/7/89-10/31/99
<TABLE>
<CAPTION>
in thousands
================================================================================
Mountain Chart
AIM Global Health
Care Fund
Class A Shares MSCI World Index MSCI All-Country
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
08/7/89 9608 9792 9756
10/31/89 9858 9752 9692
10/31/90 10718 8587 8598
10/31/91 16527 10056 9952
10/31/92 15058 9626 9432
10/31/93 15412 12317 11979
10/31/94 16970 13589 12895
10/31/95 20329 14556 14118
10/31/96 25034 16828 16419
10/31/97 32134 19477 19173
10/31/98 30620 21962 22098
10/31/99 36470 28467 28483
Source: Lipper Inc.
Past performance cannot guarantee comparable future results.
================================================================================
</TABLE>
ABOUT THIS CHART
The chart compares your fund's Class A shares to benchmark indexes. Your fund's
total return is shown with a sales charge and includes fund expenses and
management fees. It is intended to give you an idea of how your fund performed
compared to these benchmarks during the period 8/7/89-10/31/99. (Please note
that the indexes' performance figures are for the period 7/31/89-10/31/99). It
is important to understand the differences between your fund and these indexes.
An index measures performance of a hypothetical portfolio. A market index such
as the 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 your investment's return.
Since the last reporting period, AIM Global Health Care Fund has elected to
use the MSCI All Country (AC) World Index as its primary benchmark. This index
more closely reflects the performance of the securities in which the fund
invests. The fund will no longer measure its performance against the MSCI World
Index, which was used in previous shareholder reports. Because this is the first
reporting period since we adopted the new index, SEC guidelines require that we
compare the fund's performance to both the old and the new index.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
<TABLE>
<CAPTION>
================================================================================
Class A Shares
- --------------------------------------------------------------------------------
<S> <C>
10 years 13.42%
5 years 15.40
1 year 13.47*
*19.11% excluding sales charges
================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================
Class B Shares
- --------------------------------------------------------------------------------
<S> <C>
Inception (4/1/93) 15.77%
5 years 15.74
1 year 13.53*
*18.53% excluding sales charges
================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================
Class C Shares
- --------------------------------------------------------------------------------
<S> <C>
Inception (3/1/99) 1.04%*
*2.04% excluding sales charges. Total return is cumulative total return that
has not been annualized.
Advisor Class Shares*
- --------------------------------------------------------------------------------
Inception (6/1/95) 18.76%
1 year 19.86
- --------------------------------------------------------------------------------
*Sales charges do not apply to Advisor Class shares.
================================================================================
</TABLE>
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class B, Class C and Advisor Class shares will
differ from Class A shares due to differing fees and expenses. For fund
performance calculations and descriptions of the indexes cited on this page,
please see the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AIM GLOBAL HEALTH CARE FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS & OTHER
EQUITY INTERESTS-75.32%
BIOTECHNOLOGY-9.59%
Amgen, Inc.(a)(b) 530,000 $ 42,267,500
- --------------------------------------------------------------
Enzon, Inc., Series A Cumulative
Conv. Pfd. (Acquired 03/22/90;
Cost $400,000)(b)(c)(d) 16,000 1,064,630
- --------------------------------------------------------------
Genzyme Surgical Products(b) 450 2,419
- --------------------------------------------------------------
PathoGenesis Corp.(b) 16,000 240,000
- --------------------------------------------------------------
Protein Design Labs, Inc.(b) 20,000 801,250
- --------------------------------------------------------------
44,375,799
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.20%
AmeriSource Health Corp.-Class A(b) 60,000 900,000
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-2.86%
Varian Inc.(b) 263,000 4,964,125
- --------------------------------------------------------------
Varian Medical Systems, Inc. 128,000 2,696,000
- --------------------------------------------------------------
Varian Semiconductor Equipment
Associates, Inc.(b) 247,000 5,588,375
- --------------------------------------------------------------
13,248,500
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-18.49%
