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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file
number 811-05426
------------------------------------------------
AIM Investment Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert H. Graham 11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (713) 626-1919
---------------------------
Date of fiscal year end: 10/31
---------------
Date of reporting period: 4/30/03
-------------
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM DEVELOPING MARKETS FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Developing Markets Fund seeks to provide long-term growth of
capital with a secondary investment objective of income. The fund
seeks to meet its objectives by investing, normally, at least 80% of
its assets in securities of companies that are in developing markets.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
TOP COUNTRIES
As of 4/30/03
- --------------------------------------------------------------------------------
(PIE CHART)
TAIWAN 10.7%
SOUTH KOREA 19.7%
OTHER 19.0%
MALAYSIA 3.7%
THAILAND 4.2%
INDIA 5.0%
UNITED KINGDOM 5.3%
SOUTH AFRICA 6.1%
RUSSIA 7.5%
MEXICO 8.3%
BRAZIL 10.5%
TOTAL NUMBER OF HOLDINGS* 76
TOTAL NET ASSETS $163.4 MILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (1/11/94) -5.64%
5 Years -10.04
1 Year -20.52
CLASS B SHARES
Inception (11/3/97) -9.13%
5 Years -10.07
1 Year -21.19
CLASS C SHARES
Inception (3/1/99) -0.45%
1 Year -17.89
In addition to returns as of the close of the reporting period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (1/11/94), -6.64%; five years, -11.34%; one year, -27.37%.
Class B shares, inception (11/3/97); -10.79%; five years; -11.36%; one year,
- -27.94%. Class C shares, inception (3/1/99); -2.68%; one year, -25.02%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 6.17%
CLASS B SHARES 5.80
CLASS C SHARES 5.81
MSCI EMERGING MARKETS FREE INDEX
(Broad Market Index) 5.93
Lipper Emerging Markets Fund Index
(Peer Group Index) 7.21
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
==========================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ----------------------------------------------------------------------------------------------------------
1. Anglo American PLC (United Kingdom) 5.3% 1. Banks 19.4%
2. Taiwan Semiconductor Manufacturing Co. 2. Integrated Oil & Gas 8.6
Ltd.-Equity Participation Ctfs. (Taiwan) 4.2
3. Integrated Telecommunication Services 7.8
3. Kookmin Bank-ADR (South Korea) 3.6
4. Wireless Telecommunication Services 6.6
4. YUKOS-ADR (Russia) 3.0
5. Semiconductors 5.4
5. Samsung Electronic Co., Ltd.-GDR REGS
(South Korea) 2.5 6. Diversified Metals & Mining 5.3
6. India Consumer & Financials Index-Equity 7. Electronic Equipment & Instruments 5.0
Participation Ctfs. (India) 2.3
8. Casinos & Gambling 4.2
7. Fomento Economico Mexicano,
S.A. de C.V.-ADR (Mexico) 2.3 9. Diversified Financial Services 3.6
8. Mobile Telesystems-ADR (Russia) 2.3 10. Computer Hardware 3.0
9. Chinatrust Commercial Bank-Equity
Participation Ctfs. (Taiwan) 2.3
10. Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 2.2
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
==========================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective May 23, 2003, after the close of the reporting period, the
portfolio management team for AIM Developing Markets Fund is as follows:
Shuxin Cao, Borge Endresen, Clas G. Olsson and Barrett K. Sides.
o AIM Developing Markets Fund's performance figures are historical, and they
reflect fund expenses, 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 share classes will differ due to
different sales charge structures and class expenses.
o Had the advisor not waived fees and/or reimbursed expenses, returns would
have been lower.
o International investing presents certain risks not associated with
investing solely in the United States. These include risks relating to
fluctuations in the value of the U.S. dollar relative to the values of
other currencies, the custody arrangements made for the fund's foreign
holdings, differences in accounting, political risks and the lesser degree
of public information required to be provided by non-U.S. companies.
o The fund may participate in the initial public offering (IPO) market in
some market cycles. Because of the fund's small asset base, any investment
the fund may make in IPOs may significantly affect the fund's total return.
As the fund's assets grow, the impact of IPO investments will decline,
which may reduce the effect of IPO investments on the fund's total return.
o Investing in emerging markets involves greater risk and potential reward
than investing in more established markets.
o Investing in small and mid-size companies may involve risks not associated
with more established companies. Also, small companies may have business
risk, significant stock-price fluctuations and illiquidity.
o The fund is nondiversified, which may increase risks as well as potential
rewards. This means that with respect to 50% of its assets, the fund may
invest more than 5% of its assets in securities of any one issuer.
o The fund can invest in higher yielding, lower rated corporate bonds,
commonly known as junk bonds, which have a greater risk of price
fluctuation and loss of principal than do U.S. government securities (such
as U.S. Treasury bills, notes and bonds), for which the government
guarantees the repayment of principal and interest 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.
o In the Schedule of Investments in this report, the fund's portfolio
holdings are organized according to the Global Industry Classification
Standard, which was developed by and is the exclusive property and a
service mark of Morgan Stanley Capital International Inc. and Standard &
Poor's.
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 represents actual buyable opportunities for global investors.
o The unmanaged Lipper Emerging Markets Fund Index represents an average of
the 30 largest emerging markets funds tracked by Lipper, Inc., an
independent mutual fund performance monitor.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not include sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT aiminvestments.com.
TO OUR SHAREHOLDERS
Dear Shareholder:
[PHOTO OF This is the report on AIM Developing Markets Fund for the
ROBERT H. six months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page. This letter will provide an overview of the
markets and your fund during the six months covered by this
report. As always, timely information about your fund and
the markets in general is available at our Web site,
aiminvestments.com.
MARKET CONDITIONS
International markets, as measured by the unmanaged MSCI
Europe, Australasia and the Far East Index (the
EAFE--Registered Trademark), a group of foreign securities
tracked by Morgan Stanley Capital International, produced negative returns for
the first quarter of 2003. International markets, however, rallied in April.
This rally helped push international market returns into positive territory for
the six-month reporting period.
European markets rallied toward the close of the reporting period, with the
MSCI (Morgan Stanley Capital International) Europe Index, often considered
representative of the European equity market, gaining 13.49% in April. In
European monetary affairs, the European Central Bank (ECB) cut its benchmark
interest rate 25 basis points to 2.50% in March. It remained at that level as
the reporting period closed.
As widely discussed, in Asia, the epidemic of severe acute respiratory
syndrome (SARS) dealt a blow to local economies. However, the MSCI All Country
(AC) Asia Pacific Free ex-Japan Index, a group of developed and emerging Asian
and Asia-Pacific markets (except Japan) covered by Morgan Stanley Capital
International, rallied in April and was positive for the six-month reporting
period.
On the currency front, the U.S. dollar was weak compared to many foreign
currencies. In particular, the euro showed strength as it appreciated nearly 13%
against the dollar during the reporting period. Other notable currencies that
gained ground on the dollar included the Australian dollar, Swiss franc, British
pound and Canadian dollar.
YOUR FUND
Like the MSCI Emerging Markets Free Index, an unmanaged group of securities from
emerging markets tracked by Morgan Stanley Capital International, AIM Developing
Markets Fund Class A shares, at net asset value, posted positive returns for the
six months ended April 30, 2003. Throughout the reporting period, fund managers
Christine Rowley and Mike Kerley sought to identify companies, that in their
view, had the potential for above-average long-term growth in earnings and
prospects for future growth.
As of April 30, 2003, the fund had its largest exposure in financials,
telecommunications services and materials. Over the course of the reporting
period, the fund's exposure to financials and energy sectors increased, while
its weighting in consumer discretion and telecommunications services sectors
decreased. The fund had 76 holdings at the end of the reporting period.
IN CLOSING
I thank you for your continued participation in AIM Developing Markets Fund, and
I look forward to reporting to you again in six months. If you have any
questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
ON THE CURRENCY FRONT, THE
U.S. DOLLAR WAS WEAK COMPARED
TO MANY FOREIGN CURRENCIES.
ROBERT H. GRAHAM
================================================================================
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-95.15%
ARGENTINA-0.00%
Banco Hipotecario S.A.-Wts., expiring
02/02/04 (Banks) (Acquired 01/28/99; Cost
$30,850)(a)(b)(c)(d) 617 $ 0
=========================================================================
BRAZIL-10.54%
Brasil Telecom Participacoes S.A.-ADR
(Integrated Telecommunication Services) 16,300 577,020
- -------------------------------------------------------------------------
Brasil Telecom Participacoes S.A.-Pfd.
(Integrated Telecommunication Services) 354,771,000 2,498,387
- -------------------------------------------------------------------------
Companhia Siderurgica Nacional S.A. (Steel) 53,676,000 1,063,932
- -------------------------------------------------------------------------
Petroleo Brasileiro S.A.-ADR (Integrated Oil
& Gas) 197,800 3,384,358
- -------------------------------------------------------------------------
Tele Centro Oeste Celular Participacoes
S.A.-ADR (Wireless Telecommunication
Services) 256,200 1,439,844
- -------------------------------------------------------------------------
Tele Norte Leste Participacoes S.A.-ADR
(Integrated Telecommunication Services) 292,234 3,170,739
- -------------------------------------------------------------------------
Telesp Celular Participacoes S.A.-Pfd.
(Wireless Telecommunication Services) 760,769,000 1,165,589
- -------------------------------------------------------------------------
Uniao de Bancos Brasileiros S.A.-GDR (Banks) 102,916 1,867,925
- -------------------------------------------------------------------------
Votorantim Celulose e Papel S.A.-ADR (Paper
Products) 52,254 992,826
- -------------------------------------------------------------------------
Votorantim Celulose e Papel S.A.-Pfd. (Paper
Products) 28,087,000 1,070,413
=========================================================================
17,231,033
=========================================================================
CHINA-2.06%
Anhui Conch Cement Co. Ltd.-Class H
(Construction Materials) 2,702,000 1,247,229
- -------------------------------------------------------------------------
China Petroleum and Chemical Corp. (Sinopec)-
Class H (Integrated Oil & Gas) 10,700,000 2,112,821
=========================================================================
3,360,050
=========================================================================
CZECH REPUBLIC-0.81%
Komercni Banka A.S.-GDR (Banks) 57,700 1,326,523
=========================================================================
EGYPT-0.58%
Orascom Construction Industries (Construction
& Engineering) 139,106 954,406
=========================================================================
HONG KONG-1.00%
Swire Pacific Ltd.-Class A (Multi-Sector
Holdings) 414,000 1,640,287
=========================================================================
HUNGARY-1.24%
OTP Bank Rt.-GDR REGS (Banks) (Acquired
01/14/03-04/15/03; Cost $1,986,493)(a) 94,300 2,034,994
- -------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
HUNGARY - (CONTINUED)
Technoimpex (Multi-Sector Holdings)(b)(c)(e) 1,400 0
=========================================================================
2,034,994
=========================================================================
INDIA-4.97%
Bharti Televentures Ltd.-Equity Participation
Ctfs., expiring 01/30/04 (Goldman Sachs)
(Integrated Telecommunication Services)(e) 1,100,000 $ 785,400
- -------------------------------------------------------------------------
HDFC Bank Ltd.-ADR (Banks) 46,261 757,755
- -------------------------------------------------------------------------
India Consumer & Financials Index-Equity
Participation Ctfs., expiring 02/06/04
(Goldman Sachs) (Diversified Financial
Services) (Acquired 01/30/03-04/17/03; Cost
$4,182,495)(a)(e) 3,374 3,825,812
- -------------------------------------------------------------------------
India Technology Index-Equity Participation
Ctfs., expiring 02/06/04 (Goldman Sachs)
(Computer Hardware) (Acquired 01/30/03;
Cost $1,929,572)(a)(e) 7,910 1,298,189
- -------------------------------------------------------------------------
Tata Engineering & Locomotive Co. Ltd.-Equity
Participation Ctfs., expiring 01/05/04
(Salomon Smith Barney) (Construction, Farm
Machinery & Heavy Trucks) (Acquired
03/19/03; Cost $1,472,953)(a)(e) 453,300 1,448,747
=========================================================================
8,115,903
=========================================================================
INDONESIA-3.22%
PT Astro Agro Lestari TBK (Agricultural
Products) 6,400,000 1,125,007
- -------------------------------------------------------------------------
PT Bank Pan Indonesia TBK (Banks)(e) 54,000,000 1,462,740
- -------------------------------------------------------------------------
PT Telekomunikusi Indonesia (Integrated
Telecommunication Services) 5,661,500 2,675,598
=========================================================================
5,263,345
=========================================================================
ISRAEL-2.63%
NICE Systems Ltd.-ADR (Telecommunications
Equipment)(e) 59,100 721,020
- -------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 76,600 3,577,220
=========================================================================
4,298,240
=========================================================================
LUXEMBOURG-0.99%
Tenaris S.A.-ADR (Oil & Gas Equipment &
Services)(e) 68,768 1,616,048
=========================================================================
MALAYSIA-3.69%
Genting Berhad (Casinos & Gambling) 761,000 2,403,158
- -------------------------------------------------------------------------
IOI Corp. Berhad (Agricultural Products) 1,098,000 1,459,184
- -------------------------------------------------------------------------
Tanjong Public Ltd. Co. (Casinos & Gambling) 881,000 2,167,724
=========================================================================
6,030,066
=========================================================================
MEXICO-8.33%
Alfa S.A.-Class A (Industrial Conglomerates) 802,000 1,371,241
- -------------------------------------------------------------------------
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
MEXICO-(CONTINUED)
America Movil S.A. de C.V.-Series L-ADR
(Wireless Telecommunication Services) 155,800 $ 2,612,766
- -------------------------------------------------------------------------
Cemex S.A. de CV-Wts., expiring 12/21/04
(Construction Materials) (Acquired
12/16/99; Cost $7,704)(a)(b)(d) 22,000 7,287
- -------------------------------------------------------------------------
Fomento Economico Mexicano, S.A. de C.V.-ADR
(Soft Drinks) 99,424 3,774,135
- -------------------------------------------------------------------------
Grupo Financiero BanCrecer S.A. de
C.V.-Series B (Diversified Financial
Services)(e) 1 0
- -------------------------------------------------------------------------
Grupo Financiero Banorte S.A. de C.V.-Class O
(Banks) 492,000 1,372,299
- -------------------------------------------------------------------------
Grupo Financiero BBVA Bancomer, S.A. de C.V.-
Class B (Banks)(e) 2,054,490 1,791,386
- -------------------------------------------------------------------------
Grupo Posadas S.A.-Series L (Hotels, Resorts
& Cruise Lines)(e) 202,300 71,543
- -------------------------------------------------------------------------
Grupo Televisa S.A.-ADR (Broadcasting & Cable
TV)(e) 86,028 2,610,090
=========================================================================
13,610,747
=========================================================================
PHILIPPINES-0.48%
SM Prime Holdings, Inc. (Real Estate
Management & Development) 8,378,000 782,319
=========================================================================
RUSSIA-7.49%
LUKOIL Holding-ADR (Integrated Oil & Gas) 51,858 3,569,905
- -------------------------------------------------------------------------
Mobile Telesystems-ADR (Wireless
Telecommunication Services)(e) 78,300 3,758,400
- -------------------------------------------------------------------------
YUKOS-ADR (Integrated Oil & Gas) 28,000 4,914,000
=========================================================================
12,242,305
=========================================================================
SOUTH AFRICA-6.08%
Anglo American Platinum Corp. Ltd. (Precious
Metals & Minerals) 62,300 1,748,604
- -------------------------------------------------------------------------
Barloworld Ltd. (Industrial Conglomerates) 121,900 836,069
- -------------------------------------------------------------------------
Gold Fields Ltd. (Gold) 178,700 1,816,946
- -------------------------------------------------------------------------
Impala Platinum Holdings Ltd. (Precious
Metals & Minerals) 37,101 1,837,643
- -------------------------------------------------------------------------
Sappi Ltd. (Paper Products) 78,800 974,673
- -------------------------------------------------------------------------
Standard Bank Group (Banks) 677,900 2,723,464
=========================================================================
9,937,399
=========================================================================
SOUTH KOREA-19.71%
Daishin Securities Co.-Pfd. (Diversified
Financial Services) 378,300 2,136,795
- -------------------------------------------------------------------------
Hyundai Development Co. (Construction &
Engineering) 254,000 1,627,106
- -------------------------------------------------------------------------
Kangwon Land Inc. (Casinos & Gambling) 25,500 2,330,589
- -------------------------------------------------------------------------
Kookmin Bank-ADR (Banks) 211,883 5,837,377
- -------------------------------------------------------------------------
KT Corp.-ADR (Integrated Telecommunication
Services) 149,300 3,021,832
- -------------------------------------------------------------------------
POSCO-ADR (Steel) 138,900 2,854,395
- -------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
SOUTH KOREA-(CONTINUED)
Samsung Electronics Co., Ltd.-GDR REGS
(Electronic Equipment & Instruments)
(Acquired 07/25/01-01/02/02; Cost
$1,574,373)(a)(b) 44,200 $ 2,709,460
- -------------------------------------------------------------------------
Samsung Electronics Co., Ltd.-GDR REGS
(Electronic Equipment & Instruments)
(Acquired 11/03/00-08/29/01; Cost
$2,632,053)(a)(b) 32,023 4,006,077
- -------------------------------------------------------------------------
Samsung Electronics Co., Ltd.-Pfd.
(Electronic Equipment & Instruments) 11,300 1,386,332
- -------------------------------------------------------------------------
Shinhan Financial Group Co., Ltd. (Banks) 292,760 2,892,647
- -------------------------------------------------------------------------
Shinsegae Co., Ltd. (Department Stores)(e) 13,600 1,623,714
- -------------------------------------------------------------------------
SK Telecom Co., Ltd.-ADR (Wireless
Telecommunication Services) 118,092 1,794,998
=========================================================================
32,221,322
=========================================================================
TAIWAN-10.73%
Asustek Computer, Inc.-GDR (Computer
Hardware)(e) 664,000 1,334,640
- -------------------------------------------------------------------------
Chinatrust Commercial Bank-Equity
Participation Ctfs., expiring 07/18/03 (ABN
AMRO) (Banks) (Acquired 07/19/02-09/20/02;
Cost $3,985,611)(a)(b)(e) 4,782,580 3,732,804
- -------------------------------------------------------------------------
Hon Hai Precision Industry Co., Ltd.-GDR REGS
(Computer Storage & Peripherals) (Acquired
08/14/02-03/10/03; Cost $1,511,234)(a) 205,105 1,327,029
- -------------------------------------------------------------------------
MediaTek Inc.-Equity Participation Ctfs.,
expiring 01/17/06 (Salomon Smith Barney)
(Semiconductors) (Acquired
03/10/03-04/18/03; Cost $1,877,823)(a)(e) 239,400 1,961,644
- -------------------------------------------------------------------------
Quanta Computers Inc.-Equity Participation
Ctfs., expiring 01/08/04 (UBS A.G.)
(Computer Hardware)(e) 1,306,900 2,274,006
- -------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.-
Equity Participation Ctfs., expiring
01/14/05 (ABN AMRO) (Semiconductors)
(Acquired 01/02/03-03/10/03; Cost
$6,485,394)(a)(e) 5,035,058 6,906,086
=========================================================================
17,536,209
=========================================================================
THAILAND-4.16%
Bangkok Bank Public Co. Ltd.-NVDR
(Banks)(c)(e) 2,869,000 3,520,451
- -------------------------------------------------------------------------
Siam Commercial Bank PCL-$1.37 Conv. Pfd.
(Banks) 3,103,400 2,466,182
- -------------------------------------------------------------------------
Siam Panich Leasing PCL-NVDR (Consumer
Finance)(c) 1,086,100 805,976
=========================================================================
6,792,609
=========================================================================
TURKEY-1.18%
Haci Omer Sabanci Holding A.S. (Multi-Sector
Holdings) 481,759,257 1,084,766
- -------------------------------------------------------------------------
Koc Holding A.S. (Multi-Sector Holdings)(e) 83,299,000 840,705
=========================================================================
1,925,471
=========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
UNITED KINGDOM-5.26%
Anglo American PLC (Diversified Metals &
Mining) 593,200 $ 8,602,306
=========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $143,727,010) 155,521,582
=========================================================================
<Caption>
PRINCIPAL
AMOUNT
BONDS-0.00%
BRAZIL-0.00%
Companhia Vale Do Rio Doce, Non Conv. Bonds
(Diversified Metals & Mining), 0.00%,
12/31/09 (Cost $0)(c)(f)(g) BRL 276 0
=========================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-4.63%
STIC Liquid Assets Portfolio(h) 3,789,271 3,789,271
- -------------------------------------------------------------------------
STIC Prime Portfolio(h) 3,789,271 3,789,271
=========================================================================
Total Money Market Funds (Cost
$7,578,542) 7,578,542
=========================================================================
TOTAL INVESTMENTS-99.78% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $151,305,552) 163,100,124
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-7.13%
STIC Liquid Assets Portfolio(h)(i) 5,824,736 $ 5,824,736
- -------------------------------------------------------------------------
STIC Prime Portfolio(h)(i) 5,824,736 5,824,736
=========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $11,649,472) 11,649,472
=========================================================================
TOTAL INVESTMENTS-106.91% (Cost $162,955,024) 174,749,596
=========================================================================
OTHER ASSETS LESS LIABILITIES-(6.91%) (11,300,962)
=========================================================================
NET ASSETS-100.00% $163,448,634
_________________________________________________________________________
=========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
BRL - Brazilian Dollars
Conv. - Convertible
Ctfs - Certificates
GDR - Global Depositary Receipt
NVDR - Non-voting Depository Receipt
Pfd. - Preferred
REGS - Regulation S
Wts. - Warrants
</Table>
Notes to Schedule of Investments:
(a) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 04/30/03 was $29,258,129,
which represented 17.90% of the Fund's net assets.
(b) Security considered to be illiquid. The aggregate market value of these
securities at 04/30/03 was $10,455,628 which represented 6.40% of the Fund's
net assets.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(e) Non-income producing security.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) Zero coupon bond issued at a discount and acquired through a corporate
action.
(h) The money market fund and the Fund are affiliated by having the same
investment advisor.
(i) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$162,955,024)* $ 174,749,596
- ------------------------------------------------------------
Foreign currencies, at value (cost $519,810) 526,169
- ------------------------------------------------------------
Receivables for:
Investments sold 1,282,904
- ------------------------------------------------------------
Fund shares sold 3,059,907
- ------------------------------------------------------------
Dividends 1,075,729
- ------------------------------------------------------------
Investment for deferred compensation plan 4,897
- ------------------------------------------------------------
Other assets 26,528
============================================================
Total assets 180,725,730
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 3,251,862
- ------------------------------------------------------------
Fund shares reacquired 1,692,254
- ------------------------------------------------------------
Deferred compensation plan 4,897
- ------------------------------------------------------------
Collateral upon return of securities loaned 11,649,472
- ------------------------------------------------------------
Accrued distribution fees 208,544
- ------------------------------------------------------------
Accrued trustees' fees 741
- ------------------------------------------------------------
Accrued transfer agent fees 160,206
- ------------------------------------------------------------
Accrued operating expenses 309,120
============================================================
Total liabilities 17,277,096
============================================================
Net assets applicable to shares outstanding $ 163,448,634
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 427,931,807
- ------------------------------------------------------------
Undistributed net investment income 559,586
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign
currencies (276,844,727)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 11,801,968
============================================================
$ 163,448,634
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 136,204,783
____________________________________________________________
============================================================
Class B $ 24,306,528
____________________________________________________________
============================================================
Class C $ 2,937,323
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 18,415,531
____________________________________________________________
============================================================
Class B 3,328,149
____________________________________________________________
============================================================
Class C 402,822
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 7.40
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $7.40 divided by
95.25%) $ 7.77
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 7.30
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 7.29
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $11,727,543
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $213,016) $ 2,168,068
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 20,979
- --------------------------------------------------------------------------
Interest 223
- --------------------------------------------------------------------------
Security lending income 42,798
==========================================================================
Total investment income 2,232,068
==========================================================================
EXPENSES:
Advisory fees 771,267
- --------------------------------------------------------------------------
Administrative services fees 24,795
- --------------------------------------------------------------------------
Custodian fees 60,294
- --------------------------------------------------------------------------
Distribution fees -- Class A 303,487
- --------------------------------------------------------------------------
Distribution fees -- Class B 142,498
- --------------------------------------------------------------------------
Distribution fees -- Class C 14,920
- --------------------------------------------------------------------------
Transfer agent fees 596,218
- --------------------------------------------------------------------------
Trustees' fees 4,758
- --------------------------------------------------------------------------
Other 122,587
==========================================================================
Total expenses 2,040,824
==========================================================================
Less: Fees waived and expenses paid indirectly (372,480)
==========================================================================
Net expenses 1,668,344
==========================================================================
Net investment income 563,724
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (10,207,712)
- --------------------------------------------------------------------------
Foreign currencies (69,527)
==========================================================================
(10,277,239)
==========================================================================
Change in net unrealized appreciation of:
Investment securities 19,549,498
- --------------------------------------------------------------------------
Foreign currencies 23,373
==========================================================================
19,572,871
==========================================================================
Net gain from investment securities and foreign currencies 9,295,632
==========================================================================
Net increase in net assets resulting from operations $ 9,859,356
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 563,724 $ (433,539)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (10,277,239) (3,181,583)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 19,572,871 24,983,345
============================================================================================
Net increase in net assets resulting from operations 9,859,356 21,368,223
============================================================================================
Distributions to shareholders from net investment income:
Class A -- (1,561,040)
- --------------------------------------------------------------------------------------------
Class B -- (329,075)
- --------------------------------------------------------------------------------------------
Class C -- (12,188)
============================================================================================
Net increase (decrease) in net assets resulting from
distributions -- (1,902,303)
============================================================================================
Share transactions-net:
Class A 4,375,225 2,526,300
- --------------------------------------------------------------------------------------------
Class B (8,740,924) (28,318,242)
- --------------------------------------------------------------------------------------------
Class C 121,334 681,781
============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (4,244,365) (25,110,161)
============================================================================================
Net increase (decrease) in net assets 5,614,991 (5,644,241)
============================================================================================
NET ASSETS:
Beginning of period 157,833,643 163,477,884
============================================================================================
End of period $ 163,448,634 $ 157,833,643
____________________________________________________________________________________________
============================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
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 statutory 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 seven
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers multiple classes of shares.
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. Companies are listed in the Schedule of Investments based on the
country in which they are organized.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately
F-7
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. The combined results of
changes in foreign exchange rates and the fluctuation of market prices on
investments are included with the net realized and unrealized gain or loss
from investments in the Statement of Operations.
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. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's 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 waive fees and reimburse expenses
(excluding interest, taxes, dividend expense on short sales, extraordinary items
and increases in expenses due to expense offset arrangements, if any) for Class
A, Class B and Class C shares to the extent necessary to limit total operating
expenses of Class A shares to 2.00%. To the extent that the annualized expense
ratio does not exceed the contractual expense limitation, AIM will retain the
ability to be reimbursed for such fee waivers or reimbursements prior to the end
of each committed period. Further, AIM has voluntarily agreed to waive advisory
fees of the Fund in the amount of 25% of the advisory fee AIM receives from the
affiliated money market funds in which the Fund has invested (excluding
investments made in affiliated money market funds with cash collateral from
securities loaned by the Fund). For the six months ended April 30, 2003, AIM
waived fees of $370,830.
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 six months ended April 30, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $334,226 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. NASD Rules
also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Rule 12b-1 Plan
fees on Class A shares issued as a result of conversion of shares from G.T.
Developing Markets Fund, Inc. on October 31, 1997 and in connection with the AIM
Eastern Europe Fund reorganization on September 10, 1999 are limited to 0.25% of
the average net assets of the Fund's Class A shares issued in connection with
such transactions. Pursuant to the Plans, for the six months ended April 30,
2003, the Class A, Class B and Class C shares paid $303,487, $142,498 and
$14,920 respectively.
Front-end sales commissions and contingent deferred sales charges ("sales
charges") are not recorded as expenses of the Fund. Front-end sales commissions
are deducted from proceeds from the sales of Fund shares prior to investment in
Class A shares of the Fund. Contingent deferred sales charges ("CDSCs") are
deducted from redemption proceeds prior to remittance to the shareholder. During
the six months ended April 30, 2003, AIM Distributors retained $4,831 in
front-end sales commissions from the sale of Class A shares and $0, $264, and
$797 for Class A, Class B and Class C shares, respectively, for CDSCs imposed
upon redemption by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,360 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $390 and reductions in
custodian fees of $1,260 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $1,650.
F-8
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility with a syndicate administered by
Citibank, N.A. expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day following the
valuation date of the securities loaned. Therefore, the value of the collateral
may be temporarily less than the value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $11,727,543 were on
loan to brokers. The loans were secured by cash collateral of $11,649,472
received by the Fund and invested in affiliated money market funds. For the six
months ended April 30, 2003, the Fund received fees of $42,798 for securities
lending.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL
EXPIRATION LOSS CARRYFORWARD
- ----------------------------------------------------------
October 31, 2003 $ 4,421,874
- ----------------------------------------------------------
October 31, 2005 92,557,012
- ----------------------------------------------------------
October 31, 2006 77,587,890
- ----------------------------------------------------------
October 31, 2007 9,273,499
- ----------------------------------------------------------
October 31, 2008 15,085,807
- ----------------------------------------------------------
October 31, 2009 59,191,538
- ----------------------------------------------------------
October 31, 2010 7,382,000
==========================================================
Total capital loss carryforward $265,499,620
__________________________________________________________
==========================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $58,596,025 and $65,553,353, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $ 21,449,771
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (10,465,866)
===========================================================
Net unrealized appreciation of investment
securities $ 10,983,905
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $163,765,691.
