<PAGE> 1
ANNUAL REPORT / OCTOBER 31 1999
AIM GLOBAL GOVERNMENT INCOME FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
THE PARLIAMENT OF LONDON BY CLAUDE MONET
TO PROVIDE A STEADY FLOW OF INCOME AND GROWTH OF CAPITAL FOR
OUR SHAREHOLDERS, AIM GLOBAL GOVERNMENT INCOME FUND
INVESTS IN GOVERNMENT DEBT SECURITIES OF THE HIGHEST QUALITY
AND SAFETY. THE PARLIAMENT OF LONDON, PICTURED HERE, IS REPRE-
SENTATIVE OF THE INHERENT STABILITY OF THE COUNTRIES IN WHICH
THE FUND INVESTS.
-------------------------------------
AIM Global Government Income Fund is for shareholders who primarily seek a high
level of current income, and secondarily seek capital appreciation and
protection of principal. The fund invests primarily in high-quality U.S. and
foreign government debt obligations.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Government Income Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value.
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 and Class C shares will differ from
that of 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
period ended 9/30/99 (the most recent calendar quarter end), are as follows:
for Class A shares, one year, -9.24%; five years, 4.61%; 10 years, 6.15%.
For Class B shares, one year, -9.81%; five years, 4.64%; inception
(10/22/92), 4.66%. For class C shares, inception (3/1/99), -3.64 %. For
Advisor Class shares, one year, -4.28%; inception (6/1/95), 4.67%.
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 The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity or yield-to-call of its holdings, net of all
expenses and expressed on an annualized basis.
o The fund's annualized distribution rate reflects its most recent monthly
dividend distribution multiplied by 12 and divided by the most recent
month-end maximum offering price. The fund's distribution rate and 30-day
SEC yield will differ.
o During the year ended 10/31/99, the fund paid distributions of $0.435 per
Class A share, $0.376 per Class B share, $0.210 per Class C share and $0.465
per Advisor Class share.
o Government securities, such as U.S. Treasury bills, notes and bonds, offer a
high degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. Fund shares are not insured, and
their value and yield will vary with market conditions.
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 The fund's investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The J.P. Morgan Global Government Bond Index is a market value-weighted
average of government bonds from 13 major developed bond markets. It
includes the effect of reinvested coupons and is measured in U.S. dollars.
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 A PORTION 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 GOVERNMENT INCOME 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 GOVERNMENT INCOME FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND REMAINS STABLE THROUGH GLOBAL DISINFLATION
HOW WOULD YOU CHARACTERIZE THE FIXED-INCOME CLIMATE OVER THE FISCAL YEAR, AND
HOW DID AIM GLOBAL GOVERNMENT INCOME FUND FARE?
Sentiment has remained bearish across the fixed-income markets. The rise in bond
yields and the resulting drop in prices has caused performance in most sectors
to suffer this year. The fund's total return for the year ended October 31,
1999, was -3.97% for Class A shares, -4.62% for Class B shares and -3.73% for
Advisor Class shares. Class C shares commenced sales March 1, 1999, and produced
cumulative total return of -2.80% through the end of the fiscal year. The fund's
benchmark, the J.P. Morgan Global Government Bond Index, had a return of 1.94%
over the 12-month period. These returns are at net asset value, without a sales
charge.
The fund produced a high level of current income throughout the reporting
period. As of October 31, 1999, the fund's 30-day distribution rate at net asset
value was 5.13% for Class A shares, 4.40% for Class B and C shares and 5.47% for
Advisor Class shares. The fund's 30-day SEC yield at maximum offering price was
4.23% for Class A shares, 3.81% for Class B and Class C shares and 4.77% for
Advisor Class shares.
HOW WAS THE FUND STRUCTURED AT THE END OF THE FISCAL YEAR?
As of October 31, the fund had 24 holdings, with total net assets divided as
follows: international government bonds, 50.12%; domestic government bonds,
18.64%; international corporate bonds, 15.91%; domestic corporate bonds, 7.23%
and cash/cash equivalents, 8.10%.
NOTWITHSTANDING OVERALL BOND MARKET VOLATILITY, WHAT FACTORS INFLUENCED FUND
PERFORMANCE?
A primary factor that hindered the fund's performance during the reporting
period was rising interest rates. In addition, our global bond portfolio
maintained an overall duration of 6.4 years, which was moderately greater than
that of the index at 5.6 years. In an environment with rising interest rates,
the slightly longer duration of our fund negatively impacted performance.