Abbott Laboratories 120,000 4,845,000
- --------------------------------------------------------------
Bristol-Myers Squibb Co.(a) 320,000 24,580,000
- --------------------------------------------------------------
Sierra Health Services, Inc.(b) 33,000 241,312
- --------------------------------------------------------------
Warner-Lambert Co. 700,000 55,868,750
- --------------------------------------------------------------
85,535,062
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.46%
Alpharma, Inc.-Class A 10,000 351,875
- --------------------------------------------------------------
Barr Laboratories, Inc.(b) 59,000 1,788,438
- --------------------------------------------------------------
2,140,313
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-9.98%
Lilly (Eli) & Co.(a) 35,000 2,410,625
- --------------------------------------------------------------
Merck & Co., Inc.(a) 270,000 21,481,875
- --------------------------------------------------------------
Schering-Plough Corp. 450,000 22,275,000
- --------------------------------------------------------------
46,167,500
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.23%
Health Management Associates,
Inc.-Class A(b) 120,000 1,065,000
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.79%
Ventas, Inc. 750,000 3,656,250
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-13.21%
PacifiCare Health Systems, Inc.(b) 700,000 27,606,250
- --------------------------------------------------------------
United Healthcare Corp. 513,900 26,562,206
- --------------------------------------------------------------
Wellpoint Health Networks, Inc.(b) 120,000 6,960,000
- --------------------------------------------------------------
61,128,456
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-17.95%
Acuson Corp.(b) 28,000 $ 290,500
- --------------------------------------------------------------
Bausch & Lomb Inc. 75,500 4,077,000
- --------------------------------------------------------------
Baxter International, Inc. 75,000 4,865,625
- --------------------------------------------------------------
Biomet, Inc. 90,000 2,711,250
- --------------------------------------------------------------
EndoSonics Corp.(b) 1,125,000 4,183,594
- --------------------------------------------------------------
Guidant Corp.(a) 392,000 19,355,000
- --------------------------------------------------------------
Medtronic, Inc.(a) 625,000 21,640,625
- --------------------------------------------------------------
Mentor Corp. 143,200 3,374,150
- --------------------------------------------------------------
Molecular Biosystems, Inc.(b) 290,000 290,000
- --------------------------------------------------------------
Orthofix International N.V.(b) 27,000 378,000
- --------------------------------------------------------------
VISX, Inc.(b) 350,000 21,896,875
- --------------------------------------------------------------
83,062,619
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.82%
Aetna, Inc. 75,000 3,768,750
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.65%
CIGNA Corp. 40,000 2,990,000
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.09%
IMS Health, Inc. 15,000 435,000
- --------------------------------------------------------------
Total Domestic Common Stocks &
Other Equity Interests (Cost
$277,184,917) 348,473,249
- --------------------------------------------------------------
FOREIGN STOCKS-18.20%
FRANCE-1.24%
Sanofi-Synthelabo S.A. (Health
Care-Drugs- Generic & Other)(b) 129,720 5,724,997
- --------------------------------------------------------------
GERMANY-3.05%
Altana A.G. (Health
Care-Drugs-Generic & Other) 200,000 14,118,511
- --------------------------------------------------------------
ISRAEL-0.09%
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 8,700 420,863
- --------------------------------------------------------------
JAPAN-4.04%
Banyu Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 36,000 659,191
- --------------------------------------------------------------
Chugai Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 108,000 1,284,543
- --------------------------------------------------------------
Daiichi Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic &
Other) 39,000 559,254
- --------------------------------------------------------------
Eisai Co., Ltd.
(Health Care-Drugs-Generic &
Other) 40,000 1,099,228
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Kissei Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic & Other) 14,000 $ 268,572
- --------------------------------------------------------------
Kyowa Hakko Kogyo
(Health Care-Drugs-Generic & Other) 69,000 495,055
- --------------------------------------------------------------
Rohto Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic & Other) 76,000 589,746
- --------------------------------------------------------------
Shionogi & Co., Ltd.