</Table>
F-9
NOTE 9--SHARE INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 7,724,698 $ 55,449,596 16,547,680 $ 131,599,244
- ------------------------------------------------------------------------------------------------------------------------
Class B 269,363 1,963,269 1,757,089 14,693,888
- ------------------------------------------------------------------------------------------------------------------------
Class C 1,821,762 12,941,490 4,399,753 35,723,849
========================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 154,286 1,189,539
- ------------------------------------------------------------------------------------------------------------------------
Class B -- -- 36,032 276,365
- ------------------------------------------------------------------------------------------------------------------------
Class C -- -- 1,387 10,628
========================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 686,762 4,928,741 2,436,361 20,184,741
- ------------------------------------------------------------------------------------------------------------------------
Class B (694,700) (4,928,741) (2,460,236) (20,184,741)
========================================================================================================================
Reacquired:
Class A (7,782,976) (56,003,112) (18,869,366) (150,447,224)
- ------------------------------------------------------------------------------------------------------------------------
Class B (812,658) (5,775,452) (2,926,977) (23,103,754)
- ------------------------------------------------------------------------------------------------------------------------
Class C (1,790,300) (12,820,156) (4,299,081) (35,052,696)
========================================================================================================================
(578,049) $ (4,244,365) (3,223,072) $ (25,110,161)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
F-10
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.96 $ 6.32 $ 8.89 $ 9.86 $ 7.53 $ 12.56
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.03 (0.01)(a) 0.15(a) 0.01(a) 0.06(a) 0.39(a)(b)
- ------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.41 0.74 (2.67) (0.95) 2.36 (5.10)
==============================================================================================================================
Total from investment operations 0.44 0.73 (2.52) (0.94) 2.42 (4.71)
==============================================================================================================================
Redemptions fees retained -- -- -- 0.01 0.03 0.28
==============================================================================================================================
Less distributions from net investment
income -- (0.09) (0.05) (0.04) (0.12) (0.60)
==============================================================================================================================
Net asset value, end of period $ 7.40 $ 6.96 $ 6.32 $ 8.89 $ 9.86 $ 7.53
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(c) 6.32% 11.37% (28.51)% (9.52)% 33.11% (37.09)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $136,205 $123,812 $110,756 $136,160 $157,198 $87,517
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.01%(d) 1.84% 1.76% 1.87% 1.91% 1.93%
- ------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.48%(d) 2.35% 2.26% 1.95% 2.38% 2.34%
==============================================================================================================================
Ratio of net investment income (loss) to
average net assets 0.81%(d) (0.07)% 1.95% 0.05% 0.68% 3.84%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate(e) 38% 109% 144% 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) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$127,775,116.
(e) Not annualized for periods less than one year.
F-11
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
--------------------------------------------------------------------------------------
NOVEMBER 3, 1997
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ------------------------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 6.89 $ 6.25 $ 8.79 $ 9.79 $ 7.49 $ 12.56
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01 (0.05)(a) 0.11(a) (0.06)(a) 0.01(a) 0.31(a)(b)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.40 0.73 (2.65) (0.94) 2.37 (5.07)
===========================================================================================================================
Total from investment
operations 0.41 0.68 (2.54) (1.00) 2.38 (4.76)
===========================================================================================================================
Redemptions fees retained -- -- -- -- -- 0.28
===========================================================================================================================
Less distributions from net
investment income -- (0.04) -- -- (0.08) (0.59)
===========================================================================================================================
Net asset value, end of period $ 7.30 $ 6.89 $ 6.25 $ 8.79 $ 9.79 $ 7.49
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(c) 5.95% 10.85% (28.90)% (10.21)% 32.14% (39.76)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $24,307 $31,465 $51,040 $79,754 $49,723 $ 154
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 2.53%(d) 2.38% 2.35% 2.47% 2.51% 2.68%(e)
- ---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.00%(d) 2.89% 2.85% 2.55% 2.98% 3.09%(e)
===========================================================================================================================
Ratio of net investment income
(loss) to average net assets 0.29%(d) (0.61)% 1.36% (0.56)% 0.08% 3.09%(e)
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(f) 38% 109% 144% 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) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for period less than one year.
(d) Ratios are annualized and based on average daily net assets of
$28,735,858.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-12
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
------------------------------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ----------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.88 $ 6.25 $ 8.79 $ 9.79 $ 7.47
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01 (0.05)(a) 0.10(a) (0.06)(a) --(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.40 0.72 (2.64) (0.94) 2.32
=================================================================================================================================
Total from investment operations 0.41 0.67 (2.54) (1.00) 2.32
=================================================================================================================================
Less distributions from net
investment income -- (0.04) -- -- --
=================================================================================================================================
Net asset value, end of period $ 7.29 $ 6.88 $ 6.25 $ 8.79 $ 9.79
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 5.96% 10.69% (28.90)% (10.21)% 31.06%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $2,937 $2,557 $ 1,682 $ 1,618 $ 412
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 2.53%(c) 2.38% 2.35% 2.47% 2.51%(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.00%(c) 2.89% 2.85% 2.55% 2.98%(d)
=================================================================================================================================
Ratio of net investment income (loss)
to average net assets 0.29%(c) (0.61)% 1.36% (0.56)% 0.08%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 38% 109% 144% 192% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with generally accepted accounting
principles in the United States of America, does not include sales
charges and is not annualized for period less than one year.
(c) Ratios are annualized and based on average daily net assets of
$3,008,731.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 11--SUBSEQUENT EVENT
Effective as of the close of business on May 23, 2003, the Master Intergroup
Sub-Advisory Contract between INVESCO Asset Management Limited and AIM was
terminated.
F-13
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
SUB-ADVISOR
Jack M. Fields Dana R. Sutton
Vice President and Treasurer INVESCO Asset Management Limited
Carl Frischling 30 Funsbury Square
Stuart W. Coco London EC2A IAG
Prema Mathai-Davis Vice President England
Lewis F. Pennock Melville B. Cox TRANSFER AGENT
Vice President
Ruth H. Quigley A I M Fund Services, Inc.
Edgar M. Larsen P.O. Box 4739
Louis S. Sklar Vice President Houston, TX 77210-4739
Nancy L. Martin CUSTODIAN
Secretary
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
COUNSEL TO THE FUND
Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund5 AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Energy Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
YOUR GOALS. OUR SOLUTIONS.--SERVICEMARK--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
DVM-SAR-1
AIMinvestments.com
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM GLOBAL ENERGY FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Global Energy Fund seeks to provide long-term growth
of capital. The fund seeks to meet this objective
by investing, normally, at least 80% of its assets
in securities of energy-sector companies.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
PORTFOLIO COMPOSITION BY COUNTRY
As of 4/30/03
- --------------------------------------------------------------------------------
(PIE CHART)
CANADA 38.3%
ALL OTHERS COMBINED 15.7%
UNITED STATES 46.0%
TOTAL NUMBER OF HOLDINGS* 43
TOTAL NET ASSETS $41.7 million
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (5/31/94) 0.76%
5 Years -6.18
1 Year -8.11
CLASS B SHARES
Inception (5/31/94) 0.87%
5 Years -6.11
1 Year -8.87
CLASS C SHARES
Inception (3/01/99) 3.21%
1 Year -4.95
In addition to fund returns as of the close of the reporting period, industry
regulations require us to provide average annual total returns (including sales
charges) for periods ended 3/31/03, the most recent calendar quarter end, which
were as follows. Class A shares, inception (5/31/94), 0.78%; five years, -5.86%;
one year, -6.28%. Class B shares, inception (5/31/94), 0.88%; five
years, -5.80%; one year, -6.98%. Class C shares, inception (3/01/99), 3.30%; one
year, -3.07%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 6.37%
CLASS B SHARES 6.11
CLASS C SHARES 6.10
MSCI WORLD INDEX 3.62
(Broad Market Index)
MSCI AC WORLD FREE ENERGY INDEX 1.74
(Style-specific Index)
LIPPER NATURAL RESOURCES FUND INDEX 4.05
(Peer Group Index)
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
========================================================================================================================
TOP 10 EQUITY HOLDINGS* INDUSTRY BREAKDOWN*
- ------------------------------------------------------------------------------------------------------------------------
1. Patterson-UTI Energy, Inc. 4.5% 1. Oil & Gas Exploration & Production 46.5%
2. Talisman Energy Inc. 4.4 2. Oil & Gas Drilling 17.1
3. Suncor Energy, Inc. 4.2 3. Oil & Gas Equipment & Services 13.4
4. BJ Services Co. 4.0 4. Integrated Oil & Gas 11.2
5. Clean Power Income Fund 3.8 5. Electric Utilities 5.2
6. Cimarex Energy Co. 3.6 6. Precious Metals & Minerals 2.1
7. Apache Corp. 3.6 7. Electrical Components & Equipment 0.5
8. Bonavista Petroleum Ltd. 3.4
9. Burlington Resources Inc. 3.3
10. EOG Resources, Inc. 3.2
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will continue to hold any particular
security.
========================================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Global Energy Fund's performance figures are historical, and they
reflect fund expenses, 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 share classes will differ due to different
sales charge structures and class expenses.
o Had the advisor not waived fees and/or reimbursed expenses, returns would
have been lower.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. A significant portion of the fund's returns during certain
periods was attributable to its investments in IPOs. These investments have
a magnified impact when the fund's asset base is relatively small. As the
fund's assets grow, the impact of IPO investments will decline, which may
reduce the effect of IPO investments on the fund's total return. For
additional information regarding the impact of IPO investments on the fund's
performance, please see the fund's prospectus.
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 the
original cost.
o Investing in emerging markets may involve greater risk and potential reward
than investing in more established markets.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o Investing in a single-sector or single-region mutual fund may involve
greater risk and potential reward than investing in a more diversified fund.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged MSCI World Index is a group of global securities tracked by
Morgan Stanley Capital International.
o The MSCI AC World Free Energy Index is designed to measure actual buyable
opportunities in the global energy market. This index measures the
performance of energy stocks of both developed and emerging markets.
o The unmanaged Lipper Natural Resources Fund Index represents an average of
the 10 largest natural resources funds tracked by Lipper, Inc., an
independent mutual fund performance monitor, and is considered
representative of natural resources stocks.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMinvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Global Energy Fund for the six
ROBERT H. months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page. This letter will provide an overview of the
markets and your fund during the six months covered by this
report. As always, timely information about your fund and
the markets in general is available at our Web site,
aiminvestments.com.
MARKET CONDITIONS
In U.S. markets, positive performance during March and April
2003 enabled major stock market indexes to post gains for
the reporting period. For example, the unmanaged Standard &
Poor's Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period.
International markets, as measured by the unmanaged MSCI Europe, Australasia
and the Far East Index (the EAFE--Registered Trademark--), a group of foreign
securities tracked by Morgan Stanley Capital International, produced negative
returns for the first quarter of 2003. International markets, however, rallied
in April. This rally helped push international market returns into positive
territory for the six-month reporting period.
European markets rallied toward the close of the reporting period, with the
MSCI (Morgan Stanley Capital International) Europe Index, often considered
representative of the European equity market, gaining 13.49% in April. In
European monetary affairs, the European Central Bank (ECB) cut its benchmark
interest rate 25 basis points to 2.50% in March. It remained at that level as
the reporting period closed.
On the currency front, the U.S. dollar was weak compared to many foreign
currencies. In particular, the euro showed strength as it appreciated nearly 13%
against the dollar during the reporting period. Other notable currencies that
gained ground on the dollar included the Australian dollar, Swiss franc, British
pound and Canadian dollar.
YOUR FUND
For the six-month period on which this report focuses, all three share
classes of the AIM Global Energy Fund posted positive returns at net asset
value, exceeding their benchmark indexes by two to four percentage points.
Portfolio managers Roger Mortimer and Glen Hilton have been pleased with the
performance of the fund.
Additionally, there has been a 28% increase in the fund's assets. On October
31, 2002, at the end of the previous reporting period, the net assets of the
fund stood at $29.9 million. At the end of this reporting period, on April 30,
2003, net assets were $41.7 million.
Geopolitical events coincided with oil price volatility during the period.
The price of oil had risen prior to the conflict in Iraq, but a few days prior
to the start of hostilities, oil prices began to drop. The decline continued
throughout the rest of March. Prices rose again in April. Portfolio manager
Roger Mortimer attributes the performance of the fund in this highly volatile
environment to the fund's defensive investment strategy.
IN CLOSING
I thank you for your continued participation in AIM Global Energy Fund, and I
look forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department are ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
IN U.S. MARKETS, POSITIVE
PERFORMANCE DURING MARCH AND APRIL
2003 ENABLED MAJOR STOCK MARKET
INDEXES TO POST GAINS FOR THE
REPORTING PERIOD.
ROBERT H. GRAHAM
================================================================================
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-45.96%
INTEGRATED OIL & GAS-3.15%
Murphy Oil Corp. 31,600 $ 1,316,140
======================================================================
OIL & GAS DRILLING-8.83%
Grey Wolf, Inc.(a) 156,400 633,420
- ----------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 56,200 1,859,658
- ----------------------------------------------------------------------
Rowan Cos., Inc.(a) 58,000 1,189,000
======================================================================
3,682,078
======================================================================
OIL & GAS EQUIPMENT & SERVICES-11.73%
BJ Services Co.(a) 45,500 1,661,205
- ----------------------------------------------------------------------
Cooper Cameron Corp.(a) 12,600 603,036
- ----------------------------------------------------------------------
Halliburton Co. 41,100 879,951
- ----------------------------------------------------------------------
Key Energy Services, Inc.(a) 128,300 1,291,981
- ----------------------------------------------------------------------
Smith International, Inc.(a) 12,800 455,168
======================================================================
4,891,341
======================================================================
OIL & GAS EXPLORATION & PRODUCTION-22.25%
Anadarko Petroleum Corp. 15,000 666,000
- ----------------------------------------------------------------------
Apache Corp. 26,360 1,509,110
- ----------------------------------------------------------------------
BP Prudhoe Bay Royalty Trust 73,700 1,085,601
- ----------------------------------------------------------------------
Burlington Resources Inc. 29,900 1,384,669
- ----------------------------------------------------------------------
Cimarex Energy Co.(a) 76,700 1,510,990
- ----------------------------------------------------------------------
EOG Resources, Inc. 36,200 1,353,156
- ----------------------------------------------------------------------
Evergreen Resources, Inc.(a) 19,100 908,205
- ----------------------------------------------------------------------
XTO Energy, Inc. 44,333 864,493
======================================================================
9,282,224
======================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $18,347,355) 19,171,783
======================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-50.15%
BERMUDA-3.71%
Nabors Industries, Ltd. (Oil & Gas
Drilling)(a) 27,900 1,093,680
- ----------------------------------------------------------------------
Weatherford International Ltd. (Oil & Gas
Equipment & Services)(a) 11,300 454,599
======================================================================
1,548,279
======================================================================
CANADA-38.26%
Algonquin Power Income Fund (Electric
Utilities) 94,200 572,323
- ----------------------------------------------------------------------
Bonavista Petroleum Ltd. (Oil & Gas
Exploration & Production)(a) 60,500 1,417,969
- ----------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------
CANADA-(CONTINUED)
Canadian Oil Sands Trust (Oil & Gas
Exploration & Production) (Acquired
02/21/03; Cost $295,290)(a)(b)(c) 12,700 $ 303,503
- ----------------------------------------------------------------------
Canadian Superior Energy, Inc. (Oil & Gas
Exploration & Production)(a) 716,000 739,174
- ----------------------------------------------------------------------
CE Franklin Ltd. (Oil & Gas Equipment &
Services)(a) 117,200 246,120
- ----------------------------------------------------------------------
Cequel Energy Inc. (Oil & Gas Exploration &
Production)(a) 250,000 1,098,633
- ----------------------------------------------------------------------
Clean Power Income Fund (Electric Utilities) 252,500 1,602,783
- ----------------------------------------------------------------------
Compton Petroleum Corp. (Oil & Gas
Exploration & Production)(a) 320,900 1,197,555
- ----------------------------------------------------------------------
Defiant Energy Corp. (Oil & Gas Exploration &
Production)(a) 146,700 245,591
- ----------------------------------------------------------------------
Ensign Resource Service Group, Inc. (Oil &
Gas Drilling) 42,600 546,466
- ----------------------------------------------------------------------
Minefinders Corp., Ltd. (Precious Metals &
Minerals)(a) 67,600 367,801
- ----------------------------------------------------------------------
Nexen Inc. (Oil & Gas Exploration &
Production) 30,100 598,389
- ----------------------------------------------------------------------
Oiltec Resources Ltd. (Oil & Gas Exploration
& Production)(a) 126,700 106,055
- ----------------------------------------------------------------------
Penn West Petroleum Ltd. (Oil & Gas
Exploration & Production)(a) 50,000 1,334,054
- ----------------------------------------------------------------------
Southwestern Resources Corp. (Precious Metals
& Minerals)(a) 58,900 525,893
- ----------------------------------------------------------------------
Stuart Energy Systems Corp. (Electrical
Components & Equipment)(a) 97,200 202,726
- ----------------------------------------------------------------------
Suncor Energy, Inc. (Integrated Oil & Gas) 107,300 1,765,630
- ----------------------------------------------------------------------
Talisman Energy Inc. (Oil & Gas Exploration &
Production) 45,700 1,824,366
- ----------------------------------------------------------------------
Western Oil Sands Inc.-Class A (Oil & Gas
Exploration & Production)(a) 62,300 1,073,389
- ----------------------------------------------------------------------
Zargon Oil & Gas Ltd. (Oil & Gas Exploration
& Production)(a) 29,000 189,139
======================================================================
15,957,559
======================================================================
CAYMAN ISLANDS-4.36%
Noble Corp. (Oil & Gas Drilling)(a) 31,300 968,735
- ----------------------------------------------------------------------
Transocean Inc. (Oil & Gas Drilling) 44,700 851,535
======================================================================
1,820,270
======================================================================
FRANCE-2.55%
Total S.A. (Integrated Oil & Gas) 8,104 1,064,677
======================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------
UNITED KINGDOM-1.27%
BP PLC (Integrated Oil & Gas) 83,230 $ 527,962
======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $20,688,851) 20,918,747
======================================================================
MONEY MARKET FUNDS-3.37%
STIC Liquid Assets Portfolio(d) 703,341 703,341
- ----------------------------------------------------------------------
STIC Prime Portfolio(d) 703,341 703,341
======================================================================
Total Money Market Funds (Cost
$1,406,682) 1,406,682
======================================================================
TOTAL INVESTMENTS-99.48% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $40,442,888) 41,497,212
______________________________________________________________________
======================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-5.43%
STIC Liquid Assets Portfolio(d)(e) 1,133,285 $ 1,133,285
- ----------------------------------------------------------------------
STIC Prime Portfolio(d)(e) 1,133,286 1,133,286
======================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $2,266,571) 2,266,571
======================================================================
TOTAL INVESTMENTS-104.91% (Cost $42,709,459) 43,763,783
======================================================================
OTHER ASSETS LESS LIABILITIES-(4.91%) (2,049,604)
======================================================================
NET ASSETS-100.00% $41,714,179
______________________________________________________________________
======================================================================
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of this security. The
market value of this security at 04/30/03 represented 0.73% of the Fund's
net assets. This security is considered to be illiquid.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
(e) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$42,709,459)* $43,763,783
- -----------------------------------------------------------
Foreign currencies, at value (cost $88,535) 89,261
- -----------------------------------------------------------
Receivables for:
Investments sold 218,601
- -----------------------------------------------------------
Fund shares sold 94,102
- -----------------------------------------------------------
Dividends 20,887
- -----------------------------------------------------------
Due from advisor 29,078
- -----------------------------------------------------------
Investment for deferred compensation plan 4,471
- -----------------------------------------------------------
Other assets 19,042
===========================================================
Total assets 44,239,225
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 149,419
- -----------------------------------------------------------
Deferred compensation plan 4,471
- -----------------------------------------------------------
Collateral upon return of securities loaned 2,266,571
- -----------------------------------------------------------
Accrued distribution fees 34,695
- -----------------------------------------------------------
Accrued trustees' fees 704
- -----------------------------------------------------------
Accrued transfer agent fees 26,332
- -----------------------------------------------------------
Accrued operating expenses 42,854
===========================================================
Total liabilities 2,525,046
===========================================================
Net assets applicable to shares outstanding $41,714,179
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $66,818,832
- -----------------------------------------------------------
Undistributed net investment income (loss) (81,607)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign currencies (26,080,981)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 1,057,935
===========================================================
$41,714,179
___________________________________________________________
===========================================================
NET ASSETS:
Class A $26,839,248
___________________________________________________________
===========================================================
Class B $12,733,031
___________________________________________________________
===========================================================
Class C $ 2,141,900
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 2,288,672
___________________________________________________________
===========================================================
Class B 1,119,136
___________________________________________________________
===========================================================
Class C 188,099
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 11.73
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $11.73 divided by
95.25%) $ 12.31
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 11.38
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 11.39
___________________________________________________________
===========================================================
* At April 30, 2003, securities with an aggregate market
value of $2,232,860 were on loan to brokers.
</Table>
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $21,269) $ 298,819
- ------------------------------------------------------------------------
Dividends from affiliated money market funds 12,498
- ------------------------------------------------------------------------
Interest 312
- ------------------------------------------------------------------------
Security lending income 2,652
========================================================================
Total investment income 314,281
========================================================================
EXPENSES:
Advisory fees 175,228
- ------------------------------------------------------------------------
Administrative services fees 24,795
- ------------------------------------------------------------------------
Custodian fees 17,398
- ------------------------------------------------------------------------
Distribution fees -- Class A 56,487
- ------------------------------------------------------------------------
Distribution fees -- Class B 57,755
- ------------------------------------------------------------------------
Distribution fees -- Class C 8,992
- ------------------------------------------------------------------------
Transfer agent fees 91,212
- ------------------------------------------------------------------------
Trustees' fees 4,178
- ------------------------------------------------------------------------
Professional fees 52,271
- ------------------------------------------------------------------------
Other 36,796
========================================================================
Total expenses 525,112
========================================================================
Less: Fees waived and expenses paid indirectly (133,008)
========================================================================
Net expenses 392,104
========================================================================
Net investment income (loss) (77,823)
========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 82,539
- ------------------------------------------------------------------------
Foreign currencies (39,524)
========================================================================
43,015
========================================================================
Change in net unrealized appreciation of:
Investment securities 1,529,898
- ------------------------------------------------------------------------
Foreign currencies 100
========================================================================
1,529,998
========================================================================
Net gain from investment securities and foreign currencies 1,573,013
========================================================================
Net increase in net assets resulting from operations $1,495,190
________________________________________________________________________
========================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (77,823) $ (105,851)
- ----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 43,015 (4,124,801)
- ----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 1,529,998 4,568,085
========================================================================================
Net increase in net assets resulting from operations 1,495,190 337,433
========================================================================================
Distributions to shareholders from net investment income:
Class A (123,777) (71,556)
- ----------------------------------------------------------------------------------------
Class B (14,961) (220)
- ----------------------------------------------------------------------------------------
Class C (2,310) (16)
========================================================================================
Net increase (decrease) in net assets resulting from
distributions (141,048) (71,792)
========================================================================================
Share transactions-net:
Class A 8,136,179 5,662,718
- ----------------------------------------------------------------------------------------
Class B 1,586,734 (1,624,200)
- ----------------------------------------------------------------------------------------
Class C 739,969 421,819
========================================================================================
Net increase in net assets resulting from share
transactions 10,462,882 4,460,337
========================================================================================
Net increase in net assets 11,817,024 4,725,978
========================================================================================
NET ASSETS:
Beginning of period 29,897,155 25,171,177
========================================================================================
End of period $41,714,179 $29,897,155
________________________________________________________________________________________
========================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Energy Fund (the "Fund") is a separate series of AIM Investment Funds
(the "Trust"). The Trust is organized as a Delaware statutory 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 seven
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers multiple classes of shares.
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. Companies
are listed in the Schedule of Investments based on the country in which they are
organized.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate,
F-5
maturity, individual trading characteristics and other market data.
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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
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. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividends on short sales, extraordinary items and increases in
expenses due to expense offset arrangements, if any) for Class A, Class B and
Class C shares to 2.00%, 2.50% and 2.50%, respectively. To the extent that the
annualized expense ratio does not exceed the contractual expense limitation AIM
will retain the ability to be reimbursed for such fee waivers or reimbursements
prior to the end of each committed period. Further, AIM has voluntarily agreed
to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in affiliated money market funds with cash
collateral from securities loaned by the Fund). During the six months ended
April 30, 2003, AIM waived fees of $132,729.
F-6
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 six months ended April 30, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $50,034 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. NASD Rules
also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $56,487, $57,755 and $8,992, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $4,291 in front-end sales commissions from the sale of
Class A shares and $500, $0 and $653 for Class A, Class B and Class C shares,
respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,241 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $265 and reductions in
custodian fees of $14 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $279.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM, which were
parties to the line of credit could borrow on a first come, first served basis.
The funds, which were party to the line of credit, were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At April 30, 2003, securities with an aggregate value of $2,232,860 were on
loan to brokers. The loans were secured by cash collateral of $2,266,571
received by the Portfolio and subsequently invested in affiliated money market
funds. For the six months ended April 30, 2003 the Fund received fees of $2,652
for securities lending.
F-7
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- --------------------------------------------------------------------------------
October 31, 2006 $20,054,017
- --------------------------------------------------------------------------------
October 31, 2007 1,450,461
- --------------------------------------------------------------------------------
October 31, 2008 338,540
- --------------------------------------------------------------------------------
October 31, 2010 4,180,954
================================================================================
Total capital loss carryforward $26,023,972
________________________________________________________________________________
================================================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $70,858,512 and $60,501,520, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $1,724,265
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (808,233)
===============================================================================
Net unrealized appreciation of investment securities $ 916,032
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $42,847,751.
</Table>
NOTE 9--SHARE INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,509,454 $ 17,980,865 1,249,640 $ 14,281,178
- --------------------------------------------------------------------------------------------------------------------
Class B 397,760 4,487,974 505,919 5,786,626
- --------------------------------------------------------------------------------------------------------------------
Class C 123,554 1,381,944 308,554 3,384,904
====================================================================================================================
Issued as reinvestment of dividends:
Class A 10,183 117,614 6,136 62,830
- --------------------------------------------------------------------------------------------------------------------
Class B 1,175 13,197 18 180
- --------------------------------------------------------------------------------------------------------------------
Class C 184 2,070 1 12
====================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 42,059 507,816 123,071 1,378,868
- --------------------------------------------------------------------------------------------------------------------
Class B (46,106) (507,816) (127,313) (1,378,868)
====================================================================================================================
Reacquired:
Class A (902,178) (10,470,116) (905,005) (10,060,158)
- --------------------------------------------------------------------------------------------------------------------
Class B (212,686) (2,406,621) (573,699) (6,032,138)
- --------------------------------------------------------------------------------------------------------------------
Class C (57,636) (644,045) (278,055) (2,963,097)
====================================================================================================================
865,763 $ 10,462,882 309,267 $ 4,460,337
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
F-8
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.10 $ 10.58 $ 12.22 $ 12.12 $ 10.95 $ 20.65
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.01)(a) 0.05(a) 0.02(a) 0.02(a) (0.11)(a)
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.72 0.59 (1.69) 0.08 1.15 (8.91)
==========================================================================================================================
Total from investment operations 0.71 0.58 (1.64) 0.10 1.17 (9.02)
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.08) (0.06) -- -- -- (0.19)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- -- (0.49)
==========================================================================================================================
Total distributions (0.08) (0.06) -- -- -- (0.68)
==========================================================================================================================
Net asset value, end of period $ 11.73 $ 11.10 $ 10.58 $ 12.22 $ 12.12 $ 10.95
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 6.37% 5.56% (13.42)% 0.74% 10.68% (45.02)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,839 $18,076 $12,224 $12,638 $15,664 $19,463
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 2.00% 2.00% 2.00% 2.00% 1.98%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.74%(c) 2.76% 2.84% 2.80% 2.30% 2.29%
==========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.25)%(c) (0.13)% 0.45% 0.18% 0.19% (0.75)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(d) 179% 152% 189% 105% 123% 201%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$22,782,060.
(d) Not annualized for periods less than one year.
F-9
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.74 $ 10.23 $ 11.88 $ 11.84 $ 10.75 $ 20.37
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.07)(a) (0.01)(a) (0.04)(a) (0.04)(a) (0.18)(a)
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.70 0.58 (1.64) 0.08 1.13 (8.76)
==========================================================================================================================
Total from investment operations 0.66 0.51 (1.65) 0.04 1.09 (8.94)
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.02) (0.00) -- -- -- (0.19)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- -- (0.49)
==========================================================================================================================
Total distributions (0.02) (0.00) -- -- -- (0.68)
==========================================================================================================================
Net asset value, end of period $ 11.38 $ 10.74 $ 10.23 $ 11.88 $ 11.84 $ 10.75
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 6.11% 4.99% (13.89)% 0.34% 10.14% (45.25)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,733 $10,510 $12,010 $13,710 $20,019 $28,996
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50% 2.50% 2.50% 2.50% 2.48%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.24%(c) 3.26% 3.34% 3.30% 2.80% 2.79%
==========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.75)%(c) (0.63)% (0.05)% (0.32)% (0.31)% (1.25)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(d) 179% 152% 189% 105% 123% 201%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$11,646,727.
(d) Not annualized for periods less than one year.
F-10
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, --------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.75 $10.24 $ 11.88 $11.84 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.07)(a) (0.01)(a) (0.04)(a) (0.03)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.70 0.58 (1.63) 0.08 1.87
=================================================================================================================================
Total from investment operations 0.66 0.51 (1.64) 0.04 1.84
=================================================================================================================================
Less dividends from net investment income (0.02) (0.00) -- -- --
=================================================================================================================================
Net asset value, end of period $11.39 $10.75 $ 10.24 $11.88 $11.84
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 6.10% 4.98% (13.80)% 0.34% 18.40%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,142 $1,311 $ 937 $ 453 $ 41
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50% 2.50% 2.50% 2.50%(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.24%(c) 3.26% 3.34% 3.30% 2.80%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.75)%(c) (0.63)% (0.05)% (0.32)% (0.31)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate()(e) 179% 152% 189% 105% 123%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,813,351.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 11--SUBSEQUENT EVENT
The Board of Trustees of AIM Investment Funds ("Seller") unanimously approved,
on June 11, 2003, an Agreement and Plan of Reorganization (the "Plan") pursuant
to which AIM Global Energy Fund ("Selling Fund"), a series of Seller, would
transfer all of its assets to INVESCO Energy Fund ("Buying Fund"), a series of
INVESCO Sector Funds, Inc. ("the Reorganization"). As a result of the
Reorganization, shareholders of Selling Fund would receive shares of Buying Fund
in exchange for their shares of Selling Fund, and Selling Fund would cease
operations.