The lack of exposure to the Japanese yen for most of the fiscal year also
detracted from relative performance. We did not capitalize on the yen's sharp
rally in the third quarter of this year. We adjusted the portfolio to recoup
some of that exposure and the fund gained considerable ground compared with both
the fund's index and its peer group.
HAVE YOU REGAINED CONFIDENCE IN JAPAN AS ITS ECONOMIC ENVIRONMENT IMPROVES?
Japan was among the few developed countries to post positive returns in the
global bond market this year. While performance in Japanese bonds was strong
this year, better than 10% unhedged, there are fundamental reasons why optimism
may be shortsighted.
We believe the rapid deterioration in Japan's public finances will be the
dominant factor influencing the Japanese bond market going forward. Further, we
believe the yen, relative to the dollar, remains at risk as the government may
weaken its currency to keep the economic recovery going.
We are outright bearish in our Japan outlook. We believe several developing
markets represent attractive opportunities. In this environment, we will
continue our efforts to position the fund to capitalize on market trends while
providing a high degree of safety and a steady flow of income for our
shareholders.
WHAT KINDS OF TRENDS HAVE YOU NOTICED INTERNATIONALLY?
There's virtually been a synchronization of growth worldwide, whereas
previously, the United States led the way. The resurgence of global growth has
caused investors and governments to worry about the potential for higher
inflation. To date, however, inflation has remained relatively flat, confounding
expectations.
HOW IS THE GLOBAL ENVIRONMENT FOR BONDS?
The Federal Reserve Board (the Fed), the European Central Bank and the Bank of
England all kept rates unchanged while they waited for further evidence of
inflationary pressures. With the ever-present threat of higher interest rates
looming, bonds have been unable to rally.
Our bias has been to buy into this weakness, favoring the U.S. market over
foreign bond markets. This view is predicated on the long-term theme of
disinfla-
-------------------------------------
THERE'S VIRTUALLY BEEN A SYNCHRO-
NIZATION OF GROWTH WORLDWIDE,
WHEREAS PREVIOUSLY, THE UNITED
STATES LED THE WAY.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM GLOBAL GOVERNMENT INCOME FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of October 31, 1999, based on total net assets
<TABLE>
<CAPTION>
======================================================================================
TOP FIVE COUNTRIES TOP FIVE BOND HOLDINGS COUPON MATURITY %
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. United States 26% 1. Bundesrepublik Deutschland 6.000% 01/06 11.44
2. Euroland 23 2. UBS Jersey (U.K.) 8.750 06/05 10.19
3. Denmark 11 3. U.S. Treasury Bonds 6.375 08/27 7.55
4. Switzerland 10 4. Buoni Poliennali Del Tesoro 7.250 11/26 5.99
5. United Kingdom 6 5. FNMA 7.500 11/29 5.99
======================================================================================
</TABLE>
<TABLE>
<CAPTION>
BOND ALLOCATION BY SECTOR
================================================================================
<S> <C>
INTERNATIONAL GOVERNMENT 50.12%
DOMESTIC CORPORATE 7.23%
DOMESTIC GOVERNMENT 18.64%
CASH/CASH EQUIVALENTS 8.10%
INTERNATIONAL CORPORATE 15.91%
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
================================================================================
</TABLE>
tion. Market action ran counter to the long-term trend due to persisting
concerns that strong growth would lead to higher inflation.
Two of the better-performing bond markets were Canada and the United
Kingdom, and the fund benefited from its exposure to these markets. The U.K.
bond market got a boost from low inflation, and the Bank of England acted
diligently to keep it in check.
HOW HAS THE EURO EMERGED IN THE BOND MARKET?
Euroland bonds performed poorly as the economy languished before showing signs
of picking up toward the end of the fiscal year. We offset our euro exposure by
reinvesting the proceeds into the base currency of U.S. dollars for roughly the
first half of the year. This strategy helped reduce currency risk and protect
capital.
The euro increases price transparency, one more factor helping the long-term
disinflation story. It's certainly too soon to tell whether the euro will
succeed. That will take quite a few years to assess. The euro forges a historic
business environment, and we will continue to monitor its development.
WHAT WERE THE CIRCUMSTANCES SURROUNDING THE DOMESTIC BOND MARKET'S PERFORMANCE?
This year has been the worst year for bonds in the United States since 1994, and
the second worst year on record. Investors were concerned that continued strong
economic growth would prompt the Fed to raise interest rates to keep inflation
at bay, and this had an unsettling effect on the bond market.
The continued strength of the U.S. economy is still not producing
inflationary pressure, and the Fed has emphasized that the mix of strong growth
and low inflation should foster greater productivity.
