<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM GLOBAL HEALTH CARE FUND
[COVER ART]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[ COVER IMAGE ]
-------------------------------------
BASKET OF APPLES BY JOHN S. BUNKER
FRESH FRUIT IS FREQUENTLY ASSOCIATED WITH HEALTH AND WELL-
BEING. USING A DISCIPLINED INVESTMENT APPROACH, AIM GLOBAL
HEALTH CARE FUND SEEKS TO INVEST IN COMPANIES THAT BRING TO
THE MARKETPLACE PRODUCTS AND SERVICES DESIGNED TO COMBAT
DISEASE AND PROMOTE HEALTH.
-------------------------------------
AIM Global Health Care Fund is for shareholders seeking long-term growth of
capital by investing in companies around the world involved in health-care
activities or in the design, manufacture or sale of products and services used
in connection with health care or medicine.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Health Care Fund's performance figures are historical, and they
reflect the reinvestment of distributions and changes in net asset value.
o During the fiscal year ended 10/31/00, the fund paid distributions of
$2.2827 per Class A, Class B and Class C share.
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 its Class A shares due to different sales-charge
structure and class expenses.
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 National Association of Securities Dealers Automated
Quotation System Composite Index (the Nasdaq) is a market-value-weighted
index comprising all domestic and non-U.S.-based common stocks listed on
the Nasdaq system. It includes more than 5,000 companies, and it is often
considered representative of the small and medium-sized company stock
universe. While it includes many small and mid-sized company stocks,
large-capitalization technology companies tend to dominate the index.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P
500) represents the performance of the U.S. stock market.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they 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.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
The fund's average annual total returns as of the close of the reporting period
are shown in a table on the performance history page that follows. In addition,
industry regulations require us to provide average annual returns as of 9/30/00,
the most recent calendar quarter-end, which are shown below and include sales
charges.
CLASS A SHARES
Inception (8/7/89) 15.72%
10 years 16.64
5 years 19.34
1 year 37.17
CLASS B SHARES
Inception (4/1/93) 18.83%
5 years 19.72
1 year 38.28
CLASS C SHARES
Inception (3/1/99) 24.74%
1 year 42.32
================================================================================
AIM GLOBAL HEALTH CARE FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
[PHOTO OF It's an honor to address you as the AIM Funds' new chairman.
Robert H. I feel privileged to succeed Ted Bauer, who recently
Graham retired from the funds' board and will soon retire as A I M
Chairman of Management Group's chairman after a long, successful career
the Board of in the investment industry. Ted has always shown the highest
THE FUND degree of integrity and commitment to excellence, and I have
APPEARS HERE] always admired him. I'm also proud to be part of the team
that launched AIM almost 25 years ago. From the beginning,
AIM has been a very people-oriented, service-minded company,
and I plan to carry on the tradition for our shareholders,
financial advisors and employees.
UNCERTAIN MARKETS
The markets this year have been particularly volatile and
confusing for many investors, especially for those who have
only experienced the bull market of the 1990s. After almost
a decade of double-digit returns, the S&P 500 was down 1.81%
year-to-date as of October 31, 2000. But market returns in
the 20% to 30% range, such as we have seen in recent years, are not typical. If
you expect these kinds of returns every year, you'll be disappointed.
Historically, markets decline in one out of every four years. What we're seeing
now is a normal downturn.
This appears to be a worldwide trend. Throughout 2000, overseas markets
generally have been more turbulent than their U.S. counterpart.
REASONS FOR OPTIMISM
While investors may need to temper their expectations, there are plenty of
reasons to be optimistic. Economic fundamentals remain strong, and many believe
that the Federal Reserve Board may have succeeded in bringing the economy to a
"soft landing." Gross domestic product growth slowed to 2.4% in the third
quarter from the rapid pace of about 7% a year ago. With this slowdown, it seems
unlikely that the Fed will raise interest rates in the near future, and stable
interest rates provide a solid environment for both stocks and bonds.
In Europe, the region's economic and investment future continues to look
bright despite the weak euro. Restructuring, merger activity and tax reform bode
well for European economies. In Asia, most analysts think the continuing
strength of the U.S. economy will help boost Asian stock markets.
THE VALUE OF ADVICE
The current environment illustrates the value of professional money management.
Knowing when to buy and sell takes expertise and discipline even in the best of
markets. During downturns, many investors may be tempted to make decisions based
on emotions instead of strategy. The wisest choice is to rely on a professional
money manager to make these decisions for you.
In these uncertain times, it's important to keep market volatility in
perspective. Mutual fund investing should be a long-term endeavor. Remember why
you're investing, whether it's for your retirement or your child's education,
and think about your time frame. If you're unsure about whether your investments
can meet your goals, visit your financial advisor for help.
In the following pages, your fund's portfolio managers discuss market
activity, how they managed your fund during the fiscal year and their near-term
outlook. If you have any questions or comments, please contact us through our
Web site, www.aimfunds.com, or call our Client Services Department at
800-959-4246 during normal business hours. Information about your account is
available at our Web site and on our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
-------------------------------------
THE CURRENT ENVIRONMENT
ILLUSTRATES THE VALUE OF
PROFESSIONAL MONEY
MANAGEMENT. KNOWING WHEN
TO BUY AND SELL TAKES
EXPERTISE AND DISCIPLINE
EVEN IN THE BEST OF
MARKETS.
-------------------------------------
AIM GLOBAL HEALTH CARE FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
HEALTH-CARE STOCKS SHINE DESPITE VOLATILE MARKETS
MARKET VOLATILITY WAS QUITE PRONOUNCED DURING THE PAST YEAR. HOW DID AIM GLOBAL
HEALTH CARE FUND PERFORM?
