<PAGE> 1
ANNUAL REPORT / OCTOBER 31 1999
AIM GLOBAL FINANCIAL SERVICES FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[ COVER IMAGE ]
-------------------------------------
THE BANKER AND HIS WIFE BY QUENTIN METSYS (1514)
THE WORLD'S EARLIEST BANKS CAME ABOUT WHEN PEOPLE PRESENTED THEIR FORTUNES
FOR SAFEKEEPING TO THOSE THEY COULD TRUST, USUALLY GOLDSMITHS. THE
GOLDSMITHS WOULD ISSUE A NOTE THAT OFFERED TO PAY THE BEARER THE VALUE OF THE
COINS DEPOSITED. THESE NOTES WERE OFTEN EXCHANGED AND CIRCULATED,
RATHER THAN CASHED IN, AND THE GOLDSMITHS PROFITED BY CHARGING INTEREST ON THE
LOANS THEY GRANTED USING THE GOLD AND SILVER IN THEIR POSSESSION.
-------------------------------------
AIM Global Financial Services Fund is for shareholders seeking long-term growth
of capital by investing primarily in the equity securities of financial-services
companies, including those engaged in banking, insurance, investment management,
brokerage and diversified financial activities.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Financial Services Fund performance figures are historical, and
they reflect changes in net asset value and the reinvestment of all
distributions.
o Had fees and expenses not been waived during the reporting period, the
fund's 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 Class 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.
The performance of the fund's Class B, Class C and Advisor Class shares
will differ from that of its Class A shares due to differences in
sales-charge structure and expenses.
o The fund's average annual total returns, including sales charges, for the
periods ended 9/30/99 (the most recent calendar quarter end) are as follows:
Class A shares, one year, 24.36%; five years, 13.70%; inception (5/31/94),
13.14%. Class B shares, one year, 24.88%; five years, 14.01%; inception
(5/31/94), 13.51%. Class C shares, inception (3/1/99), 1.96%. Advisor Class
shares, one year, 31.22%; inception (6/1/95), 18.90%.
o Because Class C shares have been offered for less than one year (since
3/1/99), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o Beginning 3/1/99, Advisor Class shares were closed to new investors.
o During the fiscal year ended 10/31/99, the fund paid distributions of
$0.0492 per share for Class A shares, $0.0317 per share for Class B shares
and $0.1544 per share for Advisor Class shares. The fund paid no
distributions for Class C shares since sales commenced.
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 involves 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 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 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 FINANCIAL SERVICES 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 FINANCIAL SERVICES FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
INFLATION CONCERNS TEST FINANCIAL STOCKS
MARKETS HAVE CHANGED SIGNIFICANTLY SINCE LAST YEAR. HOW DID AIM GLOBAL FINANCIAL
SERVICES FUND PERFORM?
Even with the challenges presented by investors' inflation fears, the fund
finished the reporting period with excellent returns.
For the fiscal year ended October 31, 1999, Class A and Class B shares of
the fund had total returns of 36.62% and 35.91%, respectively, excluding sales
charges. Advisor Class shares finished the reporting period with a total return
of 37.37%. These returns finished well ahead of both the MSCI AC World Index and
the MSCI World Index, which had total returns of 26.41% and 24.91%,
respectively, for the fiscal year.
Class C shares of the fund, which commenced sales on March 1, 1999, had a
cumulative total return of 15.78% through October 31, excluding sales charges.
WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE FISCAL YEAR?
With the worst of the global financial crisis past, the question throughout much
of 1999 was whether or not the Federal Reserve Board (the Fed) would need to
raise interest rates to forestall inflation. Inflation fears curbed high-flying
financial stocks in the spring and brought on a resurgence of more cyclical
stocks, like energy and commodities. The Fed boosted the federal funds rate from
4.75% to 5% at the end of June in a pre-emptive strike against inflation.
By mid-summer, solid corporate earnings, continued tame inflation and
renewed vitality among technology stocks pushed key stock indexes to new highs.
But investors' fears dampened financial stocks as key economic indicators, such
as employment data and consumer prices, showed that the economy blazed
relentlessly ahead. The Fed responded by raising interest rates again in August.
Recent indicators have pointed to a slight slowdown in the U.S. economy.
Some analysts feel that the Fed has merely taken back the rate cuts it was
forced to make when last year's global financial crisis seeped into U.S.
markets. The interest-rate environment did not significantly affect the way we
managed the fund because we focus on finding strong earnings growth.