WHAT IS YOUR OUTLOOK FOR THE IMMEDIATE FUTURE?
We expect continued volatility initially, but over the long term, we foresee
positive fundamentals. We've seen interest rate hikes on both sides of the
Atlantic during the reporting period, and there are probably further hikes to
come. That provides a negative background for bonds in the near term since
yields may be higher in the future.
We think the six- to 12-month view of interest rates is overly pessimistic.
Once the near-term worries are worked out, the market will be able to focus on
the positive inflation fundamentals. We maintain a bullish bias and expect
returns to be positive.
See important fund and index disclosures inside front cover.
AIM GLOBAL GOVERNMENT INCOME FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL GOVERNMENT INCOME FUND VS. BENCHMARK INDEX
3/29/88-10/31/99
in thousands
================================================================================
AIM Global
Government J.P Morgan
Income Global Gov-
Fund, Class ernment
A Shares Bond Index
- --------------------------------------------------------------------------------
3/88 9525 10000
10/88 9589 10241.5
10/89 10345 10746.4
10/90 11579 11915.8
10/91 12666 13254.8
10/92 13465 14922.2
10/93 16413 16563.6
10/94 14958 16998.6
10/95 16337 19607.9
10/96 17501 20805.2
10/97 18337 21530.6
10/98 20207 24325.1
10/99 19405 23606.6
Past performance cannot guarantee comparable future results.
Source: Bloomberg.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
ABOUT THIS CHART
The chart compares your fund's Class A shares to a benchmark index. It is
intended to give you a general idea of how your fund compared to the bond market
over the period 3/29/88-10/31/99. (Please note that the index's performance
figures are for the period 3/31/88-10/31/99.) It is important to understand
differences between your fund and this index. Your fund's total return is shown
with a sales charge and includes fund expenses and management fees. An index
measures the performance of a hypothetical portfolio, in this case the J.P.
Morgan Global Government Bond Index. Unlike your fund, an index is not managed,
incurring no sales charge, expenses or fees. But if you could buy all the
securities that make up a market index, you would incur expenses that would
affect the return on your investment.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
================================================================================
CLASS A SHARES
10 Years 5.98%
5 years 4.32
1 year -8.56*
* -3.97% excluding sales charge
CLASS B SHARES
Inception (10/22/92) 4.61
5 years 4.31
1 year -9.19*
* -4.62% excluding sales charge
CLASS C SHARES
Inception (3/1/99) -3.75
ADVISOR CLASS SHARES*
Inception (6/1/95) 4.58
1 year -3.73
* Beginning March 1, 1999, Advisor Class shares were closed to new investors.
Sales charges do not apply.
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class B and Class C 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 refer to the inside
front cover.
AIM GLOBAL GOVERNMENT INCOME FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CORPORATE BONDS-15.91%
AUSTRALIA-1.40%
KFW International Finance
(Investment Banking/Brokerage),
Gtd. Unsec. Unsub. Bonds,
7.25%, 07/16/07 AUD 3,100,000 $ 1,987,002
- ---------------------------------------------------------------
GERMANY-1.56%
Bayerische Landesbank
Girozentrale (Banks- Money
Center), Unsec. Sub. Notes,
5.875%, 12/01/08 2,400,000 2,213,702
- ---------------------------------------------------------------
SWITZERLAND-10.19%
UBS Jersey
(Financial-Diversified), Sub.
Bonds, 8.75%, 06/20/05 GBP 8,200,000 14,475,660
- ---------------------------------------------------------------
TUNISIA-2.76%
Banque Cent de Tunisie
(Banks-Money Center), Unsec.
Bonds, 8.25%, 09/19/27 4,750,000 3,916,214
- ---------------------------------------------------------------
Total Corporate Bonds (Cost
$23,886,964) 22,592,578
- ---------------------------------------------------------------
GOVERNMENT BONDS & NOTES-45.37%
CANADA-3.59%
Canadian Government, Bonds,
6.00%, 06/01/08 CAD 7,520,000 5,092,848
- ---------------------------------------------------------------
DENMARK-5.88%
Kingdom of Denmark, Bonds, 7.00%,
11/10/24 DKK 53,300,000 8,345,569
- ---------------------------------------------------------------
GERMANY-11.44%
Bundesrepublik Deutschland,
Bonds, 6.00%, 01/05/06 EUR 14,650,000 16,246,489
- ---------------------------------------------------------------
GREECE-6.44%
Hellenic Republic, Bonds
9.20%, 03/21/02
GRD 2,210,000,000 7,223,898
- ---------------------------------------------------------------
8.80%, 06/19/07 GRD 550,000,000 1,914,372
- ---------------------------------------------------------------
9,138,270
- ---------------------------------------------------------------
ITALY-10.09%
Buoni Poliennali del Tesoro,
Deb., 8.50%, 01/01/04 EUR 4,890,000 5,817,747
- ---------------------------------------------------------------
Bonds, 7.25%, 11/01/26 EUR 7,000,000 8,503,343
- ---------------------------------------------------------------
14,321,090
- ---------------------------------------------------------------
UNITED KINGDOM-5.93%
United Kingdom Treasury, Gtd.