In the wake of the resurgence of health-care stocks, AIM Global Health Care Fund
turned in an excellent performance. For the fiscal year ended October 31, 2000,
the fund posted total returns of 38.49% for Class A shares, 37.78% for Class B
shares and 37.77% for Class C shares. (These returns are at net asset value,
which does not include sales charges.) The fund far outperformed the MSCI AC
World Index, which had a total return of 0.85% for the reporting period. Net
assets in the fund jumped from $462.6 million to $617.6 million during the
fiscal year.
WHAT WERE MARKET CONDITIONS LIKE OVER THE PAST YEAR?
Markets rallied strongly during the first half of the fiscal year, but
experienced a choppy, downward trend in the second half. In late 1999 and early
2000, technology stocks led the surge, with the tech-laden Nasdaq soaring to
record levels well into March. However, investor concern about possible
overvaluations sparked a sharp tech sell-off late in the month. Investors were
also concerned that the Federal Reserve Board (the Fed) would keep raising
interest rates to slow torrid economic growth and contain inflation. The ensuing
sell-off affected nearly every stock-market sector in April and caused severe
market volatility.
Amid mounting evidence that economic growth was slowing, markets rallied in
May and June at the prospect of no more Fed rate hikes. Indeed, the Fed left
interest rates unchanged for the rest of the fiscal year. However, in late
summer and early fall, a combination of rising oil prices, unrest in the Middle
East and concern about corporate earnings created another steep market decline.
A number of major corporations reported earnings disappointments in September
and October, as rising oil prices and a weak euro negatively affected profit
margins.
Major market indexes such as the Nasdaq peaked fairly early in 2000, and as
of the close of the fiscal year they had not regained those levels. Even so,
most market indexes recorded gains for the 12-month reporting period. After tech
stocks faded, stocks in several other sectors--including health care, financial
services, energy and utilities--posted healthy gains. Mid-cap stocks
outperformed large- and small-cap stocks. And while growth stocks outperformed
value stocks during the first half of the year, value made a comeback in the
second half, leaving growth behind.
HOW DID THE MARKET ENVIRONMENT AFFECT HEALTH-CARE STOCKS?
Seen as more attractively valued and less volatile than tech stocks, health-care
stocks have benefited from investors rotating into the sector as a result of the
tech sector's drubbing. In fact, health and biotechnology mutual funds have been
the top performers for 2000 thus far, according to Lipper, Inc., an independent
mutual fund performance monitor.
In June, the publicly funded Human Genome Project and private company
Celera Genomics both finished working drafts of the human genome. Biotech
stocks, which rode the rising and falling wave of tech stocks earlier in the
year, rose sharply on the news but then retreated as future prospects for such
companies remained in question.
The presidential race spawned many proposals for reining in rising drug
prices, and drug companies--among the most profitable in the country--have been
under increasing pressure to lower costs. This pressure weighed down drug
stocks, as did the specter of expiring drug patents. Still, big pharmaceuticals
were a favorite among investors seeking stability amidst the market's
volatility, and the brouhaha over drug costs became a nonfactor as it was priced
into the market.
HOW DID YOU MANAGE THE FUND DURING THE FISCAL YEAR?
The fund's strong performance has been a function of large positions in
hospitals and services. We increased our weightings in these groups because
valuations are catching up to the solid fundamentals and improving earnings in
these areas, and we believe there is still room for growth. We also added to the
fund's generic drug
GROWTH OF NET ASSETS
================================================================================
10/31/99-10/31/00, in millions
$462.6 $617.6
10/31/99 10/31/00
================================================================================
FUND ROUTS INDEX
Total returns for the fiscal year ended 10/31/00, excluding sales charges
================================================================================
FUND CLASS A SHARES 38.49%
FUND CLASS B SHARES 37.78%
FUND CLASS C SHARES 37.77%
MSCI AC WORLD INDEX 0.85%
================================================================================
See important fund and index disclosures inside front cover.
AIM GLOBAL HEALTH CARE FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
==========================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. AmeriSource Health Corp.-Class A 10.90% 1. Health Care (Hospital Management) 35.98%
2. ICN Pharmaceuticals, Inc. 7.29 2. Health Care (Specialized Services) 12.25
3. HEALTHSOUTH Corp. 6.80 3. Distributors (Food & Health) 11.49
4. Tenet Healthcare Corp. 6.56 4. Health Care (Drugs-Generic & Other) 9.66
5. Health Management Associates, Inc.-Class A 6.09 5. Health Care (Medical Products & Services) 9.49
6. Pfizer, Inc. 5.77 6. Health Care (Drugs-Major Pharmaceuticals) 5.77
7. Varian Semiconductor Equipment Associates, Inc. 5.57 7. Equipment (Semiconductor) 5.57
8. HCA-Healthcare Company (The) 5.56 8. Biotechnology 4.69
9. Lincare Holdings Inc. 5.45 9. Electronics (Instrumentation) 1.31
10. Universal Health Services, Inc.-Class B 5.02 10. Insurance (Multi-Line) 0.39
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
==========================================================================================================================
</TABLE>
holdings because we believe that they will benefit from the trend of expiring
drug patents, which could hurt major pharmaceutical companies, in which the fund
is underweighted.
While a larger biotechnology weighting would have enhanced the fund's
performance, the fund remained underweighted in biotech due to the volatility
and lack of earnings in the group. However, we may increase our biotech
weighting in the future if more opportunities arise as companies start to
capitalize on the growing field of genomics.