The Plan requires approval of Selling Fund shareholders and will be submitted
to the shareholders for their consideration at a meeting to be held on or around
September 25, 2003. If the Plan is approved by shareholders of Selling Fund and
certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
Effective on or about October 1, 2003, it is anticipated that Selling Fund
will be closed to new investors.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
GEN-SAR-1
AIMinvestments.com
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM GLOBAL FINANCIAL SERVICES FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Global Financial Services Fund seeks long-term growth
of capital by investing normally in the equity securities of
domestic and foreign financial services companies.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
TOP INDUSTRIES
As of April 30, 2003
- --------------------------------------------------------------------------------
(PIE CHART)
OTHER 6.6%
CONSUMER FINANCE 0.5%
IT CONSULTING SERVICES 1.1%
DATA PROCESSING SERVICES 1.3%
REINSURANCE 2.0%
INSURANCE BROKERS 2.8%
LIFE & HEALTH INSURANCE 2.9%
MULTI-LINE INSURANCE 4.3%
PROPERTY & CASUALTY INSURANCE 10.0%
DIVERSIFIED FINANCIAL SERVICES 29.0%
BANKS 39.5%
TOTAL NUMBER OF HOLDINGS* 66
TOTAL NET ASSETS $208.3 BILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (5/31/94) 9.58%
5 Years 2.73
1 Year -17.42
CLASS B SHARES
Inception (5/31/94) 9.69%
5 Years 2.88
1 Year -18.07
CLASS C SHARES
Inception (3/1/99) 4.13%
1 Year -14.63
In addition to returns as of the close of the reporting period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (5/31/94), 8.41%; five years, 1.17%; one year, -27.67%.
Class B shares, inception (5/31/94), 8.52%; 5 years, 1.32%; one year, -28.19%.
Class C shares, inception (3/1/99), 1.64%; one year, -25.17%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03,
excluding sales charges
CLASS A SHARES 4.29%
CLASS B SHARES 4.03
CLASS C SHARES 4.03
MSCI ALL COUNTRY (AC) WORLD FREE INDEX 3.70
(Broad Market Index)
NYSE FINANCE INDEX 4.85
(Style-specific Index)
LIPPER FINANCIAL SERVICES FUND INDEX 3.29
(Peer Group Index)
SOURCE: LIPPER, INC.
Past performance cannot guarantee comparable future results. DUE TO RECENT
SIGNIFICANT MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER
SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR
FOR MORE CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 COUNTRIES*
- --------------------------------------------------------------------------------
1. Bank of America Corp. 3.8% 1. United States 73.2%
2. Merrill Lynch & Co., Inc. 3.3 2. Ireland 4.6
3. Citigroup Inc. 3.2 3. Bermuda 3.5
4. Anglo Irish Bank Corp. PLC (Ireland) 3.1 4. United Kingdom 2.3
5. Legg Mason, Inc. 2.8 5. Italy 2.0
6. Lehman Brothers Holdings Inc. 2.5 6. Spain 1.9
7. Wells Fargo & Co. 2.5 7. Australia 1.2
8. Morgan Stanley 2.3 8. Cayman Islands 1.2
9. Cullen/Frost Bankers, Inc. 2.3 9. Mexico 1.0
10. American International Group, Inc. 2.2 10. Canada 1.0
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance the fund
will continue to hold any particular security.
================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Global Financial Services 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
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 share classes will differ due to different
sales-charge structure and class expenses.
o The fund may participate in the initial public offering market in some
market cycles. Because of the fund's small asset base, any investment in
IPOs may significantly increase the fund's total return. As the fund's
assets grow, the impact of IPO investments will decline, which may reduce
the effect of IPO investments on the fund's total return.
o Had the advisor not waived fees and/or absorbed fund expenses, returns would
have been lower.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information to
be provided by non-U.S. companies.
o Investing in a single-sector mutual fund involves greater risk and potential
return than investing in a more diversified fund.
o The funds investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original investment.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International, Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged MSCI All Country (AC) World Free Index tracks the performance
of approximately 50 developed and emerging countries covered by Morgan
Stanley Capital International. The "free" index represents actual buyable
opportunities for global purchases.
o The unmanaged Lipper Financial Services Fund Index represents an average of
the 10 largest financial-services funds tracked by Lipper, Inc., an
independent mutual fund performance monitor.
o The NYSE Finance Index is a capitalization-weighted index of financial
stocks designed to measure the performance of the financial sector of the
New York Stock Exchange.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMINVESTMENTS.COM.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Global Financial Services Fund for
ROBERT H. the six months ended April 30, 2003. You will note that we
GRAHAM] have adopted a more concise format for our semiannual
reports. Important information such as top holdings and
performance as of the close of the reporting period appear
on the opposite page. This letter will provide an overview
of the markets and your fund during the six months covered
by this report. As always, timely information about your
fund and the markets in general is available at our Web
site, aiminvestments.com.
MARKET CONDITIONS
In U.S. markets, positive performance during March and April
2003 enabled major stock market indexes to post gains for
the reporting period. For example, the unmanaged Standard &
Poor's Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period.
International markets, as measured by the unmanaged MSCI Europe, Australasia
and the Far East Index (the EAFE--Registered Trademark--), a group of foreign
securities tracked by Morgan Stanley Capital International, produced negative
returns for the first quarter of 2003. International markets, however, rallied
in April. This rally helped push international market returns into positive
territory for the six-month reporting period.
European markets rallied toward the close of the reporting period, with the
MSCI (Morgan Stanley Capital International) Europe Index, often considered
representative of the European equity market, gaining 13.49% in April. In
European monetary affairs, the European Central Bank (ECB) cut its benchmark
interest rate 25 basis points to 2.50% in March. It remained at that level as
the reporting period closed.
As widely discussed, in Asia, the epidemic of severe acute respiratory
syndrome (SARS) dealt a blow to local economies. However, the MSCI All Country
(AC) Asia Pacific Free ex-Japan Index, a group of developed and emerging Asian
and Asia-Pacific markets (except Japan) covered by Morgan Stanley Capital
International, rallied in April and was positive for the six-month reporting
period.
On the currency front, the U.S. dollar was weak compared to many foreign
currencies. In particular, the euro showed strength as it appreciated nearly 13%
against the dollar during the reporting period. Other notable currencies that
gained ground on the dollar included the Australian dollar, Swiss franc, British
pound and Canadian dollar.
YOUR FUND
At net asset value, AIM Global Financial Services Fund achieved positive results
for all three share classes for the six months ended April 30, 2003.
Fund managers Meggan M. Walsh, Clas G. Olsson and Barrett K Sides have
positioned banks as the largest industry among the fund's holdings.
During the reporting period, the fund has increased its presence in North
America, Latin America, Asia and the South Pacific. Holdings in Europe were
scaled back.
IN CLOSING
I thank you for your continued participation in AIM Global Financial Services
Fund, and I look forward to reporting to you again in six months. If you have
questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ Robert H. Graham
Robert H. Graham
Chairman
April 30, 2003
================================================================================
ON THE CURRENCY FRONT, THE U.S.
DOLLAR WAS WEAK COMPARED TO
MANY FOREIGN CURRENCIES.
ROBERT H. GRAHAM
================================================================================
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-73.22%
BANKS-24.63%
Bank of America Corp. 107,600 $ 7,967,780
- -------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 76,300 2,018,135
- -------------------------------------------------------------------------
Bank One Corp. 42,000 1,514,100
- -------------------------------------------------------------------------
Charter One Financial, Inc. 69,150 2,008,807
- -------------------------------------------------------------------------
Comerica Inc. 61,200 2,662,812
- -------------------------------------------------------------------------
Cullen/Frost Bankers, Inc. 143,600 4,708,644
- -------------------------------------------------------------------------
FleetBoston Financial Corp. 124,200 3,293,784
- -------------------------------------------------------------------------
KeyCorp 139,400 3,360,934
- -------------------------------------------------------------------------
M&T Bank Corp.(a) 30,600 2,584,782
- -------------------------------------------------------------------------
Mellon Financial Corp. 44,403 1,174,459
- -------------------------------------------------------------------------
Synovus Financial Corp. 159,000 3,095,730
- -------------------------------------------------------------------------
U.S. Bancorp 208,300 4,613,845
- -------------------------------------------------------------------------
Wachovia Corp. 82,000 3,133,220
- -------------------------------------------------------------------------
Wells Fargo & Co. 107,500 5,187,950
- -------------------------------------------------------------------------
Zions Bancorp. 80,700 3,976,089
=========================================================================
51,301,071
=========================================================================
CONSUMER FINANCE-0.53%
MBNA Corp. 58,700 1,109,430
=========================================================================
DATA PROCESSING SERVICES-1.26%
DST Systems, Inc.(b) 85,200 2,615,640
=========================================================================
DIVERSIFIED FINANCIAL SERVICES-28.37%
American Express Co. 112,400 4,255,464
- -------------------------------------------------------------------------
Charles Schwab Corp. (The) 127,000 1,096,010
- -------------------------------------------------------------------------
Citigroup Inc. 170,101 6,676,464
- -------------------------------------------------------------------------
Fannie Mae 40,100 2,902,839
- -------------------------------------------------------------------------
Federated Investors, Inc.-Class B 53,500 1,460,015
- -------------------------------------------------------------------------
Freddie Mac 65,200 3,775,080
- -------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The)(a) 61,300 4,652,670
- -------------------------------------------------------------------------
Investors Financial Services Corp. 45,200 985,812
- -------------------------------------------------------------------------
J.P. Morgan Chase & Co. 130,800 3,838,980
- -------------------------------------------------------------------------
Legg Mason, Inc. 108,200 5,875,260
- -------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 84,100 5,295,777
- -------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 165,300 6,785,565
- -------------------------------------------------------------------------
Morgan Stanley 105,700 4,730,075
- -------------------------------------------------------------------------
Neuberger Berman Inc. 37,000 1,135,900
- -------------------------------------------------------------------------
Principal Financial Group, Inc. 121,000 3,521,100
- -------------------------------------------------------------------------
State Street Corp. 60,200 2,108,806
=========================================================================
59,095,817
=========================================================================
</Table>
<Table>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
<Caption>
INSURANCE BROKERS-1.28%
Marsh & McLennan Cos., Inc. 55,700 $ 2,655,776
=========================================================================
IT CONSULTING & SERVICES-1.14%
SunGard Data Systems Inc.(b) 110,000 2,365,000
=========================================================================
LIFE & HEALTH INSURANCE-2.91%
Nationwide Financial Services, Inc.-Class A 98,100 2,761,515
- -------------------------------------------------------------------------
Prudential Financial, Inc. 38,800 1,240,436
- -------------------------------------------------------------------------
StanCorp Financial Group, Inc. 38,500 2,067,450
=========================================================================
6,069,401
=========================================================================
MULTI-LINE INSURANCE-4.31%
American International Group, Inc. 80,650 4,673,668
- -------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 69,200 2,820,592
- -------------------------------------------------------------------------
HCC Insurance Holdings, Inc. 54,000 1,485,000
=========================================================================
8,979,260
=========================================================================
PROPERTY & CASUALTY INSURANCE-8.79%
Ambac Financial Group, Inc. 56,600 3,302,610
- -------------------------------------------------------------------------
Chubb Corp. (The) 30,000 1,586,700
- -------------------------------------------------------------------------
MBIA Inc. 28,000 1,251,600
- -------------------------------------------------------------------------
MGIC Investment Corp. 54,000 2,454,840
- -------------------------------------------------------------------------
PMI Group, Inc. (The) 82,000 2,527,240
- -------------------------------------------------------------------------
Radian Group Inc. 82,000 3,255,400
- -------------------------------------------------------------------------
St. Paul Cos., Inc. (The) 60,800 2,087,872
- -------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class B 113,800 1,849,250
=========================================================================
18,315,512
=========================================================================
Total Domestic Common Stocks (Cost
$150,476,543) 152,506,907
=========================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-20.24%
AUSTRALIA-1.20%
St. George Bank Ltd. (Banks) 202,000 2,505,949
=========================================================================
BERMUDA-3.52%
Everest Re Group, Ltd. (Reinsurance) 61,000 4,248,650
- -------------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers) 98,500 3,072,215
=========================================================================
7,320,865
=========================================================================
CANADA-0.99%
Royal Bank of Canada (Banks) 49,500 2,064,802
=========================================================================
CAYMAN ISLANDS-1.17%
ACE Ltd. (Property & Casualty Insurance) 73,900 2,444,612
=========================================================================
FRANCE-0.72%
BNP Paribas S.A. (Banks) 31,800 1,495,468
=========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
HONG KONG-0.95%
Dah Sing Financial Group (Banks) 434,000 $ 1,981,062
=========================================================================
IRELAND-4.56%
Allied Irish Banks PLC (Banks) 78,900 1,212,999
- -------------------------------------------------------------------------
Anglo Irish Bank Corp. PLC (Banks) 858,800 6,471,912
- -------------------------------------------------------------------------
Bank of Ireland (Banks) 148,200 1,814,441
=========================================================================
9,499,352
=========================================================================
ITALY-1.96%
Banco Popolare di Verona e Novara Scrl
(Banks) 146,310 1,990,881
- -------------------------------------------------------------------------
UniCredito Italiano S.p.A. (Banks) 477,400 2,092,421
=========================================================================
4,083,302
=========================================================================
MEXICO-1.00%
Grupo Financiero BBVA Bancomer, S.A. de C.V.-
Class B (Banks)(b) 2,392,900 2,086,459
=========================================================================
SPAIN-1.92%
Banco Popular Espanol S.A. (Banks) 82,400 4,002,190
=========================================================================
UNITED KINGDOM-2.25%
Man Group PLC (Diversified Financial
Services) 81,700 1,378,967
- -------------------------------------------------------------------------
Northern Rock PLC (Banks) 56,950 651,902
- -------------------------------------------------------------------------
Royal Bank of Scotland Group PLC (Banks) 101,000 2,651,607
=========================================================================
4,682,476
=========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $32,391,176) 42,166,537
=========================================================================
</Table>
<Table>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
<Caption>
MONEY MARKET FUNDS-6.93%
STIC Liquid Assets Portfolio(c) 7,217,621 $ 7,217,621
- -------------------------------------------------------------------------
STIC Prime Portfolio(c) 7,217,621 7,217,621
=========================================================================
Total Money Market Funds (Cost
$14,435,242) 14,435,242
=========================================================================
TOTAL INVESTMENTS-100.39% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $197,302,961) 209,108,686
=========================================================================
INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED
MONEY MARKET FUNDS-4.03%
STIC Liquid Assets Portfolio(c)(d) 4,200,701 4,200,701
- -------------------------------------------------------------------------
STIC Prime Portfolio(c)(d) 4,200,701 4,200,701
=========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $8,401,402) 8,401,402
=========================================================================
TOTAL INVESTMENTS-104.42% (Cost $205,704,363) 217,510,088
=========================================================================
OTHER ASSETS LESS LIABILITIES-(4.42%) (9,209,196)
=========================================================================
NET ASSETS-100.00% $208,300,892
_________________________________________________________________________
=========================================================================
</Table>
Notes to Schedule of Investments:
(a) A portion of this security is subject to call options written. See Note 1
section G and Note 7.
(b) Non-income producing security.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
(d) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$205,704,363)* $217,510,088
- -----------------------------------------------------------
Foreign currencies, at value (cost $61,087) 61,451
- -----------------------------------------------------------
Receivables for:
Investments sold 1,902,503
- -----------------------------------------------------------
Fund shares sold 214,155
- -----------------------------------------------------------
Dividends 191,402
- -----------------------------------------------------------
Investment for deferred compensation plan 5,119
- -----------------------------------------------------------
Other assets 21,550
===========================================================
Total assets 219,906,268
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 2,167,811
- -----------------------------------------------------------
Fund shares reacquired 569,849
- -----------------------------------------------------------
Options written (premiums received $43,216) 31,733
- -----------------------------------------------------------
Deferred compensation plan 5,119
- -----------------------------------------------------------
Collateral upon return of securities loaned 8,401,402
- -----------------------------------------------------------
Accrued distribution fees 185,908
- -----------------------------------------------------------
Accrued trustees' fees 719
- -----------------------------------------------------------
Accrued transfer agent fees 141,310
- -----------------------------------------------------------
Accrued operating expenses 101,525
===========================================================
Total liabilities 11,605,376
===========================================================
Net assets applicable to shares outstanding $208,300,892
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $226,977,793
- -----------------------------------------------------------
Undistributed net investment income (loss) (168,454)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (30,330,843)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 11,822,396
===========================================================
$208,300,892
___________________________________________________________
===========================================================
NET ASSETS:
Class A $100,200,654
___________________________________________________________
===========================================================
Class B $ 83,105,760
___________________________________________________________
===========================================================
Class C $ 24,994,478
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 5,094,314
___________________________________________________________
===========================================================
Class B 4,405,688
___________________________________________________________
===========================================================
Class C 1,325,107
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 19.67
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $19.67 divided by
94.50%) $ 20.81
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 18.86
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 18.86
___________________________________________________________
===========================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $8,293,483
were on loan to brokers.
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $40,488) $ 1,981,496
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 69,018
- --------------------------------------------------------------------------
Interest 138
- --------------------------------------------------------------------------
Security lending income 31,566
==========================================================================
Total investment income 2,082,218
==========================================================================
EXPENSES:
Advisory fees 1,029,178
- --------------------------------------------------------------------------
Administrative services fees 24,795
- --------------------------------------------------------------------------
Custodian fees 27,718
- --------------------------------------------------------------------------
Distribution fees -- Class A 253,488
- --------------------------------------------------------------------------
Distribution fees -- Class B 422,367
- --------------------------------------------------------------------------
Distribution fees -- Class C 126,224
- --------------------------------------------------------------------------
Transfer agent fees 476,961
- --------------------------------------------------------------------------
Trustees' fees 4,886
- --------------------------------------------------------------------------
Other 107,626
==========================================================================
Total expenses 2,473,243
==========================================================================
Less: Fees waived and expenses paid indirectly (84,961)
==========================================================================
Net expenses 2,388,282
==========================================================================
Net investment income (loss) (306,064)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (14,161,647)
- --------------------------------------------------------------------------
Foreign currencies 28,328
- --------------------------------------------------------------------------
Option contracts written 464,152
==========================================================================
(13,669,167)
==========================================================================
Change in net unrealized appreciation of:
Investment securities 21,323,126
- --------------------------------------------------------------------------
Foreign currencies 3,641
- --------------------------------------------------------------------------
Option contracts written 11,483
==========================================================================
21,338,250
==========================================================================
Net gain from investment securities, foreign currencies and
option contracts 7,669,083
==========================================================================
Net increase in net assets resulting from operations $ 7,363,019
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (306,064) $ (1,645,236)
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (13,669,167) (15,906,992)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts 21,338,250 (3,664,216)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations 7,363,019 (21,216,444)
==========================================================================================
Share transactions-net:
Class A (11,574,963) (9,235,195)
- ------------------------------------------------------------------------------------------
Class B (10,637,219) (15,032,506)
- ------------------------------------------------------------------------------------------
Class C (3,118,587) (2,205,504)
==========================================================================================
Net increase (decrease) in net assets resulting from
share transactions (25,330,769) (26,473,205)
==========================================================================================
Net increase (decrease) in net assets (17,967,750) (47,689,649)
==========================================================================================
NET ASSETS:
Beginning of period 226,268,642 273,958,291
==========================================================================================
End of period $208,300,892 $226,268,642
__________________________________________________________________________________________
==========================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Financial Services Fund (the "Fund") is a separate series of AIM
Investment Funds (the "Trust"). The Trust is organized as a Delaware statutory
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 seven separate series portfolios, each having an unlimited number of shares
of beneficial interest. The Fund currently offers multiple classes of shares.
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. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper are valued at amortized cost which approximates market
value. For purposes of
F-5
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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. COVERED CALL OPTIONS -- The Fund may write call options, on a covered
basis; that is, the Fund will own the underlying security. When the Fund
writes a covered call option, an amount equal to the premium received by
the Fund is recorded as an asset and an equivalent liability. The amount of
the liability is subsequently "marked-to-market" to reflect the current
market value of the option written. The current market value of a written
option is the mean between the last bid and asked prices on that day. If a
written call option expires on the stipulated expiration date, or if the
Fund enters into a closing purchase transaction, the Fund realizes a gain
(or a loss if the closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss
on the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received. A risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
voluntarily agreed to limit total annual operating expenses (excluding interest,
taxes, dividends on short sales, extraordinary items and increases in expenses
due to expense offset arrangements, if any) for Class A, Class B and Class C
shares to 2.00%, 2.50% and 2.50%, respectively. Voluntary expense limitations
may be rescinded, terminated or modified at any time without further notice to
investors. During periods of voluntary waivers or reimbursements to the extent
the annualized
F-6
expense ratio does not exceed the voluntary limit for the period committed, AIM
will retain its ability to be reimbursed for such fee waivers or reimbursements
prior to the end of the fiscal year. Further, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in affiliated money market funds with cash
collateral from securities loaned by the Fund). For the six months ended April
30, 2003, AIM waived fees of $83,361.
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 six months ended April 30, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $248,855 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. NASD Rules
also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $253,488, $422,367 and $126,224, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $11,047 in front-end sales commissions from the sale of
Class A shares and $42, $710 and $1,926 for Class A, Class B and Class C shares,
respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,435 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $1,556 and reductions in
custodian fees of $44 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $1,600.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM, which were
parties to the line of credit could borrow on a first come, first served basis.
The funds, which were party to the line of credit, were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At April 30, 2003, securities with an aggregate value of $8,293,483 were on
loan to brokers. The loans were secured by cash collateral of $8,401,402
received by the Fund and subsequently invested in affiliated money market funds.
For the six months ended April 30, 2003 the Fund received fees of $31,566 for
securities lending.
F-7
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- ------------------------------------------------------------------------------------
Beginning of period -- $ --
- ------------------------------------------------------------------------------------
Written 7,239 769,151
- ------------------------------------------------------------------------------------
Closed (4,691) (515,012)
- ------------------------------------------------------------------------------------
Exercised (1,490) (113,776)
- ------------------------------------------------------------------------------------
Expired (770) (97,147)
====================================================================================
End of period 288 $ 43,216
____________________________________________________________________________________
====================================================================================
</Table>
Open call option contracts written at April 30, 2003 were as follows:
<Table>
<Caption>
APRIL 30,
2003 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. May-03 $75 81 $17,981 $18,023 $ (42)
- ---------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. May-03 80 82 5,986 2,460 3,526
- ---------------------------------------------------------------------------------------------------------------------------------
M&T Bank Corp. May-03 85 125 19,249 11,250 7,999
=================================================================================================================================
288 $43,216 $31,733 $11,483
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------------------------
October 31, 2009 $ 259,675
- ----------------------------------------------------------------------------
October 31, 2010 16,192,146
============================================================================
Total capital loss carryforward $16,451,821
____________________________________________________________________________
============================================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $40,446,577 and $68,970,615, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $ 22,485,777
- ----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (10,889,907)
============================================================================
Net unrealized appreciation of investment securities $ 11,595,870
____________________________________________________________________________
============================================================================
Cost of investments for tax purposes is $205,914,218.
</Table>
F-8
NOTE 10--SHARE INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 692,525 $ 12,933,828 2,582,636 $ 55,380,594
- ----------------------------------------------------------------------------------------------------------------------
Class B 226,360 4,121,188 1,253,533 26,379,817
- ----------------------------------------------------------------------------------------------------------------------
Class C 209,853 3,785,883 727,708 14,583,074
======================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 102,650 1,938,708 339,373 7,336,625
- ----------------------------------------------------------------------------------------------------------------------
Class B (106,896) (1,938,708) (355,226) (7,336,625)
======================================================================================================================
Reacquired:
Class A (1,437,808) (26,447,499) (3,401,742) (71,952,414)
- ----------------------------------------------------------------------------------------------------------------------
Class B (723,940) (12,819,699) (1,715,359) (34,075,698)
- ----------------------------------------------------------------------------------------------------------------------
Class C (387,180) (6,904,470) (863,759) (16,788,578)
======================================================================================================================
(1,424,436) $(25,330,769) (1,432,836) $(26,473,205)
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -----------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.86 $ 20.40 $ 24.85 $ 23.23 $ 17.05 $ 17.22
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.00)(a) (0.07)(a) (0.06)(a) (0.07)(a) (0.02)(a) 0.07(a)
- ----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.81 (1.47) (4.13) 5.87 6.25 0.37
============================================================================================================================
Total from investment operations 0.81 (1.54) (4.19) 5.80 6.23 0.44
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.25) (0.02) (0.01)
- ----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.26) (3.93) (0.03) (0.60)
============================================================================================================================
Total distributions -- -- (0.26) (4.18) (0.05) (0.61)
============================================================================================================================
Net asset value, end of period $ 19.67 $ 18.86 $ 20.40 $ 24.85 $ 23.23 $ 17.05
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) 4.29% (7.55)% (17.03)% 30.06% 36.62% 2.53%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $100,201 $108,191 $126,816 $95,393 $30,987 $28,433
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 1.97% 1.85% 2.00% 1.99% 1.97%
- ----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.08%(c) 1.97% 1.85% 2.00% 2.12% 1.99%
============================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.03)%(c) (0.31)% (0.26)% (0.33)% (0.08)% 0.37%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate(d) 20% 51% 53% 41% 107% 111%
____________________________________________________________________________________________________________________________
============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$102,235,506.
(d) Not annualized for periods less than one year.
F-9
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
---------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.13 $ 19.71 $ 24.14 $ 22.67 $ 16.71 $ 16.97
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.17)(a) (0.17)(a) (0.18)(a) (0.12)(a) (0.02)(a)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.78 (1.41) (4.00) 5.72 6.11 0.37
===========================================================================================================================
Total from investment operations 0.73 (1.58) (4.17) 5.54 5.99 0.35
===========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.14) -- (0.01)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.26) (3.93) (0.03) (0.60)
===========================================================================================================================
Total distributions -- -- (0.26) (4.07) (0.03) (0.61)
===========================================================================================================================
Net asset value, end of period $ 18.86 $ 18.13 $ 19.71 $ 24.14 $ 22.67 $ 16.71
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 4.03% (8.02)% (17.45)% 29.40% 35.91% 2.08%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $83,106 $90,838 $114,852 $92,343 $49,619 $48,785
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.47% 2.35% 2.50% 2.49% 2.47%
- ---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.58%(c) 2.47% 2.35% 2.50% 2.62% 2.49%
===========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.53)%(c) (0.81)% (0.76)% (0.83)% (0.58)% (0.13)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(d) 20% 51% 53% 41% 107% 111%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$85,173,383.
(d) Not annualized for periods less than one year.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
------------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ----------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.13 $ 19.71 $ 24.14 $ 22.67 $19.58
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.17)(a) (0.17)(a) (0.18)(a) (0.08)(a)
- ------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.78 (1.41) (4.00) 5.72 3.17
==================================================================================================================
Total from investment operations 0.73 (1.58) (4.17) 5.54 3.09
==================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.14) --
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.26) (3.93) --
==================================================================================================================
Total distributions -- -- (0.26) (4.07) --
==================================================================================================================
Net asset value, end of period $ 18.86 $ 18.13 $ 19.71 $ 24.14 $22.67
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) 4.03% (8.02)% (17.45)% 29.40% 15.78%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,994 $27,239 $32,290 $20,944 $ 605
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.47% 2.35% 2.50% 2.49%(d)
- ------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.58%(c) 2.47% 2.35% 2.50% 2.62%(d)
==================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.53)%(c) (0.81)% (0.76)% (0.83)% (0.58)%(d)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate(e) 20% 51% 53% 41% 107%
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$25,454,089.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 12--SUBSEQUENT EVENT
The Board of Trustees of AIM Investment Funds ("Seller") unanimously approved,
on June 11, 2003, an Agreement and Plan of Reorganization (the "Plan") pursuant
to which AIM Global Financial Services Fund ("Selling Fund"), a series of
Seller, would transfer all of its assets to INVESCO Financial Services Fund
("Buying Fund"), a series of INVESCO Sector Funds, Inc. ("the Reorganization")
As a result of the Reorganization, shareholders of Selling Fund would receive
shares of Buying Fund in exchange for their shares of Selling Fund, and Selling
Fund would cease operations.
The Plan requires approval of Selling Fund shareholders and will be submitted
to the shareholders for their consideration at a meeting to be held on or around
September 25, 2003. If the Plan is approved by shareholders of Selling Fund and
certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
Effective on or about October 1, 2003, it is anticipated that Selling Fund
will be closed to new investors.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
<Caption>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
FIXED INCOME
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY TAXABLE
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) AIM Floating Rate Fund
AIM Balanced Fund* AIM Developing Markets Fund AIM High Yield Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Income Fund
AIM Basic Value Fund AIM European Small Company Fund AIM Intermediate Government Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Capital Development Fund AIM Global Growth Fund AIM Money Market Fund
AIM Charter Fund AIM Global Trends Fund AIM Short-Term Bond Fund
AIM Constellation Fund AIM Global Value Fund(5) AIM Total Return Bond Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2)
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund TAX-FREE
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund AIM High Income Municipal Fund
AIM Large Cap Growth Fund AIM Municipal Bond Fund
AIM Libra Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Tax-Free Intermediate Fund(6,7)
AIM Mid Cap Core Equity Fund(2)
AIM Mid Cap Growth Fund AIM Global Energy Fund
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com GFS-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM GLOBAL HEALTH CARE FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO)
--Servicemark--
Your Goals. Our Solutions.