Bonds, 9.00%, 10/13/08 GBP 4,190,000 8,425,473
- ---------------------------------------------------------------
URUGUAY-2.00%
Republica Orient Uruguay, Unsec.
Bonds, 7.875%, 07/15/27 3,000,000 2,842,500
- ---------------------------------------------------------------
Total Government Bonds &
Notes (Cost $72,124,983) 64,412,239
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
MORTGAGE BACKED NOTES-4.75%
DENMARK-4.75%
Realkredit Danmark A/S (Banking),
6.00%, 10/01/26 (Cost
$7,313,393) DKK 50,414,000 $ 6,748,531
- ---------------------------------------------------------------
ASSET-BACKED SECURITIES-7.23%
BANKS (MONEY CENTER)-2.45%
First USA Credit Card Master
Trust, Sub. Series 1998-3 C
Floating Rate Notes, 5.356%,
02/18/04(b) 3,500,000 3,481,953
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-1.28%
Contimortgage Home Equity Loan
Trust, Sub. Series 1999-2 B
Notes, 8.50%, 04/25/29(b) 2,000,000 1,818,437
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-3.50%
Fingerhut Master Trust, Sub.
Series 1998-1 C Floating Rate
Notes, 5.738%, 02/15/05(b) 5,000,000 4,958,594
- ---------------------------------------------------------------
Total Asset-Backed Securities
(Cost $10,257,846) 10,258,984
- ---------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-9.86%
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-0.71%
Pass Through Certificates,
8.50%, 03/01/10 971,355 1,007,470
- ---------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")-9.15%
Pass Through Certificates-TBA,
7.50%, 11/01/29(c) 8,500,000 8,502,635
- ---------------------------------------------------------------
Sr. Unsub. Notes,
6.375%, 08/15/07 AUD 7,300,000 4,488,457
- ---------------------------------------------------------------
12,991,092
- ---------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost
$14,779,756) 13,998,562
- ---------------------------------------------------------------
U.S. TREASURY SECURITIES-8.78%
U.S. TREASURY NOTES-1.23%
5.625%, 05/15/08 1,800,000 1,737,378
- ---------------------------------------------------------------
U.S. TREASURY BONDS-7.55%
6.375%, 08/15/27(d) 10,750,000 10,720,760
- ---------------------------------------------------------------
Total U.S. Treasury
Securities (Cost
$12,937,328) 12,458,138
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-6.46%
STIC Liquid Assets Portfolio(e) 4,587,352 $ 4,587,352
- ---------------------------------------------------------------
STIC Prime Portfolio(e) 4,587,352 4,587,352
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $9,174,704) 9,174,704
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.36% 139,643,736
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.64% 2,323,523
- ---------------------------------------------------------------
NET ASSETS-100.00% $141,967,259
===============================================================
</TABLE>
Investment Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollar
Deb. - Debentures
DKK - Danish Krone
EUR - Euro
GBP - British Pound Sterling
GRD - Greek Drachma
Gtd. - Guaranteed
Sr. - Senior
Sub. - Subordinated
TBA - To Be Announced
Unsec. - Unsecured
Unsub. - Unsubordinated
USD - U.S. Dollar
Notes to Schedule of Investments:
(a) Principal amount in U.S. Dollars, except as otherwise indicated.
(b) The coupon rate shown on floating rate note represents rate at period end.
(c) Security purchased on a forward commitment basis. These securities are
subject to dollar roll transactions. See Note 1 Section F.
(d) The principal balance was pledged as collateral to cover securities
purchased on a forward commitment basis.