WHAT WERE SOME COMPANIES YOU FAVORED?
Among hospitals, we favored HEALTHSOUTH and Tenet Healthcare. The nation's
largest provider of rehabilitative health care and outpatient surgery services,
HEALTHSOUTH's third-quarter profits rose over the previous year. Likewise, Tenet
Healthcare, the second-largest hospital chain in the country, posted a 23%
increase in its fiscal first-quarter earnings compared to the previous year.
On the services side, we liked Lincare Holdings, one of the United States'
largest providers of oxygen and other respiratory-therapy services to in-home
patients. Lincare reported a 24% increase in third-quarter earnings over the
previous year.
One of the specialty drug companies we favored was ICN Pharmaceuticals,
which reported record third-quarter revenues compared to the year before. ICN's
best-known product is Virazole, an antiviral drug used to treat everything from
chicken pox to influenza to hepatitis C.
The fund's largest holding, AmeriSource, is a wholesale distributor of
pharmaceuticals and health-care products. The company reported record fiscal
fourth-quarter earnings ahead of the same period last year. AmeriSource's stock
price increased dramatically over the past year, which is why it became such a
large holding in the portfolio.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
The economic climate appeared favorable for stocks at the close of the reporting
period despite often-extreme market volatility. The nation's unemployment rate
had fallen to its lowest level in three decades. Consumer spending, down for
much of the second half of the fiscal year, started to pick up again. And
inflation was moderate despite higher oil prices.
Some analysts believe the health-care sector stands to outperform the market
in the years ahead because of demographics, genomics research and a growing
pipeline of promising new drugs and technologies. In the short term, we think
health-care stocks will continue to enjoy good performance because the factors
that have led investors into health care--volatility in the tech sector and
uncertainty about slowing global growth and earnings shortfalls--remain.
We believe the fund is well positioned to continue taking advantage of the
solid fundamentals and improving earnings and valuations within the health-care
sector regardless of market trends.
================================================================================
READ THIS REPORT ONLINE!
Early in 2001, a new service will be available--electronic delivery of fund
reports and prospectuses. Soon, you can read the same aim report you are
reading now--online. Once you sign up for the service, we will send you a link
to the report via e-mail. If you choose to receive your reports online, you
will not receive a paper copy by mail. You may cancel the service at any time
by visiting our Web site.
Please visit our Web site at www.aimfunds.com and go to "Your AIM Account."
Log into your account and then click on the "View Other Account Options"
dropdown menu and select "eDelivery."
================================================================================
See important fund and index disclosures inside front cover.
AIM GLOBAL HEALTH CARE FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL HEALTH CARE FUND VS. BENCHMARK INDEXES
8/7/89-10/31/00
in thousands
===============================================================================
AIM Global Health Care Fund,
Class A Shares S&P 500 Index MSCI AC World Index
-------------------------------------------------------------------------------
$50,506 $54,126 $29,998
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
===============================================================================
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
This chart compares your fund's Class A shares to benchmark indexes. It is
intended to give you an idea of how your fund performed compared to these
indexes over the period 8/7/89-10/31/00. (Please note that performance results
for the indexes are for the period 7/31/89-10/31/00.)
It is important to understand the differences between your fund and an
index. An index measures the performance of a hypothetical portfolio. A market
index such as the MSCI AC World Index or the S&P 500 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.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (8/7/89) 15.51%
10 Years 16.20
5 Years 18.80
1 Year 31.89*
*38.49% excluding sales charges
CLASS B SHARES
Inception (4/1/93) 18.46%
5 Years 19.18
1 Year 32.78*
*37.78% excluding CDSC
CLASS C SHARES
Inception (3/1/99) 22.65%
1 Year 36.77*
*37.77% excluding CDSC
================================================================================
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 that
of its Class A shares due to different sales-charge structure and class
expenses. For fund performance calculations and a description of the index cited
on this page, please see the inside front cover.
AIM GLOBAL HEALTH CARE FUND
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
[ART WORK]
CHOOSE YOUR INVESTMENT PALETTE
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and to
spread their risk over several different funds, rather than painting their
portfolios all one color.
GROWTH VS. INCOME
If you look at the list of AIM's retail mutual funds on the back of your fund
report, you'll notice that they are divided into different types. Two that
frequently appear are growth and income. Common stock is normally the growth
component of a mutual fund with growth as a primary or secondary objective.
Bonds are typically the income components of a mutual fund with income as a
primary or secondary objective.
Let's take a closer look at the categories into which AIM's retail mutual
funds are divided. Keep in mind that funds listed under the same category don't
necessarily have the same kind of investment strategy or portfolio, even if they
have the same objective.
DOMESTIC MUTUAL FUNDS
GROWTH FUNDS
Growth funds typically invest in common stocks of companies whose businesses
are growing. Growth companies tend to reinvest their profits toward expansion
of their potential to produce greater returns instead of paying dividends. So
growth mutual funds focus on generating capital gains--increasing the value of
the stocks they hold--rather than current income, which means they generally
don't pay regular income dividends. Growth funds usually do, however, make one
capital-gains distribution per year, when there are gains.
An increase over time in the value of a growth fund's portfolio means the
fund's value, or share price, increases over time also. Shareholders in a growth
fund, then, make money by selling their shares for more than they paid for them.
Of course, the opposite is also true--shareholders can lose money by selling
their shares for less than they paid for them. Growth funds usually range from
moderate to very aggressive, depending on the size and types of companies in
which they invest.