(Health Care-Drugs-Generic & Other) 44,000 404,738
- --------------------------------------------------------------
Taisho Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic & Other) 50,000 2,081,435
- --------------------------------------------------------------
Takeda Chemical Industries, Ltd.
(Health Care-Drugs-Generic & Other) 154,000 8,848,113
- --------------------------------------------------------------
Uni-Charm Corp. (The)
(Paper & Forest Products) 5,400 315,438
- --------------------------------------------------------------
Yamanouchi Pharmaceutical Co., Ltd.
(Health Care-Drugs-Generic & Other) 46,000 2,086,998
- --------------------------------------------------------------
18,692,311
- --------------------------------------------------------------
NETHERLANDS-2.87%
Akzo Nobel N.V.
(Chemicals-Diversified) 280,000 12,059,860
- --------------------------------------------------------------
Akzo Nobel N.V.-ADR
(Chemicals-Diversified) 28,000 1,207,500
- --------------------------------------------------------------
13,267,360
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-3.24%
Roche Holding A.G.
(Health Care-Drugs-Generic & Other) 1,251 $ 15,014,954
- --------------------------------------------------------------
UNITED KINGDOM-3.67%
AstraZeneca Group PLC-ADR
(Health Care-Drugs-Major
Pharmaceuticals) 350,000 16,012,500
- --------------------------------------------------------------
SmithKline Beecham PLC-ADR
(Health Care-Drugs-Major
Pharmaceuticals) 15,000 960,000
- --------------------------------------------------------------
16,972,500
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$65,836,293) 84,211,496
- --------------------------------------------------------------
MONEY MARKET FUNDS-8.10%
STIC Liquid Assets Portfolio(e) 18,742,434 18,742,434
- --------------------------------------------------------------
STIC Prime Portfolio(e) 18,742,434 18,742,434
- --------------------------------------------------------------
Total Money Market Funds (Cost
$37,484,868) 37,484,868
- --------------------------------------------------------------
TOTAL INVESTMENTS-101.62% 470,169,613
- --------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS-(1.62%) (7,500,322)
- --------------------------------------------------------------
NET ASSETS-100.00% 462,669,291
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
Notes to Schedule of Investments:
(a) A portion of this security is subject to call options written. See Note 8.
(b) Non-income producing security.
(c) Security fair valued in accordance with procedures established by the Board
of Trustees.
(d) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The market
value of this security at 10/31/99 was $1,064,630 which represented 0.23% of
the Fund's net assets.
(e) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
6
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $380,506,078) $ 470,169,613
- -------------------------------------------------------------
Receivables for:
Fund shares sold 258,340
- -------------------------------------------------------------
Dividends and interest 293,704
- -------------------------------------------------------------
Other assets 1,952
- -------------------------------------------------------------
Total assets 470,723,609
- -------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 746,897
- -------------------------------------------------------------
Options written (Premiums received $7,216,094) 6,345,313
- -------------------------------------------------------------
Accrued advisory fees 381,886
- -------------------------------------------------------------
Accrued distribution fees 303,320
- -------------------------------------------------------------
Accrued administrative services fees 13,000
- -------------------------------------------------------------
Accrued transfer agent fees 98,000
- -------------------------------------------------------------
Accrued trustees' fees 1,600
- -------------------------------------------------------------
Accrued operating expenses 164,302
- -------------------------------------------------------------
Total liabilities 8,054,318
- -------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 462,669,291
=============================================================
NET ASSETS:
Class A $ 357,746,590
=============================================================
Class B $ 102,915,544
=============================================================
Class C $ 1,278,126
=============================================================
Advisor Class $ 729,031
=============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 14,905,069
=============================================================
Class B 4,483,105
=============================================================
Class C 55,675
=============================================================
Advisor Class 29,545
=============================================================
Class A:
Net asset value and redemption price per
share $ 24.00
- -------------------------------------------------------------
Offering price per share:
(Net asset value of $24.00 divided by
95.25) $ 25.20
=============================================================
Class B:
Net asset value and offering price per
share $ 22.96
=============================================================
Class C:
Net asset value and offering price per
share $ 22.96
=============================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 24.68
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $177,844 foreign withholding
tax) $ 3,168,794
- ------------------------------------------------------------
Interest 1,712,526
- ------------------------------------------------------------
Securities lending 165,966