--Servicemark--
AIM Global Health Care Fund seeks to provide long-term
growth of capital. The fund invests in global companies
that design, manufacture or sell products and services
used in health care or medicine.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
TOP COUNTRIES
As of 4/30/03
[PIE CHART]
CASH & OTHER 2%
GERMANY 1%
UNITED KINGDOM 3%
ISRAEL 4%
NETHERLANDS 4%
JAPAN 8%
FRANCE 10%
U.S. 68%
TOTAL NUMBER OF HOLDINGS* 46
TOTAL NET ASSETS $692.2 MILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (8/7/89) 11.65%
10 Years 12.17
5 Years 5.67
1 Year -25.49
CLASS B SHARES
Inception (4/1/93) 12.38%
10 Years 12.26
5 Years 5.88
1 Year -26.05
CLASS C SHARES
Inception (3/1/99) 5.49%
1 Year -22.93
In addition to returns as of the close of the reporting period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (8/7/89), 11.44%; 10 years, 11.85%; five years, 5.28%; one
year,-28.84%. Class B shares, inception (4/1/93), 12.10%; five years, 5.48%;
one year, -29.39%. Class C shares, inception (3/1/99), 4.73%; one year, -26.37%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES -5.93%
CLASS B SHARES -6.15
CLASS C SHARES -6.14
MSCI ALL COUNTRY (AC) WORLD FREE INDEX 3.70
(Broad Based Index)
MSCI WORLD HEALTH CARE SECTOR INDEX 3.26
(Style-Specific Index)
LIPPER HEALTH/BIOTECH FUND INDEX 3.51
(Peer Group Index)
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
================================================================================================
1. Pfizer Inc. 14.1% 1. Pharmaceuticals 51.4%
2. Amgen Inc. 6.2 2. Health Care Facilities 23.0
3. Community Health Systems Inc. 6.0 3. Biotechnology 8.5
4. Aventis S.A. (France) 5.5 4. Diversified Chemicals 4.9
5. HCA Inc. 5.0 5. Health Care Equipment 4.1
6. Triad Hospitals, Inc. 4.7 6. Managed Health Care 2.0
7. Bristol-Myers Squibb Co. 4.6 7. Health Care Distributors & Services 2.0
8. Tenet Healthcare Corp. 4.5 8. IT Consulting & Services 0.7
9. Sanofi-Synthelabo S.A. (France) 4.3 9. Electronic Equipment & Instruments 0.7
10. Akzo Nobel N.V. (Netherlands) 3.9 10. Fertilizers & Agricultural Chemicals 0.5
*Excludes money market fund holdings.
The fund's holdings are subject to change, and these is no assurance the fund
will continue to hold any particular security.
================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Global Health Care Fund's performance figures are historical, and they
reflect fund expenses, 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 declined 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 share classes will differ because of different
sales charge structures and class expenses.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o Investing in a single-sector mutual fund involves greater risk and potential
reward than investing in a more diversified fund.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o In the Schedule of Investments the fund's portfolio holdings are organized
according to the Global Industry Classification Standard, which was
developed by and is the exclusive property and a service mark of Morgan
Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Health/Biotech Fund Index represents an average of the
30 largest health and biotechnology funds tracked by Lipper, Inc., an
independent mutual fund performance monitor.
o The unmanaged MSCI All Country (AC) World Free Index tracks the performance
of approximately 50 developed and emerging countries covered by Morgan
Stanley Capital International. The "free" index represents actual buyable
opportunities for global investors.
o The unmanaged MSCI World Health Care Sector Index is a group of global
securities tracked by Morgan Stanley Capital International.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT aiminvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Global Health Care Fund for the
ROBERT H. six months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page.
ON THE CURRENCY This letter will provide an overview of the markets and
FRONT, THE U.S. your fund during the six months covered by this report. As
DOLLAR WAS WEAK always, timely information about your fund and the markets
COMPARED TO MANY in general is available at aiminvestments.com.
FOREIGN CURRENCIES.
ROBERT H. GRAHAM MARKET CONDITIONS
In U.S. markets, positive performance during March and April
2003 enabled major stock market indexes to post gains for
the reporting period. For example, the unmanaged Standard & Poor's Composite
Index of 500 Stocks (the S&P 500), an index of common stocks frequently used as
a general measure of U.S. stock market performance, returned 4.47% for the six
months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period.
International markets, as measured by the unmanaged MSCI Europe, Australasia
and the Far East Index (the EAFE--Registered Trademark--), a group of foreign
securities tracked by Morgan Stanley Capital International, produced negative
returns for the first quarter of 2003. International markets, however, rallied
in April. This rally helped push international market returns into positive
territory for the six-month reporting period.
European markets rallied toward the close of the reporting period, with the
MSCI (Morgan Stanley Capital International) Europe Index, often considered
representative of the European equity market, gaining 13.49% in April. In
European monetary affairs, the European Central Bank (ECB) cut its benchmark
interest rate 25 basis points to 2.50% in March. It remained at that level as
the reporting period closed.
As widely discussed, in Asia, the epidemic of severe acute respiratory
syndrome (SARS) dealt a blow to local economies. However, the MSCI All Country
(AC) Asia Pacific Free ex-Japan Index, a group of developed and emerging Asian
and Asia-Pacific markets (except Japan) covered by Morgan Stanley Capital
International, rallied in April and was positive for the six-month reporting
period.
On the currency front, the U.S. dollar was weak compared to many foreign
currencies. In particular, the euro showed strength as it appreciated nearly 13%
against the dollar during the reporting period. Other notable currencies that
gained ground on the dollar included the Australian dollar, Swiss franc, British
pound and Canadian dollar.
YOUR FUND
While performance for the period covered by this report has been disappointing,
the fund's long-term performance, as shown on the opposite page, has been
strong. One factor affecting performance the last six months was the fund's
position in hospitals. Managers had positioned about 22 percent of the fund in
hospital stocks, and those securities performed poorly during the reporting
period. Fund managers attribute this poor performance to lower-than-expected
admissions and an anticipated reduction in pricing power.
Fund managers Michael Yellen and Sunaina Murthy have maintained significant
holdings in the pharmaceutical industry, which contributed to the fund's lower
relative numbers for the six months covered by this report. At the close of the
reporting period, the fund had 51 holdings, with just over half of those in the
pharmaceutical industry.
We encourage you to visit our Web site, aiminvestments.com, for a wealth of
information about your fund, including regular performance updates, quarterly
details of portfolio composition, and much more. From our home page, click on
Products & Performance, then Mutual Funds, and then select the type of
information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Global Health Care Fund, and
I look forward to reporting to you again in six months. If you have any
questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
DOMESTIC STOCKS-68.00%
BIOTECHNOLOGY-8.54%
Affymetrix, Inc.(a) 10,100 $ 187,355
- ------------------------------------------------------------------------
Amgen Inc.(a) 700,000 42,917,000
- ------------------------------------------------------------------------
Ciphergen Biosystems, Inc.(a) 90,000 440,100
- ------------------------------------------------------------------------
Corvas International, Inc.(a)(b) 744,000 1,458,240
- ------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 50,000 1,637,500
- ------------------------------------------------------------------------
Isis Pharmaceuticals, Inc.(a) 2,250,000 12,442,500
- ------------------------------------------------------------------------
Sequenom Inc.(a) 30,000 60,600
========================================================================
59,143,295
========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.69%
Varian Inc.(a) 150,000 4,741,500
========================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.50%
Monsanto Co. 200,000 3,480,000
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-2.00%
McKesson Corp. 500,000 13,870,000
========================================================================
HEALTH CARE EQUIPMENT-4.07%
Apogent Technologies Inc.(a) 150,000 2,577,000
- ------------------------------------------------------------------------
ATS Medical, Inc.(a)(b) 2,100,000 5,271,000
- ------------------------------------------------------------------------
Becton, Dickinson & Co. 400,000 14,160,000
- ------------------------------------------------------------------------
Cardiac Science, Inc.(a) 2,465,000 5,817,400
- ------------------------------------------------------------------------
MedSource Technologies, Inc.(a) 130,000 364,000
========================================================================
28,189,400
========================================================================
HEALTH CARE FACILITIES-23.03%
Community Health Systems Inc.(a) 2,185,000 41,515,000
- ------------------------------------------------------------------------
HCA Inc. 1,080,000 34,668,000
- ------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 80,000 1,364,800
- ------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 2,100,000 31,164,000
- ------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 1,485,000 32,684,850
- ------------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 465,000 17,981,550
========================================================================
159,378,200
========================================================================
IT CONSULTING & SERVICES-0.70%
HMS Holdings Corp.(a)(b) 1,700,000 4,812,700
========================================================================
MANAGED HEALTH CARE-2.04%
PacifiCare Health Systems, Inc.(a) 400,000 12,736,000
- ------------------------------------------------------------------------
UnitedHealth Group Inc. 15,000 1,381,950
========================================================================
14,117,950
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
PHARMACEUTICALS-26.43%
Abbott Laboratories 75,000 $ 3,047,250
- ------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,250,000 31,925,000
- ------------------------------------------------------------------------
InterMune Inc.(a) 75,000 1,524,750
- ------------------------------------------------------------------------
Merck & Co. Inc. 420,000 24,435,600
- ------------------------------------------------------------------------
Pfizer Inc. 3,176,200 97,668,150
- ------------------------------------------------------------------------
Wyeth 560,000 24,376,800
========================================================================
182,977,550
========================================================================
Total Domestic Stocks (Cost $490,318,275) 470,710,595
========================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-29.85%
DENMARK-0.21%
Novo Nordisk A.S.-Class B (Pharmaceuticals) 40,000 1,450,606
========================================================================
FRANCE-9.79%
Aventis S.A. (Pharmaceuticals) 744,000 37,858,240
- ------------------------------------------------------------------------
Sanofi-Synthelabo S.A. (Pharmaceuticals) 500,000 29,881,223
========================================================================
67,739,463
========================================================================
GERMANY-1.23%
Altana A.G. (Pharmaceuticals) 25,000 1,233,264
- ------------------------------------------------------------------------
Bayer A.G. (Diversified Chemicals) 400,000 7,312,374
========================================================================
8,545,638
========================================================================
ISRAEL-3.51%
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 520,000 24,284,000
========================================================================
JAPAN-8.34%
Eisai Co., Ltd. (Pharmaceuticals) 800,000 14,164,949
- ------------------------------------------------------------------------
Fujisawa Pharmaceutical Co., Ltd.
(Pharmaceuticals)(c) 250,000 4,247,802
- ------------------------------------------------------------------------
Kyorin Pharmaceutical Co., Ltd.
(Pharmaceuticals) Acquired
09/12/01-03/12/03; Cost $16,327,498(c)(d) 1,060,000 9,370,905
- ------------------------------------------------------------------------
Rohto Pharmaceutical Co., Ltd.
(Pharmaceuticals) 185,000 1,349,161
- ------------------------------------------------------------------------
Sankyo Co., Ltd. (Pharmaceuticals) 860,000 12,500,147
- ------------------------------------------------------------------------
Takeda Chemical Industries, Ltd.
(Pharmaceuticals) 280,000 10,292,299
- ------------------------------------------------------------------------
Yamanouchi Pharmaceutical Co., Ltd.
(Pharmaceuticals) 230,000 5,823,275
========================================================================
57,748,538
========================================================================
NETHERLANDS-3.86%
Akzo Nobel N.V. (Diversified Chemicals) 1,200,000 26,727,062
========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
UNITED KINGDOM-2.91%
Shire Pharmaceuticals Group PLC
(Pharmaceuticals)(a) 3,100,000 $ 19,937,331
- ------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR
(Pharmaceuticals)(a) 10,000 199,000
========================================================================
20,136,331
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $217,366,418) 206,631,638
========================================================================
MONEY MARKET FUNDS-1.27%
STIC Liquid Assets Portfolio(e) 4,400,205 4,400,205
- ------------------------------------------------------------------------
STIC Prime Portfolio(e) 4,400,205 4,400,205
========================================================================
Total Money Market Funds (Cost
$8,800,410) 8,800,410
========================================================================
TOTAL INVESTMENTS-99.12% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $716,485,103) 686,142,643
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-14.76%
STIC Liquid Assets Portfolio(e)(f) 51,072,651 $ 51,072,651
- ------------------------------------------------------------------------
STIC Prime Portfolio(e)(f) 51,072,650 51,072,650
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $102,145,301) 102,145,301
========================================================================
TOTAL INVESTMENTS-113.88% (Cost $818,630,404) 788,287,944
========================================================================
OTHER ASSETS LESS LIABILITIES-(13.88%) (96,094,566)
========================================================================
NET ASSETS-100.00% $692,193,378
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities. 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 04/30/03 was $11,541,940 which represented
1.67% of the Fund's net assets. The following is a summary of the
transactions with affiliates for the six months ended April 30, 2003.
<Table>
<Caption>
MARKET CHANGE IN MARKET
VALUE PURCHASES AT SALES AT UNREALIZED VALUE DIVIDEND REALIZED
10/31/02 COST COST APPR./(DEPR.) 04/30/03 INCOME GAIN/(LOSS)
- -------------------------------------------------------------------------------------------------------------------------------
ATS Medical, Inc. $1,223,220 $ -- $ (325,860) $4,373,640 $ 5,271,000 $ -- $ (122,380)
- -------------------------------------------------------------------------------------------------------------------------------
Corvas International,
Inc. 2,405,850 -- (3,637,610) 2,690,000 1,458,240 -- (1,597,103)
- -------------------------------------------------------------------------------------------------------------------------------
HMS Holdings Corp. 2,479,000 1,000,093 -- 1,333,607 4,812,700 -- --
===============================================================================================================================
$6,108,070 $11,541,940 $ -- $(1,719,483)
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(c) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of this security. The
aggregate market value of these securities at 04/30/03 was $13,618,707,
which represented 1.97% of the Fund's net assets.
(d) Security considered to be illiquid. The market value of this security at
04/30/03 was $9,370,905, which represented 1.35% of the Fund's net assets.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
(f) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$818,630,404)* $788,287,944
- -----------------------------------------------------------
Foreign currencies, at value (cost
$7,752,130) 7,812,355
- -----------------------------------------------------------
Receivables for:
Investments sold 19,493,207
- -----------------------------------------------------------
Fund shares sold 753,450
- -----------------------------------------------------------
Dividends 2,805,778
- -----------------------------------------------------------
Investment for deferred compensation plan 6,650
- -----------------------------------------------------------
Other assets 35,652
===========================================================
Total assets 819,195,036
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 22,911,590
- -----------------------------------------------------------
Fund shares reacquired 1,014,316
- -----------------------------------------------------------
Deferred compensation plan 6,650
- -----------------------------------------------------------
Collateral upon return of securities loaned 102,145,301
- -----------------------------------------------------------
Accrued distribution fees 582,400
- -----------------------------------------------------------
Accrued trustees' fees 1,388
- -----------------------------------------------------------
Accrued transfer agent fees 279,859
- -----------------------------------------------------------
Accrued operating expenses 60,154
===========================================================
Total liabilities 127,001,658
===========================================================
Net assets applicable to shares outstanding $692,193,378
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $745,980,127
- -----------------------------------------------------------
Undistributed net investment income (loss) (1,833,258)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (21,767,141)
- -----------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities and foreign
currencies (30,186,350)
===========================================================
$692,193,378
___________________________________________________________
===========================================================
NET ASSETS:
Class A $488,486,553
___________________________________________________________
===========================================================
Class B $163,035,165
___________________________________________________________
===========================================================
Class C $ 40,671,660
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 23,175,455
___________________________________________________________
===========================================================
Class B 8,410,828
___________________________________________________________
===========================================================
Class C 2,096,815
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 21.08
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $21.08 divided by
95.25%) $ 22.13
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 19.38
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 19.40
___________________________________________________________
===========================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $98,826,394
were on loan to brokers.
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $349,161) $ 5,192,345
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 175,503
- --------------------------------------------------------------------------
Interest 848
- --------------------------------------------------------------------------
Security lending income 90,414
==========================================================================
Total investment income 5,459,110
==========================================================================
EXPENSES:
Advisory fees 3,401,831
- --------------------------------------------------------------------------
Administrative services fees 87,092
- --------------------------------------------------------------------------
Custodian fees 107,488
- --------------------------------------------------------------------------
Distribution fees -- Class A 1,228,537
- --------------------------------------------------------------------------
Distribution fees -- Class B 846,057
- --------------------------------------------------------------------------
Distribution fees -- Class C 212,494
- --------------------------------------------------------------------------
Transfer agent fees 1,204,270
- --------------------------------------------------------------------------
Trustees' fees 6,826
- --------------------------------------------------------------------------
Other 199,610
==========================================================================
Total expenses 7,294,205
==========================================================================
Less: Fees waived and expenses paid indirectly (9,186)
==========================================================================
Net expenses 7,285,019
==========================================================================
Net investment income (loss) (1,825,909)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain from:
Investment securities 2,031,785
- --------------------------------------------------------------------------
Foreign currencies 40,053
- --------------------------------------------------------------------------
Options contracts written 212,494
==========================================================================
2,284,332
==========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (47,520,228)
- --------------------------------------------------------------------------
Foreign currencies 182,285
==========================================================================
(47,337,943)
==========================================================================
Net gain (loss) from investment securities and foreign
currencies (45,053,611)
==========================================================================
Net increase (decrease) in net assets resulting from
operations $(46,879,520)
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- -------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,825,909) $ (11,104,319)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts 2,284,332 (20,872,962)
- -------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (47,337,943) (101,166,775)
===========================================================================================
Net increase (decrease) in net assets resulting from
operations (46,879,520) (133,144,056)
===========================================================================================
Distributions to shareholders from net realized gains:
Class A -- (81,059,596)
- -------------------------------------------------------------------------------------------
Class B -- (33,690,875)
- -------------------------------------------------------------------------------------------
Class C -- (6,133,328)
===========================================================================================
Net increase (decrease) in net assets resulting from
distributions -- (120,883,799)
===========================================================================================
Share transactions-net:
Class A (12,697,161) 115,829,342
- -------------------------------------------------------------------------------------------
Class B (12,886,169) 37,085,336
- -------------------------------------------------------------------------------------------
Class C (3,112,478) 25,381,473
===========================================================================================
Net increase (decrease) in net assets resulting from
share transactions (28,695,808) 178,296,151
===========================================================================================
Net increase (decrease) in net assets (75,575,328) (75,731,704)
===========================================================================================
NET ASSETS:
Beginning of period 767,768,706 843,500,410
===========================================================================================
End of period $692,193,378 $ 767,768,706
___________________________________________________________________________________________
===========================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Health Care Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware statutory 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 seven
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers multiple classes of shares.
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. Companies are
listed in the Schedule of Investments based on the country in which they are
organized.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate,
F-5
maturity, individual trading characteristics and other market data.
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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. COVERED CALL OPTIONS -- The Fund may write call options, on a covered
basis; that is, the Fund will own the underlying security. When the Fund
writes a covered call option, an amount equal to the premium received by
the Fund is recorded as an asset and an equivalent liability. The amount of
the liability is subsequently "marked-to-market" to reflect the current
market value of the option written. The current market value of a written
option is the mean between the last bid and asked prices on that day. If a
written call option expires on the stipulated expiration date, or if the
Fund enters into a closing purchase transaction, the Fund realizes a gain
(or a loss if the closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss
on the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received. A risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first
F-6
$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 voluntarily agreed to waive
fees and/or reimburse expenses (excluding interest, taxes, dividends on short
sales, extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A, Class B and Class C shares to the extent
necessary to limit the total annual fund operating expenses of Class A to 2.00%.
Voluntary expense limitations may be rescinded, terminated or modified at any
time without further notice to investors. During periods of voluntary waivers or
reimbursements to the extent the annualized expense ratio does not exceed the
limit, AIM will retain its ability to be reimbursed for such fee waivers or
reimbursements prior to the end of each fiscal year. Further, AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in affiliated money market
funds with cash collateral from securities loaned by the Fund). For the six
months ended April 30, 2003, AIM waived fees of $3,763.
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 six months ended April 30, 2003, AIM
was paid $87,092 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. During the six months ended April 30, 2003,
AFS retained $712,304 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. NASD Rules
also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $1,228,537, $846,057 and $212,494, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $67,473 in front-end sales commissions from the sale of
Class A shares and $334, $84 and $5,952 for Class A, Class B and Class C shares,
respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of $1,975
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $5,107 and reductions in
custodian fees of $316 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $5,423.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line of
credit facility with a syndicate administered by Citibank, N.A. The Fund could
borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM, which were
parties to the line of credit could borrow on a first come, first served basis.
The funds, which were party to the line of credit, were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under the
interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to
F-7
obtain additional collateral from or return excess collateral to the borrower by
the end of the next business day following the valuation date of the securities
loaned. Therefore, the value of the collateral may be temporarily less than the
value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $98,826,394 were on
loan to brokers. The loans were secured by cash collateral of $102,145,301
received by the Fund and subsequently invested in affiliated money market funds.
For the six months ended April 30, 2003 the Fund received fees of $90,414 for
securities lending.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- -----------------------------------------------------
October 31, 2010 $22,909,153
_____________________________________________________
=====================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $281,787,486 and $256,981,848, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $ 49,845,083
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (81,126,002)
===========================================================
Net unrealized appreciation (depreciation) of
investment securities $(31,280,919)
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $819,568,863.
</Table>
NOTE 9--CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- ----------------------------------------------------------
Beginning of period -- $ --
- ----------------------------------------------------------
Written 1,000 212,494
- ----------------------------------------------------------
Expired (1,000) $(212,494)
==========================================================
End of period -- $ --
__________________________________________________________
==========================================================
</Table>
NOTE 10--SHARE INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,970,059 $ 41,272,904 6,517,505 $ 172,255,113
- -----------------------------------------------------------------------------------------------------------------------
Class B 808,115 15,732,128 4,072,845 101,210,611
- -----------------------------------------------------------------------------------------------------------------------
Class C 219,641 4,291,171 1,519,053 37,639,046
=======================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 2,814,476 75,259,155
- -----------------------------------------------------------------------------------------------------------------------
Class B -- -- 1,272,073 31,496,539
- -----------------------------------------------------------------------------------------------------------------------
Class C -- -- 231,214 5,727,184
=======================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 256,179 5,438,208 950,595 24,572,842
- -----------------------------------------------------------------------------------------------------------------------
Class B (278,204) (5,438,208) (1,029,485) (24,572,842)
=======================================================================================================================
Reacquired:
Class A (2,844,416) (59,408,273) (6,136,679) (156,257,768)
- -----------------------------------------------------------------------------------------------------------------------
Class B (1,208,411) (23,180,089) (3,042,509) (71,048,972)
- -----------------------------------------------------------------------------------------------------------------------
Class C (384,576) (7,403,649) (785,681) (17,984,757)
=======================================================================================================================
(1,461,613) $(28,695,808) 6,383,407 $ 178,296,151
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
F-8
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.41 $ 29.93 $ 30.12 $ 24.00 $ 20.15 $ 27.98
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.29)(a) (0.39)(a) (0.22)(a) (0.19)(a) (0.21)(a)
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.29) (3.17) 3.44 8.62 4.04 (0.91)
==========================================================================================================================
Total from investment operations (1.33) (3.46) 3.05 8.40 3.85 (1.12)
==========================================================================================================================
Less distributions:
Distributions from net realized gains -- (4.06) (3.24) (2.28) -- (6.70)
- --------------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- -- -- (0.01)
==========================================================================================================================
Total distributions -- (4.06) (3.24) (2.28) -- (6.71)
==========================================================================================================================
Net asset value, end of period $ 21.08 $ 22.41 $ 29.93 $ 30.12 $ 24.00 $ 20.15
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (5.93)% (13.76)% 10.85% 38.49% 19.11% (4.71)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $488,487 $533,216 $588,072 $460,445 $357,747 $357,534
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets 1.92%(c) 1.86% 1.75% 1.73% 1.82% 1.84%
==========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.37)%(c) (1.10)% (1.28)% (0.85)% (0.81)% (0.98)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(d) 37% 153% 207% 242% 123% 187%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$495,487,463.
(d) Not annualized for periods less than one year.
F-9
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.66 $ 28.03 $ 28.53 $ 22.96 $ 19.37 $ 27.27
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.38)(a) (0.51)(a) (0.34)(a) (0.30)(a) (0.30)(a)
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.19) (2.93) 3.25 8.19 3.89 (0.89)
==========================================================================================================================
Total from investment operations (1.28) (3.31) 2.74 7.85 3.59 (1.19)
==========================================================================================================================
Less distributions:
Distributions from net realized gains -- (4.06) (3.24) (2.28) -- (6.70)
- --------------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- -- -- (0.01)
==========================================================================================================================
Total distributions -- (4.06) (3.24) (2.28) -- (6.71)
==========================================================================================================================
Net asset value, end of period $ 19.38 $ 20.66 $ 28.03 $ 28.53 $ 22.96 $ 19.37
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (6.19)% (14.21)% 10.32% 37.78% 18.53% (5.20)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $163,035 $187,793 $219,036 $144,861 $102,916 $100,311
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets 2.42%(c) 2.36% 2.25% 2.23% 2.33% 2.34%
==========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.87)%(c) (1.60)% (1.78)% (1.35)% (1.32)% (1.48)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(d) 37% 153% 207% 242% 123% 187%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$170,613,759.
(d) Not annualized for periods less than one year.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
--------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, --------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.67 $ 28.03 $ 28.53 $ 22.96 $22.50
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.38)(a) (0.51)(a) (0.34)(a) (0.21)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.18) (2.92) 3.25 8.19 0.67
=================================================================================================================================
Total from investment operations (1.27) (3.30) 2.74 7.85 0.46
=================================================================================================================================
Less distributions from net realized gains -- (4.06) (3.24) (2.28) --
=================================================================================================================================
Net asset value, end of period $ 19.40 $ 20.67 $ 28.03 $ 28.53 $22.96
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (6.14)% (14.18)% 10.32% 37.77% 2.04%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $40,672 $46,759 $36,366 $12,339 $1,278
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.42%(c) 2.36% 2.25% 2.23% 2.33%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.87)%(c) (1.60)% (1.78)% (1.35)% (1.32)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 37% 153% 207% 242% 123%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$42,850,886.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. Kevin M. Carome A I M Advisors, Inc.
Jack M. Fields Senior Vice President 11 Greenway Plaza
Carl Frischling Suite 100
Prema Mathai-Davis Gary T. Crum Houston, TX 77046
Lewis F. Pennock Senior Vice President
Ruth H. Quigley TRANSFER AGENT
Louis S. Sklar Dana R. Sutton A I M Fund Services, Inc.
Vice President and Treasurer P.O. Box 4739
Houston, TX 77210-4739
Stuart W. Coco
Vice President CUSTODIAN
Melville B. Cox State Street Bank and Trust Company
Vice President 225 Franklin Street
Boston, MA 02110
Edgar M. Larsen
Vice President COUNSEL TO THE FUND
Ballard Spahr
Nancy L. Martin Andrews & Ingersoll, LLP
Secretary 1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Energy Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIMinvestments.com GHC-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM GLOBAL SCIENCE AND TECHNOLOGY FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Global Science and Technology Fund seeks long-term
growth of capital. The fund invests in equity securities of
companies that design, develop or provide products and
services in the science or technology industry.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
INVESTMENT TYPE BREAKDOWN
As of 4/30/03
(PIE CHART)
COMMON STOCK INTERNATIONAL 11.41%
CASH AND OTHER ASSETS 6.53%
COMMON STOCK DOMESTIC 82.06%
TOTAL NUMBER OF HOLDINGS* 83
TOTAL NET ASSETS $390.8 MILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (1/27/92) -2.40%
10 Years -3.97
5 Years -20.13
1 Year -28.87
CLASS B SHARES
Inception (4/1/93) -3.71%
10 Years -3.89
5 Years -20.01
1 Year -29.46
CLASS C SHARES
Inception (3/1/99) -23.64%
1 Year -26.49
In addition to returns as of the close of the fiscal year period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (1/27/92), -3.19%; 10 years, -4.67%; five years, -21.42%;
one year, -41.89%. Class B shares, inception (4/1/93), -4.60%; 5 years, -21.28%;
one year, -42.25%. Class C shares, inception (3/1/99), -25.65%; one year,
- -39.82%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 3.27%
CLASS B SHARES 3.07
CLASS C SHARES 3.07
S&P 500 Index 4.47
(Broad Market Index)
PSE TECHNOLOGY 100 INDEX 7.67
(Style-specific Index)
LIPPER SCIENCE & Technology Fund Index 9.84
(Peer Group Index)
Past performance cannot guarantee comparable fund results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
<Table>
<Caption>
===========================================================================================================================
TOP 10 INDUSTRIES* TOP 10 EQUITY HOLDINGS*
- ---------------------------------------------------------------------------------------------------------------------------
1. Semiconductors 17.6% 1. Microsoft Corp. 3.7%
2. Semiconductor Equipment 8.4 2. Dell Computer Corp, 3.5
3. Systems Software 8.3 3. Nextel Communications, Inc.-Class A 3.1
4. Application Software 6.7 4. Texas Instruments Inc. 3.1
5. Telecommunications Equipment 6.2 5. Gilead Sciences, Inc. 3.1
6. Wireless Telecommunication Services 6.0 6. Samsung Electronics Co., Ltd. (South Korea) 2.9
7. Biotechnology 4.6 7. eBay Inc. 2.6
8. Computer Storage & Peripherals 4.5 8. Analog Devices, Inc. 2.6
9. Computer Hardware 4.4 9. UTStarcom, Inc. 2.2
10. Internet Retail 4.4 10. Cisco Systems, Inc. 2.0
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance the fund will continue to hold particular security.
===========================================================================================================================
</Table>
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective July 1, 2002, AIM Global Telecommunications and Technology Fund
was renamed AIM Global Science and Technology Fund.
o AIM Global Science and Technology Fund's performance figures are historical,
and they reflect the reinvestment of distributions and changes in net asset
value.
o Had the advisor not waived fees and/or absorbed fund expenses during the
reporting period, returns would have been lower.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and 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 shares classes will differ because of
different sale charge structures and class expenses.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. Because of the fund's small asset base, any investment the
fund may make in IPOs may significantly affect the fund's total return. As
the fund's assets grow, the impact of IPO investments will decline, which
may reduce the effect of IPO investments on the fund's total return.
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 value of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o Investing in a single-sector mutual fund involves greater risk and potential
return than investing in a more diversified fund.
o The fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original investment.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and is a service mark
of Morgan Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o The unmanaged Pacific Stock Exchange Technology 100 Index (the PSE
Technology100) is a price-weighted index of 100 listed and over-the-counter
technology stocks from 15 technology-related industries.
o The unmanaged Lipper Science and Technology Fund Index represents and
average of the performance of the 30 largest science and technology funds
tracked by Lipper, Inc., an independent mutual fund performance monitor.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT aiminvestments.com.