HOW HAVE FOREIGN MARKETS PERFORMED?
Global economic news is good on the whole, thanks largely to recoveries in
Europe, Asia and Japan. Markets that were devastated a year ago have come along
well during 1999; countries that have focused on restructuring their banking
systems and stabilizing their currencies have enjoyed the best relative
performance.
HOW WAS THE FUND POSITIONED AT THE END OF THE REPORTING PERIOD?
The majority of the fund's 54 holdings were U.S. companies, primarily brokers,
money-center banks and specialty consumer-finance companies. Since our last
report to shareholders, we have reduced our European weighting due to the rich
valuations. We have recently found improving quality earnings and valuations in
Asia--many of these companies are just beginning to recover from last year's
financial crisis.
Effective June 21, 1999, the fund gained a new portfolio-management team.
The fund's objective and investment strategy did not change. However, the team
brought to the fund a broader view of the financial sector and the markets in
general, which we believe will benefit the fund's performance.
HOW HAVE FINANCIAL STOCKS FARED?
The nation's biggest financial-services companies, banks and brokerages--
including fund holdings Citigroup, Chase Manhattan, American Express and Morgan
Stanley Dean Witter--continued to meet or exceed earnings forecasts during 1999.
Even so, interest-rate concerns plagued financial stocks, causing those stocks
to experience substantial volatility during the year. We took advantage of the
volatility to increase our holdings in companies that we think will most benefit
the fund.
WHAT ARE THE MAIN TRENDS IN THE FINANCIAL SECTOR?
The major trend among financial companies continues to be consolidation,
particularly in Europe. Europe already accounts for five of the world's 10
largest banks (by assets). The deregulation of financial services in the
European Union (EU) and the euro's launch have unleashed a swell of merger
activity in every EU country. Japan has also gotten in on the trend, with three
of its largest banks merging
-------------------------------------
THE INTEREST-RATE ENVIRONMENT DID
NOT SIGNIFICANTLY AFFECT THE WAY WE
MANAGED THE FUND BECAUSE WE FOCUS
ON FINDING STRONG EARNINGS GROWTH.
-------------------------------------
FUND OUTPERFORMS INDEXES
One-year total returns as of 10/31/99, excluding sales charges
================================================================================
FUND CLASS A SHARES 36.62%
FUND CLASS B SHARES 35.91%
MSCI AC WORLD INDEX 26.41%
MSCI WORLD INDEX 24.91%
================================================================================
See important fund and index disclosures inside front cover.
AIM GLOBAL FINANCIAL SERVICES FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
this year to create the world's largest bank in terms of assets ($1.3 trillion).
In the United States, Congress voted on November 4 to reform the
Glass-Steagall Act, created after the Great Depression to separate commercial
and investment banking. Some analysts believe this reform could set off a flurry
of merger-and-acquisition (M&A) activity among U.S. banks, insurance companies,
investment managers and brokers. We do not know to what extent such M&A activity
could occur. In keeping with our investment discipline, we will continue to
focus on companies that fit our earnings-momentum style, regardless of whether
they are potential takeover targets.
HOW HAS TECHNOLOGY AFFECTED THE FINANCIAL SECTOR?
The increasing presence of technology is allowing many financial companies to
move operations online. We have been taking advantage of this trend by investing
in companies like Digital Insight, which helps banks offer checking accounts
online, and First Data, which is developing electronic bill presentment (EBP)
programs. To take advantage of the e-commerce craze, many traditional banks,
like fund holdings Wells Fargo and Citibank (a unit of Citigroup), are moving
much of their business to the Internet.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
The fourth quarter has historically been the best for markets over the last
decade, up an average 6%. The Fed raised interest rates at its November policy
meeting and adopted a neutral stance, sending a sigh of relief through financial
markets.
Many analysts still expect double-digit earnings growth in financial stocks
for the year. Some banks are particularly well poised because so many of them
have diversified into fee-based money management and services, areas that are
far less interest-rate sensitive than traditional lending.
As for the fund, even with the lines of competition blurring as more
consolidation takes place in the financial sector, we still find longer-term
fundamentals attractive. We believe we are well positioned to benefit from the
globalization of financial services, the strong demographic trends in the United
States and other large markets, and the increasing use of technology to deliver
better financial products and services.
-------------------------------------
MANY ANALYSTS STILL EXPECT DOUBLE-DIGIT
EARNINGS GROWTH IN FINANCIAL
STOCKS FOR THE YEAR.