- ------------------------------------------------------------
Total investment income 5,047,286
- ------------------------------------------------------------
EXPENSES:
Advisory and administrative fees 4,855,959
- ------------------------------------------------------------
Accounting services fees 142,382
- ------------------------------------------------------------
Custodian fees 95,286
- ------------------------------------------------------------
Distribution fees -- Class A 1,919,476
- ------------------------------------------------------------
Distribution fees -- Class B 1,088,812
- ------------------------------------------------------------
Distribution fees -- Class C 4,464
- ------------------------------------------------------------
Trustees' fees 19,026
- ------------------------------------------------------------
Transfer agent fees -- Class A 749,616
- ------------------------------------------------------------
Transfer agent fees -- Class B 212,608
- ------------------------------------------------------------
Transfer agent fees -- Class C 871
- ------------------------------------------------------------
Transfer agent fees -- Advisor Class 9,409
- ------------------------------------------------------------
Other 504,928
- ------------------------------------------------------------
Total expenses 9,602,837
- ------------------------------------------------------------
Less: Expenses paid indirectly (4,130)
- ------------------------------------------------------------
Net expenses 9,598,707
- ------------------------------------------------------------
Net investment income (loss) (4,551,421)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 34,924,655
- ------------------------------------------------------------
Foreign currencies (72,071)
- ------------------------------------------------------------
Option contracts written 9,881,201
- ------------------------------------------------------------
44,733,785
- ------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 44,979,725
- ------------------------------------------------------------
Foreign currencies 35,250
- ------------------------------------------------------------
Option contracts written 870,781
- ------------------------------------------------------------
45,885,756
- ------------------------------------------------------------
Net gain from investment securities, foreign
currencies, and option contracts 90,619,541
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $ 86,068,120
============================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (4,551,421) $ (5,699,337)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts 44,733,785 (805,542)
- -------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts 45,885,756 (18,545,458)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 86,068,120 (25,050,337)
- -------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A -- (111,031,821)
- -------------------------------------------------------------------------------------------
Class B -- (34,132,236)
- -------------------------------------------------------------------------------------------
Advisor Class -- (1,792,960)
- -------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (66,396,665) 14,570,400
- -------------------------------------------------------------------------------------------
Class B (15,601,954) (6,081,715)
- -------------------------------------------------------------------------------------------
Class C 1,345,583 --
- -------------------------------------------------------------------------------------------
Advisor Class (6,483,138) 913,897
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,068,054) (162,604,772)
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 463,737,345 626,342,117
- -------------------------------------------------------------------------------------------
End of period $462,669,291 $ 463,737,345
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $329,089,377 $ 420,849,043
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts 43,046,264 (1,759,592)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 90,533,650 44,647,894
- -------------------------------------------------------------------------------------------
$462,669,291 $ 463,737,345
===========================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Health Care Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of twelve
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares were sold
without a sales charge. Matters affecting each portfolio or class will be voted
on exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The 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 at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in the
case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
fund share redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was increased by
$4,551,421, undistributed net realized gains increased by $72,071 and
paid-in capital decreased by $4,623,492 as a result of differing book/tax
treatment of foreign currency transactions and net operating loss
reclassifications in order to comply with the requirements of the American
Institute of Certified Public Accountants Statement of Position 93-2. Net
assets of the Fund were unaffected by the reclassification discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such
9
<PAGE> 12
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
E. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
F. Covered Call Options -- The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time at which the Fund effects a closing purchase transaction by
purchasing (at a price which may be higher than that received when the call
option was written) a call option identical to the one originally written.
