<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM DEVELOPING MARKETS FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
-------------------------------------
MURAL FROM THE TEMPLE OF LONGING BY PAUL KLEE
PAUL KLEE'S ART WAS TRANSFORMED BY A TRIP HE TOOK TO TUNISIA
IN 1914, WHERE HE WAS AWED BY THE LANDSCAPE'S BEAUTIFULLY
INTENSE COLOR AND LIGHT. KLEE BROUGHT THESE QUALITIES TO HIS
OWN WORK, CREATING IMAGINATIVE, LIGHT-FILLED PAINTINGS LIKE THE
ONE ON THE COVER. RADIATING OPTIMISM AND ENERGY, KLEE'S MURAL
IS A FITTING EMBLEM FOR THE DYNAMIC GROWTH PUSHING TODAY'S
EMERGING MARKETS INTO THE 21ST CENTURY.
-------------------------------------
AIM Developing Markets Fund is for shareholders who seek long-term growth of
capital and secondarily seek income. The fund primarily invests in
developing-market equity securities, but may also invest in developing-market
debt securities.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Developing Markets Fund's performance figures are historical, and they
reflect the reinvestment of 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 A, B and C shares will differ due to
different sales-charge structures and class expenses.
o The fund's average annual total returns (including sales charges) for the
periods ended 9/30/00 (the most recent calendar quarter-end) are as follows.
Class A shares, one year, -4.28%; five years, -2.46%; inception (1/11/94),
-4.44%. Class B shares, one year, -5.20%; inception (11/3/97), -9.66%. Class
C shares, one year, -1.21%; inception (3/1/99), 15.70%.
o During the fiscal year ended 10/31/00, the fund paid distributions of
$0.0395 per Class A share.
o Government securities (such as U.S. Treasury bills, notes and bonds) offer a
high degree of safety, and they guarantee 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 information required to
be provided by non-U.S. companies.
o The fund invests in higher-yielding, lower-rated corporate bonds, commonly
known as junk bonds, which have a greater risk of price fluctuation and loss
of principal and income than do U.S. government securities (such as U.S.
Treasury bills and bonds, the repayment of principal and interest of which
is guaranteed by the government if held to maturity).
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 Emerging Markets Free Index is a group of securities from
emerging markets tracked by Morgan Stanley Capital International. A "free"
index includes only securities available to non-domestic investors.
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 NEITHER
GUARANTEED NOR INSURED 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 shareholders or to persons
who have received a current prospectus of the fund.
AIM DEVELOPING MARKETS FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
It's an honor to address you as the AIM Funds' new chairman.
[PHOTO OF I feel privileged to succeed Ted Bauer, who recently retired
Robert H. from the funds' board and will soon retire as A I M
Graham, Management Group's chairman after a long, successful career
Chairman of in the investment industry. Ted has always shown the highest
the Board of degree of integrity and commitment to excellence, and I have
THE FUND always admired him. I'm also proud to be part of the team
APPEARS HERE] 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 DEVELOPING MARKETS FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
GLOBAL ECONOMIC SLOWDOWN HAMPERS AIM DEVELOPING MARKETS FUND
WHAT RESULTS DID THE FUND SEE THIS YEAR?
After last year's stellar returns, the fund faced slowing economic conditions
worldwide during the latter half of the fiscal year ended October 31, 2000. The
fund continued to make gains during the more exuberant market of late 1999 and
early 2000, but its performance was affected by the sell-off in the technology
sector and other market difficulties in the following months. Several major
market indexes peaked fairly early in 2000 and had not regained those levels by
the close of the fiscal year.
Excluding sales charges, the fund's total returns were -9.52% for Class A
shares and -10.21% for Class B and Class C shares. A positive contribution to
this result was made by an infusion of fixed-income investments at the end of
June. At that time, AIM Emerging Markets Debt Fund was merged into AIM
Developing Markets Fund, significantly buoying the fund's performance.
Emerging-markets bonds were one of the best-performing asset classes during the
third quarter of 2000.
The fund's benchmark index, the MSCI EMF, returned -8.81% for the period
covered by this report.
WHAT GENERAL TRENDS SHAPED DEVELOPING MARKETS DURING THE FISCAL YEAR?
Developing markets have suffered from high oil prices and the severe worldwide
correction in technology stocks. In most cases, economies that depend heavily on
international trade (such as South Korea, Taiwan and Hong Kong) have been more
heavily affected than economies whose growth has been dependent primarily on
internal factors (such as Russia and Turkey). However, even in the more
vulnerable countries, some industries offered excellent opportunities.
WHAT HAS BEEN GOING ON IN ASIAN MARKETS?
Asia continues to rebound from its economic crisis of 1997-98. Growth rates have
normalized, inflation is tame and currencies are relatively stable. Export
growth remains strong, even though it has slackened some due to the slowing pace
of economic growth worldwide.
Hong Kong is troubled by deflation--falling prices. However, interest rates
are now holding steady, unemployment is down and exports have been rising
vigorously. During the first quarter of 2000, the Gross Domestic Product (GDP)
was up more than 14% from a year earlier.
During India's 1999-2000 fiscal year (April-March), industry expanded by
8%--double the previous year's growth. The administration is again trying to
implement the government's privatization program, but is still meeting stiff
resistance from powerful organized labor.
South Korea's economy grew 10.7% last year--the fastest growth in Asia--and
is expected to expand at least 8% this year. In the first 10 months of 2000, the
country accumulated a trade surplus of $9.8 billion. But the cooling of global
demand for memory chips, computers and mobile phones could slow Korea's export
growth significantly next year, and we will watch developments closely.
HOW HAVE EVENTS SHAPED UP IN EUROPE AND THE MIDDLE EAST?
In the first ten months of 2000, Russia's GDP grew 6.5%, industrial production
increased 9.5% and capital investment rose 17.5%, but the inflation rate (near
35%) is of major concern. Company profits are up sharply. Russian oil production
has generated high profits on oil exports as well as a production-cost advantage
to makers of other goods.
In Turkey, privatization continues under the highly successful three-year
economic restructuring program, begun in 1998. At the December 1999 Helsinki
Summit, the European Union (the EU) declared Turkey an official candidate for
full EU member-
-------------------------------------
WE HAVE INCREASED HOLDINGS IN MARKET
SEGMENTS AND GEOGRAPHIC AREAS THAT
ARE DOING WELL, SUCH AS CELLULAR-
PHONE FIRMS IN KOREA AND BRAZIL.