(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 $150,474,974) $139,643,736
- ------------------------------------------------------------
Foreign currencies, at value (cost $7,789,654) 8,143,813
- ------------------------------------------------------------
Receivables for:
Fund shares sold 213,493
- ------------------------------------------------------------
Dividends and interest 3,282,169
- ------------------------------------------------------------
Other assets 8,228
- ------------------------------------------------------------
Total assets 151,291,439
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 8,524,792
- ------------------------------------------------------------
Fund shares reacquired 407,460
- ------------------------------------------------------------
Forward contracts 20,290
- ------------------------------------------------------------
Accrued advisory fees 86,440
- ------------------------------------------------------------
Accrued accounting services fees 4,247
- ------------------------------------------------------------
Accrued distribution fees 92,478
- ------------------------------------------------------------
Accrued trustees' fees 2,483
- ------------------------------------------------------------
Accrued operating expenses 185,990
- ------------------------------------------------------------
Total liabilities 9,324,180
- ------------------------------------------------------------
Net assets applicable to shares outstanding $141,967,259
============================================================
NET ASSETS:
Class A $ 85,669,094
============================================================
Class B $ 55,849,297
============================================================
Class C $ 242,724
============================================================
Advisor Class $ 206,144
- ------------------------------------------------------------
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 10,462,287
============================================================
Class B 6,821,145
============================================================
Class C 29,660
============================================================
Advisor Class 25,070
- ------------------------------------------------------------
Class A:
Net asset value and redemption price per
share $ 8.19
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $8.19 / 95.25%) $ 8.60
- ------------------------------------------------------------
Class B:
Net asset value and offering price per share $ 8.19
- ------------------------------------------------------------
Class C:
Net asset value and offering price per share $ 8.18
- ------------------------------------------------------------
Advisor Class:
Net asset value, redemption and offering
price per share $ 8.22
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $10,916,810
- ------------------------------------------------------------
Dividend 9,622
- ------------------------------------------------------------
Securities lending 38,923
- ------------------------------------------------------------
Total investment income 10,965,355
- ------------------------------------------------------------
EXPENSES:
Advisory and administrative fees 1,272,103
- ------------------------------------------------------------
Accounting services fees 55,858
- ------------------------------------------------------------
Custodian fees 83,324
- ------------------------------------------------------------
Distribution fees -- Class A 363,720
- ------------------------------------------------------------
Distribution fees -- Class B 710,164
- ------------------------------------------------------------
Distribution fees -- Class C 1,320
- ------------------------------------------------------------
Interest (Note 5) 62,649
- ------------------------------------------------------------
Trustees' fees 15,984
- ------------------------------------------------------------
Transfer agent fees -- Class A 140,477
- ------------------------------------------------------------
Transfer agent fees -- Class B 95,998
- ------------------------------------------------------------
Transfer agent fees -- Class C 266
- ------------------------------------------------------------
Transfer agent fees -- Advisor Class 633
- ------------------------------------------------------------
Printing fees 215,029
- ------------------------------------------------------------
Other 116,476
- ------------------------------------------------------------
Total expenses 3,134,001
- ------------------------------------------------------------
Less: Expenses paid indirectly (2,214)
- ------------------------------------------------------------
Net expenses 3,131,787
- ------------------------------------------------------------
Net investment income 7,833,568
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (3,878,935)
- ------------------------------------------------------------
Foreign currencies (540,747)
- ------------------------------------------------------------
Forward currency contracts 1,386,145
- ------------------------------------------------------------
(3,033,537)
- ------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (12,237,893)
- ------------------------------------------------------------
Foreign currencies 241,116
- ------------------------------------------------------------
Forward currency contracts (69,604)
- ------------------------------------------------------------
(12,066,381)
- ------------------------------------------------------------
Net gain (loss) from investment securities,
foreign currencies and forward currency
contracts (15,099,918)
- ------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $(7,266,350)
============================================================
</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 $ 7,833,568 $ 14,544,704
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and forward currency contracts (3,033,537) 11,183,037
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and forward
currency contracts (12,066,381) (2,416,473)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (7,266,350) 23,311,268
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (5,214,153) (8,450,756)
- --------------------------------------------------------------------------------------------
Class B (3,093,713) (5,569,246)
- --------------------------------------------------------------------------------------------
Class C (5,619) --
- --------------------------------------------------------------------------------------------
Advisor Class (24,763) (22,257)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (26,367,395) (37,966,528)
- --------------------------------------------------------------------------------------------
Class B (29,686,097) (40,171,903)
- --------------------------------------------------------------------------------------------
Class C 255,619 --
- --------------------------------------------------------------------------------------------
Advisor Class (170,615) 300,289
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (71,573,086) (68,569,133)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 213,540,345 282,109,478
- --------------------------------------------------------------------------------------------
End of period $ 141,967,259 $ 213,540,345
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 282,651,180 $ 338,619,386
- --------------------------------------------------------------------------------------------
Undistributed net investment income 469,694 --
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and forward currency
contracts (130,631,972) (126,623,779)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward currency
contracts (10,521,643) 1,544,738
- --------------------------------------------------------------------------------------------
$ 141,967,259 $ 213,540,345
============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Government Income 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 high current income, and its secondary
investment objective is growth of capital and protection of principal.