G. Put Options -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
I. Foreign Securities -- There are certain additional considerations and risks
associated with investing in foreign securities and currency transactions
that are not inherent in investments of domestic origin. The Fund's
investment in emerging market countries may involve greater risks than
investments in more developed markets and the price of such investments may
be volatile. These risks of investing in foreign and emerging markets may
include foreign currency exchange fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
In addition, the Fund's policy of concentrating its investments in
companies in the health care industry subjects the Fund to greater risk than
a fund that is more diversified.
J. Indexed Securities -- The Fund may invest in indexed securities whose value
is linked either directly or indirectly to changes in foreign currencies,
interest rates, equities, indices, or other reference instruments. Indexed
securities may be more volatile than the reference instrument itself, but
any loss is limited to the amount of the original investment.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the maximum annual
rate of 2.00%, 2.50%, 2.50% and 1.50% of the average daily net assets of the
Fund's Class A, Class B, Class C and Advisor Class shares, respectively.
10
<PAGE> 13
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
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. For the year ended
October 31, 1999, AIM was paid $142,382 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended October 31, 1999, AFS was
paid $972,504 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and Advisor Class shares of the Fund. The Trust has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares, Class B shares and Class C shares (collectively the
"Plans"). The Fund , pursuant to the Plans, pays AIM Distributors compensation
at the annual rate of 0.50% of the Fund's average daily net assets of Class A
shares and 1.00% of the average daily net assets of Class B and C shares. Of
these amounts, the Fund may pay a service fee of 0.25% of the average daily net
assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. For the year ended October 31, 1999, the Class A, Class B and Class C
shares paid AIM Distributors $1,919,476, $1,088,812 and 4,464, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $51,905 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $3,480 in contingent deferred sales charges imposed on
redemptions of Fund shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended October 31, 1999, the Fund received reductions in
custodian fees of $4,130 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$4,130 during the year ended October 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. The funds which
are party to the line of credit are charged a commitment fee of 0.09% on the
unused balance of the committed line. The commitment fee is allocated among the
funds based on their respective average net assets for the period. Prior to May
28, 1999, the Fund, along with certain other funds advised and/or administered
by AIM, had a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allowed the Fund and certain other
funds to borrow, on a first come, first served basis, an aggregate maximum
amount of $250,000,000.
NOTE 5-PORTFOLIO SECURITIES LOANED
At October 31, 1999, securities with an aggregate value of $2,087,256 were on
loan to brokers. The loans were secured by cash collateral of $2,129,001
received by the Fund. For the year ended October 31, 1999, the Fund received
fees of $165,966 for securities lending.
For international securities, cash collateral is received by the Fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Fund against loaned securities in the amount at least equal to
102% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. The cash 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.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1999 was
$569,311,572 and $591,125,893, respectively. The amount of unrealized
appreciation (depreciation) of investment securities, for tax purposes, as of
October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 99,703,597
- ---------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (10,972,470)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 88,731,127
- ---------------------------------------------------------
Cost of investments for tax purposes is $381,438,486.