-------------------------------------
[ART WORK]
-------------------------------------
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 "e-Delivery."
-------------------------------------
See important fund and index disclosures inside front cover.
AIM DEVELOPING MARKETS FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
ship, presenting encouraging prospects for future trade expansion.
WHAT HAS BEEN HAPPENING IN LATIN AMERICA?
Brazil's economy has made a remarkable recovery since narrowly avoiding
recession in 1999. In the first half of 2000, the economy grew 3.8%, enabling
the central bank to reduce interest rates three times. The current 16.5% rate is
the lowest in six years, and inflation is down to 4.3%. Internet growth is
running over 50% annually. Especially notable is the sudden popularity and rapid
growth of the cellular-telephone industry in Brazil.
The biggest story for Mexico's economy this year occurred in March, when
rating agency Moody's reclassified the country's sovereign government debt to
investment-grade. Through August, real GDP had grown about 7.7%. There is some
concern that the rapid growth may spur inflation enough to require raising the
interest rate, which stood at 15.1% at the end of August.
HOW HAS THE PORTFOLIO BEEN ADJUSTED TO TAKE ADVANTAGE OF THE YEAR'S CHANGES?
We have increased holdings in market segments and geographic areas that are
doing well, such as cellular-phone firms in Korea and Brazil. In line with
slackening global demand for electronics hardware and semiconductors, we shifted
away from those stocks. We eliminated the Philippines from the portfolio because
of political and currency concerns, removed several Korean and Taiwanese
electronics stocks and sold some Malaysian stocks to take profits. A blue-chip
Singaporean bank, UOB, was added to the portfolio. We increased exposure to
Turkish and Russian equities, which have been doing especially well.
WHAT WERE SOME OF THE STOCKS IN THE PORTFOLIO?
Mobile TeleSystems is one of the leading providers of mobile cellular
communications services in Moscow. The Singapore-based United Overseas Bank
Group operates banking institutions in nearly 20 countries including China,
where the banking business is just beginning to move into the world economy.
Also interesting is Telefonos de Mexico (Telmex), the regional market leader in
local and long-distance wire service, wireless communications, Internet access
and networking. It announced in September a plan to spin off its cellular
business to form America Movil, freeing Telmex to focus on its Internet
strategy.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We continue to be cautiously optimistic about the prospects in emerging
economies. There is still a brisk demand for their goods among the more
developed nations. The global economy continues to expand, even though the pace
of growth has moderated. Several developing nations have achieved a level of
economic restructuring in the past two to three years that makes their stocks
more attractive now. However, we expect volatility to remain a factor in
emerging markets due to their sensitivity to political and economic events.
[ART WORK]
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
===================================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. India Technology (India) 3.18% 1. Telecommunications 1. Brazil 12.86%
2. Korea Telecom Corp.-- (Cellular/Wireless) 12.55% 2. Russia 12.76
ADR (South Korea) 3.07 2. Telephone 11.45 3. Taiwan 11.19
3. Mobile TeleSystems-- 3. Banks (Major Regional) 6.98 4. South Korea 10.77
ADR (Russia) 2.78 4. Banks (Regional) 5.50 5. Mexico 9.22
4. Telefonos de Mexico, S.A. 5. Electronics (Component 6. Hong Kong 8.90
de C.V.--ADR (Mexico) 2.70 Distributors) 5.02 7. India 5.95
5. Fomento Economico Mexicano, 6. Electronics (Semiconductors) 4.94 8. Turkey 5.74
S.A. de C.V.--ADR (Mexico) 2.45 7. Computers (Software 9. South Africa 5.62
6. United Overseas Bank Ltd. & Services) 4.21 10. Israel 3.51
--For (Singapore) 2.28 8. Financial (Diversified) 3.23
7. China Unicom Ltd. (China) 2.20 9. Entertainment 2.89
8. Taiwan Semiconductor 10. Beverages (Alcoholic) 2.88
Manufacturing Co. Ltd.--ADR (Taiwan) 2.11
9. Grupo Televisa S.A.--ADR (Mexico) 2.01
10. Hong Kong Exch & Clear (Hong Kong) 2.00
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
===================================================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM DEVELOPING MARKETS FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM DEVELOPING MARKETS FUND VS. BENCHMARK INDEX
1/11/94-10/31/00
in thousands
================================================================================
Date AIM Developing Markets Fund, MSCI Emerging Markets Free Index
Class A Shares
--------------------------------------------------------------------------------
1/11/94 9524 10182.1
10/94 9194 10630.6
10/95 7664 8565.29
10/96 9581 9120.75
10/97 9092 8347.06
10/98 5720 5760.57
10/99 7614 8331.24
10/00 6889 7597.46
$6,889 $ 7,597
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 a benchmark index. It is
intended to give you an idea of how your fund performed compared to that index
over the period 1/11/94-10/31/00. (Please note that the data for the MSCI
Emerging Markets Free Index are for the period 12/31/93-10/31/00.) 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 Emerging Markets Free Index is not managed, incurring no sales charges,
expenses or fees. If you could buy all the securities that make up a market
index, you would incur expenses that would affect the return on your investment.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (1/11/94) -5.33%
5 years -3.06
1 year -13.80*
*-9.52% excluding sales charges
CLASS B SHARES
Inception (11/3/97) -11.47%
1 year -14.70*
*-10.21% excluding CDSC
CLASS C SHARES
Inception (3/1/99) 10.24%
1 year -11.11*
*-10.21% 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 DEVELOPING MARKETS FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-81.62%
BRAZIL-7.32%
Brasil Telecom Participacoes
S.A.-Pfd. (Telephone) 133,600,000 $ 1,446,196
--------------------------------------------------------------
Embratel Participacoes S.A.-Pfd.
(Telephone) 175,867,000 2,821,056
--------------------------------------------------------------
Itausa-Investimentos Itau
S.A.-Pfd. (Investment
Management) 1,882,400 1,587,151
--------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras-Pfd. (Oil &
Gas-Exploration & Production) 109,200 2,894,266
--------------------------------------------------------------
Tele Centro Oeste Celular
Participacoes S.A.-Pfd.