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 and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid monthly. The Fund may elect to use a portion of the
proceeds of fund share redemptions as distributions for Federal income tax
purposes. Distributions from net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, paid-in capital increased by $282, undistributed
net investment income increased by $974,374, and undistributed net realized
losses was decreased by $974,656 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. The Fund has a capital loss
carryforward of $130,001,314 as of October 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2007. D. Foreign Currency Translations
-- Portfolio securities and other assets and liabilities denominated in
foreign currencies are
9
<PAGE> 12
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 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.
<TABLE>
<CAPTION>
SETTLEMENT CONTRACT TO CONTRACT TO UNREALIZED
DATE DELIVER RECEIVE VALUE DEPRECIATION
---------- ----------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
01/24/00 CAD 8,000,000 $ 5,427,408 $5,447,698 $(20,290)
----------------------------------------------------------------------------------
</TABLE>
F. Mortgage Dollar Rolls -- The Fund may engage in dollar roll transactions
with respect to mortgage backed securities issued by GNMA, FNMA and FHLMC.
In a dollar roll transaction, the Fund sells a mortgage backed security
held in the Fund to a financial institution such as a bank or
broker-dealer, and simultaneously agrees to repurchase a substantially
similar security (same type, coupon and maturity) from the institution at a
later date at an agreed upon price. The mortgage backed securities that are
repurchased will bear the same interest rate as those sold, but generally
will be collateralized by different pools of mortgages with prepayment
histories. During the period between the sale and repurchase, the Fund will
not be entitled to receive interest and principal payments on securities
sold. Proceeds of the sale will be invested in short-term instruments, and
the income from these investments, together with any additional fee income
received on the sale, could generate income for the Fund exceeding the
yield on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the
securities that the Fund has sold but is obligated to repurchase under the
agreement. In the event the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to repurchase the securities.
G. 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.
H. 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.
I. 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.
INVESCO Asset Management Limited is the Fund's subadvisor. The Fund pays AIM
investment management and administration fees at an annual rate of 0.725% on the
first $500 million of the Fund's average daily net assets, plus 0.70% on the
next $1 billion of the Fund's average daily net assets, plus 0.675% on the next
$1 billion of the Fund's average daily net assets, plus 0.65% on the Fund's
average daily net assets exceeding $2.5 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 1.75%, 2.40%, 2.40%
and 1.40% of the average daily net assets of the Fund's Class A, Class B, Class
C and Advisor Class shares, respectively.
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 $55,858 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.
10
<PAGE> 13
For the year ended October 31, 1999, AFS was paid $196,597 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 0.35% 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 $363,720, $710,164 and $1,320, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $10,533 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 $418 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 $2,214 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$2,214 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.
During the year ended October 31, 1999, the average outstanding daily balance
of bank loans for the Fund was $1,145,937 with a weighted average interest rate
of 5.47%. Interest expense for the Fund for the year ended October 31, 1999 was
$62,649.
NOTE 5-PORTFOLIO SECURITIES LOANED
At October 31, 1999, there were no securities on loan to brokers. For the year
ended October 31, 1999, the Fund received fees of $38,923 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
$179,706,395 and $245,341,305, 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 $ 241,589
- ---------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (11,703,485)
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities $(11,461,896)
- ---------------------------------------------------------
Cost of investments for tax purposes is $151,105,632.
</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 10,753,759 $ 95,017,270 82,946,586 $720,078,445
- ----------------------------------------------------------------------------------------------------------------------
Class B 1,683,644 14,905,906 33,203,356 287,724,801
- ----------------------------------------------------------------------------------------------------------------------
Class C* 28,983 250,000 -- --
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class 56,528 507,460 397,514 3,461,130
- ----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 385,899 3,327,811 537,397 4,673,843
- ----------------------------------------------------------------------------------------------------------------------
Class B 217,787 1,880,996 342,811 2,983,470
- ----------------------------------------------------------------------------------------------------------------------
Class C* 677 5,619 -- --
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class 2,482 21,819 2,169 19,000
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (14,190,581) (124,712,476) (87,859,651) (762,718,816)
- ----------------------------------------------------------------------------------------------------------------------
Class B (5,321,253) (46,472,999) (38,124,508) (330,880,174)
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class (80,666) (699,894) (366,368) (3,179,841)
- ----------------------------------------------------------------------------------------------------------------------
(6,462,741) $ (55,968,488) (8,920,694) $(77,838,142)
======================================================================================================================
</TABLE>
* Class C shares commenced sales on March 1, 1999.