GROWTH AND INCOME FUNDS
A growth and income fund generally invests in common and preferred stocks and
bonds of older, more established companies that have a longer track record of
growth and paying dividends.
A typical growth and income mutual fund will pay quarterly or annual income
dividends to its shareholders. (Monthly dividends are not common.) In this way,
growth and income funds can potentially provide long-term growth of investments
and also current income. These funds tend to be more conservative than growth
funds.
[ART WORK]
INCOME FUNDS
Income funds are generally designed to provide high current income rather than
long-term growth. To that end, income funds usually invest chiefly in
interest-paying corporate and government bonds. They may also own stocks of
companies that pay regular dividends. Some income funds are more aggressive than
others. The aggressiveness of a particular fund depends not only on the kinds
of securities in which it invests, but also on the fund's sector allocation and
maturity structure.
For example, Treasury securities are considered a relatively safe
investment because they are guaranteed by the U.S. government. However, lower
risk also
AIM GLOBAL HEALTH CARE FUND
5
<PAGE> 8
ANNUAL REPORT / FOR CONSIDERATION
means lower return potential. On the other hand, lower-rated corporate bonds,
often called junk bonds, involve more risk because they are not guaranteed--they
are only as good as the companies that issue them. But the added risk also means
higher return potential.
Income funds are considered more conservative and are suited for investors
seeking income rather than growth.
TAX-FREE INCOME OR MUNICIPAL FUNDS
These funds provide shareholders with current income that is tax-exempt at some
level, depending on the securities in which they invest. So municipal mutual
funds appeal to investors who are looking to reduce income that would otherwise
be subject to tax. Municipal bonds or notes, which are issued by state or local
governments, are generally exempt from federal taxes. Federal securities, like
Treasury bonds, are usually exempt from state taxes. And then there are some
securities that are exempt from both federal and state taxes.(1)
MONEY MARKET FUNDS
A money market fund is one of the safest types of mutual funds available because
its main goal is preserving your investment while paying current income in the
form of interest. As a result, these funds tend to appeal to investors looking
for safety, liquidity and some income from their investment. Money market funds
invest in high-quality short-term securities such as commercial paper and U.S.
government agency securities. Although money market funds are not guaranteed or
insured by the U.S. government, the securities they hold are less risky than
other types of fixed-income securities. The trade-off for safety of principal
investment is a lower rate of return.(2)
INTERNATIONAL AND GLOBAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
An international growth fund has the same objective as a domestic growth fund,
except it invests in stocks of companies located the United States. Like their
domestic counterparts, international growth funds tend to pay distributions in
the form of capital gains rather than dividends. An international growth mutual
fund might invest in a particular country, region or continent depending on the
investment strategy shown in its prospectus.
International funds carry different risks than domestic funds because most
foreign markets are not as established as the markets in the United States.
Other risks include changes in the value of the U.S. dollar compared to foreign
currencies, accounting differences, political risks and foreign regulatory
differences.
GLOBAL GROWTH, GLOBAL GROWTH AND INCOME, AND GLOBAL INCOME FUNDS
These funds are similar to their domestic equivalents in terms of their goals
and the income distributions they pay. Global funds are comparable to
international funds in that they can invest in stocks of companies outside the
United States. But global funds can also invest substantially in U.S. stocks;
international funds generally do not. The amount of a global fund's portfolio
that can be invested in the United States varies greatly from fund to fund,
according to a fund's prospectus. Global funds carry the same risks as
international funds.
SPECIALIZED FUNDS
THEME FUNDS
Theme or sector funds invest primarily in a particular industry or sector of the
economy, either domestically or globally. Theme funds are required by prospectus
to invest a certain percentage of their assets in their industry or sector of
choice under normal market conditions. As a result, theme funds present greater
risk and potential reward than more diversified funds. The types of securities
held by a theme fund determine its goal of growth and/or income.
--------------------------------------------------------------------------------
TYPES OF FUND DISTRIBUTIONS
INCOME DIVIDENDS are paid from dividends and/or interest from securities in a
fund's portfolio. For example, if a company in which a mutual fund owns stock
distributes some of its earnings to its shareholders as a dividend, the fund
passes on those earnings to its own shareholders. Income dividends are usually
taxed as ordinary income.
CAPITAL GAINS represent the net profit realized from the growth in value of the
holdings in a fund's portfolio. These distributions are usually made once per
year. There are two types of capital gains:
o Short-term capital gains are paid from net profits gained when a mutual
fund sells stocks or bonds it has held for less than a year. Short-term
capital gains are taxed as ordinary income.
o Long-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for more than a year. Long-term capital
gains are usually taxed at the capital-gains rate, which is typically lower
than ordinary income-tax rates.
--------------------------------------------------------------------------------
(1) Investors in tax-free income funds still have a risk of incurring taxes on
capital-gains distributions, for example, so it's wise to see your tax advisor
before investing in such funds.
(2) There is no guarantee that a money market fund will be able to maintain a
stable net asset value of $1.00 per share.
See the back cover for a complete list of AIM's retail mutual funds. For more
information about your fund's objective, read your fund prospectus. 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.