(Telecommunications-
Cellular/Wireless)(a) 282,121,000 952,962
--------------------------------------------------------------
Tele Norte Leste Participacoes
S.A.-ADR (Telephone) 120,000 2,655,000
--------------------------------------------------------------
Telesp Celular Participacoes
S.A.-Pfd.
(Telecommunications-
Cellular/Wireless)(a) 1,000 7
--------------------------------------------------------------
Telesp Participacoes S.A.
(Telephone) 1,000 5
--------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros S.A.-GDR
(Banks-Regional) 103,416 2,611,254
--------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros S.A.-Units
(Banks-Regional)(b) 19,000,000 960,223
==============================================================
15,928,120
==============================================================
CHILE-0.43%
Compania Cervecerias Unidas
S.A.-ADR (Beverages-Alcoholic) 48,364 934,030
==============================================================
CHINA-2.19%
China Unicom Ltd.
(Telecommunications-
Cellular/Wireless)(a) 2,378,000 4,771,855
==============================================================
GREECE-1.89%
Alpha Credit Bank (Banks-Regional) 42,900 1,584,204
--------------------------------------------------------------
Hellenic Telecommunication
Organization S.A.
(Telecommunication-Cellular/Wireless) 68,300 1,191,974
--------------------------------------------------------------
National Bank of Greece S.A.
(Banks-Money Center) 34,800 1,324,215
==============================================================
4,100,393
==============================================================
HONG KONG-8.90%
China Everbright Ltd. (Land
Development)(a) 2,490,000 2,218,938
--------------------------------------------------------------
China Mobile Ltd.
(Telecommunications-
Cellular/Wireless)(a) 886,000 5,679,699
--------------------------------------------------------------
Chinadotcom Corp.-Class A
(Computers-Software &
Services)(a) 144,467 1,462,728
--------------------------------------------------------------
Denway Motors Ltd. (Auto Parts &
Equipment)(a) 8,460,000 1,366,791
--------------------------------------------------------------
Hang Lung Development Co. Ltd.
(Land Development) 3,000,000 2,692,653
--------------------------------------------------------------
Hong Kong Exchanges & Clearing
Ltd. (Financial-Diversified) 2,494,000 4,349,070
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HONG KONG-(CONTINUED)
New World Infrastructure Ltd.
(Services-Commercial &
Consumer)(a) 1,750,000 $ 1,593,153
==============================================================
19,363,032
==============================================================
HUNGARY-0.83%
Magyar Tavkozlesi Rt-ADR
(Telecommunications-Long
Distance) 75,800 1,781,300
--------------------------------------------------------------
Pannonplast Rt. (Building
Materials) 2,270 32,461
--------------------------------------------------------------
Technoimpex (Services-Commercial &
Consumer)(a)(c) 1,400 0
==============================================================
1,813,761
==============================================================
INDIA-5.95%
Associated Cement Co. Ltd.
(Construction-Cement &
Aggregates)(c) 50 100
--------------------------------------------------------------
BSES Ltd. (Electric Companies) 100 378
--------------------------------------------------------------
Cinevista Communications
(Telecommunications-Long
Distance)(a) 3,700 10,800
--------------------------------------------------------------
Himachal Futuristic
Communications, Ltd.
(Telecommunications-Cellular/Wireless) 74,180 1,957,872
--------------------------------------------------------------
Hindustan Lever Ltd. (Aluminum)(c) 1,000 3,808
--------------------------------------------------------------
ICICI Bank Ltd.
(Banks-Regional)(c) 441,384 1,031,598
--------------------------------------------------------------
India Technology-Equity
Participation Ctfs., expiring
02/07/01 (Goldman Sachs Group,
Inc (The)) (Computers-Software &
Services)(d) 13,010 6,907,710
--------------------------------------------------------------
Indian Hotels Co. Ltd.
(Lodging-Hotels) 50 214
--------------------------------------------------------------
ITC Ltd. (Tobacco)(c) 1,499 24,462
--------------------------------------------------------------
Ranbaxy Laboratories Ltd. (Health
Care-Drugs-Generic & Other)(c) 200 2,988
--------------------------------------------------------------
State Bank of India (Banks-Major
Regional)(c) 2,200 7,729
--------------------------------------------------------------
Tata Engineering and Locomotive
Co. Ltd.-GDR
(Automobiles) 340,000 510,000
--------------------------------------------------------------
Tata Engineering and Locomotive
Co. Ltd.-(Automobiles) 100 150
--------------------------------------------------------------
Videsh Sanchar Nigam Ltd.-ADR
(Telephone) 261,100 1,925,613
--------------------------------------------------------------
Videsh Sanchar Nigam Ltd.-GDR
(Telephone) 77,350 570,456
==============================================================
12,953,878
==============================================================
INDONESIA-0.41%
PT Lippo Bank Tbk (Banks-Major
Regional)(a) 128,519,400 892,496
==============================================================
ISRAEL-3.51%
Bank Leumi Le-Israel (Banks-Money
Center) 842,913 1,655,686
--------------------------------------------------------------
Bezeq Israeli Telecommunications
Corp. Ltd. (Telephone) 342,700 1,714,742
--------------------------------------------------------------
Elron Electronic Industries Ltd.
(Computers-Networking) 55,000 1,440,445
--------------------------------------------------------------
Partner Communications Co.
Ltd.-ADR
(Telecommunications-
Cellular/Wireless)(a) 343,200 2,059,200
--------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ISRAEL-(CONTINUED)
RADVision Ltd. (Computers-Software
& Services)(a) 34,792 $ 769,773
==============================================================
7,639,846
==============================================================
MALAYSIA-0.26%
Public Finance Berhad
(Banks-Regional) 627,000 557,707
==============================================================
MEXICO-9.22%
Fomento Economico Mexicano, S.A.
de C.V.-ADR
(Beverages-Alcoholic) 139,474 5,326,163
--------------------------------------------------------------
Grupo Financiero Banamex Accival,
S.A. de C.V. (Banacci)
(Financial-Diversified)(a) 1,728,900 2,686,829
--------------------------------------------------------------
Grupo Financiero Bancomer, S.A. de
C.V.-Class O (Banks-Regional)(a) 2,914,490 1,804,411
--------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 80,628 4,363,991
--------------------------------------------------------------
Telefonos de Mexico S.A. de
C.V.-Class L-ADR (Telephone) 108,724 5,864,301
==============================================================
20,045,695
==============================================================
PAKISTAN-0.00%
Dewan Salman Fibre Ltd.