TO OUR SHAREHOLDERS
Dear Shareholder:
[PHOTO OF This is the report on AIM Global Science and Technology Fund
ROBERT H. for the six months ended April 30, 2003. You will note that
GRAHAM] we have adopted a more concise format for our semiannual
reports. Important information such as top holdings and
performance as of the close of the reporting period appear
ON THE CURRENCY on the opposite page. This letter will provide an overview
FRONT, THE U.S. of the markets and your fund during the six months covered
DOLLAR WAS WEAK by this report. As always, timely information about your
COMPARED TO MANY fund and the markets in general is available at our Web
FOREIGN site, aiminvestments.com.
CURRENCIES.
MARKET CONDITIONS
ROBERT H. GRAHAM
In U.S. markets, positive performance during March and April
2003 enabled major stock market indexes to post gains for
the reporting period. For example, the unmanaged Standard &
Poor's Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period.
International markets, as measured by the unmanaged MSCI Europe, Australasia
and the Far East Index (the EAFE--Registered Trademark--), a group of foreign
securities tracked by Morgan Stanley Capital International, produced negative
returns for the first quarter of 2003. International markets, however, rallied
in April. This rally helped push international market returns into positive
territory for the six-month reporting period.
European markets rallied toward the close of the reporting period, with the
MSCI (Morgan Stanley Capital International) Europe Index, often considered
representative of the European equity market, gaining 13.49% in April. In
European monetary affairs, the European Central Bank (ECB) cut its benchmark
interest rate 25 basis points to 2.50% in March. It remained at that level as
the reporting period closed.
As widely discussed, in Asia, the epidemic of severe acute respiratory
syndrome (SARS) dealt a blow to local economies. However, the MSCI All Country
(AC) Asia Pacific Free ex-Japan Index, a group of developed and emerging Asian
and Asia-Pacific markets (except Japan) covered by Morgan Stanley Capital
International, rallied in April and was positive for the six-month reporting
period.
On the currency front, the U.S. dollar was weak compared to many foreign
currencies. In particular, the euro showed strength as it appreciated nearly 13%
against the dollar during the reporting period. Other notable currencies that
gained ground on the dollar included the Australian dollar, Swiss franc, British
pound and Canadian dollar.
YOUR FUND
At net asset value AIM Global Science and Technology Fund turned in positive
performance for the six-month reporting period. The fund also generated positive
results at net asset value year-to-date and for the three-month and one-month
periods ended April 30, 2003. Fund manager Abel Garcia and senior analyst Warren
Tennant increased the total number of holdings during the reporting period from
63 to 83 to further diversify the portfolio.
In addition, fund managers have begun to reduce their holdings in industries
like aerospace and defense, as well as computer storage. They have added more
holdings in health care and networking equipment.
IN CLOSING
I thank you for your continued participation in AIM Global Science and
Technology Fund, and I look forward to reporting to you again in six months. If
you have any questions, please consult your financial advisor to help you with
your investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-82.06%
AEROSPACE & DEFENSE-0.54%
L-3 Communications Holdings, Inc.(a) 47,600 $ 2,113,440
==========================================================================
APPLICATION SOFTWARE-4.15%
Documentum, Inc.(a) 303,500 5,581,365
- --------------------------------------------------------------------------
FileNET Corp.(a) 108,700 1,672,893
- --------------------------------------------------------------------------
Intuit Inc.(a) 39,800 1,543,444
- --------------------------------------------------------------------------
Mercury Interactive Corp.(a) 192,200 6,523,268
- --------------------------------------------------------------------------
PeopleSoft, Inc.(a) 60,400 907,812
==========================================================================
16,228,782
==========================================================================
AUTO PARTS & EQUIPMENT-1.24%
Gentex Corp.(a) 159,800 4,825,960
==========================================================================
BIOTECHNOLOGY-4.64%
Amgen Inc.(a) 52,500 3,218,775
- --------------------------------------------------------------------------
Charles River Laboratories International,
Inc.(a) 45,500 1,235,325
- --------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 260,500 12,019,470
- --------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 50,800 1,663,700
==========================================================================
18,137,270
==========================================================================
COMPUTER HARDWARE-4.35%
Dell Computer Corp.(a) 476,300 13,769,833
- --------------------------------------------------------------------------
Hewlett-Packard Co. 198,600 3,237,180
==========================================================================
17,007,013
==========================================================================
COMPUTER STORAGE & PERIPHERALS-4.46%
EMC Corp.(a) 401,400 3,648,726
- --------------------------------------------------------------------------
Hutchinson Technology Inc.(a) 90,700 2,144,148
- --------------------------------------------------------------------------
Imation Corp.(a) 56,200 1,927,660
- --------------------------------------------------------------------------
SanDisk Corp.(a) 171,100 4,140,620
- --------------------------------------------------------------------------
Storage Technology Corp.(a) 123,900 3,062,808
- --------------------------------------------------------------------------
Western Digital Corp.(a) 267,900 2,499,507
==========================================================================
17,423,469
==========================================================================
CONSUMER ELECTRONICS-0.81%
Harman International Industries, Inc. 47,500 3,163,025
==========================================================================
DATA PROCESSING SERVICES-0.80%
Paychex, Inc. 100,100 3,117,114
==========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.24%
Trimble Navigation Ltd.(a) 192,100 4,850,525
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
HEALTH CARE DISTRIBUTORS & SERVICES-1.65%
Cerner Corp.(a) 50,000 999,000
- --------------------------------------------------------------------------
Express Scripts, Inc.(a) 19,300 $ 1,137,928
- --------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 68,400 2,015,064
- --------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 38,500 2,300,375
==========================================================================
6,452,367
==========================================================================
HEALTH CARE EQUIPMENT-1.19%
Advanced Neuromodulation Systems, Inc.(a) 23,600 988,132
- --------------------------------------------------------------------------
Boston Scientific Corp.(a) 84,900 3,654,945
==========================================================================
4,643,077
==========================================================================
HEALTH CARE SUPPLIES-0.62%
Fisher Scientific International Inc.(a) 83,700 2,411,397
==========================================================================
INTERNET RETAIL-4.35%
Amazon.com, Inc.(a) 235,500 6,751,785
- --------------------------------------------------------------------------
eBay Inc.(a) 110,500 10,251,085
==========================================================================
17,002,870
==========================================================================
INTERNET SOFTWARE & SERVICES-2.44%
United Online, Inc.(a) 158,300 3,539,588
- --------------------------------------------------------------------------
Websense, Inc.(a) 125,100 1,785,177
- --------------------------------------------------------------------------
Yahoo! Inc.(a) 170,700 4,229,946
==========================================================================
9,554,711
==========================================================================
IT CONSULTING & SERVICES-3.27%
Affiliated Computer Services, Inc.-Class A(a) 142,200 6,782,940
- --------------------------------------------------------------------------
Anteon International Corp.(a) 158,800 3,760,384
- --------------------------------------------------------------------------
Cognizant Technology Solutions Corp.(a) 124,800 2,241,408
==========================================================================
12,784,732
==========================================================================
NETWORKING EQUIPMENT-4.15%
Cisco Systems, Inc.(a) 525,000 7,896,000
- --------------------------------------------------------------------------
McDATA Corp.-Class A(a) 235,000 2,486,300
- --------------------------------------------------------------------------
NetScreen Technologies, Inc.(a) 288,600 5,852,808
==========================================================================
16,235,108
==========================================================================
PHARMACEUTICALS-0.64%
Forest Laboratories, Inc.(a) 48,000 2,482,560
==========================================================================
SEMICONDUCTOR EQUIPMENT-8.37%
Applied Materials, Inc.(a) 355,700 5,193,220
- --------------------------------------------------------------------------
Axcelis Technologies, Inc.(a) 522,900 2,970,072
- --------------------------------------------------------------------------
Entegris Inc.(a) 230,300 2,641,541
- --------------------------------------------------------------------------
KLA-Tencor Corp.(a) 96,200 3,944,200
- --------------------------------------------------------------------------
Lam Research Corp.(a) 345,000 5,012,850
- --------------------------------------------------------------------------
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT-(CONTINUED)
Novellus Systems, Inc.(a) 169,100 $ 4,741,564
- --------------------------------------------------------------------------
Teradyne, Inc.(a) 361,700 4,195,720
- --------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 174,000 4,010,700
==========================================================================
32,709,867
==========================================================================
SEMICONDUCTORS-15.04%
Analog Devices, Inc.(a) 301,300 9,979,056
- --------------------------------------------------------------------------
Cree, Inc.(a) 89,700 1,789,515
- --------------------------------------------------------------------------
GlobespanVirata, Inc.(a) 430,000 2,610,100
- --------------------------------------------------------------------------
Integrated Circuit Systems, Inc.(a) 103,300 2,243,676
- --------------------------------------------------------------------------
Intel Corp. 327,100 6,018,640
- --------------------------------------------------------------------------
Maxim Integrated Products, Inc. 48,300 1,897,707
- --------------------------------------------------------------------------
Microchip Technology Inc. 302,200 6,282,738
- --------------------------------------------------------------------------
OmniVision Technologies, Inc.(a) 79,700 1,935,116
- --------------------------------------------------------------------------
QLogic Corp.(a) 63,000 2,771,370
- --------------------------------------------------------------------------
Silicon Laboratories Inc.(a) 242,400 6,896,280
- --------------------------------------------------------------------------
Texas Instruments Inc. 657,700 12,160,873
- --------------------------------------------------------------------------
Xilinx, Inc.(a) 155,300 4,203,971
==========================================================================
58,789,042
==========================================================================
SYSTEMS SOFTWARE-8.33%
Borland Software Corp.(a) 226,200 2,051,634
- --------------------------------------------------------------------------
Microsoft Corp. 560,000 14,319,200
- --------------------------------------------------------------------------
Oracle Corp.(a) 449,400 5,338,872
- --------------------------------------------------------------------------
Symantec Corp.(a) 165,800 7,286,910
- --------------------------------------------------------------------------
VERITAS Software Corp.(a) 161,500 3,554,615
==========================================================================
32,551,231
==========================================================================
TELECOMMUNICATIONS EQUIPMENT-4.53%
Advanced Fibre Communications, Inc.(a) 177,100 2,709,630
- --------------------------------------------------------------------------
QUALCOMM Inc. 206,100 6,572,529
- --------------------------------------------------------------------------
UTStarcom, Inc.(a) 387,400 8,434,085
==========================================================================
17,716,244
==========================================================================
WIRELESS TELECOMMUNICATION SERVICES-5.25%
AT&T Wireless Services Inc.(a) 700,400 4,524,584
- --------------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 829,400 12,266,826
- --------------------------------------------------------------------------
United States Cellular Corp.(a) 154,500 3,715,725
==========================================================================
20,507,135
==========================================================================
Total Domestic Common Stocks (Cost
$304,846,797) 320,706,939
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-11.41%
BERMUDA-0.96%
Marvell Technology Group Ltd.
(Semiconductors)(a) 163,000 $ 3,761,877
==========================================================================
CANADA-0.57%
Cognos, Inc. (Application Software)(a) 81,700 2,217,338
==========================================================================
CAYMAN ISLANDS-0.47%
Garmin Ltd. (Consumer Electronics)(a) 43,100 1,826,578
==========================================================================
FINLAND-1.67%
Nokia Oyj-ADR (Telecommunications Equipment) 392,900 6,510,353
==========================================================================
GERMANY-0.94%
SAP A.G. (Application Software) 35,953 3,690,273
==========================================================================
ISRAEL-0.59%
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 49,600 2,316,320
==========================================================================
NETHERLANDS-0.51%
STMicroelectronics N.V. (Semiconductors) 96,215 1,992,344
==========================================================================
SOUTH KOREA-2.88%
Samsung Electronics Co., Ltd. (Electronic
Equipment & Instruments)(a) 44,800 11,250,721
==========================================================================
TAIWAN-1.09%
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Semiconductors)(a) 510,000 4,268,700
==========================================================================
UNITED KINGDOM-1.73%
Amdocs Ltd. (Application Software)(a) 223,000 3,938,180
- --------------------------------------------------------------------------
Vodafone Group PLC-ADR (Wireless
Telecommunication Services) 143,400 2,833,584
==========================================================================
6,771,764
==========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $41,130,657) 44,606,268
==========================================================================
MONEY MARKET FUNDS-6.81%
STIC Liquid Assets Portfolio(b) 13,310,011 13,310,011
- --------------------------------------------------------------------------
STIC Prime Portfolio(b) 13,310,011 13,310,011
==========================================================================
Total Money Market Funds (Cost
$26,620,022) 26,620,022
==========================================================================
TOTAL INVESTMENTS-100.28% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $372,597,476) 391,933,229
==========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-30.31%
STIC Liquid Assets Portfolio(b)(c) 59,230,865 $ 59,230,865
- --------------------------------------------------------------------------
STIC Prime Portfolio(b)(c) 59,230,866 59,230,866
==========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $118,461,731) 118,461,731
==========================================================================
TOTAL INVESTMENTS-130.59% (Cost $491,059,207) 510,394,960
==========================================================================
OTHER ASSETS LESS LIABILITIES-(30.59%) (119,550,987)
==========================================================================
NET ASSETS-100.00% $ 390,843,973
__________________________________________________________________________
==========================================================================
</Table>
Investment Abbreviations:
<Table>
<Caption>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
(c) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$491,059,207)* $ 510,394,960
- ------------------------------------------------------------
Receivables for:
Investments sold 7,622,083
- ------------------------------------------------------------
Fund shares sold 783,357
- ------------------------------------------------------------
Dividends 49,555
- ------------------------------------------------------------
Investment for deferred compensation plan 5,988
- ------------------------------------------------------------
Other assets 28,301
============================================================
Total assets 518,884,244
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 7,707,258
- ------------------------------------------------------------
Fund shares reacquired 529,932
- ------------------------------------------------------------
Deferred compensation plan 5,988
- ------------------------------------------------------------
Collateral upon return of securities
loaned 118,461,731
- ------------------------------------------------------------
Accrued distribution fees 306,267
- ------------------------------------------------------------
Accrued trustees' fees 915
- ------------------------------------------------------------
Accrued transfer agent fees 769,145
- ------------------------------------------------------------
Accrued operating expenses 259,035
============================================================
Total liabilities 128,040,271
============================================================
Net assets applicable to shares outstanding $ 390,843,973
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 1,883,547,649
- ------------------------------------------------------------
Undistributed net investment income (loss) (3,341,523)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (1,508,697,888)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 19,335,735
============================================================
$ 390,843,973
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 281,962,711
____________________________________________________________
============================================================
Class B $ 92,434,635
____________________________________________________________
============================================================
Class C $ 16,446,627
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 55,831,611
____________________________________________________________
============================================================
Class B 19,645,773
____________________________________________________________
============================================================
Class C 3,495,549
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 5.05
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $5.05 divided by
95.25%) $ 5.30
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 4.71
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 4.71
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $115,491,986
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $56,014) $ 448,315
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 122,470
- --------------------------------------------------------------------------
Interest 2,992
- --------------------------------------------------------------------------
Security lending income 187,694
==========================================================================
Total investment income 761,471
==========================================================================
EXPENSES:
Advisory fees 1,861,334
- --------------------------------------------------------------------------
Administrative services fees 51,781
- --------------------------------------------------------------------------
Custodian fees 29,072
- --------------------------------------------------------------------------
Distribution fees -- Class A 680,062
- --------------------------------------------------------------------------
Distribution fees -- Class B 470,959
- --------------------------------------------------------------------------
Distribution fees -- Class C 77,977
- --------------------------------------------------------------------------
Transfer agent fees 2,620,464
- --------------------------------------------------------------------------
Trustees' fees 5,240
- --------------------------------------------------------------------------
Other 282,399
==========================================================================
Total expenses 6,079,288
==========================================================================
Less: Fees waived, expenses reimbursed and expenses paid
indirectly (1,982,975)
==========================================================================
Net expenses 4,096,313
==========================================================================
Net investment income (loss) (3,334,842)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (67,607,777)
- --------------------------------------------------------------------------
Foreign currencies 113,763
- --------------------------------------------------------------------------
Option contracts written 746,115
==========================================================================
(66,747,899)
==========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 82,364,232
- --------------------------------------------------------------------------
Foreign currencies (293)
- --------------------------------------------------------------------------
Option contracts written 36,037
==========================================================================
82,399,976
==========================================================================
Net gain from investment securities, foreign currencies and
options contracts 15,652,077
==========================================================================
Net increase in net assets resulting from operations $ 12,317,235
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (3,334,842) $ (11,879,992)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (66,747,899) (240,968,796)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option contracts 82,399,976 27,536,826
============================================================================================
Net increase (decrease) in net assets resulting from
operations 12,317,235 (225,311,962)
============================================================================================
Share transactions-net:
Class A (7,644,251) (5,159,028)
- --------------------------------------------------------------------------------------------
Class B (12,703,314) (122,002,616)
- --------------------------------------------------------------------------------------------
Class C 17,055 (3,417,367)
============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (20,330,510) (130,579,011)
============================================================================================
Net increase (decrease) in net assets (8,013,275) (355,890,973)
============================================================================================
NET ASSETS:
Beginning of period 398,857,248 754,748,221
============================================================================================
End of period $ 390,843,973 $ 398,857,248
____________________________________________________________________________________________
============================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Science and Technology Fund, (the "Fund") is a separate series of AIM
Investment Funds (the "Trust"). The Trust is organized as a Delaware statutory
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 seven separate series portfolios, each having an unlimited number of shares
of beneficial interest. The Fund currently offers multiple classes of shares.
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. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper are valued at amortized cost which approximates market
value. For purposes of
F-6
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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
F. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. COVERED CALL OPTIONS -- The Fund may write call options, on a covered
basis; that is, the Fund will own the underlying security. When the Fund
writes a covered call option, an amount equal to the premium received by
the Fund is recorded as an asset and an equivalent liability. The amount of
the liability is subsequently "marked-to-market" to reflect the current
market value of the option written. The current market value of a written
option is the mean between the last bid and asked prices on that day. If a
written call option expires on the stipulated expiration date, or if the
Fund enters into a closing purchase transaction, the Fund realizes a gain
(or a loss if the closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss
on the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received. A risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividends on short sales, extraordinary items and increases in
expenses due to expense offset arrangements, if any) for Class A, Class B and
Class C shares to 2.00%, 2.50% and 2.50%, respectively. To the extent that the
annualized expense ratio does not exceed the contractual expense limitation, AIM
will retain the ability to be reimbursed for such fee waivers or reimbursements
prior to the end of
F-7
the committed period. Further, AIM has voluntarily agreed to waive advisory fees
of the Fund in the amount of 25% of the advisory fee AIM receives from the
affiliated money market funds in which the Fund has invested (excluding
investments made in affiliated money market funds with cash collateral from
securities loaned by the Fund). For the six months ended April 30, 2003, AIM
waived fees of $1,861,334 and reimbursed expenses of $117,798.
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 six months ended April 30, 2003, AIM
was paid $51,781 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. During the six months ended April 30, 2003,
AFS retained $1,445,915 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. NASD Rules
also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $680,062, $470,959 and $77,977, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During six months ended April 30, 2003, AIM
Distributors retained $26,268 in front-end sales commissions from the sale of
Class A shares and $21,338, $82 and $822 for Class A, Class B and Class C
shares, respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,601 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $3,480 and reductions in
custodian fees of $363 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $3,843.
NOTE 4--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 5--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At April 30, 2003, securities with an aggregate value of $115,491,986 were
on loan to brokers. The loans were secured by cash collateral of $118,461,731
received by the Fund and invested in affiliated money market funds. For the six
months ended April 30, 2003, the Fund received fees of $187,694 for securities
lending.
F-8
NOTE 6--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- --------------------------------------------------------------------------------
Beginning of period 3,745 $ 453,826
- --------------------------------------------------------------------------------
Written 1,855 588,893
- --------------------------------------------------------------------------------
Closed (2,975) (670,083)
- --------------------------------------------------------------------------------
Exercised (1,630) (163,226)
- --------------------------------------------------------------------------------
Expired (995) (209,410)
================================================================================
End of period -- $ --
________________________________________________________________________________
================================================================================
</Table>
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ---------------------------------------------------------------------------------
October 31, 2009 $1,181,366,577
- ---------------------------------------------------------------------------------
October 31, 2010 259,449,545
=================================================================================
Total capital loss carryforward $1,440,816,122
_________________________________________________________________________________
=================================================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $223,539,005 and $249,271,801, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $ 49,100,060
- ---------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (29,976,637)
=================================================================================
Net unrealized appreciation of investment securities $ 19,123,423
_________________________________________________________________________________
=================================================================================
Cost of investments for tax purposes is $491,271,537.
</Table>
NOTE 9--SHARE INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 16,788,636 $ 79,964,191 26,274,193 $ 171,598,190
- -------------------------------------------------------------------------------------------------------------------------
Class B 1,963,349 8,873,751 2,939,110 19,257,843
- -------------------------------------------------------------------------------------------------------------------------
Class C 643,027 2,902,247 1,050,513 6,971,729
=========================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 1,676,512 8,228,998 8,433,047 56,174,791
- -------------------------------------------------------------------------------------------------------------------------
Class B (1,797,104) (8,228,998) (9,000,274) (56,174,791)
=========================================================================================================================
Reacquired:
Class A (20,023,550) (95,837,440) (36,509,509) (232,932,009)
- -------------------------------------------------------------------------------------------------------------------------
Class B (2,972,756) (13,348,067) (12,786,276) (85,085,668)
- -------------------------------------------------------------------------------------------------------------------------
Class C (644,523) (2,885,192) (1,669,762) (10,389,096)
=========================================================================================================================
(4,366,409) $(20,330,510) (21,268,958) $(130,579,011)
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
F-9
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 4.89 $ 7.41 $ 30.61 $ 26.44 $ 16.28 $ 18.04
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.12)(a) (0.20)(a) 0.06(a)(b) (0.25) (0.17)(a)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.20 (2.40) (19.12) 7.23 10.97 (0.39)
================================================================================================================================
Total from investment operations 0.16 (2.52) (19.32) 7.29 10.72 (0.56)
================================================================================================================================
Less distributions from net realized
gains -- -- (3.88) (3.12) (0.56) (1.20)
================================================================================================================================
Net asset value, end of period $ 5.05 $ 4.89 $ 7.41 $ 30.61 $ 26.44 $ 16.28
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(c) 3.27% (34.01)% (71.16)% 27.52% 67.63% (3.16)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $281,963 $280,426 $438,702 $1,513,595 $1,023,124 $713,904
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense
reimbursements 2.00%(d) 2.01% 1.98% 1.63% 1.77% 1.88%
- --------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense
reimbursements 3.04%(d) 2.56% 2.03% 1.63% 1.77% 1.88%
================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.60)%(d) (1.76)% (1.57)% 0.16% (1.11)% (0.93)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate(e) 61% 115% 173% 111% 122% 75%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects dividend income of $0.49 per
share recognized from the spin-off of Nortel Networks Corp. from BCE,
Inc.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily assets of $274,279,177.
(e) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS B
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 4.56 $ 6.96 $ 29.17 $ 25.43 $ 15.76 $ 17.58
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.14)(a) (0.25)(a) (0.11)(a)(b) (0.35) (0.25)(a)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.20 (2.26) (18.08) 6.97 10.58 (0.37)
================================================================================================================================
Total from investment operations 0.15 (2.40) (18.33) 6.86 10.23 (0.62)
================================================================================================================================
Less distributions from net realized
gains -- -- (3.88) (3.12) (0.56) (1.20)
================================================================================================================================
Net asset value, end of period $ 4.71 $ 4.56 $ 6.96 $ 29.17 $ 25.43 $ 15.76
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(c) 3.29% (34.48)% (71.30)% 26.87% 66.84% (3.67)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $92,435 $102,470 $287,394 $1,414,915 $898,400 $614,715
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense
reimbursements 2.50%(d) 2.51% 2.48% 2.13% 2.28% 2.38%
- --------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense
reimbursements 3.54%(d) 3.06% 2.53% 2.13% 2.28% 2.38%
================================================================================================================================
Ratio of net investment income (loss) to
average net assets (2.10)%(d) (2.26)% (2.07)% (0.34)% (1.62)% (1.43)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate(e) 61% 115% 173% 111% 122% 75%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects dividend income of $0.49 per
share recognized from the spin-off of Nortel Networks Corp. from BCE,
Inc.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily assets of $94,972,441.
(e) Not annualized for periods less than one year.
F-10
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
---------------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ------------------------------------ OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 4.56 $ 6.96 $ 29.16 $ 25.43 $ 19.23
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.14)(a) (0.25)(a) (0.11)(a)(b) (0.11)
- ---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.20 (2.26) (18.07) 6.96 6.31
=====================================================================================================================
Total from investment operations 0.15 (2.40) (18.32) 6.85 6.20
=====================================================================================================================
Less distributions from net realized
gains -- -- (3.88) (3.12) --
=====================================================================================================================
Net asset value, end of period $ 4.71 $ 4.56 $ 6.96 $ 29.16 $ 25.43
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(c) 3.29% (34.48)% (71.29)% 26.83% 32.24%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $16,447 $15,961 $28,652 $114,667 $12,352
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense
reimbursements 2.50%(d) 2.51% 2.48% 2.13% 2.28%(e)
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense
reimbursements 3.54%(d) 3.06% 2.53% 2.13% 2.28%(e)
=====================================================================================================================
Ratio of net investment income (loss) to
average net assets (2.10)%(d) (2.26)% (2.07)% (0.34)% (1.62)%(e)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate(f) 61% 115% 173% 111% 122%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects dividend income of $0.49 per
share recognized from the spin-off of Nortel Networks Corp. from BCE,
Inc.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily assets of $15,724,705.
(e) Annualized.
(f) Not annualized for periods less than one year.
NOTE 11--SUBSEQUENT EVENT
The Board of Trustees of AIM Investment Funds ("Seller") unanimously approved,
on June 11, 2003, an Agreement and Plan of Reorganization (the "Plan") pursuant
to which AIM Global Science and Technology Fund ("Selling Fund"), a series of
Seller, would transfer all of its assets to INVESCO Technology Fund ("Buying
Fund"), a series of INVESCO Sector Funds, Inc. ("the Reorganization"). As a
result of the Reorganization, shareholders of Selling Fund would receive shares
of Buying Fund in exchange for their shares of Selling Fund, and Selling Fund
would cease operations.
The Plan requires approval of Selling Fund shareholders and will be submitted
to the shareholders for their consideration at a meeting to be held on or around
September 25, 2003. If the Plan is approved by shareholders of Selling Fund and
certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
Effective on or about October 1, 2003, it is anticipated that Selling Fund
will be closed to new investors.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
TAXABLE
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2)
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund
AIM Large Cap Growth Fund
AIM Libra Fund TAX-FREE
AIM Mid Cap Basic Value Fund SECTOR EQUITY
AIM Mid Cap Core Equity Fund(2)
AIM Mid Cap Growth Fund
AIM Opportunities I Fund(2,3) AIM High Income Municipal Fund
AIM Opportunities II Fund(2,3) AIM Global Energy Fund AIM Municipal Bond Fund
AIM Opportunities III Fund(2,3) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Premier Equity Fund(2) AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Premier Equity II Fund(2) AIM Global Science and Technology Fund(2)
AIM Select Equity Fund AIM Global Utilities Fund
AIM Small Cap Equity Fund AIM New Technology Fund
AIM Small Cap Growth Fund(4) AIM Real Estate Fund
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
College Separately
Mutual Retirement Annuities Savings Managed Offshore Alternative Cash
Funds Products Plans Accounts Products Investments Management
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002.
(7)Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
GST-SAR-1
AIMinvestments.com
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM LIBRA FUND
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
Your Goals. Our Solutions.
--Servicemark--
AIM Libra Fund seeks to provide long-term growth of capital.
The fund seeks to meet its objective by investing in securities
of companies the portfolio manager believes are likely to
benefit from new or innovative products, services or processes.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
PORTFOLIO COMPOSITION BY COMPANY SIZE*
As of 4/30/03
[PIE CHART]
LARGE-CAP STOCKS 16%
MID-CAP STOCKS 25%
SMALL-CAP STOCKS 59%
Source: Lipper, Inc.
TOTAL NUMBER OF HOLDINGS 92
TOTAL NET ASSETS $5.3 MILLION
================================================================================
================================================================================
CUMULATIVE TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (11/01/02) -5.48%
CLASS B SHARES
Inception (11/01/02) -5.38%
CLASS C SHARES
Inception (11/01/02) -1.40%
In addition to fund returns as of the close of the reporting period, industry
regulations require us to provide cumulative total returns (including sales
charges) for periods ended 3/31/03, the most recent calendar quarter-end, which
were as follows. Class A shares, inception (11/01/02), -12.19%. Class B shares,
inception (11/01/02), -11.94%. Class C shares, inception (11/01/02), -8.23%.
================================================================================
================================================================================
FUND VS. INDEXES
Excluding sales charges
Libra Fund: Cumulative Total Returns 11/01/02-4/30/03
Index returns: Cumulative Total Returns 10/31/02-4/30/03
CLASS A SHARES 0.00%
CLASS B SHARES -0.40
CLASS C SHARES -0.40
S&P 500 INDEX 4.47
(Broad Market and Index)
RUSSELL MIDCAP GROWTH INDEX 8.19
(Style-Specific Index)
LIPPER MULTI-CAP GROWTH FUND INDEX 4.79
(Peer Group Index)
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
==============================================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ------------------------------------------------------------------------------------------------------------------------------
1. iShares Russell 1000 Growth Index Fund 4.8% 1. Semiconductors 10.0%
2. iShares Russell Midcap Growth Index Fund 4.1 2. Mutual Funds 8.9
3. Foundry Networks, Inc. 1.4 3. Health Care Equipment 7.1
4. American Pharmaceutical Partners, Inc. 1.3 4. Diversified Commercial Services 6.9
5. Corinthian Colleges, Inc. 1.2 5. Federal Home Loan Bank 6.0
6. United Online, Inc. 1.2 6. Managed Health Care 5.6
7. ITT Educational Services, Inc. 1.2 7. Health Care Distributors & Services 4.7
8. Genesis Microchip Inc. 1.2 8. Pharmaceuticals 3.9
9. AMERIGROUP Corp. 1.1 9. Application Software 3.9
10. Integra LifeSciences Holdings 1.1 10. Computer Storage & Peripherals 3.8
*Excludes money market and government agency fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will continue to hold any particular
security.