</TABLE>
11
<PAGE> 14
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
---------- ------------
<S> <C> <C>
Beginning of year -- $ --
- ---------------------------------------------------------------------------------------
Written 92,970 30,864,043
- ---------------------------------------------------------------------------------------
Closed (55,720) (18,608,125)
- ---------------------------------------------------------------------------------------
Exercised (13,045) (3,104,014)
- ---------------------------------------------------------------------------------------
Expired (5,155) (1,935,810)
- ---------------------------------------------------------------------------------------
End of year 19,050 $ 7,216,094
=======================================================================================
</TABLE>
Open call option contracts written at October 31, 1999 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 1999 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
- ------------------------------------------- -------- ------- ---------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Amgen, Inc. Dec-99 $ 80 5,300 $3,126,206 $ 2,650,000 $ 476,206
- ---------------------------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. Dec-99 75 3,200 1,329,105 1,520,000 (190,895)
- ---------------------------------------------------------------------------------------------------------------------------------
Guidant Corp. Jan-00 60 1,500 912,720 271,875 640,845
- ---------------------------------------------------------------------------------------------------------------------------------
Guidant Corp. Nov-99 55 1,000 271,991 68,750 203,241
- ---------------------------------------------------------------------------------------------------------------------------------
Lilly (Eli) & Co. Nov-99 65 350 95,197 164,063 (68,866)
- ---------------------------------------------------------------------------------------------------------------------------------
Medtronic, Inc. Nov-99 37.5 3,000 466,584 196,875 269,709
- ---------------------------------------------------------------------------------------------------------------------------------
Medtronic, Inc. Nov-99 40 2,000 371,988 56,250 315,738
- ---------------------------------------------------------------------------------------------------------------------------------
Merck & Co., Inc. Nov-99 75 2,700 642,303 1,417,500 (775,197)
- ---------------------------------------------------------------------------------------------------------------------------------
19,050 $7,216,094 $ 6,345,313 $ 870,781
=================================================================================================================================
</TABLE>
NOTE 8-PUT OPTION CONTRACTS
Transactions in put options during the year ended October 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS PAID
---------- -----------
<S> <C> <C>
Beginning of year -- $ --
- --------------------------------------------------------------------------------------
Purchased 5,950 1,894,123
- --------------------------------------------------------------------------------------
Closed (1,850) (488,808)
- --------------------------------------------------------------------------------------
Exercised (1,900) (256,104)
- --------------------------------------------------------------------------------------
Expired (2,200) (1,149,211)
- --------------------------------------------------------------------------------------
End of year -- $ --
======================================================================================
</TABLE>
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 6,319,231 $ 143,915,406 24,980,706 $ 526,818,779
- ----------------------------------------------------------------------------------------------------------------------
Class B 691,366 16,088,681 3,933,442 81,783,021
- ----------------------------------------------------------------------------------------------------------------------
Class C * 58,588 1,413,024 -- --
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class 18,009 438,450 2,760,416 60,020,116
- ----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A -- -- 4,212,044 87,484,194
- ----------------------------------------------------------------------------------------------------------------------
Class B -- -- 1,393,872 27,961,083
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class -- -- 84,210 1,780,217
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (9,158,822) (210,312,070) (28,318,023) (599,732,573)
- ----------------------------------------------------------------------------------------------------------------------
Class B (1,386,892) (31,690,636) (5,554,950) (115,825,819)
- ----------------------------------------------------------------------------------------------------------------------
Class C* (2,913) (67,441) -- --
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class (274,593) (6,921,588) (2,799,107) (60,886,436)
- ----------------------------------------------------------------------------------------------------------------------
(3,736,026) $ (87,136,174) 692,610 $ 9,402,582
======================================================================================================================
</TABLE>
* Class C shares commenced sales on March 1, 1999.
12
<PAGE> 15
NOTE 10-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
---------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1999(A) 1998(a) 1997(a) 1996(a) 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.15 $ 27.98 $ 23.60 $ 21.84 $ 19.60
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19) (0.21) (0.25) (0.17) (0.15)
- -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 4.04 (0.91) 6.48 4.79 3.73
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations 3.85 (1.12) 6.23 4.62 3.58
- -----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gain on investments -- (6.70) (1.85) (2.86) (1.34)
- -----------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- (0.01) -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions -- (6.71) (1.85) (2.86) (1.34)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 24.00 $ 20.15 $ 27.98 $ 23.60 $ 21.84
=======================================================================================================================
Total return(b) 19.11% (4.71)% 28.36% 23.14% 19.79%
=======================================================================================================================
Ratios and supplemental data:
Net assets, end of period (in 000's) $357,747 $357,534 $472,083 $467,861 $426,380
=======================================================================================================================
Ratio of net investment income (loss) to average net assets: (0.81)%(c) (0.98)% (1.03)% (0.75)% (0.78)%
=======================================================================================================================
Ratio of expenses to average net assets: 1.82%(c) 1.84% 1.80% 1.84% 1.91%
=======================================================================================================================
Portfolio turnover rate 123% 187% 149% 157% 99%
=======================================================================================================================
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charge and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $383,895,122.