(Chemicals-Specialty) 6 3
--------------------------------------------------------------
Pakistan State Oil Co. Ltd.
(Oil-International Integrated) 93 254
==============================================================
257
==============================================================
RUSSIA-4.01%
Mobile Telesystems-ADR
(Telecommunications-
Cellular/Wireless)(a) 218,600 6,038,825
--------------------------------------------------------------
RAO Unified Energy Systems-GDR
(Electric Companies) 52,700 666,655
--------------------------------------------------------------
Surgutneftegaz-ADR
(Oil-International Integrated) 157,000 2,017,450
==============================================================
8,722,930
==============================================================
SINGAPORE-3.38%
DBS Group Holdings Ltd.
(Banks-Money Center) 97,000 1,143,256
--------------------------------------------------------------
Total Access Communication PLC
(Telephone) 391,600 1,245,288
--------------------------------------------------------------
United Overseas Bank Ltd.
(Banks-Major Regional) 670,000 4,959,289
==============================================================
7,347,833
==============================================================
SOUTH AFRICA-5.62%
Anglo American Platinum Corp. Ltd.
(Metals Mining) 103,300 4,029,980
--------------------------------------------------------------
Barloworld Ltd.
(Manufacturing-Diversified) 327,200 1,709,192
--------------------------------------------------------------
Hosken Consolidated Investments
Ltd. (Investment Management)(a) 2,186,500 1,546,977
--------------------------------------------------------------
Impala Platinum Holdings Ltd.
(Metals Mining) 35,700 1,529,656
--------------------------------------------------------------
Johnnic Holdings Ltd.
(Entertainment) 168,243 1,913,445
--------------------------------------------------------------
Sappi Ltd. (Paper & Forest
Products) 218,200 1,494,738
==============================================================
12,223,988
==============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SOUTH KOREA-10.77%
H & CB-GDR (Banks-Major Regional)
(Acquired 09/05/00-09/06/00;
Cost $1,307,349)(a)(e) 59,200 $ 1,435,600
--------------------------------------------------------------
Hyundai Electronics Industries Co.
(Electronics-Component
Distributors)(a) 330,600 2,031,555
--------------------------------------------------------------
Kookmin Bank-GDR (Banks-Major
Regional) (Acquired
09/06/00-09/20/00; Cost
$2,426,465)(e) 206,602 2,453,399
--------------------------------------------------------------
Korea Telecom Corp.-ADR
(Telephone) 181,016 6,674,965
--------------------------------------------------------------
Korea Telecom Freetel
(Telecommunications-
Cellular/Wireless)(a) 64,028 2,257,163
--------------------------------------------------------------
LG Home Shopping Inc. (Retail-Home
Shopping) 41,507 2,495,893
--------------------------------------------------------------
Samsung Electronics N.V.-Pfd.
(Electronics-Component
Distributors) 30,000 1,537,582
--------------------------------------------------------------
Shinhan Bank-GDR (Banks-Major
Regional) 105,600 2,151,600
--------------------------------------------------------------
SK Telecom Co., Ltd.-ADR
(Telecommunications-Cellular/Wireless) 95,492 2,393,268
==============================================================
23,431,025
==============================================================
TAIWAN-11.19%
Asustek Computer, Inc.-Equity
Linked Notes, expiring 03/16/01
(UBS Warburg)
(Computers-Hardware) 142,596 710,128
--------------------------------------------------------------
Bank Sinopac-Equity Participation
Ctfs., expiring 10/09/01
(Goldman Sachs Group, Inc.
(The)) (Investment Banking/
Brokerage)(d) 6,920,000 2,906,400
--------------------------------------------------------------
Compeq Manufacturing Co., Ltd.
(Computers-Hardware) 698,400 2,635,879
--------------------------------------------------------------
Hon Hai Precision Industry Co.,
Ltd. (Electronics-Component
Distributors) 190,707 997,045
--------------------------------------------------------------
Hon Hai Precision Industry Co.,
Ltd.-Equity Participation Ctfs.,
expiring 01/21/01 (ABN-AMRO)
(Electronics-Component
Distributors)(d) 15 101
--------------------------------------------------------------
Siliconware Precision Industries
Co.-ADR
(Electronics-Semiconductors)(a) 508,724 2,034,896
--------------------------------------------------------------
Siliconware Precision Industries
Co.-Equity Participation Ctfs.,
expiring 01/21/01 (ABN-AMRO)
(Electronics-Semiconductors)
(Acquired (03/15/00-03/16/00);
Cost $2,941,233)(d)(e) 2,000,000 963,400
--------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd.
(Electronics-Semiconductors)(a) 529,920 1,606,563
--------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd.-ADR (Electronics-
Semiconductors) 201,560 4,572,893
--------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd.-Equity Participation
Ctfs., expiring 01/27/01
(ABN-AMRO)
(Electronics-Semiconductors)(d) 404,988 1,559,447
--------------------------------------------------------------
United Microelectronics Corp. Ltd.
(Electronics-Component
Distributors)(a) 1,046,600 1,845,513
--------------------------------------------------------------
United Microelectronics Corp.
Ltd.-Equity Participation Ctfs.,
expiring 03/23/01 (UBS Warburg)
(Electronics-Component
Distributors)(d) 1,676,040 2,949,830
--------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TAIWAN-(CONTINUED)
Via Technologies Inc.-Equity
Participation Ctfs., expiring
02/16/01 (ABN-AMRO)
(Electronics-Component
Distributors)(d)(f) 145,838 $ 1,555,424
==============================================================
24,337,519
==============================================================
TURKEY-5.74%
Haci Omer Sabanci Holding A.S.
(Investment Management) 276,345,680 2,794,541
--------------------------------------------------------------
Turkcell Iletisim Hizmetleri A.S.
(Investments)(a) 35,023,300 1,539,881
--------------------------------------------------------------
Turkiye Garanti Bankasi A.S.