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 $ 8.97 $ 8.62 $ 8.74 $ 8.81 $ 8.63
- -------------------------------------------------------- ------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.41 0.54 0.52 0.57 0.62
- -------------------------------------------------------- ------- -------- -------- -------- --------
Net realized and unrealized gain (loss) on investments (0.76) 0.32 (0.13) 0.03 0.15
- -------------------------------------------------------- ------- -------- -------- -------- --------
Net increase (decrease) from investment operations (0.35) 0.86 0.39 0.60 0.77
- -------------------------------------------------------- ------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income (0.43) (0.16) (0.31) (0.57) (0.59)
- -------------------------------------------------------- ------- -------- -------- -------- --------
From net realized gain on investments -- -- -- (0.10) --
- -------------------------------------------------------- ------- -------- -------- -------- --------
In excess of net investment income -- (0.35) (0.20) -- --
- -------------------------------------------------------- ------- -------- -------- -------- --------
Total distributions (0.43) (0.51) (0.51) (0.67) (0.59)
- -------------------------------------------------------- ------- -------- -------- -------- --------
Net asset value, end of period $ 8.19 $ 8.97 $ 8.62 $ 8.74 $ 8.81
======================================================== ======= ======== ======== ======== ========
Total return(b) (3.97)% 10.20% 4.78% 7.11% 9.22%
======================================================== ======= ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in 000's) $85,669 $121,268 $154,272 $240,945 $385,404
======================================================== ======= ======== ======== ======== ========
Ratio of net investment income to average net assets: 4.72%(c) 6.06% 6.04% 6.52% 6.98%
======================================================== ======= ======== ======== ======== ========
Ratio of expenses to average net assets (excluding
interest expense): 1.49%(c) 1.52% 1.51% 1.39% 1.38%
======================================================== ======= ======== ======== ======== ========
Ratio of interest expense to average net assets 0.04% 0.29% -- -- --
======================================================== ======= ======== ======== ======== ========
Portfolio turnover rate 110% 305% 241% 268% 385%
======================================================== ======= ======== ======== ======== ========
</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 $103,919,944.
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 $ 8.97 $ 8.62 $ 8.74 $ 8.80 $ 8.64
- -------------------------------------------------------- ------ ------ -------- -------- --------
Income from investment operations:
Net investment income 0.35 0.47 0.46 0.51 0.55
- -------------------------------------------------------- ------ ------ -------- -------- --------
Net realized and unrealized gain (loss) on investments (0.75) 0.34 (0.12) 0.04 0.14
- -------------------------------------------------------- ------ ------ -------- -------- --------
Net increase (decrease) from investment operations (0.40) 0.81 0.34 0.55 0.69
- -------------------------------------------------------- ------ ------ -------- -------- --------
Distributions to shareholders:
From net investment income (0.38) (0.11) (0.28) (0.51) (0.53)
- -------------------------------------------------------- ------ ------ -------- -------- --------
From net realized gain on investments -- -- -- (0.10) --
- -------------------------------------------------------- ------ ------ -------- -------- --------
In excess of net investment income -- (0.35) (0.18) -- --
- -------------------------------------------------------- ------ ------ -------- -------- --------
Total distributions (0.38) (0.46) (0.46) (0.61) (0.53)
- -------------------------------------------------------- ------ ------ -------- -------- --------
Net asset value, end of period $ 8.19 $ 8.97 $ 8.62 $ 8.74 $ 8.80
======================================================== ====== ====== ======== ======== ========
Total return(b) (4.62)% 9.65% 4.00% 6.54% 8.22%
======================================================== ====== ====== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in 000's) $55,849 $91,852 $127,722 $166,577 $235,481
======================================================== ====== ====== ======== ======== ========
Ratio of net investment income (loss) to average net assets: 4.07%(c) 5.41% 5.39% 5.87% 6.33%
======================================================== ====== ====== ======== ======== ========
Ratio of expenses to average net assets (excluding interest
expense): 2.14%(c) 2.17% 2.16% 2.04% 2.03%
======================================================== ====== ====== ======== ======== ========
Ratio of interest expense to average net assets 0.04% 0.29% -- -- --
======================================================== ====== ====== ======== ======== ========
Portfolio turnover rate 110% 305% 241% 268% 385%
======================================================== ====== ====== ======== ======== ========
</TABLE>
(a) These selected per share data were calculated based upon 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 $71,016,370.