AIM GLOBAL HEALTH CARE FUND
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-94.23%
BIOTECHNOLOGY-4.69%
Amgen Inc.(a) 500,000 $ 28,968,750
==============================================================
DISTRIBUTORS (FOOD & HEALTH)-11.49%
AmeriSource Health Corp.-Class A(a) 1,550,000 67,328,125
--------------------------------------------------------------
Owens & Minor, Inc. Holding Co. 240,000 3,630,000
==============================================================
70,958,125
==============================================================
ELECTRONICS (INSTRUMENTATION)-1.31%
Varian Inc.(a) 263,000 8,103,687
==============================================================
EQUIPMENT (SEMICONDUCTOR)-5.57%
Varian Semiconductor Equipment
Associates, Inc.(a) 1,495,000 34,385,000
==============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-7.29%
ICN Pharmaceuticals, Inc. 1,183,000 45,027,937
==============================================================
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-5.77%
Pfizer Inc. 825,000 35,629,687
==============================================================
HEALTH CARE (HOSPITAL MANAGEMENT)-35.98%
Community Health Systems(a) 625,000 17,617,188
--------------------------------------------------------------
HCA-Healthcare Corp. (The) 860,000 34,346,250
--------------------------------------------------------------
Health Management Associates,
Inc.-Class A(a) 1,900,000 37,643,750
--------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 90,000 3,487,500
--------------------------------------------------------------
Province Healthcare Co.(a) 280,000 11,795,000
--------------------------------------------------------------
Quorum Health Group, Inc.(a) 2,232,000 29,853,000
--------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,030,000 40,491,875
--------------------------------------------------------------
Triad Hospitals, Inc.(a) 575,000 15,956,250
--------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 370,000 31,033,750
==============================================================
222,224,563
==============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-9.49%
INAMED Corp.(a) 750,000 21,000,000
--------------------------------------------------------------
Sunrise Medical, Inc.(a) 25,000 232,813
--------------------------------------------------------------
Syncor International Corp.(a) 1,150,000 29,540,625
--------------------------------------------------------------
Varian Medical Systems, Inc.(a) 160,000 7,820,000
==============================================================
58,593,438
==============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-12.25%
HEALTHSOUTH Corp.(a) 3,500,000 42,000,000
--------------------------------------------------------------
Lincare Holdings, Inc.(a) 800,000 33,650,000
==============================================================
75,650,000
==============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE)-0.39%
CIGNA Corp. 20,000 $ 2,439,000
==============================================================
Total Domestic Common Stocks
(Cost $406,492,847) 581,980,187
==============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-2.37%
HEALTH CARE (DRUGS-GENERIC & OTHER)
FRANCE-0.03%
Sanofi-Synthelabo S.A. 3,000 157,849
==============================================================
GERMANY-0.49%
Altana A.G. 25,000 3,033,924
==============================================================
ISRAEL-1.72%
Teva Pharmaceutical Industries
Ltd.-ADR 180,000 10,642,500
==============================================================
JAPAN-0.13%
Banyu Pharmaceutical Co., Ltd. 3,000 64,336
--------------------------------------------------------------
Chugai Pharmaceutical Co., Ltd. 4,000 67,892
--------------------------------------------------------------
Daiichi Pharmaceutical Co., Ltd. 3,000 85,231
--------------------------------------------------------------
Eisai Co., Ltd. 5,000 153,966
--------------------------------------------------------------
Kissei Pharmaceutical Co., Ltd. 2,000 36,640
--------------------------------------------------------------
Kyowa Hakko Kogyo Co., Ltd. 5,000 40,003
--------------------------------------------------------------
Rohto Pharmaceutical Co., Ltd. 8,000 107,043
--------------------------------------------------------------
Shionogi & Co., Ltd. 3,000 58,562
--------------------------------------------------------------
Taisho Pharmaceutical Co., Ltd. 2,000 57,554
--------------------------------------------------------------
Takeda Chemical Industries Ltd. 1,000 65,894
--------------------------------------------------------------
Yamanouchi Pharmaceutical Co., Ltd. 2,000 90,547
==============================================================
827,668
==============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$6,716,874) 14,661,941
==============================================================
MONEY MARKET FUNDS-3.23%
STIC Liquid Assets Portfolio(b) 9,969,269 9,969,269
--------------------------------------------------------------
STIC Prime Portfolio(b) 9,969,269 9,969,269
==============================================================
Total Money Market Funds
(Cost $19,938,538) 19,938,538
==============================================================
TOTAL INVESTMENTS-99.83%
(Cost $433,148,259) 616,580,666
==============================================================
OTHER ASSETS LESS LIABILITIES-0.17% 1,064,439
==============================================================
NET ASSETS-100.00% $617,645,105
______________________________________________________________
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$433,148,259) $616,580,666
------------------------------------------------------------
Receivables for:
Investments sold 3,871,774
------------------------------------------------------------
Fund shares sold 5,674,309
------------------------------------------------------------
Dividends 237,527
------------------------------------------------------------
Other assets 19,660
============================================================
Total assets 626,383,936
============================================================
LIABILITIES:
Payables for:
Investments purchased 6,813,688
------------------------------------------------------------
Fund shares reacquired 806,710
------------------------------------------------------------
Accrued advisory fees 506,704
------------------------------------------------------------
Accrued administrative services fees 10,723
------------------------------------------------------------
Accrued distribution fees 383,300
------------------------------------------------------------
Accrued trustees' fees 1,050
------------------------------------------------------------
Accrued transfer agent fees 108,916
------------------------------------------------------------
Accrued operating expenses 107,740
============================================================
Total liabilities 8,738,831
============================================================
Net assets applicable to shares outstanding $617,645,105
____________________________________________________________
============================================================
NET ASSETS:
Class A $460,444,944
____________________________________________________________
============================================================
Class B $144,861,414
____________________________________________________________
============================================================
Class C $ 12,338,747
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 15,286,551
____________________________________________________________
============================================================
Class B 5,078,111
____________________________________________________________
============================================================
Class C 432,454
____________________________________________________________
============================================================
Class A :
Net asset value and redemption price per
share $ 30.12
------------------------------------------------------------
Offering price per share:
(Net asset value of $30.12 divided
by 95.25%) $ 31.62
____________________________________________________________
============================================================
Class B :
Net asset value and offering price per share $ 28.53
____________________________________________________________
============================================================
Class C :