(Banks-Regional)(a) 332,991,500 3,416,173
--------------------------------------------------------------
Turkiye Is Bankasi (Isbank)
(Banks-Money Center) 76,378,000 1,455,192
--------------------------------------------------------------
Yapi ve Kredi Bankasi A.S.
(Banks-Major Regional) 379,746,596 3,283,633
==============================================================
12,489,420
==============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$201,792,081) 177,553,785
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS &
NOTES-15.95%
SOVEREIGN DEBT-15.95%
Republic of Brazil (Brazil) Unsec.
Bonds, 10.13%, 05/15/27 $ 3,520,000 2,641,552
--------------------------------------------------------------
Republic of Brazil (Brazil),
Floating Rate Gtd. Bonds, 7.69%,
04/15/12(g) 5,797,000 4,349,240
--------------------------------------------------------------
Republic of Brazil (Brazil), Series
C, Bonds, 8.00%, 04/15/14 6,030,215 4,535,813
--------------------------------------------------------------
Republic of Brazil (Brazil), Unsec.
Bonds, 12.25%, 03/06/30 630,000 549,990
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
SOVEREIGN DEBT-(CONTINUED)
Republic of Venezuela (Venezuela),
Unsec. Bonds, 9.25%, 09/15/27 $ 2,879,000 $ 1,886,263
--------------------------------------------------------------
Republic of Venezuela
(Venezuela)-Series DL, Floating
Rate Deb., 7.88%, 12/18/07(g) 1,964,270 1,653,303
--------------------------------------------------------------
Russian Federation (Russia), Sr.
Unsec. Unsub. Bonds, 11.75%,
06/10/03 1,250,000 1,196,606
--------------------------------------------------------------
Russian Federation (Russia), Sr.
Unsec. Unsub. Euro Bonds, 12.75%,
06/24/28 5,663,000 4,793,866
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Disc. Bonds, 7.50%,
03/31/30 (Acquired 08/25/00; Cost
$5,614,371)(e)(h) 13,102,320 4,913,370
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Euro Bonds, 11.00%,
07/24/18 4,000,000 2,934,248
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Euro Notes, 8.75%,
07/24/05 5,020,000 3,954,063
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Notes, 8.25%, 03/31/10
(Acquired 08/25/00-09/01/00; Cost
$1,341,703)(e) 1,975,614 1,274,271
==============================================================
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$31,996,162) 34,682,585
==============================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-1.08%
STIC Liquid Assets Portfolio(i) 1,174,363 1,174,363
--------------------------------------------------------------
STIC Prime Portfolio(i) 1,174,363 1,174,363
==============================================================
Total Money Market Funds
(Cost $2,348,726) 2,348,726
==============================================================
TOTAL INVESTMENTS-98.65%
(Cost $236,136,969) 214,585,096
==============================================================
OTHER ASSETS LESS LIABILITIES-1.35% 2,947,252
==============================================================
NET ASSETS-100.00% $217,532,348
______________________________________________________________
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
GDR - Global Depositary Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Sr. - Senior
Unsec. - Unsecured
Unsub. - Unsubordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit includes common or preferred
shares of the issuer.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Acquired as part of a unit with or in exchange for other securities.
(e) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at 10/31/00
was $11,040,040, which represented 5.08% of the Fund's net assets.
(f) Affiliated issuer in which the Fund's holdings of the issuer represent 5% or
more of the outstanding voting securities of the issuer. The Fund has not
owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer.
The market value as of 10/31/00 represented 0.72% of the Fund's net assets.
(g) The coupon rate shown on floating rate bonds represents the rate at period
end.
(h) Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(i) 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
$236,136,969) $214,585,096
------------------------------------------------------------
Foreign currencies, at value (cost $3,145,936) 3,153,650
------------------------------------------------------------
Cash 100,055
------------------------------------------------------------
Receivables for:
Investments sold 2,448,057
------------------------------------------------------------
Fund shares sold 650,936
------------------------------------------------------------
Dividends and interest 1,573,710
------------------------------------------------------------
Collateral for securities loaned 10,496,794
------------------------------------------------------------
Other Assets 14,346
============================================================
Total assets $233,022,644
============================================================
LIABILITIES:
Payables for:
Investments purchased 3,914,097
------------------------------------------------------------
Fund shares reacquired 618,235
------------------------------------------------------------
Collateral upon return of securities loaned 10,496,794
------------------------------------------------------------
Accrued advisory fees 17,388
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 175,736
------------------------------------------------------------
Accrued trustees' fees 1,834
------------------------------------------------------------
Accrued transfer agent fees 111,571
------------------------------------------------------------
Accrued operating expenses 150,406
============================================================
Total liabilities 15,490,296
============================================================
Net assets applicable to shares outstanding $217,532,348
____________________________________________________________
============================================================
NET ASSETS:
Class A $136,160,449
____________________________________________________________
============================================================
Class B $ 79,754,001
____________________________________________________________
============================================================
Class C $ 1,617,898
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 15,323,976
____________________________________________________________
============================================================
Class B 9,069,002
____________________________________________________________
============================================================
Class C 184,146
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 8.89
------------------------------------------------------------
Offering price per share:
(Net asset value of $8.89 divided by
95.25%) $ 9.33
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 8.79
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 8.79
____________________________________________________________
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$513,163) $ 2,186,759
------------------------------------------------------------
Dividends from affiliated money market funds 342,057
------------------------------------------------------------
Interest 1,886,629
------------------------------------------------------------
Security lending income 65,936
============================================================
Total investment income 4,481,381
============================================================
EXPENSES:
Advisory fees 2,321,564
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 212,346
------------------------------------------------------------
Distribution fees -- Class A 646,612
------------------------------------------------------------
Distribution fees -- Class B 712,953
------------------------------------------------------------
Distribution fees -- Class C 13,244
------------------------------------------------------------
Interest 10,831
------------------------------------------------------------
Transfer agent fees 1,005,593
------------------------------------------------------------
Trustees' fees 10,749
------------------------------------------------------------
Other 90,938
============================================================
Total expenses 5,074,830
============================================================
Less: Fees waived (195,861)
------------------------------------------------------------
Expenses paid indirectly (64,654)
============================================================
Net expenses 4,814,315
============================================================
Net investment income (loss) (332,934)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (5,531,214)
------------------------------------------------------------
Foreign currencies (405,617)
============================================================
(5,936,831)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (18,746,181)
------------------------------------------------------------
Foreign currencies 9,375
============================================================
(18,736,806)
============================================================
Net gain (loss) from investment securities and
foreign currencies (24,673,637)
============================================================
Net increase (decrease) in net assets
resulting from operations $(25,006,571)
____________________________________________________________
============================================================
</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) $ (332,934) $ 867,596
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (5,936,831) 2,820,314
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (18,736,806) 23,887,175
============================================================================================
Net increase (decrease) in net assets resulting from
operations (25,006,571) 27,575,085
============================================================================================
Distributions to shareholders from net investment income:
Class A (611,162) (1,347,785)
--------------------------------------------------------------------------------------------
Class B -- (1,895)
--------------------------------------------------------------------------------------------
Advisor Class* (1,538) (510)
--------------------------------------------------------------------------------------------
Share transactions-net:
Class A (8,288,646) 46,114,455
--------------------------------------------------------------------------------------------
Class B 42,716,558 46,958,649
--------------------------------------------------------------------------------------------
Class C 1,635,318 409,273
--------------------------------------------------------------------------------------------
Advisor Class* (659,631) 340,294
============================================================================================
Net increase in net assets 9,784,328 120,047,566
============================================================================================
NET ASSETS:
Beginning of year 207,748,020 87,700,454
============================================================================================
End of year $ 217,532,348 $ 207,748,020
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 424,284,883 $ 462,286,688
--------------------------------------------------------------------------------------------
Undistributed net investment income 88,436 601,051
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (185,222,717) (252,000,704)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (21,618,254) (3,139,015)
============================================================================================
$ 217,532,348 $ 207,748,020
____________________________________________________________________________________________
============================================================================================
</TABLE>
* Advisor Class shares were converted to Class A shares effective
as of close of business February 11, 2000.