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 B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(A) 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.37 $ 27.27 $ 23.15 $ 21.56 $ 19.46
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.30) (0.30) (0.37) (0.27) (0.25)
- -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 3.89 (0.89) 6.34 4.72 3.69
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations 3.59 (1.19) 5.97 4.45 3.44
- -----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gain on investments -- (6.70) (1.85) (2.86) (1.34)
- -----------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- (0.01) -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions -- (6.71) (1.85) (2.86) (1.34)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 22.96 $ 19.37 $ 27.27 $ 23.15 $ 21.56
=======================================================================================================================
Total return(b) 18.53% (5.20)% 27.75% 22.59% 19.17%
=======================================================================================================================
Ratios and supplemental data:
Net assets, end of period (in 000's) $102,916 $100,311 $147,440 $107,622 $70,740
=======================================================================================================================
Ratio of net investment income (loss) to average net assets: (1.32)%(c) (1.48)% (1.53)% (1.25)% (1.28)%
=======================================================================================================================
Ratio of expenses to average net assets: 2.33%(c) 2.34% 2.30% 2.34% 2.41%
=======================================================================================================================
Portfolio turnover rate 123% 187% 149% 157% 99%
=======================================================================================================================
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $108,881,226.
13
<PAGE> 16
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
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 C ADVISOR CLASS
------------------- ------------------------------------------------------------
MARCH 1, 1999 YEAR ENDED OCTOBER 31, JUNE 1, 1995
TO ----------------------------------------- TO
OCTOBER 31, 1999(a) 1999(a) 1998(a) 1997(a) 1996(a) OCTOBER 31, 1995
------------------- ------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $22.50 $ 20.59 $ 28.34 $ 23.77 $ 21.88 $18.66
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.21) (0.08) (0.10) (0.12) (0.05) (0.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 0.67 4.17 (0.94) 6.54 4.80 3.24
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment
operations 0.46 4.09 (1.04) 6.42 4.75 3.22
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gain on investments -- -- (6.70) (1.85) (2.86) --
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on
investments -- -- (0.01) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (6.71) (1.85) (2.86) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $22.96 $ 24.68 $20.59 $28.34 $23.77 $21.88
=================================================================================================================================
Total return(b) 2.04% 19.86% (4.28)% 29.00% 23.82% 17.10%
=================================================================================================================================
Ratios and supplemental data:
Net assets, end of period (in 000's) $1,278 $ 729 $5,892 $6,819 $1,152 $ 539
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets: (1.32)%(c) (0.33)%(d) (0.48)% (0.53)% (0.25)% (0.28)%(e)
=================================================================================================================================
Ratio of expenses to average net assets: 2.33%(c) 1.34%(d) 1.34% 1.30% 1.34% 1.41%(e)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 123% 123% 187% 149% 157% 99%
=================================================================================================================================
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $670,519.
(d) Ratios are based on average net assets of $4,818,675.
(e) Annualized.
NOTE 11-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The proposed effective date of this conversion
is February 11, 2000.
14
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Health Care Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Global Health Care Fund at October 31, 1999, and the
results of its operations, the changes in its net assets
and the financial highlights for the periods indicated
therein, 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, 1999 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 23, 1999
15
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
President, Plantagenet Capital Chairman and President Suite 100
Management, LLC (an investment Houston, TX 77046
partnership); Chief Executive Officer, Dana R. Sutton
Plantagenet Holdings, Ltd. Vice President and Treasurer INVESTMENT MANAGER
(an investment banking firm)
Samuel D. Sirko A I M Advisors, Inc.