-------------------------------------
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
<TABLE>
<CAPTION>
==============================================================================================
TOP 10 HOLDINGS TOP 5 COUNTRIES
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Citigroup, Inc. 5.10% 1. United States 79.31%
2. Providian Financial Corp. 4.19 2. France 3.21
3. American International Group, Inc. 4.08 3. Japan 2.72
4. Morgan Stanley, Dean Witter, Discover & Co. 3.77 4. Hong Kong 1.88
5. Chase Manhattan Corp. (The) 3.73 5. Ireland 1.52
6. AXA (France) 3.21
7. American Express Co. 3.20
8. Marsh & McLennan Co. 2.91
9. Capital One Financial Corp. 2.81
10. Investors Financial Services Corp. 2.71
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 FINANCIAL SERVICES FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL FINANCIAL SERVICES FUND VS. BENCHMARK INDEXES
5/31/94-10/31/99
in thousands
================================================================================
AIM GLOBAL AIM GLOBAL
FINANCIAL FINANCIAL
SERVICES FUND, SERVICES FUND,
CLASS B CLASS A MSCI AC MSCI WORLD
DATE SHARES SHARES WORLD INDEX INDEX
- --------------------------------------------------------------------------------
5/94 10,000 9,525 10,000 10,000
10/94 10,149 9,683 10,575 10,471
10/95 10,350 9,933 11,328 11,464
10/96 12,401 11,941 13,095 13,332
10/97 16,013 15,513 15,157 15,568
10/98 16,346 15,905 17,091 17,943
10/99 22,216 21,729 21,604 22,414
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
ABOUT THIS CHART
The chart compares your fund's Class A and Class B shares to benchmark indexes.
It is intended to give you an idea of how your fund performed compared to these
benchmarks over the period 5/31/94- 10/31/99. It is important to understand the
differences between your fund and these indexes. An index measures the
performance of a hypothetical portfolio. Your fund's total return is shown with
the applicable sales charge, and it includes fund expenses and management fees.
1A market index such as the MSCI AC World Index or 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 Financial Services Fund has
elected to use the MSCI 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,
the index published in previous reports to shareholders.
Because this is the first reporting period since we have 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
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
Inception (5/31/94) 15.40%
5 years 16.40
1 year 30.13*
*36.62%, excluding sales charges
CLASS B SHARES
- --------------------------------------------------------------------------------
Inception (5/31/94) 15.77%
5 years 16.75
1 year 30.91*
*35.91%, excluding sales charges
CLASS C SHARES
- --------------------------------------------------------------------------------
Inception (3/1/99) 14.78%*
*15.78%, excluding sales charges. The return is the cumulative total return that
has not been annualized.
ADVISOR CLASS SHARES*
- --------------------------------------------------------------------------------
Inception (6/1/95) 21.72%
1 year 37.37
*Sales charges do not apply.
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class C and Advisor Class shares will differ from
Class A and Class B shares due to differing fees and expenses. For fund
performance calculations and descriptions of the indexes cited on this page,
please refer to the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. THE
RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AIM GLOBAL FINANCIAL SERVICES FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-79.31%
BANKS (MAJOR REGIONAL)-6.33%
Bank of New York Co., Inc. (The) 30,000 $ 1,256,250
- --------------------------------------------------------------
Fleet Boston Corp. 31,978 1,395,040
- --------------------------------------------------------------
Mellon Financial Corp. 29,600 1,093,350
- --------------------------------------------------------------
Wells Fargo Co. 30,000 1,436,250
- --------------------------------------------------------------
5,180,890
- --------------------------------------------------------------
BANKS (MONEY CENTER)-4.82%
Bank of America Corp. 13,843 891,143
- --------------------------------------------------------------
Chase Manhattan Corp. (The) 35,000 3,058,125
- --------------------------------------------------------------
3,949,268
- --------------------------------------------------------------
BANKS (REGIONAL)-6.70%
City National Corp. 43,350 1,679,812
- --------------------------------------------------------------
First Tennessee National Corp. 19,100 649,400
- --------------------------------------------------------------
North Fork Bancorporation, Inc. 30,000 620,625
- --------------------------------------------------------------
UnionBanCal Corp. 28,200 1,224,937
- --------------------------------------------------------------
UST Corp. 19,300 598,300