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Developing Markets 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 and its secondary
objective is income, to the extent consistent with seeking 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 -- Securities, including restricted securities, are
valued according to the following policy. 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
$433,019, undistributed net realized gains increased by $72,714,818 and paid
in capital decreased by $73,147,837 as a result of differing book/tax
treatment of foreign currency transactions, merger transactions, capital
losses 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.
The Fund has a capital loss carryforward of $184,591,854 as of October 31,
2000, to the extent provided by regulations, which may be carried forward to
offset future taxable gains, if any, which expires on varying dates, if not
previously utilized, through the year 2008.
10
<PAGE> 13
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 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. Bond Premiums -- It has been the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes. In November 2000, a
revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was
issued and is effective for fiscal years beginning after December 15, 2000.
The revised Guide will require the Fund to amortize premium and discount on
all fixed-income securities. Upon initial adoption, the Fund will be required
to adjust the cost of its fixed-income securities by the cumulative amount of
amortization that would have been recognized had amortization been in effect
from the purchase date of each holding. Adopting this accounting principle
will not effect the Fund's net asset value, but will change the
classification of certain amounts between interest income and realized and
unrealized gain/loss in the Statement of Operations. The Fund expects that
the impact of the adoption of this principle will not be material to the
financial statements.
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 FEE 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 sub-advisor and
sub-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 1.75%, 2.40% and 2.40%,
respectively. Prior to June 19, 2000, AIM had 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. During the year ended October 31, 2000, AIM waived fees of
$247,246.
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 $50,000 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 $655,263 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 $646,612, $712,953
and $13,244, respectively, as compensation under the Plans.
AIM Distributors received commissions of $25,847 from sales of the Class A
shares of the Fund during the year ended October 31, 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 $45,221 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 $3,308 and reductions in custodian
fees of $61,346 under expense offset arrangements which resulted in a reduction
of the Fund's total expenses of $64,654.
11
<PAGE> 14
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 failed to return the securities.
At October 31, 2000, securities with an aggregate value of $10,290,974 were on
loan to brokers. The loans were secured by cash collateral of $10,496,794
received by the Fund. For the year ended October 31, 2000, the Fund received
fees of $65,936 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
$470,416,958 and $438,231,041, 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 $ 20,760,351
---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (42,943,087)
=========================================================
Net unrealized appreciation (depreciation)
of investment securities $(22,182,736)
_________________________________________________________
=========================================================
Cost of investments for tax purposes is $236,767,832.
</TABLE>
NOTE 7-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 4,368,248 $ 46,361,270 3,932,389 $45,584,472
-----------------------------------------------------------------------------------------------------------------------
Class B 828,920 9,063,557 911,202 18,260,670
-----------------------------------------------------------------------------------------------------------------------
Class C* 149,805 1,690,938 68,223 667,879
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** 3,615 (118,692) 67,714 758,300
=======================================================================================================================
Issued as reinvestment of dividends:
Class A 40,351 452,453 125,865 932,660
-----------------------------------------------------------------------------------------------------------------------
Class B 2,445 25,799 255 1,881
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** 137 1,534 69 510
=======================================================================================================================
Issued in connection with acquisitions:
Class A 4,474,504 47,588,765*** 9,961,789 87,233,513****
-----------------------------------------------------------------------------------------------------------------------
Class B 7,049,831 74,412,545*** 5,660,631 42,682,248****
-----------------------------------------------------------------------------------------------------------------------
Class C* 32,330 341,089*** -- --
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** -- -- 64,652 488,211****
=======================================================================================================================
Conversion of Advisor Class to Class A shares*****
Class A 8,558 109,035 -- --
-----------------------------------------------------------------------------------------------------------------------
Advisor Class (8,558) (109,035) -- --
=======================================================================================================================
Reacquired:
Class A****** (9,512,192) (102,800,169) (9,691,690) (87,636,190)
-----------------------------------------------------------------------------------------------------------------------
Class B (3,891,896) (40,785,343) (1,512,951) (13,986,150)
-----------------------------------------------------------------------------------------------------------------------
Class C* (40,068) (396,709) (26,144) (258,606)
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** (37,214) (433,438) (94,292) (906,727)
=======================================================================================================================
3,468,816 $ 35,403,599 9,467,712 $93,822,671
_______________________________________________________________________________________________________________________
=======================================================================================================================
</TABLE>
* Class C shares commenced sales on March 1, 1999.
** Advisor Class share activity for the period November 1, 1999 through
February 11, 2000 (date of conversion).