Net asset value and offering price per share $ 28.53
____________________________________________________________
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$17,713) $ 2,451,685
------------------------------------------------------------
Dividends from affiliated money market funds 1,989,453
------------------------------------------------------------
Interest 2,131
------------------------------------------------------------
Security lending income 31,096
============================================================
Total investment income 4,474,365
============================================================
EXPENSES:
Advisory fees 4,963,633
------------------------------------------------------------
Administrative services fees 117,295
------------------------------------------------------------
Custodian fees 69,740
------------------------------------------------------------
Distribution fees -- Class A 1,943,859
------------------------------------------------------------
Distribution fees -- Class B 1,142,815
------------------------------------------------------------
Distribution fees -- Class C 60,160
------------------------------------------------------------
Transfer agent fees 954,967
------------------------------------------------------------
Trustees' fees 18,474
------------------------------------------------------------
Other 157,242
============================================================
Total expenses 9,428,185
============================================================
Less: Expenses paid indirectly (6,784)
------------------------------------------------------------
Net expenses 9,421,401
============================================================
Net investment income (loss) (4,947,036)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 78,710,304
------------------------------------------------------------
Foreign currencies (757,392)
------------------------------------------------------------
Option contracts written 293,495
============================================================
78,246,407
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 93,768,872
------------------------------------------------------------
Foreign currencies (3,563)
------------------------------------------------------------
Option contracts written (870,781)
============================================================
92,894,528
============================================================
Net gain from investment securities, foreign
currencies and option contracts 171,140,935
============================================================
Net increase in net assets resulting from
operations $166,193,899
____________________________________________________________
============================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (4,947,036) $ (4,551,421)
------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 78,246,407 44,733,785
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option contracts 92,894,528 45,885,756
==========================================================================================
Net increase in net assets resulting from operations 166,193,899 86,068,120
==========================================================================================
Distributions to shareholders from net realized gains:
Class A (33,324,503) --
------------------------------------------------------------------------------------------
Class B (9,919,856) --
------------------------------------------------------------------------------------------
Class C (162,378) --
------------------------------------------------------------------------------------------
Advisor Class* (84,346) --
------------------------------------------------------------------------------------------
Share transactions-net:
Class A 9,141,881 (66,396,665)
------------------------------------------------------------------------------------------
Class B 14,704,535 (15,601,954)
------------------------------------------------------------------------------------------
Class C 9,136,876 1,345,583
------------------------------------------------------------------------------------------
Advisor Class* (710,294) (6,483,138)
==========================================================================================
Net increase (decrease) in net assets 154,975,814 (1,068,054)
==========================================================================================
NET ASSETS:
Beginning of year 462,669,291 463,737,345
==========================================================================================
End of year $617,645,105 $462,669,291
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $364,662,375 $329,089,377
------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 69,554,552 43,046,264
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 183,428,178 90,533,650
==========================================================================================
$617,645,105 $462,669,291
__________________________________________________________________________________________
==========================================================================================
</TABLE>
* Advisor Class shares were converted to Class A shares effective as of the
close of business on February 11, 2000.
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Health Care Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of nine
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares were sold
without a sales charge. Matters affecting each portfolio or class will be voted
on exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 option contracts generally will be
valued 15 minutes after the close of the customary trading session 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 customary
trading session 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 and Investment Income -- 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On October 31, 2000, undistributed net investment income was increased by
$4,947,036, undistributed net realized gains decreased by $8,247,036 and paid
in capital increased by $3,300,000 as a result of book/tax differences due to
utilization of a portion of the proceeds from redemptions as distributions
for federal income tax purposes, foreign currency transactions, net operating
loss and other reclassifications. Net assets of the Fund were unaffected by
the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. 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.
E. 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
10
<PAGE> 13
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 the 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.
F. 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.
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2000, AIM was
paid $117,295 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, 2000, AFS was
paid $592,507 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 and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund ,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $1,943,859,
$1,142,815 and $60,160, respectively, as compensation under the Plans.
AIM Distributors received commissions of $97,946 from sales of the Class A
shares of the Fund during the year ended October 31,
11
<PAGE> 14
2000. 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, 2000, AIM Distributors received $3,020 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
For the year ended October 31, 2000, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $6,784 under expense an offset
arrangement which resulted in a reduction of the Fund's total expenses of
$6,784.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A.. 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, 2000, 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.
NOTE 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities.
At October 31, 2000, there were no securities on loan to brokers. For the year
ended October 31, 2000, the Fund received fees of $31,096 for securities
lending.
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, 2000 was
$1,164,844,307 and $1,170,212,123, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $192,344,728
---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (8,920,735)
=========================================================
Net unrealized appreciation of investment
securities $183,423,993
_________________________________________________________
=========================================================
Cost of investments for tax purposes is
$433,156,673.