- --------------------------------------------------------------
Zions Bancorp 12,100 713,144
- --------------------------------------------------------------
5,486,218
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-2.85%
Digital Insight Corp.(a) 20,200 800,425
- --------------------------------------------------------------
HomeStore.com, Inc.(a) 7,900 370,806
- --------------------------------------------------------------
Intuit, Inc.(a) 40,000 1,165,000
- --------------------------------------------------------------
2,336,231
- --------------------------------------------------------------
CONSUMER FINANCE-11.65%
Capital One Financial Corp. 43,500 2,305,500
- --------------------------------------------------------------
Doral Financial Corp. 40,000 512,500
- --------------------------------------------------------------
Investors Financial Services Corp. 60,100 2,223,700
- --------------------------------------------------------------
MBNA Corp. 38,500 1,063,562
- --------------------------------------------------------------
Providian Financial Corp. 31,500 3,433,500
- --------------------------------------------------------------
9,538,762
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.82%
General Electric Co. 11,000 1,491,187
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-15.58%
American Express Co. 17,000 2,618,000
- --------------------------------------------------------------
Associates First Capital Corp.-Class
A 45,000 1,642,500
- --------------------------------------------------------------
Citigroup, Inc. 77,137 4,175,040
- --------------------------------------------------------------
Fannie Mae 31,000 2,193,250
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-(CONTINUED)
Freddie Mac 39,500 $ 2,135,469
- --------------------------------------------------------------
12,764,259
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-3.62%
AFLAC, Inc. 25,000 1,278,125
- --------------------------------------------------------------
AXA Financial, Inc. 35,000 1,122,187
- --------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 15,000 568,125
- --------------------------------------------------------------
2,968,437
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-4.65%
American International Group, Inc. 32,500 3,345,469
- --------------------------------------------------------------
Hartford Financial Services Group,
Inc. (The) 9,000 466,313
- --------------------------------------------------------------
3,811,782
- --------------------------------------------------------------
INSURANCE BROKERS-2.91%
Marsh & McLennan Co. 30,100 2,379,781
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-6.39%
Merrill Lynch & Co., Inc. 8,000 628,000
- --------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover
& Co. 28,000 3,088,750
- --------------------------------------------------------------
Schwab (Charles) Corp. (The) 39,000 1,518,563
- --------------------------------------------------------------
5,235,313
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-3.26%
Alliance Capital Management L.P. 68,800 1,887,700
- --------------------------------------------------------------
Knight/Trimark Group, Inc.-Class A(a) 30,000 781,875
- --------------------------------------------------------------
2,669,575
- --------------------------------------------------------------
RAILROADS-1.74%
Kansas City Southern Industries, Inc. 30,000 1,423,125
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.51%
Golden West Financial Corp. 11,100 1,240,425
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-1.05%
Metris Companies, Inc. 25,000 860,938
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-4.43%
Concord EFS, Inc.(a) 42,000 1,136,625
- --------------------------------------------------------------
First Data Corp. 41,000 1,873,188
- --------------------------------------------------------------
Profit Recovery Group International,
Inc.(a) 15,000 617,813
- --------------------------------------------------------------
3,627,626
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $49,466,406) 64,963,817
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS-12.46%
FRANCE-3.21%
AXA (Insurance-Multi-Line) 18,650 $ 2,631,140
- --------------------------------------------------------------
HONG KONG-1.88%
Dah Sing Financial Group
(Banks-Regional) 386,000 1,540,403
- --------------------------------------------------------------
IRELAND-1.52%
Bank of Ireland (Banks-Major
Regional) 159,601 1,245,876
- --------------------------------------------------------------
JAPAN-2.72%
Nikko Securities Co., Ltd. (The)
(Investment Banking/Brokerage) 94,000 883,603
- --------------------------------------------------------------
Nomura Securities Co., Ltd.
(Finance-Asset Management)(a) 37,000 610,781
- --------------------------------------------------------------
Shohkoh Fund & Co., Ltd.
