AMENDMENT NO. 1

   1
                                                              EXHIBIT (h)(1)(b)




                                AMENDMENT NO. 1

                     TRANSFER AGENCY AND SERVICE AGREEMENT

         The Transfer Agency and Service Agreement (the "Agreement"), dated as
of September 8, 1998, by and between AIM Investment Funds, a Delaware business
trust, and A I M Fund Services, Inc., a Delaware corporation, is hereby amended
as follows (terms used herein but not otherwise defined herein have the meaning
ascribed them in the Agreement):

1)       Section 1. of the Fee Schedule to the Agreement is hereby deleted in
its entirety and replaced with the following:

 "1.          For performance by the Transfer Agent pursuant to this Agreement,
              the Fund agrees on behalf of each of the Portfolios to pay the
              Transfer Agent an annualized fee for shareholder accounts that
              are open during any monthly period as set forth below, and an
              annualized fee of $.70 per shareholder account that is closed
              during any monthly period. Both fees shall be billed by the
              Transfer Agent monthly in arrears on a prorated basis of 1/12 of
              the annualized fee for all such accounts.



                                                             Per Account Fee
Fund Type                                                      Annualized
---------                                                      ----------
                                                          
Class A Annual/Semi-Annual Dividends                             $24.85*
Class A Quarterly & Monthly Dividend                              24.85*
Class A Daily Accrual                                             24.85*

Class B                                                           24.85*

Class C                                                           24.85*

Advisor Class                                                     24.85*


*             This fee includes all out of pocket expenses, the annualized
              credit, Consumer Price Index increase, Balance Credit and Remote
              Services Fee discussed below. Currently, therefore, paragraphs
              2, 3, and 5 below do not apply. Paragraph 4 does not apply for
              1998, however the XXX Annual Maintenance Fee will be charged
              beginning in 1999."

              All other terms and provisions of the Agreement not amended
herein shall remain in full force and effect.

Dated:   March 1, 1999

                                                 AIM INVESTMENT FUNDS


Attest: /s/ XXXXX X. XXXXXX                      By: /s/ XXXXXX X. XXXXXX
        -------------------                          ---------------------------
        Assistant Secretary                          Xxxxxx X. Xxxxxx
                                                     President

(SEAL)

                                                 A I M FUND SERVICES, INC.


Attest: /s/ XXXXX X. XXXXXX                      By: /s/ XXXX XXXXXXXX
        -------------------                          ---------------------------
        Assistant Secretary                           Xxxx Xxxxxxxx
                                                      President

(SEAL)