</TABLE>
12
<PAGE> 15
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2000 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------- -------------
<S> <C> <C>
Beginning of year 19,050 $ 7,216,093
--------------------------------------------------------------------------------------------
Written 63,070 28,566,772
--------------------------------------------------------------------------------------------
Closed (61,964) (26,521,246)
--------------------------------------------------------------------------------------------
Exercised (7,270) (6,107,642)
--------------------------------------------------------------------------------------------
Expired (12,886) (3,153,977)
============================================================================================
End of year -- $ --
____________________________________________________________________________________________
============================================================================================
</TABLE>
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999
were as follows:
<TABLE>
<CAPTION>
2000 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 2,265,037 $ 61,242,852 6,319,231 $ 143,915,406
------------------------------------------------------------------------------------------------------------------------
Class B 1,557,713 38,869,448 691,366 16,088,681
------------------------------------------------------------------------------------------------------------------------
Class C* 775,066 19,232,447 58,588 1,413,024
------------------------------------------------------------------------------------------------------------------------
Advisor Class** 12,143 310,037 18,009 438,450
------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,402,570 30,940,689 -- --
------------------------------------------------------------------------------------------------------------------------
Class B 437,951 9,188,203 -- --
------------------------------------------------------------------------------------------------------------------------
Class C* 6,991 146,741 -- --
------------------------------------------------------------------------------------------------------------------------
Advisor Class** 3,706 84,344 -- --
------------------------------------------------------------------------------------------------------------------------
Conversion of Advisor Class shares to Class A shares***:
Class A 44,266 1,041,571 --
------------------------------------------------------------------------------------------------------------------------
Advisor Class** (42,881) (1,041,571) -- --
------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (3,330,391) (84,083,231) (9,158,822) (210,312,070)
------------------------------------------------------------------------------------------------------------------------
Class B (1,400,658) (33,353,116) (1,386,892) (31,690,636)
------------------------------------------------------------------------------------------------------------------------
Class C* (405,278) (10,242,312) (2,913) (67,441)
------------------------------------------------------------------------------------------------------------------------
Advisor Class** (2,513) (63,104) (274,593) (6,921,588)
========================================================================================================================
1,323,722 $ 32,272,998 (3,736,026) $ (87,136,174)
________________________________________________________________________________________________________________________
========================================================================================================================
</TABLE>
* Class C shares commenced sales on March 1, 1999.
** Advisor Class share activity for the period November 1, 1999 through
February 11, 2000.
*** Effective as of the close of business February 11, 2000, pursuant to
approval by the Board of Trustees on November 3, 1999, all outstanding
shares of Advisor Class shares were converted to Class A shares of the fund.
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 24.00 $ 20.15 $ 27.98 $ 23.60 $ 21.84
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.22) (0.19) (0.21) (0.25) (0.17)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.62 4.04 (0.91) 6.48 4.79
======================================================================================================================
Total from investment operations 8.40 3.85 (1.12) 6.23 4.62
======================================================================================================================
Less distributions:
Distributions from net realized gains (2.28) -- (6.70) (1.85) (2.86)
----------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- (0.01) -- --
======================================================================================================================
Total distributions (2.28) -- (6.71) (1.85) (2.86)
======================================================================================================================
Net asset value, end of period $ 30.12 $ 24.00 $ 20.15 $ 27.98 $ 23.60
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) 38.49% 19.11% (4.71)% 28.36% 23.14%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $460,445 $357,747 $357,534 $472,083 $467,861
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.73%(c) 1.82% 1.84% 1.80% 1.84%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.85)%(c) (0.81)% (0.98)% (1.03)% (0.75)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 242% 123% 187% 149% 157%
______________________________________________________________________________________________________________________
======================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include sales charge.
(c) Ratios are based on average daily net assets of $388,771,812.
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 22.96 $ 19.37 $ 27.27 $ 23.15 $ 21.56
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34) (0.30) (0.30) (0.37) (0.27)
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.19 3.89 (0.89) 6.34 4.72
=======================================================================================================================
Total from investment operations 7.85 3.59 (1.19) 5.97 4.45
=======================================================================================================================
Less distributions:
Distributions from net realized gains (2.28) -- (6.70) (1.85) (2.86)
-----------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- (0.01) -- --
=======================================================================================================================
Total distributions (2.28) -- (6.71) (1.85) (2.86)
=======================================================================================================================
Net asset value, end of period $ 28.53 $ 22.96 $ 19.37 $ 27.27 $ 23.15
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) 37.78% 18.53% (5.20)% 27.75% 22.59%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $144,861 $102,916 $100,311 $147,440 $107,622
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.33% 2.34% 2.30% 2.34%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of net investment income (loss) to average net assets (1.35)%(c) (1.32)% (1.48)% (1.53)% (1.25)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 242% 123% 187% 149% 157%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $114,281,453.
14
<PAGE> 17
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 22.96 $22.50
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34) (0.21)
---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.19 0.67
=============================================================================================
Total from investment operations 7.85 0.46
=============================================================================================
Less distributions from net realized gains (2.28) --
=============================================================================================
Net asset value, end of period $ 28.53 $22.96
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 37.77% 2.04%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,339 $1,278
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.33%(d)
_____________________________________________________________________________________________
=============================================================================================
Ratio of net investment income (loss) to average net assets (1.35)%(c) (1.32)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 242% 123%
_____________________________________________________________________________________________
=============================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $6,015,947.
(d) Annualized.
15
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Health Care Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Global Health Care Fund at October 31, 2000, and the
results of its operations, the changes in its net assets
and the financial highlights for the periods indicated in
conformity with accounting principles generally accepted
in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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, 2000 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 18, 2000
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
Senior Managing Partner, Chairman and President Suite 100
Plantagenet Capital Houston, TX 77046
Management, LLC (an investment Dana R. Sutton
partnership); Chief Executive Officer, Vice President and Treasurer INVESTMENT MANAGER
Plantagenet Holdings, Ltd.