(Financial-Diversified) 1,200 734,353
- --------------------------------------------------------------
2,228,737
- --------------------------------------------------------------
NETHERLANDS-1.04%
Aegon N.V. (Insurance-Multi-Line
Property) 9,263 851,617
- --------------------------------------------------------------
PHILIPPINES-0.80%
Equitable PCI Bank (Banks-Major
Regional) 370,000 655,112
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SINGAPORE-1.29%
DBS Group Holdings Ltd. (Banks-Money
Center)(a) 93,040 $ 1,051,995
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$7,511,744) 10,204,880
- --------------------------------------------------------------
MONEY MARKET FUNDS-8.17%
STIC Liquid Assets Portfolio(b) 3,346,551 3,346,551
- --------------------------------------------------------------
STIC Prime Portfolio(b) 3,346,551 3,346,551
- --------------------------------------------------------------
Total Money Market Funds (Cost
$6,693,102) 6,693,102
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.94% 81,861,799
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.06% 51,486
- --------------------------------------------------------------
NET ASSETS-100.00% $81,913,285
- --------------------------------------------------------------
</TABLE>
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)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 $63,671,252) $81,861,799
- ------------------------------------------------------------
Foreign currencies, at value (cost $1,048) 1,055
- ------------------------------------------------------------
Receivables for:
Fund shares sold 1,240,372
- ------------------------------------------------------------
Dividends and interest 161,989
- ------------------------------------------------------------
Other assets 18,589
- ------------------------------------------------------------
Total assets 83,283,804
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 942,162
- ------------------------------------------------------------
Fund shares reacquired 252,474
- ------------------------------------------------------------
Accrued advisory fees 66,119
- ------------------------------------------------------------
Accrued administrative services fees 4,110
- ------------------------------------------------------------
Accrued distribution fees 58,202
- ------------------------------------------------------------
Accrued transfer agent fees 8,098
- ------------------------------------------------------------
Accrued trustees' fees 2,000
- ------------------------------------------------------------
Accrued operating expenses 37,354
- ------------------------------------------------------------
Total liabilities 1,370,519
- ------------------------------------------------------------
Net assets applicable to shares outstanding $81,913,285
============================================================
NET ASSETS:
Class A $30,987,361
============================================================
Class B $49,618,581
============================================================
Class C $ 604,996
============================================================
Advisor Class $ 702,347
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 1,334,046
============================================================
Class B 2,189,216
============================================================
Class C 26,690
============================================================
Advisor Class 29,792
============================================================
Class A:
Net asset value and redemption price per
share $ 23.23
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $23.23 / 95.25%) $ 24.39
============================================================
Class B:
Net asset value and offering price per share $ 22.67
============================================================
Class C:
Net asset value and offering price per share $ 22.67
============================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 23.58
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends income (net of $54,994 foreign
withholding tax) $ 1,308,600
- ------------------------------------------------------------
Interest 327,608
- ------------------------------------------------------------
Securities lending 35,500
- ------------------------------------------------------------
Total investment income 1,671,708
- ------------------------------------------------------------
EXPENSES:
Advisory and administrative fees 853,755
- ------------------------------------------------------------
Accounting services fees 34,005
- ------------------------------------------------------------
Custodian fees 41,915
- ------------------------------------------------------------
Distribution fees -- Class A 151,168
- ------------------------------------------------------------
Distribution fees -- Class B 495,394
- ------------------------------------------------------------
Distribution fees -- Class C 1,687
- ------------------------------------------------------------
Printing fees 137,968
- ------------------------------------------------------------
Trustees' fees 13,287
- ------------------------------------------------------------
Transfer agent fees -- Class A 78,627
- ------------------------------------------------------------
Transfer agent fees -- Class B 127,932
- ------------------------------------------------------------
Transfer agent fees -- Class C 436
- ------------------------------------------------------------
Transfer agent fees -- Advisor Class 17,835
- ------------------------------------------------------------
Other 113,101
- ------------------------------------------------------------
Total expenses 2,067,110
- ------------------------------------------------------------
Less: Expenses paid indirectly (787)
- ------------------------------------------------------------
Fees waived by advisor (114,306)
- ------------------------------------------------------------
Net expenses 1,952,017
- ------------------------------------------------------------
Net investment income (loss) (280,309)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
AND FORWARD CONTRACTS:
Net realized gain (loss) from:
Investment securities 19,323,357
- ------------------------------------------------------------
Foreign currencies (132,395)
- ------------------------------------------------------------
Forward contracts (336,844)
- ------------------------------------------------------------
18,854,118
- ------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 8,598,450
- ------------------------------------------------------------