==============================================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, all information presented here is as of 4/30/03 and
is based on total net assets.
o AIM Libra Fund's performance figures are historical, and they reflect fund
expenses, 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 5.50% 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 share classes will differ due to different
sales charge structures and class expenses.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. Because of the fund's small asset base, any investment the
fund may make in IPOs may significantly affect the fund's total return. As
the fund's assets grow, the impact of IPO investments will decline, which
may reduce the effect of IPO investments on the fund's total return.
o Had the advisor not waived fees and/or reimbursed expenses, returns would
have been lower.
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.
o Investing in small and mid-size companies may involve risks not associated
with investing in more established companies. Also, small companies may have
business risk, significant stock price fluctuations and illiquidity.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o The unmanaged Russell Midcap Index represents the performance of the stocks
of domestic mid-capitalization companies; the Growth segment measures the
performance of Russell Midcap companies with higher price/book ratios and
higher forecasted growth values.
o The unmanaged Lipper Multi-Cap Growth Fund Index represents an average of
the performance of the 30 largest multi-capitalization growth funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT aiminvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the first shareholder report on AIM Libra Fund. The
ROBERT H. fund was launched on November 1, 2002, and this report
GRAHAM] covers the six-month period that ended April 30, 2003.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page. This letter will provide an overview of the
POSITIVE markets and your fund during the six months covered by this
PERFORMANCE DURING report. As always, timely information about your fund and
MARCH AND APRIL the markets in general is available at our Web site,
2003 ENABLED MAJOR aiminvestments.com.
STOCK MARKET
INDEXES TO POST MARKET CONDITIONS
GAINS FOR THE
REPORTING PERIOD. Positive performance during March and April 2003 enabled
ROBERT H. GRAHAM major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed the
growth investment style during the six-month reporting period. For example, the
Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced a total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
When AIM Libra Fund was launched on November 1, 2002, it began with the purchase
of about 50 stocks. By the end of the reporting period, it included 92 equity
holdings.
The fund can invest in stocks of every market capitalization. As of April 30,
2003, small and mid-cap stocks accounted for more than three-fourths of the
fund's holdings.
The fund may invest up to 25% of its assets in foreign securities, however,
at the end of the reporting period, foreign securities represented less than 3%
of the fund's assets.
Portfolio manager Jonathan Schoolar characterizes the fund as an aggressive
and potentially volatile investment. Though the fund is diversified across all
market capitalizations, it is not charged with diversifying across all market
sectors. At the end of the reporting period, the fund had no holdings in energy,
utilities or materials. Its holdings in consumer staples, financials and
telecommunications were small (less than 3% each). The fund was concentrated in
four sectors: information technology, health care, consumer discretionary and
industrials. As stated in the prospectus, the fund manager(s) purchase
securities of companies that have experienced, or that they believe have the
potential for, above-average growth in earnings or that have the potential for
superior earnings growth.
IN CLOSING
I thank you for your participation in AIM Libra Fund, and I look forward to
reporting to you again in six months. If you have any questions, please consult
your financial advisor to help you with your investment choices. As always,
members of our award-winning Client Services department are ready to help. They
can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-93.60%
AEROSPACE & DEFENSE-0.52%
Mercury Computer Systems, Inc.(a) 1,313 $ 27,573
====================================================================
APPAREL RETAIL-3.74%
Abercrombie & Fitch Co.-Class A(a) 1,447 47,577
- --------------------------------------------------------------------
Chico's FAS, Inc.(a) 2,276 55,398
- --------------------------------------------------------------------
Hot Topic, Inc.(a) 1,801 44,034
- --------------------------------------------------------------------
Pacific Sunwear of California, Inc.(a) 2,247 51,299
====================================================================
198,308
====================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-2.07%
Coach, Inc.(a) 1,238 53,865
- --------------------------------------------------------------------
Quicksilver, Inc.(a) 1,709 55,713
====================================================================
109,578
====================================================================
APPLICATION SOFTWARE-3.88%
Amdocs Ltd. (United Kingdom)(a) 2,949 52,079
- --------------------------------------------------------------------
Electronic Arts Inc.(a) 752 44,571
- --------------------------------------------------------------------
Mentor Graphics Corp.(a) 5,354 55,789
- --------------------------------------------------------------------
Verity, Inc.(a) 3,225 53,309
====================================================================
205,748
====================================================================
BANKS-0.91%
New York Community Bancorp, Inc. 1,398 48,539
====================================================================
BIOTECHNOLOGY-1.94%
Amgen Inc.(a) 849 52,052
- --------------------------------------------------------------------
Biogen, Inc.(a) 1,332 50,603
====================================================================
102,655
====================================================================
CASINOS & GAMBLING-0.84%
International Game Technology(a) 516 44,531
====================================================================
COMPUTER STORAGE & PERIPHERALS-3.77%
Avid Technology, Inc.(a) 1,760 48,347
- --------------------------------------------------------------------
EMC Corp.(a) 5,846 53,140
- --------------------------------------------------------------------
SanDisk Corp.(a) 2,303 55,733
- --------------------------------------------------------------------
Storage Technology Corp.(a) 1,732 42,815
====================================================================
200,035
====================================================================
DATA PROCESSING SERVICES-1.11%
CheckFree Corp.(a) 2,127 58,641
====================================================================
DIVERSIFIED COMMERCIAL SERVICES-6.88%
Apollo Group, Inc.-Class A(a) 955 51,760
- --------------------------------------------------------------------
Career Education Corp.(a) 864 51,952
- --------------------------------------------------------------------
Corinthian Colleges, Inc.(a) 1,402 64,198
- --------------------------------------------------------------------
Corporate Executive Board Co. (The)(a) 1,183 48,491
- --------------------------------------------------------------------
FTI Consulting, Inc.(a) 1,041 $ 47,105
- --------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------
DIVERSIFIED COMMERCIAL SERVICES-(CONTINUED)
ITT Educational Services, Inc.(a) 2,109 62,215
- --------------------------------------------------------------------
University of Phoenix Online(a) 883 38,976
====================================================================
364,697
====================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-2.11%
Arrow Electronics, Inc. 3,116 52,598
- --------------------------------------------------------------------
Trimble Navigation Ltd.(a) 2,340 59,085
====================================================================
111,683
====================================================================
ENVIRONMENTAL SERVICES-2.11%
Stericycle, Inc.(a) 1,419 55,753
- --------------------------------------------------------------------
Tetra Tech, Inc. 3,639 56,404
====================================================================
112,157
====================================================================
FOOD RETAIL-0.87%
Whole Foods Market, Inc.(a) 779 46,241
====================================================================
FOOTWEAR-0.96%
K-Swiss, Inc.-Class A 1,712 50,898
====================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-4.68%
AdvancePCS(a) 1,779 53,477
- --------------------------------------------------------------------
Odyssey Healthcare, Inc.(a) 1,817 46,951
- --------------------------------------------------------------------
Omnicare, Inc. 1,574 41,742
- --------------------------------------------------------------------
Pharmaceutical Product Development, Inc.(a) 2,005 52,471
- --------------------------------------------------------------------
WebMD Corp.(a) 5,570 53,695
====================================================================
248,336
====================================================================
HEALTH CARE EQUIPMENT-7.12%
Becton, Dickinson & Co. 1,271 44,993
- --------------------------------------------------------------------
Biosite Diagnostics Inc.(a) 1,219 52,027
- --------------------------------------------------------------------
Boston Scientific Corp.(a) 904 38,917
- --------------------------------------------------------------------
Integra LifeSciences Holdings(a) 2,227 59,439
- --------------------------------------------------------------------
STERIS Corp.(a) 1,583 35,934
- --------------------------------------------------------------------
Stryker Corp. 790 52,938
- --------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 787 42,388
- --------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 1,087 50,980
====================================================================
377,616
====================================================================
HEALTH CARE FACILITIES-0.89%
VCA Antech, Inc.(a) 2,827 47,463
====================================================================
HEALTH CARE SUPPLIES-2.61%
Coopers Cos., Inc. 1,370 38,223
- --------------------------------------------------------------------
Fisher Scientific International Inc.(a) 1,548 44,598
- --------------------------------------------------------------------
Immucor, Inc.(a) 2,707 55,575
====================================================================
138,396
====================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------
HOME IMPROVEMENT RETAIL-0.97%
Lowe's Cos., Inc. 1,169 $ 51,307
====================================================================
INTERNET SOFTWARE & SERVICES-1.19%
United Online, Inc.(a) 2,814 62,921
====================================================================
IT CONSULTING & SERVICES-1.86%
CACI International Inc.-Class A(a) 1,313 45,863
- --------------------------------------------------------------------
Cognizant Technology Solutions Corp.(a) 2,954 53,054
====================================================================
98,917
====================================================================
LEISURE PRODUCTS-0.94%
Leapfrog Enterprises, Inc.-Class A(a) 1,876 50,089
====================================================================
MANAGED HEALTH CARE-5.64%
Aetna Inc. 935 46,563
- --------------------------------------------------------------------
AMERIGROUP Corp.(a) 2,085 60,715
- --------------------------------------------------------------------
Anthem, Inc.(a) 713 48,940
- --------------------------------------------------------------------
First Health Group Corp.(a) 1,651 41,358
- --------------------------------------------------------------------
Mid Atlantic Medical Services, Inc.(a) 1,122 48,863
- --------------------------------------------------------------------
UnitedHealth Group Inc. 571 52,606
====================================================================
299,045
====================================================================
MUTUAL FUNDS-8.90%
iShares Russell 1000 Growth Index Fund 6,547 253,042
- --------------------------------------------------------------------
iShares Russell Midcap Growth Index Fund 3,952 219,138
====================================================================
472,180
====================================================================
NETWORKING EQUIPMENT-2.43%
Foundry Networks, Inc.(a) 6,592 71,721
- --------------------------------------------------------------------
NetScreen Technologies, Inc.(a) 2,819 57,169
====================================================================
128,890
====================================================================
PHARMACEUTICALS-3.92%
American Pharmaceutical Partners, Inc.(a) 3,066 71,591
- --------------------------------------------------------------------
Forest Laboratories, Inc.(a) 814 42,100
- --------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Israel)(a) 1,027 46,996
- --------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 1,011 47,214
====================================================================
207,901
====================================================================
PUBLISHING-0.99%
Getty Images, Inc.(a) 1,558 52,738
====================================================================
RESTAURANTS-0.92%
P.F. Chang's China Bistro, Inc.(a) 1,168 48,939
====================================================================
SEMICONDUCTORS-9.97%
Altera Corp.(a) 3,323 52,537
- --------------------------------------------------------------------
Broadcom Corp.-Class A(a) 2,848 50,951
- --------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------
SEMICONDUCTORS-(CONTINUED)
Cree, Inc.(a) 2,683 $ 53,526
- --------------------------------------------------------------------
Genesis Microchip Inc.(a) 3,599 61,759
- --------------------------------------------------------------------
Marvell Technology Group Ltd. (Bermuda)(a) 2,126 49,066
- --------------------------------------------------------------------
National Semiconductor Corp.(a) 2,848 53,343
- --------------------------------------------------------------------
OmniVision Technologies, Inc.(a) 2,161 52,469
- --------------------------------------------------------------------
QLogic Corp.(a) 1,222 53,756
- --------------------------------------------------------------------
Silicon Laboratories Inc.(a) 1,733 49,304
- --------------------------------------------------------------------
Xilinx, Inc.(a) 1,922 52,029
====================================================================
528,740
====================================================================
SPECIALTY STORES-2.90%
Advance Auto Parts, Inc.(a) 998 49,641
- --------------------------------------------------------------------
Guitar Center Inc.(a) 2,297 53,199
- --------------------------------------------------------------------
Tractor Supply Co.(a) 1,209 51,201
====================================================================
154,041
====================================================================
SYSTEMS SOFTWARE-1.96%
Micromuse Inc.(a) 7,403 48,423
- --------------------------------------------------------------------
Progress Software Corp.(a) 2,840 55,352
====================================================================
103,775
====================================================================
TELECOMMUNICATIONS EQUIPMENT-2.97%
ADTRAN, Inc.(a) 1,284 51,976
- --------------------------------------------------------------------
Avocent Corp.(a) 1,781 52,753
- --------------------------------------------------------------------
UTStarcom, Inc.(a) 2,425 52,795
====================================================================
157,524
====================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.03%
Nextel Communications, Inc.-Class A(a) 3,696 54,664
====================================================================
Total Common Stocks & Other Equity
Interests (Cost $4,515,438) 4,964,766
====================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES-5.96%
FEDERAL HOME LOAN BANK-5.96%
Disc. Notes,
1.25%, 05/01/03 (Cost $316,000)(b) $316,000 316,000
=====================================================================
U.S. TREASURY BILLS-1.88%
1.12%, 06/19/03 (Cost $99,847)(b) 100,000(c) 99,847
=====================================================================
TOTAL INVESTMENTS-101.44% (Cost $4,931,285) 5,380,613
=====================================================================
OTHER ASSETS LESS LIABILITIES-(1.44%) (76,404)
=====================================================================
NET ASSETS-100.00% $5,304,209
_____________________________________________________________________
=====================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Disc. - Discounted
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 8.
See Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost $4,931,285) $5,380,613
- -----------------------------------------------------------
Cash 642
- -----------------------------------------------------------
Receivables for:
Investments sold 386,078
- -----------------------------------------------------------
Variation margin 675
- -----------------------------------------------------------
Fund shares sold 33,552
- -----------------------------------------------------------
Dividends 26
- -----------------------------------------------------------
Investment for deferred compensation plan 1,061
- -----------------------------------------------------------
Other assets 45,257
===========================================================
Total assets 5,847,904
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 491,454
- -----------------------------------------------------------
Fund shares reacquired 27,731
- -----------------------------------------------------------
Deferred compensation plan 1,061
- -----------------------------------------------------------
Accrued distribution fees 5,202
- -----------------------------------------------------------
Accrued trustees' fees 728
- -----------------------------------------------------------
Accrued transfer agent fees 1,980
- -----------------------------------------------------------
Accrued operating expenses 15,539
===========================================================
Total liabilities 543,695
===========================================================
Net assets applicable to shares outstanding $5,304,209
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,214,571
- -----------------------------------------------------------
Undistributed net investment income (loss) (29,107)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and futures contracts (342,917)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities and futures contracts 461,662
===========================================================
$5,304,209
___________________________________________________________
===========================================================
NET ASSETS:
Class A $4,201,632
___________________________________________________________
===========================================================
Class B $ 627,692
___________________________________________________________
===========================================================
Class C $ 474,885
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 420,346
___________________________________________________________
===========================================================
Class B 63,016
___________________________________________________________
===========================================================
Class C 47,663
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.00
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $10.00 divided by
94.50%) $ 10.58
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 9.96
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 9.96
___________________________________________________________
===========================================================
</Table>
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $47) $ 3,935
- -----------------------------------------------------------------------
Interest 3,788
=======================================================================
Total investment income 7,723
=======================================================================
EXPENSES:
Advisory fees 16,056
- -----------------------------------------------------------------------
Administrative services fees 24,795
- -----------------------------------------------------------------------
Custodian fees 7,117
- -----------------------------------------------------------------------
Distribution fees -- Class A 5,087
- -----------------------------------------------------------------------
Distribution fees -- Class B 2,377
- -----------------------------------------------------------------------
Distribution fees -- Class C 1,978
- -----------------------------------------------------------------------
Transfer agent fees 10,557
- -----------------------------------------------------------------------
Trustees' fees 4,523
- -----------------------------------------------------------------------
Registration and filing fees 25,398
- -----------------------------------------------------------------------
Printing 8,999
- -----------------------------------------------------------------------
Professional fees 20,278
- -----------------------------------------------------------------------
Other 2,298
=======================================================================
Total expenses 129,463
=======================================================================
Less: Fees waived, expenses reimbursed and paid indirectly (92,633)
=======================================================================
Net expenses 36,830
=======================================================================
Net investment income (loss) (29,107)
=======================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (262,313)
- -----------------------------------------------------------------------
Futures contracts (80,604)
=======================================================================
(342,917)
=======================================================================
Change in net unrealized appreciation of:
Investment securities 449,329
- -----------------------------------------------------------------------
Futures contracts 12,333
=======================================================================
461,662
=======================================================================
Net gain from investment securities and futures contracts 118,745
=======================================================================
Net increase in net assets resulting from operations $ 89,638
_______________________________________________________________________
=======================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003
(Unaudited)
<Table>
<Caption>
APRIL 30,
2003
- --------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (29,107)
- --------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
futures contracts (342,917)
- --------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and futures contracts 461,662
==========================================================================
Net increase in net assets resulting from operations 89,638
==========================================================================
Share transactions-net:
Class A 4,117,739
- --------------------------------------------------------------------------
Class B 622,753
- --------------------------------------------------------------------------
Class C 474,079
==========================================================================
Net increase (decrease) in net assets resulting from
share transactions 5,214,571
==========================================================================
Net increase in net assets 5,304,209
==========================================================================
NET ASSETS:
Beginning of period --
==========================================================================
End of period $5,304,209
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-5
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Libra Fund (the "Fund") is a separate series of AIM Investment Funds (the
"Trust"). The Trust is organized as a Delaware statutory 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 seven separate
series portfolios, each having an unlimited number of shares of beneficial
interest. The Fund currently offers multiple classes of shares. 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 commenced operations
November 1, 2002.
The Fund's investment objective is to provide long-term growth of capital.
In the Schedule of Investments each company is organized in the United States
unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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. Premiums and
discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the
F-6
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks also include to
varying degrees, the risk of loss in excess of the variation margin
disclosed in the Statement of Assets and Liabilities.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO (NY), Inc. is the Fund's subadvisor. The Fund pays AIM investment
management and administration fees at an annual rate of 0.85% of the first $1
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily nest assets in excess of $1 billion. AIM has voluntarily agreed to limit
total annual operating expenses (excluding interest, taxes, dividend expense on
short sales, extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A, Class B and Class C shares to 1.80%, 2.45%
and 2.45%, respectively. Voluntary expense limitations may be rescinded,
terminated or modified at any time without further notice to investors. During
periods of voluntary waivers or reimbursements to the extent the annualized
expense ratio does not exceed the voluntary limit for the period committed, AIM
will retain its ability to be reimbursed for such fee waivers or reimbursements
prior to the end of each fiscal year. Further, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in affiliated money market funds with cash
collateral from securities loaned by the Fund). For the six months ended April
30, 2003, AIM waived fees of $16,056 and reimbursed expenses of $76,435.
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 six months ended April 30, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $7,854 for such services.
The Trust has entered into a master distribution agreement 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $5,087, $2,377 and $1,978, respectively.
Front-end sales commissions and contingent deferred sales charges ("sales
charges") are not recorded as expenses of the Fund. Front-end sales commissions
are deducted from proceeds from the sales of Fund shares prior to investment in
Class A shares of the Fund. Contingent deferred sales charges ("CDSCs") are
deducted from redemption proceeds prior to remittance to the shareholder. During
the six months ended April 30, 2003, AIM Distributors retained $3,346 in
front-end sales commissions from the sale of Class A shares and $0, $0, and $0
for Class A, Class B and Class C shares, respectively, for CDSCs imposed upon
redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of $446
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $19 and reductions in
custodian fees of $123 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $142.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. The Fund did not borrow or lend under this
facility during the six months ended April 30, 2003.
F-7
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of any
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $12,119,954 and $7,342,204, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $499,839
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (50,511)
==========================================================
Net unrealized appreciation of investment
securities $449,328
__________________________________________________________
==========================================================
Investments have the same cost for tax and financial
statement purposes.
</Table>
NOTE 8--FUTURES CONTRACTS
On April 30, 2003, $22,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts as of April 30, 2003 were as follows:
<Table>
<Caption>
NO. OF MONTH/ MARKET UNREALIZED
CONTRACT CONTRACTS COMMITMENT VALUE APPRECIATION
- ------------------------------------------------------------------------
E-Mini S&P 500 3 Jun 03/Long $137,415 $ 4,933
- ------------------------------------------------------------------------
S&P Mid 400 E-Mini 3 Jun 03/Long 131,625 7,400
========================================================================
$269,040 $12,333
________________________________________________________________________
========================================================================
</Table>
NOTE 9--SHARE INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. The Fund commenced operations November 1, 2002.
Changes in shares outstanding during the six months ended April 30, 2003 were as
follows:
<Table>
<Caption>
SIX MONTHS ENDED
APRIL 30, 2003
---------------------
SHARES AMOUNT
- ------------------------------------------------------------
Sold:
Class A 476,758 $4,639,401
- ------------------------------------------------------------
Class B 68,055 668,887
- ------------------------------------------------------------
Class C 47,663 474,079
============================================================
Reacquired:
Class A (56,412) (521,662)
- ------------------------------------------------------------
Class B (5,039) (46,134)
============================================================
531,025 $5,214,571
____________________________________________________________
============================================================
</Table>
F-8
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding during the six months ended April 30, 2003.
<Table>
<Caption>
CLASS A
----------------
NOVEMBER 1, 2002
(DATE OPERATIONS
COMMENCED) TO
APRIL 30,
2003
- --------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a)
- --------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.07
================================================================================
Net asset value, end of period $10.00
________________________________________________________________________________
================================================================================
Total return(b) 0.00%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,202
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.81%(c)
- --------------------------------------------------------------------------------
Without fee waivers 6.70%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (1.39)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 218%
________________________________________________________________________________
================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$2,930,892.
(d) Not annualized for periods less than one year.
F-9
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
----------------
NOVEMBER 1, 2002
(DATE OPERATIONS
COMMENCED) TO
APRIL 30,
2003
- --------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(a)
- --------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.06
================================================================================
Total from investment operations (0.04)
================================================================================
Net asset value, end of period $ 9.96
________________________________________________________________________________
================================================================================
Total return(b) (0.40)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 628
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.46%(c)
- --------------------------------------------------------------------------------
Without fee waivers 7.35%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (2.04)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 218%
________________________________________________________________________________
================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $479,350.
(d) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS C
----------------
NOVEMBER 1, 2002
(DATE OPERATIONS
COMMENCED)
TO APRIL 30,
2003
- --------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(a)
- --------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.06
================================================================================
Total from investment operations (0.04)
================================================================================
Net asset value, end of period $ 9.96
________________________________________________________________________________
================================================================================
Total return(b) (0.40)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 475
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.46%(c)
- --------------------------------------------------------------------------------
Without fee waivers 7.35%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (2.04)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate(d) 218%
________________________________________________________________________________
================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $398,916.
(d) Not annualized for periods less than one year.
F-10
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. A I M Advisors, Inc.
Jack M. Fields Kevin M. Carome 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 100
Prema Mathai-Davis Houston, TX 77046
Lewis F. Pennock Gary T. Crum
Ruth H. Quigley Senior Vice President TRANSFER AGENT
Louis S. Sklar A I M Fund Services, Inc.
Dana R. Sutton P.O. Box 4739
Vice President and Treasurer Houston, TX 77210-4739
Stuart W. Coco CUSTODIAN
Vice President State Street Bank and Trust Company
225 Franklin Street
Melville B. Cox Boston, MA 02110
Vice President
COUNSEL TO THE FUND
Edgar M. Larsen Ballard Spahr
Vice President Andrews & Ingersoll, LLP
1735 Market Street
Nancy L. Martin Philadelphia, PA 19103
Secretary
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENT LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIMinvestments.com LIB-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM STRATEGIC INCOME FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Strategic Income Fund seeks to provide high current
income and, secondarily, seeks growth of capital.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
- --------------------------------------------------------------------------------
Class A Shares
10 Years 3.73%
5 Years -2.10
1 Year -0.99
Class B Shares
10 Years 3.71%
5 Years -2.07
1 Year -1.62
Class C Shares
Inception (3/1/99) -0.08%
1 Year 2.26
Past performance cannot guarantee comparable future results.
In addition to fund returns as of the close of the reporting period, industry
regulations require us to provide average annual total returns (including sales
charges) for periods ended 3/31/03, the most recent calendar quarter-end, which
were as follows. Class A shares, ten years, 3.66%; five years, -2.59%; one year,
- -3.50%. Class B shares, ten years, 3.64%; five years, -2.54%; one year, -4.11%.
Class C shares, inception (3/1/99), -0.79%; one year, -0.34%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
Class A Shares 11.55%
Class B Shares 11.17
Class C Shares 11.03
LEHMAN AGGREGATE BOND INDEX 4.31
(Broad Market and Style-Specific Index)
LIPPER MULTI-SECTOR INCOME FUND INDEX 12.24
(Peer Group Index)
DUE TO SIGNIFICANT MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY
DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL
ADVISOR FOR MORE CURRENT PERFORMANCE.
================================================================================
================================================================================
YIELD AND DISTRIBUTION RATE
30-DAY DISTRIBUTION RATE
CLASS A SHARES 4.99%
CLASS B SHARES 4.63
CLASS C SHARES 4.63
30-DAY YIELD
CLASS A SHARES 4.37%
CLASS B SHARES 3.94
CLASS C SHARES 3.94
Had the advisor not waived fees and/or reimbursed expenses, the fund's 30-day
yield would have been 3.79% for Class A shares and 3.32% for Class B and Class C
shares.
================================================================================
<Table>
<Caption>
===================================================================================================================================
TOP 10 FIXED-INCOME ISSUERS* TOP 10 INDUSTRIES* TOP 10 COUNTRIES*
- -----------------------------------------------------------------------------------------------------------------------------------
1. Federal National Mortgage 4.5% 1. Banks 10.3% 1. United States 76.6%
Association (FNMA) 2. Broadcasting & Cable TV 9.6 2. Germany 5.6
2. Bundesrepublik Deutschland-Series 3.3 3. Sovereign Debt 7.5 3. Canada 4.3
2002 (Germany) 4. Electric Utilities 6.7 4. Mexico 3.5
3. Federal Home Loan Mortgage Corp. 3.2 5. Diversified Financial Services 6.5 5. United Kingdom 2.5
(FHLMC) 6. Oil & Gas Exploration & Production 5.4 6. Netherlands 2.3
4. CSC Holdings Inc. 2.5 7. Integrated Telecommunication 5.2 7. Cayman Islands 0.8
5. United Mexican States (Mexico) 2.5 Services 8. France 0.6
6. Sprint Capital Corp. 2.2 8. Federal National Mortgage 4.5 9. Bermuda 0.2
7. Household Finance Corp. 2.0 Association (FNMA) 10. Bahamas 0.2
8. TCI Communications, Inc. 1.7 9. Consumer Finance 4.4
9. Newfield Exploration Co. 1.6 10. Real Estate 3.5 TOTAL NUMBER OF HOLDINGS 240
10. Nextel Communications, Inc. 1.5
TOTAL NET ASSETS $101.4 million
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Strategic Income Fund's performance figures are historical, and they
reflect fund expenses, the reinvestment of distributions and changes in net
asset value.
o Had the advisor not waived fees and/or reimbursed expenses, returns would
have been lower.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's share classes will differ due to different
sales charge structures and class expenses.
o The 30-day yield is calculated using a formula defined by the Securities and
Exchange Commission. The formula is based on the portfolio's potential
earnings from dividends, interest and yield-to-maturity or yield-to-call of
the bonds in the portfolio, net of all expenses, calculated at maximum
offering price, and annualized.
o The fund's 30-day distribution rate reflects its most recent monthly
dividend distribution multiplied by 12 and divided by the most recent
month-end maximum offering price. The fund's distribution rate and 30-day
SEC yield will differ.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
o Investing in emerging markets may involve greater risk and potential reward
than investing in more established markets.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. Because of the fund's small asset base, any investment the
fund may make in IPOs may significantly affect the fund's total return. As
the fund's assets grow, the impact of IPO investments will decline, which
may reduce the effect of IPO investments on the fund's total return.
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, for which the repayment of principal and interest
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 Lehman Aggregate Bond Index, which represents the U.S.
investment-grade fixed-rate bond market (including government and corporate
securities, mortgage pass-through securities and asset-backed securities),
is compiled by Lehman Brothers, a well-known global investment bank.
o The unmanaged Lipper Multi-Sector Income Fund Index represents an average of
the performance of the 30 largest multi-sector income funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMINVESTMENTS.COM.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is your final report on AIM Strategic Income Fund.
ROBERT H. After the close of the six-month period ended April 30,
GRAHAM] 2003, fund shareholders approved the reorganization of the
fund's assets into AIM Income Fund. That reorganization was
effected during June.
You will note that we have adopted a more concise format
for our semiannual reports. Important information such as
holdings and performance as of the close of the reporting
period appear on the opposite page. This letter will provide
an overview of the markets and your fund during the six
months covered by this report. As always, timely information
about your fund and the markets in general is available at
our Web site, aiminvestments.com.
MARKET CONDITIONS
U.S. gross domestic product increased at only a 1.4% annual rate in the fourth
quarter of 2002, barely improving to 1.6%, annualized, for the first quarter of
2003. The country continued to lose jobs every month of the reporting period but
January. The unemployment rate began the period at 5.7% and ended at 6%.
Nonetheless, the Conference Board's Index of Consumer Confidence rose sharply
from 61.4 in March to 81.0 in April.
U.S. Treasuries produced negative returns in November, January and March but
were positive in December, February and April. For the six-month period, they
returned 3.06%. The U.S. investment-grade bond market, as represented by the
Lehman U.S. Aggregate Bond Index, posted a 4.31% total return for the six
months. This index includes government and corporate securities, mortgage
pass-through securities and asset-backed securities. The domestic high yield
sector, as represented by the Lehman U.S. Corporate High Yield Index, returned
22.75%. Performance in the global bond markets was higher, with six-month total
returns of 8.50% for the investment-grade Lehman Global Aggregate Index and
24.36% for the Lehman Global High Yield Index. (These indexes are compiled by
Lehman Brothers, a global investment bank.)
Yield spreads for corporate bonds--the difference in yield between a
corporate bond and a Treasury issue of equivalent maturity--narrowed over the
period.
As of April 30, 2003, the federal funds rate remained at a 41-year low of
1.25%, helping hold down the cost of borrowing for corporations and consumers.
YOUR FUND
AIM Strategic Income Fund achieved positive results at net asset value for the
six-month period. In investing the fund's assets, fund co-managers Robert G.
Alley, Jan H. Friedli, Carolyn L. Gibbs, Scot W. Johnson, and Craig A. Smith
concentrated on debt securities of issuers in the United States, developed
foreign countries and emerging markets. As mentioned, virtually all segments of
the bond market had positive returns for the period covered by this report.