Frank S. Bayley Vice President and Secretary 11 Greenway Plaza
Partner, law firm of Suite 100
Baker & McKenzie Melville B. Cox Houston, TX 77046
Vice President
Robert H. Graham TRANSFER AGENT
President and Chief Executive Officer, Gary T. Crum
A I M Management Group Inc. Vice President A I M Fund Services, Inc.
P.O. Box 4739
Ruth H. Quigley Carol F. Relihan Houston, TX 77210-4739
Private Investor Vice President
CUSTODIAN
Mary J. Benson
Assistant Vice President and State Street Bank and Trust Company
Assistant Treasurer 225 Franklin Street
Boston, MA 02110
Sheri Morris
Assistant Vice President and COUNSEL TO THE FUND
Assistant Treasurer
Kirkpatrick & Lockhart LLP
Nancy L. Martin 1800 Massachusetts Avenue, N.W.
Assistant Secretary Washington, D.C. 20036-1800
Ofelia M. Mayo COUNSEL TO THE TRUSTEES
Assistant Secretary
Paul, Hastings, Janofsky & Walker LLP
Kathleen J. Pflueger Twenty Third Floor
Assistant Secretary 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
160 Federal St.
Boston, MA 02110
</TABLE>
16
<PAGE> 19
------------------------------------
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<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Asian Growth Fund since 1976 and managed approximately
AIM Capital Development Fund AIM Developing Markets Fund $120 billion in assets for more than 6.4
AIM Constellation Fund AIM Euroland Growth Fund(4) million shareholders, including
AIM Dent Demographic Trends Fund AIM European Development Fund individual investors, corporate clients
AIM Large Cap Growth Fund AIM International Equity Fund and financial institutions, as of
AIM Mid Cap Equity Fund AIM Japan Growth Fund September 30, 1999.
AIM Mid Cap Growth Fund AIM Latin American Growth Fund The AIM Family of Funds--Registered
AIM Mid Cap Opportunities Fund AIM New Pacific Growth Fund Trademark-- is distributed nationwide,
AIM Select Growth Fund and AIM today is the 10th-largest mutual
AIM Small Cap Growth Fund(2) GLOBAL GROWTH FUNDS fund complex in the United States in
AIM Small Cap Opportunities Fund(3) AIM Global Aggressive Growth Fund assets under management, according to
AIM Value Fund AIM Global Growth Fund Strategic Insight, an independent mutual
AIM Weingarten Fund fund monitor.
GLOBAL GROWTH & INCOME FUNDS
GROWTH & INCOME FUNDS AIM Global Growth & Income Fund
AIM Advisor Flex Fund AIM Global Utilities Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL INCOME FUNDS
AIM Balanced Fund AIM Emerging Markets Debt Fund
AIM Basic Value Fund AIM Global Government Income Fund
AIM Charter Fund AIM Global Income Fund
AIM Strategic Income Fund
INCOME FUNDS
AIM Floating Rate Fund THEME FUNDS
AIM High Yield Fund AIM Global Consumer Products and Services Fund
AIM High Yield Fund II AIM Global Financial Services Fund
AIM Income Fund AIM Global Health Care Fund
AIM Intermediate Government Fund AIM Global Infrastructure Fund
AIM Limited Maturity Treasury Fund AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund(5)
TAX-FREE INCOME FUNDS AIM Global Trends Fund(6)
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 Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors on November 16, 1998.
(2) AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (3)
AIM Small Cap Opportunities Fund closed to new investors on November 4, 1999.
(4) On September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth
Fund. Previously the fund invested in all size companies in most areas of
Europe. The fund now seeks to invest at least 65%of its assets in large-cap
companies within countries using the euro as their currency (EMU-member
countries). (5) On June 1, 1999, AIM Global Telecommunications Fund was renamed
AIM Global Telecommunications and Technology Fund. (6) Effective August 27,
1999, AIM Global Trends Fund was restructured to operate as a traditional mutual
fund. Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
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current Quarterly Review of Performance for AIM Funds.
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