Foreign currencies (2,573)
- ------------------------------------------------------------
Forward contracts 287,308
- ------------------------------------------------------------
8,883,185
- ------------------------------------------------------------
Net gain from investment securities, foreign
currencies, and forward contracts 27,737,303
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $27,456,994
============================================================
</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) $ (280,309) $ 140,505
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, and forward contracts 18,854,118 (702,889)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, and forward contracts 8,883,185 1,398,601
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 27,456,994 836,217
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (27,914) (11,044)
- -----------------------------------------------------------------------------------------
Class B -- (16,883)
- -----------------------------------------------------------------------------------------
Advisor Class (62,446) (2,239)
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A (50,561) (1,099,618)
- -----------------------------------------------------------------------------------------
Class B (88,384) (1,681,050)
- -----------------------------------------------------------------------------------------
Advisor Class (16,133) (222,890)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A (6,952,812) (847,176)
- -----------------------------------------------------------------------------------------
Class B (14,361,940) 2,731,796
- -----------------------------------------------------------------------------------------
Class C 578,307 --
- -----------------------------------------------------------------------------------------
Advisor Class (11,056,810) 5,846,237
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (4,581,699) 5,533,350
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 86,494,984 80,961,634
- -----------------------------------------------------------------------------------------
End of period $ 81,913,285 $86,494,984
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 46,550,387 $78,345,098
- -----------------------------------------------------------------------------------------
Undistributed net investment income (loss) 736,025 88,991
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, and forward contracts 16,437,684 (1,245,109)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, and forward contracts 18,189,189 9,306,004
- -----------------------------------------------------------------------------------------
$ 81,913,285 $86,494,984
=========================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Financial Services 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 Fund
invests substantially all of its investable assets in Global Financial Services
Portfolio (the "Portfolio"). The Portfolio is organized as a Delaware business
trust which 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 the 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, 1999, all of the shares of beneficial interest of the Portfolio were
owned by either the Fund or INVESCO (NY) Asset Management, Inc., which has a
nominal ($100) investment in the Portfolio.
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 and the Portfolio 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
$1,017,703, undistributed net realized gains decreased by $1,016,247 and
paid-in capital decreased by $1,458 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
9
<PAGE> 12
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 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 Portfolio may enter into a foreign currency contract to attempt to
minimize the risk to the Portfolio from adverse changes in the relationship
between currencies. The Portfolio 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
Portfolio 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. 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.
G. 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 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 financial services industry subjects the Portfolio to
greater risk than a fund that is more diversified.
H. 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.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's and the Portfolio's investment
manager and administrator. The Fund pays AIM administration fees at an
annualized rate of 0.25% of the Fund's average daily net assets. The Portfolio
pays AIM investment management and administration fees at an annual rate of
0.725% on the first $500 million of the Portfolio's average daily net assets,
plus 0.70% on the next $500 million of the Portfolio's average daily net assets,
plus 0.675% on the next $500 million of the Portfolio's average daily net
assets, plus 0.65% on the Portfolio'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. During the year ended October 31, 1999, AIM waived fees of
$114,306.
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 and the Portfolio. Prior to July 1,
1999, AIM was the pricing and accounting agent for the Fund and the Portfolio.
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 was
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 $34,005 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 $204,616 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
10
<PAGE> 13
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 $151,168, $495,394 and
$1,687, respectively, as compensation under the Plans.
AIM Distributors received commissions of $16,231 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 $1,268 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 $787 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of $787
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. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. 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 $1,843,403 were on
loan to brokers. The loans were secured by cash collateral of $1,880,271
received by the Portfolio. For the year ended October 31, 1999, the Portfolio
received fees of $35,500 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 Portfolio during the year ended October 31, 1999 was
$86,951,106 and $123,914,428, 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 $ 18,691,989
- ---------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (1,021,422)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 17,670,567
=========================================================
Cost of investments for tax purposes is $64,191,232.