High-yield bonds, which made up close to a quarter of the fund's assets at
the end of the period, produced higher returns than investment-grade corporate
bonds or government bonds. Over the six months, the fund reduced its government
holdings and increased its corporate holdings, particularly among U.S.
financials.
IN CLOSING
I thank you for your continued participation in AIM Strategic Income Fund, and I
look forward to reporting to you again in six months as a shareholder of AIM
Income Fund. If you have any questions, please consult your financial advisor
to help you with your investment choices. As always, members of our
award-winning Client Services department are ready to help. They can be reached
at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
AS OF APRIL 30, 2003,
THE FEDERAL FUNDS RATE REMAINED AT
A 41-YEAR LOW OF 1.25%, HELPING
HOLD DOWN THE COST OF BORROWING
FOR CORPORATIONS AND CONSUMERS.
ROBERT H. GRAHAM
================================================================================
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
U.S. DOLLAR DENOMINATED BONDS & NOTES-76.57%
ADVERTISING-1.31%
Lamar Advertising Co., Conv. Unsec. Notes,
5.25%, 09/15/06 $ 1,300,000 $ 1,326,000
============================================================================
AEROSPACE & DEFENSE-1.29%
Lockheed Martin Corp.,
Series A, Medium Term Notes,
8.66%, 11/30/06 100,000 117,297
- ----------------------------------------------------------------------------
Unsec. Gtd. Unsub. Notes, 7.25%, 05/15/06 500,000 567,280
- ----------------------------------------------------------------------------
Raytheon Co.,
Notes, 6.75%, 08/15/07 315,000 353,480
- ----------------------------------------------------------------------------
Sr. Unsec. Notes, 6.30%, 03/15/05 250,000 268,157
============================================================================
1,306,214
============================================================================
AIRLINES-0.17%
Northwest Airlines Inc., Sr. Unsec. Gtd.
Notes, 8.88%, 06/01/06 280,000 169,400
============================================================================
APPAREL RETAIL-0.41%
Gap, Inc. (The), Unsec. Unsub. Global Notes,
9.90%, 12/15/05 365,000 412,450
============================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.20%
Russell Corp., Sr. Unsec. Gtd. Global Notes,
9.25%, 05/01/10 90,000 99,000
- ----------------------------------------------------------------------------
William Carter Co. (The)-Series B, Sr. Unsec.
Gtd. Sub. Global Notes, 10.88%, 08/15/11 95,000 105,925
============================================================================
204,925
============================================================================
AUTOMOBILE MANUFACTURERS-0.63%
DaimlerChrysler N.A. Holding Corp.-Series D,
Gtd. Medium Term Notes, 3.40%, 12/15/04 200,000 203,740
- ----------------------------------------------------------------------------
General Motors Corp., Unsec. Putable Deb.,
8.80%, 03/01/21 400,000 429,856
============================================================================
633,596
============================================================================
BANKS-7.91%
American Savings Bank, Notes, 6.63%, 02/15/06
(Acquired 03/05/03; Cost $221,810)(a)(b) 200,000 218,190
- ----------------------------------------------------------------------------
Bank of America Corp.-Series B,
Sub. Medium Term Putable Notes, 8.57%,
11/15/04 300,000 407,028
- ----------------------------------------------------------------------------
Bank of New York Co., Inc. (The), Sub. Medium
Term Notes, 7.09%, 03/24/28(c) 1,500,000 272,505
- ----------------------------------------------------------------------------
Bank One Corp., Sr. Unsec. Unsub. Global
Notes, 7.63%, 08/01/05 400,000 449,008
- ----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
BANKS-(CONTINUED)
Barclays O/S Investment Co. (Netherlands),
Unsec. Gtd. Unsub. Floating Rate Euro
Notes, 1.63%, 11/29/49 $ 650,000 $ 551,329
- ----------------------------------------------------------------------------
Barnett Banks, Inc., Sub. Notes, 6.90%,
09/01/05 70,000 78,119
- ----------------------------------------------------------------------------
Barnett Capital I, Gtd. Notes, 8.06%,
12/01/26 300,000 348,862
- ----------------------------------------------------------------------------
Citicorp, Jr. Unsec. Sub. Notes, 6.38%,
01/15/06 300,000 325,071
- ----------------------------------------------------------------------------
KeyBank N.A., Sr. Notes, 4.10%, 06/30/05 300,000 312,969
- ----------------------------------------------------------------------------
Lloyds Bank PLC-Series 1 (United Kingdom),
Unsec. Sub. Floating Rate Euro Notes,
1.69%, 06/29/49(d) 550,000 440,925
- ----------------------------------------------------------------------------
MBNA America Bank, N.A., Notes, 6.88%,
07/15/04 (Acquired 12/04/02; Cost
$418,352)(a)(b) 400,000 421,048
- ----------------------------------------------------------------------------
NBD Bank N.A. Michigan, Unsec. Putable Sub.
Deb., 8.25%, 11/01/04 600,000 778,626
- ----------------------------------------------------------------------------
Santander Financial Issuances (Cayman
Islands), Unsec. Gtd. Sub. Yankee Notes,
7.00%, 04/01/06 150,000 166,677
- ----------------------------------------------------------------------------
U.S. Bancorp-Series N, Sr. Medium Term Notes,
2.75%, 03/30/06 100,000 100,786
- ----------------------------------------------------------------------------
U.S. Bank, N.A., Sub. Global Notes, 4.80%,
04/15/15 200,000 202,484
- ----------------------------------------------------------------------------
UBS Preferred Funding Trust I, Gtd. Global
Bonds, 8.62%, 10/29/49 600,000 755,520
- ----------------------------------------------------------------------------
Union Planters Bank N.A., Unsec. Putable Sub.
Notes, 6.50%, 03/15/08 650,000 736,027
- ----------------------------------------------------------------------------
Wachovia Corp., Unsec. Putable Sub. Deb.,
7.50%, 04/15/05 600,000 762,678
- ----------------------------------------------------------------------------
Washington Mutual, Inc., Jr. Unsec. Sub.
Notes, 8.25%, 04/01/10 575,000 694,335
============================================================================
8,022,187
============================================================================
BROADCASTING & CABLE TV-9.56%
Adelphia Communications Corp.,
Series B, Sr. Unsec. Notes, 9.88%, 03/01/07
(Acquired 12/19/00; Cost $132,125)(a)(b)(e) 140,000 71,050
- ----------------------------------------------------------------------------
Sr. Unsec. Notes, 10.88%, 10/01/10
(Acquired 09/15/00; Cost
$545,837)(a)(b)(e) 550,000 279,125
- ----------------------------------------------------------------------------
Allbritton Communications Co., Sr. Sub.
Notes, 7.75%, 12/15/12 (Acquired 01/28/03;
Cost $157,288)(a)(b) 160,000 167,200
- ----------------------------------------------------------------------------
British Sky Broadcasting Group PLC (United
Kingdom), Unsec. Gtd. Yankee Notes, 7.30%,
10/15/06 750,000 815,445
- ----------------------------------------------------------------------------
</Table>
F-1
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
BROADCASTING & CABLE TV-(CONTINUED)
Charter Communications, Inc., Sr. Conv.
Notes, 5.75%, 10/15/05 (Acquired 10/25/00;
Cost $1,500,000)(a)(b) $ 1,500,000 $ 637,500
- ----------------------------------------------------------------------------
Clear Channel Communications, Inc., Sr.
Unsec. Notes, 7.88%, 06/15/05 75,000 83,035
- ----------------------------------------------------------------------------
Comcast Cable Communications, Inc., Unsec.
Unsub. Notes, 8.88%, 05/01/17 250,000 313,607
- ----------------------------------------------------------------------------
Comcast UK Cable Partners Ltd. (Bermuda), Sr.
Unsec. Yankee Disc. Deb., 11.20%,
11/15/07(f) 250,000 210,000
- ----------------------------------------------------------------------------
CSC Holdings Inc.,
Sr. Unsec. Deb., 7.88%, 02/15/18 1,250,000 1,325,000
- ----------------------------------------------------------------------------
Sr. Unsec. Notes,
7.25%, 07/15/08 500,000 517,500
- ----------------------------------------------------------------------------
7.88%, 12/15/07 700,000 740,250
- ----------------------------------------------------------------------------
Comcast Corp., Sr. Sub. Notes 10.50%,
06/15/06 400,000 464,000
- ----------------------------------------------------------------------------
Pegasus Communications Corp.-Series B, Sr.
Notes, 9.63%, 10/15/05 500,000 462,500
- ----------------------------------------------------------------------------
TCA Cable TV, Inc., Sr. Unsec. Putable Deb.,
6.53%, 02/01/08 450,000 493,312
- ----------------------------------------------------------------------------
TCI Communications, Inc., Medium Term Notes,
8.35%, 02/15/05 275,000 298,114
- ----------------------------------------------------------------------------
Sr. Deb.,
8.75%, 08/01/15 500,000 634,700
- ----------------------------------------------------------------------------
10.13%, 04/15/22 185,000 241,852
- ----------------------------------------------------------------------------
Sr. Notes, 8.65%, 09/15/04 325,000 349,697
- ----------------------------------------------------------------------------
Sr. Unsec. Deb., 7.88%, 02/15/26 200,000 223,698
- ----------------------------------------------------------------------------
Time Warner Inc., Unsec. Deb., 9.15%,
02/01/23 1,000,000 1,212,180
- ----------------------------------------------------------------------------
Turner Broadcasting System, Inc., Sr. Notes,
7.40%, 02/01/04 150,000 155,814
============================================================================
9,695,579
============================================================================
CASINOS & GAMBLING-1.13%
Boyd Gaming Corp., Sr. Unsec. Gtd. Global
Notes, 9.25%, 08/01/09 210,000 233,100
- ----------------------------------------------------------------------------
Sr. Unsec. Sub. Global Notes, 8.75%,
04/15/12 215,000 232,737
- ----------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, Sr. Unsec.
Gtd. Sub. Global Notes, 8.00%, 04/01/12 270,000 287,550
- ----------------------------------------------------------------------------
Park Place Entertainment Corp.,
Sr. Notes, 7.00%, 04/15/13 (Acquired
04/08/03; Cost $225,000)(a)(b) 225,000 229,500
- ----------------------------------------------------------------------------
Sr. Unsec. Global Notes, 7.50%, 09/01/09 155,000 164,300
============================================================================
1,147,187
============================================================================
COMMODITY CHEMICALS-0.08%
ISP Chemco Inc.-Series B, Sr. Unsec. Gtd.
Sub. Global Notes, 10.25%, 07/01/11 70,000 76,650
============================================================================
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
COMPUTER HARDWARE-0.29%
Candescent Technologies Corp., Sr. Unsec.
Sub. Gtd. Deb., 8.00%, 05/01/03 (Acquired
03/07/00; Cost $480,000)(a)(b)(e)(g) $ 600,000 $ 31,800
- ----------------------------------------------------------------------------
IBM Corp., Deb., 8.38%, 11/01/19 200,000 262,314
============================================================================
294,114
============================================================================
CONSTRUCTION MATERIALS-0.27%
MMI Products, Inc.-Series B, Sr. Unsec. Sub.
Notes, 11.25%, 04/15/07 360,000 271,800
============================================================================
CONSUMER FINANCE-4.44%
CitiFinancial Credit Co., Notes, 6.63%,
06/01/15 290,000 331,914
- ----------------------------------------------------------------------------
Ford Motor Credit Co., Notes, 7.50%, 06/15/04 150,000 156,654
- ----------------------------------------------------------------------------
Unsec. Global Notes, 6.88%, 02/01/06 750,000 774,960
- ----------------------------------------------------------------------------
General Motors Acceptance Corp., Medium Term
Notes,
4.15%, 02/07/05 750,000 759,600
- ----------------------------------------------------------------------------
6.38%, 01/30/04 300,000 309,051
- ----------------------------------------------------------------------------
Unsec. Unsub. Notes, 7.63%, 06/15/04 175,000 183,743
- ----------------------------------------------------------------------------
Household Finance Corp., Global Notes, 6.38%,
10/15/11 800,000 880,424
- ----------------------------------------------------------------------------
Medium Term Notes, 3.38%, 02/21/06 50,000 50,882
- ----------------------------------------------------------------------------
Sr. Unsec. Global Notes,
6.50%, 01/24/06 200,000 220,594
- ----------------------------------------------------------------------------
8.00%, 05/09/05 750,000 835,582
============================================================================
4,503,404
============================================================================
DISTILLERS & VINTNERS-0.56%
Constellation Brands, Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 8.13%, 01/15/12 170,000 181,050
- ----------------------------------------------------------------------------
Diageo PLC, Sr. Unsec. Gtd. Putable Notes,
7.45%, 04/15/05 300,000 383,952
============================================================================
565,002
============================================================================
DIVERSIFIED CHEMICALS-0.21%
Equistar Chemicals L.P./Equistar Funding
Corp., Sr. Unsec. Gtd. Global Notes,
10.13%, 09/01/08 200,000 211,000
============================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.24%
United Rentals North America Inc., Sr. Unsec.
Gtd. Notes, 10.75%, 04/15/08 (Acquired
12/17/02; Cost $218,351)(a) 225,000 243,562
============================================================================
DIVERSIFIED FINANCIAL SERVICES-5.58%
ASIF Global Financing XIX, Sec. Notes, 4.90%,
01/17/13 (Acquired 01/08/03; Cost
$184,421)(a)(b) 185,000 189,854
- ----------------------------------------------------------------------------
</Table>
F-2
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
ASIF Global Financing XX, Sec. Notes, 2.65%,
01/17/06 (Acquired 01/08/03; Cost
$174,724)(a)(b) $ 175,000 $ 177,473
- ----------------------------------------------------------------------------
Auburn Hills Trust, Unsec. Gtd. Deb., 12.38%,
05/01/20 500,000 768,590
- ----------------------------------------------------------------------------
Bear Stearns, Cos. Inc. (The), Global Notes,
3.00%, 03/30/06 100,000 101,682
- ----------------------------------------------------------------------------
Capital One Bank, Sr. Bank Notes, 6.62%,
08/04/03 50,000 50,247
- ----------------------------------------------------------------------------
CIT Group Inc., Global Notes, 5.63%, 05/17/04 100,000 103,365
- ----------------------------------------------------------------------------
Sr. Floating Rate Medium Term Global Notes,
2.57%, 11/25/03(h) 200,000 200,128
- ----------------------------------------------------------------------------
Citigroup Capital II, Jr. Gtd. Sub. Bonds,
7.75%, 12/01/36 600,000 700,230
- ----------------------------------------------------------------------------
Countrywide Home Loans, Inc., Series J, Gtd.
Medium Term Global Notes, 5.25%, 06/15/04 75,000 78,026
- ----------------------------------------------------------------------------
Series K, Medium Term Global Notes, 3.50%,
12/19/05 175,000 179,086
- ----------------------------------------------------------------------------
Fidelity Investments, Bonds, 7.57%, 06/15/29
(Acquired 07/25/02; Cost $218,316)(a)(b) 200,000 248,626
- ----------------------------------------------------------------------------
First Industrial Realty Trust Inc., PATS,
Putable Bonds, 7.38%, 05/15/04 (Acquired
02/06/03; Cost $209,700)(a)(b) 200,000 209,796
- ----------------------------------------------------------------------------
General Electric Capital Corp.-Series A,
Medium Term Global Notes, 6.00%, 06/15/12 320,000 353,741
- ----------------------------------------------------------------------------
International Lease Finance Corp., Notes,
5.13%, 08/01/04 80,000 82,872
- ----------------------------------------------------------------------------
John Hancock Global Funding II, Notes, 5.00%,
07/27/07 (Acquired 06/12/02; Cost
$99,945)(a)(b) 100,000 105,831
- ----------------------------------------------------------------------------
6.50%, 03/01/11 (Acquired 07/24/02; Cost
$295,243)(a)(b) 280,000 308,132
- ----------------------------------------------------------------------------
Lehman Brothers Inc., Sr. Sub. Deb., 11.63%,
05/15/05 150,000 176,220
- ----------------------------------------------------------------------------
Morgan Stanley, Unsec. Notes, 6.30%, 01/15/06 300,000 329,568
- ----------------------------------------------------------------------------
Regional Diversified Funding, Sr. Notes,
9.25%, 03/15/30 (Acquired 01/10/03; Cost
$220,406)(a)(b) 196,434 231,493
- ----------------------------------------------------------------------------
USL Capital Corp., Sr. Global Notes, 5.95%,
10/15/03 250,000 253,327
- ----------------------------------------------------------------------------
Washington Mutual Financial, Sr. Unsec.
Notes, 8.25%, 06/15/05 325,000 367,266
- ----------------------------------------------------------------------------
Wells Fargo Financial, Inc., Global Notes,
6.13%, 02/15/06 400,000 442,232
============================================================================
5,657,785
============================================================================
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
ELECTRIC UTILITIES-5.68%
AES Corp. (The), Sec. Notes, 10.00%, 07/15/05
(Acquired 12/13/02; Cost $329,903)(a) $ 350,000 $ 365,750
- ----------------------------------------------------------------------------
AmerenEnergy Generating Co.-Series C, Sr.
Unsec. Global Notes, 7.75%, 11/01/05 150,000 167,197
- ----------------------------------------------------------------------------
Calpine Canada Energy Finance ULC (Canada),
Sr. Unsec. Gtd. Yankee Notes, 8.50%,
05/01/08 300,000 223,500
- ----------------------------------------------------------------------------
CenterPoint Energy, Inc., Conv. ZENS, 2.00%,
09/15/29 17,000 479,910
- ----------------------------------------------------------------------------
Cleveland Electric Illuminating Co. (The),
First Mortgage Bonds, 6.86%, 10/01/08 400,000 442,284
- ----------------------------------------------------------------------------
CMS Energy Corp., Sr. Unsec. Unsub. Notes,
8.90%, 07/15/08 180,000 180,900
- ----------------------------------------------------------------------------
Columbus Southern Power Co.-Series A, Medium
Term Notes, 6.51%, 02/01/08(i) 500,000 551,280
- ----------------------------------------------------------------------------
Duke Energy Corp.,
Bonds, 6.45%, 10/15/32 200,000 210,580
- ----------------------------------------------------------------------------
First Mortgage Bonds,
3.75%, 03/05/08 (Acquired 02/20/03; Cost
$99,709)(a)(b) 100,000 100,945
- ----------------------------------------------------------------------------
Hydro-Quebec (Canada), Gtd. Yankee Bonds,
9.40%, 02/01/21(i) 385,000 556,964
- ----------------------------------------------------------------------------
Mission Energy Holding Co., Sr. Sec. Global
Notes, 13.50%, 07/15/08 365,000 235,425
- ----------------------------------------------------------------------------
Niagara Mohawk Power Corp.-Series H, Sr.
Unsec. Disc. Notes, 8.50%, 07/01/10(f) 1,150,000 1,188,214
- ----------------------------------------------------------------------------
Public Service Co. of Colorado, First
Mortgage Bonds, 4.88%, 03/01/13 (Acquired
03/07/03; Cost $249,635)(a)(b) 250,000 252,397
- ----------------------------------------------------------------------------
Public Service Co. of New Mexico-Series A,
Sr. Unsec. Notes, 7.10%, 08/01/05 400,000 430,536
- ----------------------------------------------------------------------------
TXU Corp.-Series B, Sr. Unsec. Notes, 6.38%,
10/01/04(i) 350,000 371,721
============================================================================
5,757,603
============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-1.20%
ASM Lithography Holding N.V. (Netherlands),
Conv. Yankee Bonds, 4.25%, 11/30/04
(Acquired 04/05/00; Cost $1,507,813)(a)(b) 1,250,000 1,214,063
============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.09%
Solectron Corp., Sr. Unsec. Notes, 9.63%,
02/15/09 85,000 92,650
============================================================================
FOREST PRODUCTS-0.12%
Louisiana-Pacific Corp., Sr. Unsec. Notes,
8.50%, 08/15/05 110,000 118,250
============================================================================
GAS UTILITIES-1.58%
CenterPoint Energy Resources Corp., Unsec.
Deb., 6.50%, 02/01/08 350,000 371,612
- ----------------------------------------------------------------------------
</Table>
F-3
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
GAS UTILITIES-(CONTINUED)
Kinder Morgan, Inc., Sr. Unsec. Notes, 6.80%,
03/01/08 $ 750,000 $ 843,353
- ----------------------------------------------------------------------------
MCN Corp., First Mortgage Bonds, 5.70%,
03/15/33 385,000 387,564
============================================================================
1,602,529
============================================================================
GENERAL MERCHANDISE STORES-0.22%
Wal-Mart Stores, Inc., Unsec. Deb., 8.50%,
09/15/24 200,000 224,196
============================================================================
HEALTH CARE FACILITIES-0.83%
Hanger Orthopedic Group, Inc., Sr. Unsec.
Gtd. Global Notes, 10.38%, 02/15/09 400,000 438,000
- ----------------------------------------------------------------------------
HCA Inc., Notes, 6.25%, 02/15/13 250,000 256,965
- ----------------------------------------------------------------------------
Select Medical Corp., Sr. Unsec. Sub. Global
Notes, 9.50%, 06/15/09 140,000 150,500
============================================================================
845,465
============================================================================
HOMEBUILDING-0.92%
Beazer Homes USA, Inc., Sr. Unsec. Gtd.
Global Notes 8.38%, 04/15/12 115,000 125,350
- ----------------------------------------------------------------------------
K Hovnanian Enterprises, Inc., Sr. Unsec.
Gtd. Notes, 10.50%, 10/01/07 400,000 452,000
- ----------------------------------------------------------------------------
WCI Communities, Inc., Sr. Unsec. Gtd. Sub.
Global Notes, 9.13%, 05/01/12 350,000 357,000
============================================================================
934,350
============================================================================
HOTELS, RESORTS & CRUISE LINES-0.32%
Hilton Hotels Corp., Sr. Unsec. Notes, 7.63%,
12/01/12 95,000 99,988
- ----------------------------------------------------------------------------
John Q. Hammons Hotels, Inc., Sr. First
Mortgage Global Notes, 8.88%, 05/15/12 60,000 62,325
- ----------------------------------------------------------------------------
Kerzner International Ltd. (Bahamas), Sr.
Unsec. Gtd. Sub. Global Notes, 8.88%,
08/15/11 150,000 160,125
============================================================================
322,438
============================================================================
INDUSTRIAL MACHINERY-0.26%
Pall Corp., Notes, 6.00%, 08/01/12 (Acquired
08/01/02; Cost $249,873)(a)(b) 250,000 265,663
============================================================================
INTEGRATED OIL & GAS-2.94%
Amerada Hess Corp., Unsec. Notes, 5.90%,
08/15/06 200,000 216,458
- ----------------------------------------------------------------------------
BP Canada Finance Co. (Canada), Unsec. Gtd.
Unsub. Global Bonds, 3.38%, 10/31/07 750,000 761,618
- ----------------------------------------------------------------------------
El Paso Energy Partners, L.P.,
Series B, Sr. Unsec. Gtd. Sub. Global
Notes, 8.50%, 06/01/11 110,000 119,350
- ----------------------------------------------------------------------------
Sr. Sub. Notes, 8.50%, 06/01/10 (Acquired
03/19/03; Cost $230,000)(a)(b) 230,000 248,400
- ----------------------------------------------------------------------------
Husky Oil Ltd. (Canada), Yankee Bonds, 8.90%,
08/15/28 925,000 1,040,502
- ----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
INTEGRATED OIL & GAS-(CONTINUED)
Occidental Petroleum Corp., Sr. Unsec. Notes,
6.50%, 04/01/05 $ 250,000 $ 270,185
- ----------------------------------------------------------------------------
Repsol International Finance B.V.
(Netherlands), Unsec. Gtd. Global Notes,
7.45%, 07/15/05 300,000 327,834
============================================================================
2,984,347
============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-5.22%
AT&T Corp.,
Sr. Unsec. Global Notes, 7.00%, 11/15/06 200,000 213,500
- ----------------------------------------------------------------------------
Sr. Unsec. Notes,
7.80%, 11/15/11 350,000 384,563
- ----------------------------------------------------------------------------
8.50%, 11/15/31 150,000 166,313
- ----------------------------------------------------------------------------
British Telecom PLC (United Kingdom), Global
Notes, 7.88%, 12/15/05 50,000 56,646
- ----------------------------------------------------------------------------
Deutsche Telekom International Finance B.V.
(Netherlands), Unsec. Gtd. Unsub. Global
Bonds, 8.25%, 06/15/05 200,000 221,998
- ----------------------------------------------------------------------------
France Telecom S.A. (France), Unsec. Global
Notes, 10.00%, 03/01/31 425,000 564,863
- ----------------------------------------------------------------------------
GTE Hawaiian Telephone Co., Inc.-Series A,
Unsec. Deb., 7.00%, 02/01/06 140,000 154,554
- ----------------------------------------------------------------------------
New England Telephone & Telegraph Co., Unsec.
Notes, 7.65%, 06/15/07 250,000 288,843
- ----------------------------------------------------------------------------
SBC Communications Capital Corp.-Series D,
Medium Term Notes, 7.11%, 08/14/06 70,000 79,573
- ----------------------------------------------------------------------------
Sprint Capital Corp., Gtd. Global Notes,
6.90%, 05/01/19 600,000 569,250
- ----------------------------------------------------------------------------
Sr. Unsec. Gtd. Global Notes, 6.00%,
01/15/07 1,055,000 1,077,419
- ----------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Global Notes, 6.13%,
11/15/08 200,000 202,250
- ----------------------------------------------------------------------------
Unsec. Gtd. Global Notes, 7.90%, 03/15/05 400,000 424,500
- ----------------------------------------------------------------------------
Verizon Global Funding Corp., Sr. Unsec.
Unsub. Global Notes, 7.75%, 12/01/30 200,000 246,766
- ----------------------------------------------------------------------------
Verizon Pennsylvania Inc.-Series A, Global
Notes, 5.65%, 11/15/11 600,000 646,818
============================================================================
5,297,856
============================================================================
LIFE & HEALTH INSURANCE-1.13%
Americo Life Inc., Notes, 7.88%, 05/01/13
(Acquired 04/25/03; Cost 494,080)(a)(b) 500,000 499,615
- ----------------------------------------------------------------------------
Lincoln National Corp., Unsec. Deb., 9.13%,
10/01/24 375,000 421,148
- ----------------------------------------------------------------------------
ReliaStar Financial Corp. Unsec. Notes,
8.00%, 10/30/06 200,000 221,672
============================================================================
1,142,435
============================================================================
METAL & GLASS CONTAINERS-0.41%
Owens-Illinois, Inc., Sr. Unsec. Notes,
7.50%, 05/15/10 420,000 414,750
============================================================================
</Table>
F-4
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
OIL & GAS DRILLING-0.59%
Transocean Inc. (Cayman Islands), Unsec.
Notes, 6.95%, 04/15/08 $ 525,000 $ 599,519
============================================================================
OIL & GAS EXPLORATION & PRODUCTION-5.36%
Amerada Hess Corp., Unsec. Notes, 5.30%,
08/15/04 200,000 208,012
- ----------------------------------------------------------------------------
Burlington Resources Finance Co. (Canada),
Sr. Unsec. Gtd. Notes, 7.20%, 08/15/31 320,000 378,554
- ----------------------------------------------------------------------------
Chesapeake Energy Corp., Sr. Unsec. Gtd.
Notes, 8.38%, 11/01/08 240,000 258,000
- ----------------------------------------------------------------------------
Kerr-McGee Corp., Jr. Conv. Sub. Unsec. Deb.,
5.25%, 02/15/10 1,000,000 1,072,500
- ----------------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec.
Notes, 6.88%, 12/01/07 550,000 625,185
- ----------------------------------------------------------------------------
Newfield Exploration Co., Sr. Unsec. Unsub.
Notes, 7.63%, 03/01/11 1,500,000 1,627,500
- ----------------------------------------------------------------------------
Noble Energy, Inc.,
Sr. Unsec. Deb., 7.25%, 08/01/97 350,000 338,261
- ----------------------------------------------------------------------------
Sr. Unsec. Notes, 8.00%, 04/01/27 800,000 928,160
============================================================================
5,436,172
============================================================================
OIL & GAS REFINING, MARKETING &
TRANSPORTATION-1.43%
Frontier Oil Corp., Sr. Unsec. Sub. Notes,
11.75%, 11/15/09 390,000 434,850
- ----------------------------------------------------------------------------
Petroleos Mexicanos (Mexico), Unsec. Gtd.
Global Notes, 6.50%, 02/01/05 280,000 298,200
- ----------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Yankee Bonds, 9.38%,
12/02/08 600,000 720,750
============================================================================
1,453,800
============================================================================
PACKAGED FOODS & MEATS-0.64%
Dole Food Co., Inc., Sr. Unsec. Global Notes,
8.63%, 05/01/09 300,000 325,500
- ----------------------------------------------------------------------------
Kraft Foods Inc., Global Notes,
5.63%, 11/01/11 150,000 156,996
- ----------------------------------------------------------------------------
6.25%, 06/01/12 150,000 163,437
============================================================================
645,933
============================================================================
PHARMACEUTICALS-0.95%
aaiPharma Inc., Sr. Sub. Unsec. Gtd. Global
Notes, 11.00%, 04/01/10 250,000 270,625
- ----------------------------------------------------------------------------
Biovail Corp. (Canada), Sr. Sub. Yankee
Notes, 7.88%, 04/01/10 200,000 212,000
- ----------------------------------------------------------------------------
Roche Holding A.G., Conv. Putable LYONS,
0.34%, 01/19/04 (Acquired 03/10/00; Cost
$624,813)(a)(b)(c) 650,000 476,938
============================================================================
959,563
============================================================================
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
PUBLISHING-1.74%
News America Holdings, Inc.,
Sr. Gtd. Deb., 9.25%, 02/01/13 $ 300,000 $ 385,890
- ----------------------------------------------------------------------------
Sr. Unsec. Gtd. Deb., 7.75%, 01/20/24 900,000 997,506
- ----------------------------------------------------------------------------
News America Inc., Sr. Putable Deb., 6.75%,
01/09/10 200,000 220,638
- ----------------------------------------------------------------------------
Tribune Co., Putable Notes, 6.61%, 09/15/04 150,000 159,432
============================================================================
1,763,466
============================================================================
RAILROADS-0.28%
CSX Corp., Sr. Unsec. Putable Deb., 7.25%,
05/01/05 250,000 288,658
============================================================================
REAL ESTATE-3.53%
EOP Operating L.P.,
Sr. Unsec. Notes,
6.50%, 06/15/04 400,000 417,104
- ----------------------------------------------------------------------------
7.25%, 06/15/28 500,000 544,680
- ----------------------------------------------------------------------------
Unsec. Notes, 8.38%, 03/15/06 250,000 284,320
- ----------------------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec. Notes,
7.50%, 08/15/07 500,000 527,175
- ----------------------------------------------------------------------------
Host Marriott L.P. Series E, Sr. Sec. Gtd.