(an investment banking firm) Melville B. Cox A I M Advisors, Inc.
Vice President 11 Greenway Plaza
Frank S. Bayley Suite 100
Partner, law firm of Gary T. Crum Houston, TX 77046
Baker & McKenzie Vice President
TRANSFER AGENT
Robert H. Graham Carol F. Relihan
President and Chief Executive Officer, Vice President and Secretary A I M Fund Services, Inc.
A I M Management Group Inc. P.O. Box 4739
Mary J. Benson Houston, TX 77210-4739
Ruth H. Quigley Assistant Vice President and
Private Investor Assistant Treasurer CUSTODIAN
Sheri Morris State Street Bank and Trust Company
Assistant Vice President and 225 Franklin Street
Assistant Treasurer Boston, MA 02110
Nancy L. Martin COUNSEL TO THE FUND
Assistant Secretary
Kirkpatrick & Lockhart LLP
Ofelia M. Mayo 1800 Massachusetts Avenue, N.W.
Assistant Secretary Washington, D.C. 20036-1800
Kathleen J. Pflueger COUNSEL TO THE TRUSTEES
Assistant Secretary
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 Street
Boston, MA 02110
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended
October 31, 2000, 0% is eligible for the dividends received deduction for
corporations. The Fund distributed long-term capital gains of $46,791,083 for
the Fund's tax year ended October 31, 2000 of which 100% is 20% rate gain.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<CAPTION>
EQUITY FUNDS
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS
<S> <C> <C>
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Small Cap Opportunities(1) AIM Latin American Growth A I M Management Group Inc. has
AIM Mid Cap Opportunities(2) AIM Developing Markets provided leadership in the mutual
AIM Large Cap Opportunities(3) AIM European Small Company fund industry since 1976 and
AIM Emerging Growth AIM Asian Growth managed approximately $183 billion
AIM Small Cap Growth(4) AIM Japan Growth in assets for more than eight
AIM Aggressive Growth AIM International Emerging Growth million shareholders, including
AIM Mid Cap Growth AIM European Development individual investors, corporate
AIM Small Cap Equity AIM Euroland Growth clients and financial
AIM Capital Development AIM Global Aggressive Growth institutions, as of September
AIM Constellation AIM International Equity 30, 2000.
AIM Dent Demographic Trends AIM Advisor International Value The AIM Family of
AIM Select Growth AIM Global Trends Funds--Registered Trademark--
AIM Large Cap Growth AIM Global Growth is distributed nationwide, and
AIM Weingarten AIM today is the eighth-largest
AIM Mid Cap Equity MORE CONSERVATIVE mutual fund complex in the
AIM Value II United States in assets under
AIM Charter SECTOR EQUITY FUNDS management, according to Strategic
AIM Value Insight, an independent mutual
AIM Blue Chip MORE AGGRESSIVE fund monitor.
AIM Basic Value AIM is a subsidiary of
AIM Large Cap Basic Value AIM New Technology AMVESCAP PLC, one of the world's
AIM Balanced AIM Global Telecommunications and Technology largest independent financial
AIM Advisor Flex AIM Global Resources services companies with $414
AIM Global Financial Services billion in assets under
MORE CONSERVATIVE AIM Global Health Care management as of September
AIM Global Consumer Products and Services 30, 2000.
AIM Global Infrastructure
AIM Advisor Real Estate
AIM Global Utilities
MORE CONSERVATIVE
FIXED-INCOME FUNDS
TAXABLE FIXED-INCOME FUNDS TAX-FREE FIXED-INCOME FUNDS
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Strategic Income AIM High Income Municipal
AIM High Yield II AIM Tax-Exempt Bond of Connecticut
AIM High Yield AIM Municipal Bond
AIM Income AIM Tax-Free Intermediate
AIM Global Income AIM Tax-Exempt Cash
AIM Floating Rate(5)
AIM Intermediate Government MORE CONSERVATIVE
AIM Limited Maturity Treasury
AIM Money Market
MORE CONSERVATIVE
</TABLE>
The AIM Risk Spectrum illustrates equity and fixed-income funds from more
aggressive to more conservative. When assessing the degree of risk, three
factors were considered: the funds' portfolio holdings, volatility patterns over
time and diversification permitted within the fund. Fund rankings are relative
to one another within The AIM Family of Funds--Registered Trademark-- and
should not be compared with other investments. There is no guarantee that any
one AIM fund will be less volatile than any other. (1) AIM Small Cap
Opportunities Fund closed to new investors Nov. 4, 1999. (2) AIM Mid Cap
Opportunities Fund closed to new investors March 21, 2000. (3) AIM Large Cap
Opportunities Fund closed to new investors Sept. 29, 2000. (4) AIM Small Cap
Growth Fund closed to new investors Nov. 8, 1999. (5) AIM Floating Rate Fund was
restructured to offer multiple share classes April 3, 2000. Existing shares were
converted to Class B shares, and Class C shares commenced offering.
FOR MORE COMPLETE INFORMATION ABOUT ANY AIM FUND, INCLUDING SALES CHARGES
AND EXPENSES, OBTAIN THE APPROPRIATE PROSPECTUS(ES) FROM YOUR FINANCIAL ADVISOR.
PLEASE READ THE PROSPECTUS(ES) CAREFULLY BEFORE YOU INVEST OR SEND MONEY. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective fund prospectus. If used as
sales material after Jan. 20, 2001, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
[DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE]
--Registered Trademark--
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. GHC-AR-1