</TABLE>
11
<PAGE> 14
NOTE 7-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 833,262 $ 17,299,042 3,687,543 $ 67,971,118
- ---------------------------------------------------------------------------------------------------------------------------
Class B 676,623 13,852,370 2,101,129 37,907,965
- ---------------------------------------------------------------------------------------------------------------------------
Class C* 32,543 712,656 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Advisor Class 27,443 605,576 563,080 10,164,684
- ---------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 4,035 73,215 54,738 960,105
- ---------------------------------------------------------------------------------------------------------------------------
Class B 4,616 82,070 76,614 1,322,362
- ---------------------------------------------------------------------------------------------------------------------------
Advisor Class 4,287 78,579 12,691 225,008
- ---------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,170,739) (24,325,069) (3,795,511) (69,778,399)
- ---------------------------------------------------------------------------------------------------------------------------
Class B (1,411,988) (28,296,380) (2,061,758) (36,498,531)
- ---------------------------------------------------------------------------------------------------------------------------
Class C* (5,853) (134,349) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Advisor Class (537,683) (11,740,965) (254,804) (4,543,455)
- ---------------------------------------------------------------------------------------------------------------------------
(1,543,454) $ (31,793,255) 383,722 $ 7,730,857
===========================================================================================================================
</TABLE>
12
<PAGE> 15
NOTE 8-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(a)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.05 $ 17.22 $ 14.20 $11.92 $11.62
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Income from investment operations:
Net investment income (loss) (0.02) 0.07 0.04 0.05(b) 0.17(c)
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Net realized and unrealized gain on investments 6.25 0.37 3.97 2.36 0.13
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Net increase from investment operations 6.23 0.44 4.01 2.41 0.30
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Distributions to shareholders:
From net investment income (0.02) (0.01) -- (0.12) --
- ------------------------------------------------------------ ------- ------- ------- ------ ------
From net realized gain on investments (0.03) (0.60) (0.99) (0.01) --
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Total distributions (0.05) (0.61) (0.99) (0.13) --
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Net asset value, end of period $ 23.23 $ 17.05 $ 17.22 $14.20 $11.92
============================================================ ======= ======= ======= ====== ======
Total return(d) 36.62% 2.53% 29.91% 20.21% 2.58%
============================================================ ======= ======= ======= ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000s) $30,987 $28,433 $29,639 $7,302 $5,687
============================================================ ======= ======= ======= ====== ======
Ratio of net investment income (loss) to average net assets:
With fee waivers (0.08)%(e) 0.37% 0.23% 0.41% 1.46%
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Without fee waivers (0.21)%(e) 0.35% 0.16% (0.66)% (5.34)%
============================================================ ======= ======= ======= ====== ======
Ratio of expenses to average net assets:
With fee waivers 1.99%(e) 1.97% 2.29% 2.32% 2.34%
- ------------------------------------------------------------ ------- ------- ------- ------ ------
Without fee waivers 2.12%(e) 1.99% 2.36% 3.39% 9.14%
============================================================ ======= ======= ======= ====== ======
Portfolio turnover rate 107% 111% 91% 103% 170%
============================================================ ======= ======= ======= ====== ======
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Before reimbursement the net investment income per share would have been
reduced by $0.13.
(c) Before reimbursement the net investment income per share would have been
reduced by $0.59.
(d) Total return does not include sales charge.
(e) Ratios are based on average net assets of $30,233,569.
13
<PAGE> 16
NOTE 8-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 B
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.71 $16.97 $14.06 $11.83 $11.60
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.12) (0.02) (0.04) (0.01)(b) 0.11(c)
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Net realized and unrealized gain on investments 6.11 0.37 3.94 2.34 0.12
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Net increase from investment operations 5.99 0.35 3.90 2.33 0.23
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Distributions to shareholders:
From net investment income -- (0.01) -- (0.09) --
- ------------------------------------------------------------ ------- ------ ------ ------ ------
From net realized gain on investments (0.03) (0.60) (0.99) (0.01) --
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Total distributions (0.03) (0.61) (0.99) (0.10) --
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Net asset value, end of period $ 22.67 $16.71 $16.97 $14.06 $11.83
============================================================ ======= ====== ====== ====== ======
Total return(d) 35.91% 2.08% 29.13% 19.81% 1.98%
============================================================ ======= ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000s) $49,619 $48,785 $47,585 $9,886 $4,548
============================================================ ======= ====== ====== ====== ======
Ratio of net investment income (loss) to average net assets:
With fee waivers (0.58)%(e) (0.13)% (0.27)% (0.09)% 0.96%
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Without fee waivers (0.71)%(e) (0.15)% (0.34)% (1.16)% (5.84)%
============================================================ ======= ====== ====== ====== ======
Ratio of expenses to average net assets:
With fee waivers 2.49%(e) 2.47% 2.79% 2.82% 2.84%
- ------------------------------------------------------------ ------- ------ ------ ------ ------
Without fee waivers 2.62%(e) 2.49% 2.86% 3.89% 9.64%
============================================================ ======= ====== ====== ====== ======
Portfolio turnover rate 107% 111% 91% 103% 170%
============================================================ ======= ====== ====== ====== ======
</TABLE>
(a) These selected per share data were calculated based upon average shares
outstanding during the period.
(b) Before reimbursement the net investment income per share would have been
reduced by $0.13.
(c) Before reimbursement the net investment income per share would have been
reduced by $0.59.
(d) Total return does not include sales charges.
(e) Ratios are based on average net assets of $49,539,408.