Notes, 8.38%, 02/15/06 270,000 276,750
- ----------------------------------------------------------------------------
Series I, Unsec. Gtd. Global Notes, 9.50%,
01/15/07 450,000 474,750
- ----------------------------------------------------------------------------
iStar Financial Inc., Sr. Unsec. Notes,
8.75%, 08/15/08 210,000 227,850
- ----------------------------------------------------------------------------
Simon Property Group, L.P., Notes, 5.45%,
03/15/13 (Acquired 03/13/03; Cost
$823,375)(a)(b) 825,000 831,815
============================================================================
3,584,444
============================================================================
SEMICONDUCTORS-0.02%
TranSwitch Corp., Conv. Unsec. Unsub. Notes,
4.50%, 09/12/05 (Acquired 09/06/00; Cost
$37,000)(a)(b) 37,000 22,154
============================================================================
SOVEREIGN DEBT-3.04%
Export Development Canada (Canada), Global
Bonds, 4.00%, 08/01/07 185,000 194,032
- ----------------------------------------------------------------------------
New Brunswick (Province of) (Canada), Sec.
Yankee Deb., 6.75%, 08/15/13 320,000 388,845
- ----------------------------------------------------------------------------
United Mexican States (Mexico), Global Notes,
4.63%, 10/08/08 100,000 100,875
- ----------------------------------------------------------------------------
7.50%, 04/08/33 950,000 981,113
- ----------------------------------------------------------------------------
Series A, Medium Term Global Notes,
9.88%, 02/01/10 420,000 533,400
- ----------------------------------------------------------------------------
6.38%, 01/16/13 550,000 575,850
- ----------------------------------------------------------------------------
6.63%, 03/03/15 300,000 313,125
============================================================================
3,087,240
============================================================================
</Table>
F-5
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
SPECIALTY CHEMICALS-0.04%
OM Group, Inc., Sr. Unsec. Gtd. Sub. Global
Notes, 9.25%, 12/15/11 $ 50,000 $ 43,250
============================================================================
SPECIALTY STORES-0.17%
CSK Auto, Inc., Sr. Unsec. Gtd. Global Notes,
12.00%, 06/15/06 160,000 176,000
============================================================================
TELECOMMUNICATIONS EQUIPMENT-1.37%
Comverse Technology, Inc., Sr. Unsec. Conv.
Sub. Notes, 1.50%, 12/01/05 (Acquired
12/05/00; Cost $1,537,500)(a)(b) 1,500,000 1,393,125
============================================================================
WIRELESS TELECOMMUNICATION SERVICES-2.21%
AT&T Wireless Services Inc., Sr. Unsec.
Unsub. Global Notes, 8.75%, 03/01/31 500,000 619,375
- ----------------------------------------------------------------------------
Cingular Wireless LLC, Sr. Unsec. Gtd. Global
Notes, 5.63%, 12/15/06 50,000 54,722
- ----------------------------------------------------------------------------
Nextel Communications, Inc.,
Sr. Conv. Notes, 5.25%, 01/15/10 (Acquired
02/15/00; Cost $1,055,000)(a)(b) 1,000,000 912,500
- ----------------------------------------------------------------------------
Sr. Unsec. Global Notes, 9.50%, 02/01/11 600,000 658,500
============================================================================
2,245,097
============================================================================
Total U.S. Dollar Denominated Bonds &
Notes (Cost $78,098,577) 77,655,871
============================================================================
<Caption>
PRINCIPAL(j)
AMOUNT
NON-U.S. DOLLAR DENOMINATED BONDS &
NOTES-7.39%
CANADA-0.58%
Hydro-Quebec (Electric Utilities), Gtd.
Floating Rate Euro Notes, 1.94%,
09/29/49 EUR 650,000 584,866
============================================================================
GERMANY-5.65%
Bundesrepublik Deutschland (Sovereign
Debt)-Series 2002, Euro Bonds, 5.00%,
07/04/12 EUR 2,800,000 3,345,044
- ----------------------------------------------------------------------------
Kreditanstalt fuer Wiederaufbau (Banks), Sr.
Unsec. Unsub. Global Notes., 5.25%,
07/04/12 EUR 1,000,000 1,219,621
- ----------------------------------------------------------------------------
Landesbank Baden-Wuerttenberg (Banks), Bonds,
3.25%, 05/08/08 EUR 1,050,000 1,163,439
============================================================================
5,728,104
============================================================================
UNITED KINGDOM-1.16%
United Kingdom (Treasury of) (Sovereign
Debt), Bonds, 7.25%, 12/07/07 GBP 650,000 1,182,979
============================================================================
Total Non-U.S. Dollar Denominated Bonds &
Notes (Cost $6,172,459) 7,495,949
============================================================================
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-8.34%
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC)-3.21%
Pass Through Ctfs.,
6.50%, 04/01/16 to 08/01/32 $ 1,477,681 $ 1,550,396
- ----------------------------------------------------------------------------
6.00%, 05/01/17 to 06/01/17 661,482 691,334
- ----------------------------------------------------------------------------
Pass Through Ctfs.,
7.00%, 07/01/29 19,099 20,162
- ----------------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.00%, 05/01/33(k) 950,000 990,583
============================================================================
3,252,475
============================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA)-4.45%
Pass Through Ctfs.,
6.50%, 10/01/16 to 11/01/31 912,089 954,757
- ----------------------------------------------------------------------------
7.00%, 05/01/17 to 09/01/32 952,079 1,008,079
- ----------------------------------------------------------------------------
8.50%, 02/01/28 345,470 378,124
- ----------------------------------------------------------------------------
7.50%, 08/01/29 to 05/01/32 1,179,026 1,257,092
- ----------------------------------------------------------------------------
8.00%, 06/01/31 to 04/01/32 700,580 756,783
- ----------------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.00%, 05/01/33(k) 154,000 160,749
============================================================================
4,515,584
============================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA)-0.68%
Pass Through Ctfs.,
7.50%, 06/15/23 248,581 267,209
- ----------------------------------------------------------------------------
6.50%, 11/15/31 314,678 331,039
- ----------------------------------------------------------------------------
6.00%, 11/15/32 87,669 91,853
============================================================================
690,101
============================================================================
Total U.S. Government Agency Securities
(Cost $8,259,974) 8,458,160
============================================================================
ASSET-BACKED NOTES-2.30%
AIRLINES-0.94%
Continental Airlines, Inc.
Series 2000-1, Class A-1, Sr. Sec. Pass
Through Ctfs., 8.05%, 11/01/20 276,567 236,119
- ----------------------------------------------------------------------------
Series 2000-2, Class A-1, Sr. Sec. Pass
Through Ctfs., 7.71%, 04/02/21 425,177 362,463
- ----------------------------------------------------------------------------
Series 974A, Pass Through Ctfs., 6.90%,
01/02/18 424,430 357,582
============================================================================
956,164
============================================================================
DIVERSIFIED FINANCIAL SERVICES-0.91%
Citicorp Lease-Series 1999-1, Class A1, Pass
Through Ctfs., 7.22%, 06/15/05 (Acquired
05/08/02; Cost $311,038)(a)(b) 295,004 320,369
- ----------------------------------------------------------------------------
</Table>
F-6
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
Citicorp Lease-Series 1999-1, Class A2, Pass
Through Ctfs., 8.04%, 12/15/19 (Acquired
06/01/00; Cost $493,835)(a)(b) $ 500,000 $ 600,715
============================================================================
921,084
============================================================================
ELECTRIC UTILITIES-0.45%
Beaver Valley II Funding Corp., SLOBS, 9.00%,
06/01/17 400,000 460,408
============================================================================
Total Asset-Backed Notes (Cost
$2,277,393) 2,337,656
============================================================================
<Caption>
SHARES
COMMON STOCKS & OTHER EQUITY INTERESTS-1.79%
BROADCASTING & CABLE TV-0.00%
ONO Finance PLC (United Kingdom)-Wts.,
expiring 01/05/09 (Acquired 07/30/99; Cost
$0)(a)(b)(g)(l) 300 0
============================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.07%
Monsanto Co. 4,334 75,412
============================================================================
HOME FURNISHINGS-0.00%
O'Sullivan Industries, Inc.-Series B, Pfd.
Wts., expiring 11/15/09 (Acquired 06/13/00;
Cost $0)(a)(b)(l) 960 9
- ----------------------------------------------------------------------------
O'Sullivan Industries, Inc.-Wts., expiring
11/15/09 (Acquired 06/13/00; Cost
$0)(a)(b)(l) 960 9
============================================================================
18
============================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------------
INTEGRATED TELECOMMUNICATION SERVICES-0.00%
NTELOS Inc.-Wts., expiring 08/15/10 (Acquired
11/15/00; Cost $0)(a)(b)(l) 425 $ 4
============================================================================
MULTI-UTILITIES & UNREGULATED POWER-0.64%
Mirant Trust I-Series A, $3.13 Conv. Pfd 28,300 643,542
============================================================================
PHARMACEUTICALS-1.08%
Pfizer Inc. 35,569 1,093,747
============================================================================
RAILROADS-0.00%
RailAmerica Inc.-Wts., expiring 08/15/10
(Acquired 10/05/00; Cost $0)(a)(b)(l) 325 1,843
============================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.00%
IWO Holdings Inc.-Wts., expiring 01/15/11
(Acquired 08/24/01; Cost $0)(a)(b)(l) 400 100
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,836,440) 1,814,666
============================================================================
MONEY MARKET FUNDS-5.14%
STIC Liquid Assets Portfolio(m) 2,605,049 2,605,049
- ----------------------------------------------------------------------------
STIC Prime Portfolio(m) 2,605,049 2,605,049
============================================================================
Total Money Market Funds (Cost
$5,210,098) 5,210,098
============================================================================
TOTAL INVESTMENTS-101.53% (Cost $102,854,941) 102,972,400
============================================================================
OTHER ASSETS LESS LIABILITIES-(1.53%) (1,553,322)
============================================================================
NET ASSETS-100.00% $101,419,078
____________________________________________________________________________
============================================================================
</Table>
Investment Abbreviations:
<Table>
Conv. - Convertible
Ctfs - Certificates
Deb. - Debentures
Disc. - Discounted
EUR - Euro
Gtd. - Guaranteed
Jr. - Junior
LYONS - Liquid Yield Option Notes
PATS - Pass Thru Asset Trust Sec.
Pfd. - Preferred
REIT - Real Estate Investment Trust
Sec. - Secured
SLOBS - Secured Lease Obligation Securities
Sr. - Senior
Sub. - Subordinated
TBA - To Be Announced
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
ZENS - Zero Exchange Sub. Notes
</Table>
F-7
Notes to Schedule of Investments:
(a) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 04/30/03 was $11,276,594,
which represented 11.12% of the Fund's net assets.
(b) Security considered to be illiquid. The aggregate market value of these
securities considered illiquid at 04/30/03 was $10,667,282 which represented
10.52% of the Fund's net assets.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the yield to maturity at issue.
(d) Interest rates are redetermined semi-annually. Rates shown are rates in
effect on 04/30/03.
(e) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(f) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(g) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(h) Interest rates are redetermined monthly. Rates shown are rates in effect on
04/30/03.
(i) Principal and interest are secured by bond insurance provided by one of the
following companies: Ambac Assurance Corp. or MBIA Insurance Co.
(j) Foreign denominated security. Par value is denominated in currency
indicated.
(k) Security purchased on forward commitment basis. These securities are subject
to dollar roll transactions. See Note 1 Section G.
(l) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(i) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
F-8
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$102,854,941) $ 102,972,400
- ------------------------------------------------------------
Receivables for:
Dividends and interest 1,561,664
- ------------------------------------------------------------
Investments sold 641,010
- ------------------------------------------------------------
Fund shares sold 171,558
- ------------------------------------------------------------
Due from advisor 38,556
- ------------------------------------------------------------
Investment for deferred compensation plan 4,667
- ------------------------------------------------------------
Other assets 21,993
============================================================
Total assets 105,411,848
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 3,639,331
- ------------------------------------------------------------
Fund shares reacquired 126,888
- ------------------------------------------------------------
Deferred compensation plan 4,667
- ------------------------------------------------------------
Accrued distribution fees 79,235
- ------------------------------------------------------------
Accrued trustees' fees 754
- ------------------------------------------------------------
Accrued transfer agent fees 46,693
- ------------------------------------------------------------
Accrued operating expenses 95,202
============================================================
Total liabilities 3,992,770
============================================================
Net assets applicable to shares outstanding $ 101,419,078
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 234,256,848
- ------------------------------------------------------------
Undistributed net investment income (785,662)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and foreign currency contracts (132,164,281)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 112,173
============================================================
$ 101,419,078
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 74,099,480
____________________________________________________________
============================================================
Class B $ 24,761,492
____________________________________________________________
============================================================
Class C $ 2,558,106
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 9,245,300
____________________________________________________________
============================================================
Class B 3,080,432
____________________________________________________________
============================================================
Class C 318,589
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 8.01
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $8.01 divided by
95.25%) $ 8.41
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 8.04
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 8.03
____________________________________________________________
============================================================
</Table>
See Notes to Financial Statements.
F-9
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Interest $ 2,910,765
- -------------------------------------------------------------------------
Dividends 58,681
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 9,976
=========================================================================
Total investment income 2,979,422
=========================================================================
EXPENSES:
Advisory fees 342,906
- -------------------------------------------------------------------------
Administrative services fees 24,795
- -------------------------------------------------------------------------
Custodian fees 10,231
- -------------------------------------------------------------------------
Distribution fees -- Class A 122,530
- -------------------------------------------------------------------------
Distribution fees -- Class B 110,789
- -------------------------------------------------------------------------
Distribution fees -- Class C 12,099
- -------------------------------------------------------------------------
Printing 65,297
- -------------------------------------------------------------------------
Professional fees 46,161
- -------------------------------------------------------------------------
Transfer agent fees 168,328
- -------------------------------------------------------------------------
Trustees' fees 4,299
- -------------------------------------------------------------------------
Other 32,371
=========================================================================
Total expenses 939,806
=========================================================================
Less: Fees waived, expenses reimbursed and paid indirectly (363,302)
=========================================================================
Net expenses 576,504
=========================================================================
Net investment income 2,402,918
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (1,267,404)
- -------------------------------------------------------------------------
Foreign currencies 7,455
=========================================================================
(1,259,949)
=========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 9,084,199
- -------------------------------------------------------------------------
Foreign currencies (6,707)
=========================================================================
9,077,492
=========================================================================
Net gain from investment securities and foreign currencies 7,817,543
=========================================================================
Net increase in net assets resulting from operations $10,220,461
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-10
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,402,918 $ 7,166,011
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and foreign currency contracts (1,259,949) (10,537,944)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and foreign
currency contracts 9,077,492 (4,139,173)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations 10,220,461 (7,511,106)
==========================================================================================
Distributions to shareholders from net investment income:
Class A (2,204,915) (4,831,416)
- ------------------------------------------------------------------------------------------
Class B (631,199) (1,935,024)
- ------------------------------------------------------------------------------------------
Class C (68,732) (149,195)
==========================================================================================
Total distributions from net investment income (2,904,846) (6,915,635)
==========================================================================================
Return of Capital:
Class A -- (723,193)
- ------------------------------------------------------------------------------------------
Class B -- (272,948)
- ------------------------------------------------------------------------------------------
Class C -- (25,019)
==========================================================================================
Total return of capital -- (1,021,160)
==========================================================================================
Net increase (decrease) in net assets resulting from
distributions (2,904,846) (7,936,795)
==========================================================================================
Share transactions-net:
Class A 1,219,039 15,596,092
- ------------------------------------------------------------------------------------------
Class B 1,926,534 (22,216,782)
- ------------------------------------------------------------------------------------------
Class C 126,940 522,395
==========================================================================================
Net increase (decrease) in net assets resulting from
share transactions 3,272,513 (6,098,295)
==========================================================================================
Net increase (decrease) in net assets 10,588,128 (21,546,196)
==========================================================================================
NET ASSETS:
Beginning of period 90,830,950 112,377,146
==========================================================================================
End of period $101,419,078 $ 90,830,950
__________________________________________________________________________________________
==========================================================================================
</Table>
See Notes to Financial Statements.
F-11
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Strategic Income Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware statutory 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 seven
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers multiple classes of shares.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund.
The Fund's investment objective is high current income, and its secondary
investment objective is growth of capital. Each company listed in the Schedule
of Investments is organized in the United States unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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. Premiums and
discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income are declared daily and paid
monthly. Distributions from net realized capital gain, 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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. FOREIGN CURRENCY TRANSLATIONS -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in
F-12
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. The combined results of
changes in foreign exchange rates and the fluctuation of market prices on
investments are included with the net realized and unrealized gain or loss
from investments in the Statement of Operations.
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. DOLLAR ROLL TRANSACTIONS -- The Fund may engage in dollar roll transactions
with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC.
In a dollar roll transaction, the Fund sells a mortgage-backed security
held in the Fund to a financial institution such as a bank or
broker-dealer, and simultaneously agrees to repurchase a substantially
similar security (same type, coupon and maturity) from the institution at a
later date at an agreed upon price. The mortgage-backed securities that are
repurchased will bear the same interest rate as those sold, but generally
will be collateralized by different pools of mortgages with different
prepayment histories. During the period between the sale and repurchase,
the Fund will not be entitled to receive interest and principal payments on
securities sold. Proceeds of the sale will be invested in short-term
instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the
Fund exceeding the yield on the security sold. The Fund will segregate
assets to cover its obligations under dollar roll transactions. The
difference between the selling price and the future repurchase price is
recorded as an adjustment to interest income.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the
securities that the Fund has sold but is obligated to repurchase under the
agreement. In the event that the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to repurchase the securities. The return
earned by the Fund with the proceeds of the dollar roll transaction may not
exceed transaction costs.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO (NY), Inc. is the Fund's subadvisor. The Fund pays AIM investment
management and administration fees at an annual rate of 0.725% on the first $500
million of the Fund's average daily net assets, plus 0.70% on the next $500
million of the Fund's average daily net assets, plus 0.675% on the next $500
million of the Fund's average daily net assets, plus 0.65% 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, dividends on short
sales, extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A shares to 1.50%. AIM has voluntarily agreed to
limit total annual operating expenses (excluding interest, taxes, dividends on
short sales, extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A to 1.05%. Voluntary fee waivers or
reimbursements may be rescinded, terminated or modified at any time without
further notice to investors. During periods of waivers or reimbursements, to the
extent the annualized expense ratio does not exceed the contractual limit for
the period committed, AIM will retain its ability to be reimbursed for such fee
waivers or reimbursements prior to the end of each fiscal year. Further, AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in affiliated money market
funds with cash collateral from securities loaned by the Fund). For the six
months ended April 30, 2003, AIM waived fees of $342,906 and reimbursed expenses
of $19,727.
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 six months ended April 30, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $88,705 for such services.
The Trust has entered into a master distribution agreement 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six
F-13
months ended April 30, 2003, the Class A, Class B and Class C shares paid
$122,530, $110,789 and $12,099, respectively.
Front-end sales commissions and contingent deferred sales charges ("sales
charges") are not recorded as expenses of the Fund. Front-end sales commissions
are deducted from proceeds from the sales of Fund shares prior to investment in
Class A shares of the Fund. Contingent deferred sales charges ("CDSCs") are
deducted from redemption proceeds prior to remittance to the shareholder. During
the six months ended April 30, 2003, AIM Distributors retained $7,068 in
front-end sales commissions from the sale of Class A shares and $0, $14, and
$257 for Class A, Class B and Class C shares, respectively, for CDSCs imposed
upon redemption by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,241 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $669 under an expense
offset arrangement which resulted in a reduction of the Fund's total expenses of
$669.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility with a syndicate administered by
Citibank, N.A. expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ---------------------------------------------
October 31, 2003 $ 65,749,433
- ---------------------------------------------
October 31, 2006 6,435,251
- ---------------------------------------------
October 31, 2007 15,371,600
- ---------------------------------------------
October 31, 2008 26,076,211
- ---------------------------------------------
October 31, 2009 7,031,872
- ---------------------------------------------
October 31, 2010 10,239,965
=============================================
Total capital loss carryforward $130,904,332
_____________________________________________
=============================================
</Table>
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $58,910,239 and $54,514,431, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $ 4,980,005
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (5,275,693)
===========================================================
Net unrealized appreciation (depreciation) of
investment securities $ (295,688)
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $103,268,088.
</Table>
F-14
NOTE 8--SHARE INFORMATION
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,519,324 $ 11,768,106 3,040,181 $ 25,114,870
- ----------------------------------------------------------------------------------------------------------------------
Class B 963,446 7,488,746 1,655,813 13,336,970
- ----------------------------------------------------------------------------------------------------------------------
Class C 162,147 1,257,499 346,563 2,765,379
======================================================================================================================
Issued as reinvestment of dividends:
Class A 191,922 1,471,941 452,544 3,624,472
- ----------------------------------------------------------------------------------------------------------------------
Class B 53,592 412,443 168,966 1,373,554
- ----------------------------------------------------------------------------------------------------------------------
Class C 5,671 43,603 14,404 116,302
======================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 184,610 1,421,973 1,961,322 16,080,092
- ----------------------------------------------------------------------------------------------------------------------
Class B (184,132) (1,421,973) (1,951,299) (16,080,092)
======================================================================================================================
Reacquired:
Class A (1,742,204) (13,442,981) (3,625,489) (29,223,342)
- ----------------------------------------------------------------------------------------------------------------------
Class B (588,525) (4,552,682) (2,537,083) (20,847,214)
- ----------------------------------------------------------------------------------------------------------------------
Class C (151,369) (1,174,162) (300,290) (2,359,286)
======================================================================================================================
414,482 $ 3,272,513 (774,368) $ (6,098,295)
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
F-15
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.42 $ 8.63 $ 9.17 $ 10.13 $ 10.80 $ 12.00
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.20 0.58(a)(b) 0.72 0.77(b) 0.68 0.91(b)(c)
- -----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.63 (1.15) (0.53) (0.99) (0.66) (1.27)
=======================================================================================================================
Total from investment operations 0.83 (0.57) 0.19 (0.22) 0.02 (0.36)
=======================================================================================================================
Less distributions:
Dividends from net investment income (0.24) (0.56) (0.72) (0.52) (0.65) (0.65)
- -----------------------------------------------------------------------------------------------------------------------
Returns of capital -- (0.08) (0.01) (0.22) (0.04) (0.19)
=======================================================================================================================
Total distributions (0.24) (0.64) (0.73) (0.74) (0.69) (0.84)
=======================================================================================================================
Net asset value, end of period $ 8.01 $ 7.42 $ 8.63 $ 9.17 $ 10.13 $ 10.80
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(d) 11.41% (6.93)% 2.05% (2.35)% 0.06% (3.41)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $74,099 $67,475 $62,708 $48,865 $68,675 $102,280
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.05%(e) 1.05% 1.05% 1.21% 1.41% 1.56%
- -----------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.82%(e) 1.63% 1.57% 1.57% 1.41% 1.56%
=======================================================================================================================
Ratio of net investment income to
average net assets 5.25%(e) 7.15%(a) 7.94% 7.84% 6.44% 7.73%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate(f) 59% 80% 89% 309% 235% 306%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) As required, effective November 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.59 and the ratio of net investment income to
average net assets would have been 7.33%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to November 1, 2001 have not been restated to
reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Net investment income per share reflects an interest payment received
from the conversion of Vnesheconombank loan agreements of $0.11 per
share.
(d) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(e) Ratios are annualized and based on average daily net assets of
$70,597,517.
(f) Not annualized for periods less than one year.
F-16
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
-----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 7.44 $ 8.65 $ 9.18 $ 10.15 $ 10.81 $ 12.01
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18 0.53(a)(b) 0.65 0.71(b) 0.62 0.84(b)(c)
- ------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.64 (1.16) (0.51) (1.01) (0.66) (1.28)
==================================================================================================================
Total from investment
operations 0.82 (0.63) 0.14 (0.30) (0.04) (0.44)
==================================================================================================================
Less distributions:
Dividends from net investment
income (0.22) (0.50) (0.66) (0.45) (0.58) (0.57)
- ------------------------------------------------------------------------------------------------------------------
Returns of capital -- (0.08) (0.01) (0.22) (0.04) (0.19)
==================================================================================================================
Total distributions (0.22) (0.58) (0.67) (0.67) (0.62) (0.76)
==================================================================================================================
Net asset value, end of period $ 8.04 $ 7.44 $ 8.65 $ 9.18 $ 10.15 $ 10.81
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(d) 11.17% (7.54)% 1.47% (3.11)% (0.52)% (4.04)%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 24,761 $21,110 $47,582 $76,680 $118,904 $188,660
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.70%(e) 1.70% 1.70% 1.86% 2.07% 2.21%
- ------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.47%(e) 2.28% 2.22% 2.22% 2.07% 2.21%
==================================================================================================================
Ratio of net investment income to
average net assets 4.60%(e) 6.50%(a) 7.29% 7.18% 5.78% 7.08%
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate(f) 59% 80% 89% 309% 235% 306%
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) As required, effective November 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.54 and the ratio of net investment income to
average net assets would have been 6.68%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to November 1, 2001 have not been restated to
reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Net investment income per share reflects an interest payment received
from the conversion of Vnesheconombank loan agreements of $0.11 per
share.
(d) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(e) Ratios are annualized and based on average daily net assets of
$22,341,430.
(f) Not annualized for periods less than one year.
F-17
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
--------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.44 $ 8.64 $ 9.17 $10.14 $10.67
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18 0.53(a)(b) 0.65 0.70(b) 0.33
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.63 (1.15) (0.51) (1.00) (0.47)
=================================================================================================================================
Total from investment operations 0.81 (0.62) 0.14 (0.30) (0.14)
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.22) (0.50) (0.66) (0.45) (0.36)
- ---------------------------------------------------------------------------------------------------------------------------------
Returns of capital -- (0.08) (0.01) (0.22) (0.03)
=================================================================================================================================
Total distributions (0.22) (0.58) (0.67) (0.67) (0.39)
=================================================================================================================================
Net asset value, end of period $ 8.03 $ 7.44 $ 8.64 $ 9.17 $10.14
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 11.03% (7.43)% 1.47% (3.12)% (1.35)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,558 $2,247 $2,087 $ 484 $ 251
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.70%(d) 1.70% 1.70% 1.86% 2.07%(e)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.47%(d) 2.28% 2.22% 2.22% 2.07%(e)
=================================================================================================================================
Ratio of net investment income to average net assets 4.60%(d) 6.50%(a) 7.29% 7.18% 5.78%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 59% 80% 89% 309% 235%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) As required, effective November 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.54 and the ratio of net investment income to
average net assets would have been 6.68%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to November 1, 2001 have not been restated to
reflect this change in presentation.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$2,439,767.
(e) Annualized.
(f) Not annualized for periods less than one year.
NOTE 10--SUBSEQUENT EVENT
The Board of Trustees unanimously approved, on February 6, 2003, and
shareholders subsequently approved, on June 4, 2003, an Agreement and Plan of
Reorganization ("Plan") pursuant to which AIM Strategic Income Fund ("Strategic
Income"), a series of AIM Investment Funds, would transfer all of its assets to
AIM Income Fund ("Income Fund"), a series of AIM Investment Securities Funds.
Effective on or about June 23, 2003, this transaction is expected to become
effective and shareholders of Strategic Income would receive shares of Income
Fund in exchange for their shares of Strategic Income, and Strategic Income
would cease operations. Effective May 22, 2003, Strategic Income was closed to
new investors.
F-18
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
<Caption>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS-Registered Trademark--
<Table>
FIXED INCOME
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY TAXABLE
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) AIM Floating Rate Fund
AIM Balanced Fund* AIM Developing Markets Fund AIM High Yield Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Income Fund
AIM Basic Value Fund AIM European Small Company Fund AIM Intermediate Government Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Capital Development Fund AIM Global Growth Fund AIM Money Market Fund
AIM Charter Fund AIM Global Trends Fund AIM Short-Term Bond Fund
AIM Constellation Fund AIM Global Value Fund(5) AIM Total Return Bond Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2)
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund TAX-FREE
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund AIM High Income Municipal Fund
AIM Large Cap Growth Fund AIM Municipal Bond Fund
AIM Libra Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Tax-Free Intermediate Fund(6,7)
AIM Mid Cap Core Equity Fund(2)
AIM Mid Cap Growth Fund AIM Global Energy Fund
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com SINC-SAR-1
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
As of June 20, 2003, an evaluation was performed under the supervision and with
the participation of the officers of AIM Equity Funds, AIM International Funds
Inc., AIM Investment Funds, AIM Special Opportunities Funds, and AIM Summit
Funds (the "Funds"), including the Principal Executive Officer ("PEO") and
Principal Financial Officer ("PFO"), of the effectiveness of the Fund's
disclosure controls and procedures. Based on that evaluation, the Fund's
officers, including the PEO and PFO, concluded that, as of June 20, 2003, the
Fund's disclosure controls and procedures were reasonably designed so as to
ensure that material information relating to the Funds is made known to the PEO
and PFO. There have been no significant changes in the Fund's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation and until the filing of this report, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b)(1) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2 under the Investment Company Act of
1940. Certification of principal executive officer and principal
financial officer as required by Section 906 of the Sarbanes-Oxley
Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ ROBERT H. GRAHAM
-------------------------------
Robert H. Graham
Principal Executive Officer
Date: June 20, 2003
By: /s/ DANA R. SUTTON
------------------------------
Dana R. Sutton
Principal Financial Officer
Date: June 20, 2003
EXHIBIT INDEX
(b)(1) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2 under the Investment Company Act of
1940. Certification of principal executive officer and principal
financial officer as required by Section 906 of the Sarbanes-Oxley
Act of 2002.