*** As of the close of business on June 16, 2000, the Fund acquired all the
net assets of AIM Emerging Markets Debt Fund pursuant to a plan of
reorganization approved by Emerging Markets Debt Fund's shareholders on
May 31, 2000. The acquisition was accomplished by a tax-free exchange of
11,556,665 shares of the Fund for 13,847,344 shares of Emerging Markets
Debt Fund outstanding as of the close of business on June 16, 2000.
Emerging Markets Debt Fund's net assets at that date of $122,342,399,
12
<PAGE> 15
including ($257,567) of unrealized appreciation, were combined with those
of the Fund. The aggregate net assets of the Fund immediately before the
acquisition were $193,278,258.
**** AIM Emerging Markets Fund (Emerging Markets Fund") and AIM Eastern Europe
Fund ("Eastern Europe Fund") transferred all of their assets to the Fund
on February 12, 1999 and September 10, 1999, respectively, pursuant to a
plan of reorganization and termination. The Fund assumed all of the
liabilities of the Emerging Markets Fund and the Eastern Europe Fund.
Shareholders of the Emerging Markets Fund and Eastern Europe Fund were
issued full and fractional shares of the applicable class of the Fund.
The acquisitions, which were approved by the shareholders of Emerging
Markets Fund and Eastern Europe Fund on February 10, 1999 and August 25,
1999, respectively, were accomplished by an exchange of 10,912,463 shares
of the Fund for the 11,087,719 shares then outstanding of the Emerging
Markets Fund and 4,774,609 shares of the Fund for the 5,864,782 shares
then outstanding of the Eastern Europe Fund. Based on the opinion of the
Fund counsel, the reorganization qualified as a tax-free reorganization
for federal income tax purposes with no gain or loss recognized to the
Fund or its shareholders. Emerging Markets Fund's and Eastern Europe
Fund's net assets, including($18,098,264) and ($1,068,554), respectively,
of unrealized depreciation were combined with the Fund for total net
assets after the acquisition of $159,666,366 and $238,151,276,
respectively.
***** Effective as of the close of business February 11, 2000, pursuant to
approval by the Board of Trustees on November 3, 1999, all shares were
converted to Class A shares of the Fund.
****** This amount includes $114,574 and $370,669 of redemption fees associated
with the merger of Eastern Europe Fund for 2000 and 1999, respectively.
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
TEN
MONTHS YEAR ENDED
YEAR ENDED OCTOBER 31, ENDED DECEMBER 31,
------------------------------ OCTOBER 31, ----------------------
2000(a) 1999(a) 1998(a) 1997(b) 1996 1995
-------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.86 $ 7.53 $ 12.56 $ 13.84 $ 11.60 $ 12.44
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.06 0.39(c) 0.25 0.53 0.72
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.95) 2.36 (5.10) (1.53) 2.19 (0.84)
=================================================================================================================================
Total from investment operations (0.94) 2.42 (4.71) (1.28) 2.72 (0.12)
=================================================================================================================================
Redemptions fees retained 0.01 0.03 0.28 -- --
=================================================================================================================================
Less distributions from net investment income (0.04) (0.12) (0.60) -- (0.48) (0.72)
=================================================================================================================================
Net asset value, end of period $ 8.89 $ 9.86 $ 7.53 $ 12.56 $ 13.84 $ 11.60
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(d) (9.52)% 33.11% (37.09)% (9.25)% 23.59% (0.95)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $136,160 $157,198 $87,517 $457,379 $504,012 $422,348
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including
interest expense):
With fee waivers 1.87%(e) 1.91% 1.93% 1.75%(f) 1.82% 1.77%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.95%(e) 2.38% 2.34% 1.83%(f) 1.85% 1.80%
=================================================================================================================================
Ratio of net investment income to average net assets 0.05%(e) 0.68% 3.84% 2.03%(f) 4.07% 6.33%
=================================================================================================================================
Ratio of interest expense to average net assets 0.01%(e) 0.01% 0.20% -- -- --
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 192% 125% 111% 184% 138% 75%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Prior to November 1, 1997 the Fund was known as G.T. Developing Markets
Fund, Inc. All Capital shares issued and outstanding on October 31, 1997
were reclassified as Class A shares.
(c) Net investment income per share reflects an interest payment received from
the conversion of Vnesheconombank loan agreements of $0.14 per share.
(d) Does not include sales charges and is not annualized for period less than
one year.
(e) Ratios are based on average daily net assets of $165,415,131.
(f) Annualized.
13
<PAGE> 16
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------
NOVEMBER 3, 1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED)
---------------------- TO OCTOBER 31,
2000(a) 1999(a) 1998(a)
------- ------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.79 $ 7.49 $ 12.56
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) 0.01 0.31(b)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.94) 2.37 (5.07)
============================================================================================================
Total from investment operations (1.00) 2.38 (4.76)
============================================================================================================
Redemptions fees retained -- -- 0.28
============================================================================================================
Less distributions from net investment income -- (0.08) (0.59)
============================================================================================================
Net asset value, end of period $ 8.79 $ 9.79 $ 7.49
____________________________________________________________________________________________________________
============================================================================================================
Total return(c) (10.21)% 32.14% (39.76)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $79,754 $49,723 $ 154
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.47%(d) 2.51% 2.68%(e)
------------------------------------------------------------------------------------------------------------
Without fee waivers 2.55%(d) 2.98% 3.09%(e)
============================================================================================================
Ratio of net investment income (loss) to average net assets (0.56)%(d) 0.08% 3.09%(e)
============================================================================================================
Ratio of interest expense to average net assets 0.01%(d) 0.01% 0.20%(e)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 192% 125% 111%
____________________________________________________________________________________________________________
============================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects an interest payment received from
the conversion of Vnesheconombank loan agreements of $0.14 per share.
(c) Does not include contingent deferred sales charges and is not annualized for
period less than one year.
(d) Ratios are based on average daily net assets of $71,295,269.
(e) Annualized.