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
------------------- --------------------------------------------------------
JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO
MARCH 1, 1999 TO ---------------------------------------- OCTOBER 31,
OCTOBER 31, 1999(a) 1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
------------------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.63 $ 9.00 $ 8.61 $ 8.73 $ 8.80 $ 8.98
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.20 0.45 0.56 0.55 0.60 0.26
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Net realized and unrealized gain (loss) on
investments (0.44) (0.77) 0.37 (0.13) 0.03 (0.19)
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Net increase (decrease) from investment
operations (0.24) (0.32) 0.93 0.42 0.63 0.07
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income (0.21) (0.46) (0.19) (0.33) (0.60) (0.25)
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
From net realized gain on investments -- -- -- -- (0.10) --
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
In excess of net investment income -- -- (0.35) (0.21) -- --
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Total distributions (0.21) (0.46) (0.54) (0.54) (0.70) (0.25)
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of period $ 8.18 $ 8.22 $ 9.00 $ 8.61 $ 8.73 $ 8.80
============================================== ====== ====== ====== ====== ====== ======
Total return(b) (2.80)% (3.73)% 11.18% 5.15% 7.49% 0.83%
============================================== ====== ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000's) $ 243 $ 206 $ 421 $ 116 $ 86 $ 131
============================================== ====== ====== ====== ====== ====== ======
Ratio of net investment income (loss) to average
net assets: 4.07%(c) 5.07%(d) 6.41% 6.39% 6.87% 7.33%(e)
============================================== ====== ====== ====== ====== ====== ======
Ratio of expenses to average net assets
(excluding interest expense): 2.14%(c) 1.14%(d) 1.17% 1.16% 1.04% 1.03%(e)
============================================== ====== ====== ====== ====== ====== ======
Ratio of interest expense to average net assets 0.04% 0.04% 0.29% -- -- --
============================================== ====== ====== ====== ====== ====== ======
Portfolio turnover rate 110% 110% 305% 241% 268% 385%
============================================== ====== ====== ====== ====== ====== ======
</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 $196,715.
(d) Ratios are based on average net assets of $468,333.
(e) 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 Government Income 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 Government Income 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, 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 SUB-ADVISOR
President and Chief Executive Officer, Gary T. Crum
A I M Management Group Inc. Vice President INVESCO Asset Management Ltd.
11 Devonshire Square
Ruth H. Quigley Carol F. Relihan London EC2M 4YR
Private Investor Vice President England
Mary J. Benson TRANSFER AGENT
Assistant Vice President and
Assistant Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Sheri Morris Houston, TX 77210-4739
Assistant Vice President and
Assistant Treasurer CUSTODIAN
Nancy L. Martin State Street Bank and Trust Company
Assistant Secretary 225 Franklin Street
Boston, MA 02110
Ofelia M. Mayo
Assistant Secretary COUNSEL TO THE FUND
Kathleen J. Pflueger Kirkpatrick & Lockhart LLP
Assistant Secretary 1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
COUNSEL TO THE TRUSTEES
Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
160 Federal St.
Boston, MA 02110
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION -- UNAUDITED
AIM Global Government Income Fund paid ordinary dividends in the amount of
$0.435, $0.376, $0.210 and $0.465 per share to Class A, Class B, Class C and
Advisor Class shareholders, respectively during the Fund's tax year ended
October 31, 1999. Of these amounts, 0.01% 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. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual-fund industry since
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund 1976 and managed approximately $120 billion
AIM Capital Development Fund in assets for more than 6.4 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund investors, corporate clients and financial
AIM Large Cap Growth Fund AIM Asian Growth Fund institutions, as of September 30, 1999.
AIM Mid Cap Equity Fund AIM Developing Markets Fund The AIM Family of Funds--Registered
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) Trademark-- is distributed nationwide, and
AIM Mid Cap Opportunities Fund AIM European Development Fund AIM today is the 10th-largest mutual fund
AIM Select Growth Fund AIM International Equity Fund complex in the United States in assets under
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund management, according to Strategic Insight,
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund an independent mutual fund monitor.
AIM Value Fund AIM New Pacific Growth Fund
AIM Weingarten Fund
GLOBAL GROWTH FUNDS
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund
AIM Advisor Flex Fund AIM Global Growth Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
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--
A I M Distributors, Inc. GGVI-AR 1