14
<PAGE> 17
NOTE 8-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
------------------- --------------------------------------------------------------
YEAR ENDED OCTOBER 31,
MARCH 1, 1999 TO ---------------------------------------- JUNE 1, 1995 TO
October 31, 1999(a) 1999(a) 1998(a) 1997(a) 1996(a) OCTOBER 31, 1995(a)
------------------- ------- ------- ------- ------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.58 $17.31 $17.40 $14.26 $11.95 $11.09
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.08) 0.08 0.17 0.12 0.12(b) 0.09(c)
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Net realized and unrealized gain on
investments 3.17 6.34 0.35 4.01 2.36 0.77
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Net increase from investment
operations 3.09 6.42 0.52 4.13 2.48 0.86
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income -- (0.12) (0.01) -- (0.16) --
- ---------------------------------------- ------ ------ ------ ------ ------ ------
From net realized gain on investments -- (0.03) (0.60) (0.99) (0.01) --
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Total distributions -- (0.15) (0.61) (0.99) (0.17) --
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of period $22.67 $23.58 $17.31 $17.40 $14.26 $11.95
======================================== ====== ====== ====== ====== ====== ======
Total return(d) 15.78% 37.37% 3.03% 30.52% 20.87% 7.75%
======================================== ====== ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000s) $ 605 $ 702 $9,276 $3,738 $ 72 $ 31
======================================== ====== ====== ====== ====== ====== ======
Ratio of net investment income (loss) to
average net assets:
With fee waivers (0.58)%(e) 0.43%(f) 0.87% 0.73% 0.91% 1.96%(g)
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Without fee waivers (0.71)%(e) 0.30%(f) 0.85% 0.66% (0.16)% 4.84%(g)
======================================== ====== ====== ====== ====== ====== ======
Ratio of expenses to average net assets:
With fee waivers 2.49%(e) 1.48(f) 1.47% 1.79% 1.82% 1.84%(g)
- ---------------------------------------- ------ ------ ------ ------ ------ ------
Without fee waivers 2.62%(e) 1.61(f) 1.49% 1.86% 2.89% 8.64%(g)
======================================== ====== ====== ====== ====== ====== ======
Portfolio turnover rate 107% 107% 111% 91% 103% 170%
======================================== ====== ====== ====== ====== ====== ======
</TABLE>
(a) These selected per share data were calculated based upon average shares
outstanding during the period.
(b) Before reimbursement the net investment income per share would have been
reduced by $0.13.
(c) Before reimbursement the net investment income per share would have been
reduced by $0.30.
(d) Total return does not include sales charges and is not annualized for
periods less than one year.
(e) Ratios are annualized and based on average net assets of $251,286.
(f) Ratios are based on average net assets of $7,564,046.
(g) Annualized.
NOTE 9-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.
15
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Financial Services 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 Financial Services Fund - Consolidated at
October 31, 1999, 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, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the
opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 23, 1999
16
<PAGE> 19
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
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>
REQUIRED FEDERAL INCOME TAX INFORMATION -- UNAUDITED
AIM Global Financial Services Fund paid ordinary dividends in the amount of
$0.0492, $0.0317, and $0.1544 per share to Class A, Class B and Advisor Class
shareholders, respectively during its tax year ended October 31, 1999. Of this
amount, 99.02% is eligible for the dividends received deduction for
corporations.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc.
AIM Aggressive Growth Fund(1) AIM Money Market Fund has provided leadership in the
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund mutual fund industry since
AIM Capital Development Fund 1976 and managed approximately
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS $120 billion in assets for
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund more than 6.4 million
AIM Large Cap Growth Fund AIM Asian Growth Fund shareholders, including
AIM Mid Cap Equity Fund AIM Developing Markets Fund individual investors,
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) corporate clients and
AIM Mid Cap Opportunities Fund AIM European Development Fund financial institutions, as of
AIM Select Growth Fund AIM International Equity Fund September 30, 1999.
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund The AIM Family of Funds
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund --Registered Trademark-- is
AIM Value Fund AIM New Pacific Growth Fund distributed nationwide, and
AIM Weingarten Fund AIM today is the 10th-largest
GLOBAL GROWTH FUNDS mutual fund complex in the
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund United States in assets under
AIM Advisor Flex Fund AIM Global Growth Fund management, according to
AIM Advisor Large Cap Value Fund Strategic Insight, an
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS independent mutual fund
AIM Balanced Fund AIM Global Growth & Income Fund monitor.
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</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 sales
material after January 20, 2000, this report must be accompanied by a current
Quarterly Review of Performance for AIM Funds.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE
--Registered Trademark--
AIM Distributors, Inc. GFS-AR-1