<TABLE>
<CAPTION>
CLASS C
-----------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999(a)
----------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 9.79 $ 7.47
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) --
-------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.94) 2.32
=================================================================================================
Total from investment operations (1.00) 2.32
=================================================================================================
Net asset value, end of period $ 8.79 $ 9.79
_________________________________________________________________________________________________
=================================================================================================
Total return(b) (10.21)% 31.06%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,618 $ 412
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.47%(c) 2.51%(d)
-------------------------------------------------------------------------------------------------
Without fee waivers 2.55%(c) 2.98%(d)
=================================================================================================
Ratio of net investment income (loss) to average net assets (0.56)%(c) 0.08%(d)
=================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.01%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate 192% 125%
_________________________________________________________________________________________________
=================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
period less than one year.
(c) Ratios are based on average daily net assets of $1,324,425.
(d) Annualized.
14
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Developing Markets 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 Developing Markets 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
15
<PAGE> 18
<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 Management, LLC Houston, TX 77046
(an investment partnership); Dana R. Sutton
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
SUB-ADVISOR
Robert H. Graham Carol F. Relihan
President and Chief Executive Officer, Vice President and Secretary INVESCO Asset Management Ltd.
A I M Management Group Inc. 11 Devonshire Square
Mary J. Benson London EC2M 4YR
Ruth H. Quigley Assistant Vice President and England
Private Investor Assistant Treasurer
TRANSFER AGENT
Sheri Morris
Assistant Vice President and A I M Fund Services, Inc.
Assistant Treasurer P.O. Box 4739
Houston, TX 77210-4739
Nancy L. Martin
Assistant Secretary CUSTODIAN
Ofelia M. Mayo State Street Bank and Trust Company
Assistant Secretary 225 Franklin Street
Boston, MA 02110
Kathleen J. Pflueger
Assistant Secretary COUNSEL TO THE FUND
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
COUNSEL TO THE TRUSTEES
Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
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, 2.61% is eligible for the dividends received deduction for
corporations.
16
<PAGE> 19
THE AIM FUNDS RISK SPECTRUM
On the back cover of this fund report, you'll find the funds in the AIM family
divided into the following categories: sector, international/global, domestic,
taxable and tax-free. You'll also notice that the funds in each category are
listed from more aggressive to more conservative.
Within each category of this risk spectrum, we assessed each fund on the
basis of three factors: its holdings, volatility patterns and diversification.
From that assessment, we assigned a degree of risk to each fund and ordered them
accordingly.
Mutual funds typically invest in stocks, bonds or money market instruments,
each with varying levels of potential risk and reward. Generally, the riskier
the investment, the greater the potential reward.
o Stock funds usually offer the most upside potential, but they also carry the
greatest risk. Funds that invest in large, well-established companies
generally have lower risk/reward potential than funds that invest in small,
fast-growing companies.
o Funds that invest in a broad range of industries are considered more
diversified and less risky--and potentially less rewarding--than funds that
invest in a single sector, such as technology.
o Funds that invest in international markets tend to have higher risk/reward
potential than those that invest solely in domestic securities.
o Bond funds are generally considered safer and therefore potentially less
rewarding than stock funds. Funds that invest in U.S. Treasury securities
typically have lower risk/reward potential than funds that invest in
higher-yielding junk bonds.
o Money market funds, while considered extremely safe, typically produce lower
returns than stock and bond funds. Moreover, it is possible that a money
market fund's returns will not keep pace with inflation.
The amount of investment risk you undertake depends on several factors: your
financial objectives, your risk tolerance and your time horizon. Are you saving
for your later years or are you investing to buy a large item, like a car or a
house, soon? Are you a young adult early in your work life, or are you
approaching retirement?
If your investment plan has a rather long time horizon, you may be able to
invest more aggressively because you could have time to recoup should you
experience losses. If your needs are more immediate, you may need to be more
conservative to meet your goal.
Because these factors change over time, it's a good idea to reassess your
portfolio periodically to make sure it still meets your needs. Your financial
advisor can help you figure out if your portfolio is right where it should be or
if it could use some fine-tuning.
In assessing your investments, remember to keep diversification in mind.
Such a strategy, where you spread your investments over several types of mutual
funds, may help mitigate volatility and/or risk in your portfolio because not
all investments behave the same way at the same time.
AIM has a large selection of mutual funds to choose from. See your financial
advisor for insight into which ones would best fit in your portfolio.
------------------------------------
THE AMOUNT OF INVESTMENT
RISK YOU UNDERTAKE DEPENDS
ON SEVERAL FACTORS: YOUR
FINANCIAL OBJECTIVES, YOUR
RISK TOLERANCE AND YOUR
TIME HORIZON.
------------------------------------
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
EQUITY FUNDS
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc. has
provided leadership in the mutual
MORE AGGRESSIVE MORE AGGRESSIVE fund industry since 1976 and
managed approximately $183 billion
AIM Small Cap Opportunities(1) AIM Latin American Growth in assets for more than eight
AIM Mid Cap Opportunities(2) AIM Developing Markets million shareholders, including
AIM Large Cap Opportunities(3) AIM European Small Company individual investors, corporate
AIM Emerging Growth AIM Asian Growth clients and financial institutions,
AIM Small Cap Growth(4) AIM Japan Growth as of September 30, 2000.
AIM Aggressive Growth AIM International Emerging Growth The AIM Family of Funds
AIM Mid Cap Growth AIM European Development --Registered Trademark-- is
AIM Small Cap Equity AIM Euroland Growth distributed nationwide, and AIM
AIM Capital Development AIM Global Aggressive Growth today is the eighth-largest mutual
AIM Constellation AIM International Equity fund complex in the United States
AIM Dent Demographic Trends AIM Advisor International Value in assets under management,
AIM Select Growth AIM Global Trends according to Strategic Insight, an
AIM Large Cap Growth AIM Global Growth independent mutual fund monitor.
AIM Weingarten AIM is a subsidiary of
AIM Mid Cap Equity MORE CONSERVATIVE AMVESCAP PLC, one of the world's
AIM Value II largest independent financial
AIM Charter SECTOR EQUITY FUNDS services companies with $414
AIM Value billion in assets under management
AIM Blue Chip MORE AGGRESSIVE as of September 30, 2000.
AIM Basic Value
AIM Large Cap Basic Value AIM New Technology
AIM Balanced AIM Global Telecommunications and Technology
AIM Advisor Flex AIM Global Resources
AIM Global Financial Services
MORE CONSERVATIVE AIM Global Health Care
AIM Global Consumer Products and Services
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. DVM-AR-1
