As filed with the Securities and Exchange Commission on February 25, 2002
1933 Act Registration No. 2-25469
1940 Act Registration No. 811-1424
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 71 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 71 X
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(Check appropriate box or boxes.)
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Robert H. Graham
Copy to:
Lisa A. Moss, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
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Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment.
It is proposed that this filing will become effective (check appropriate box)
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a --- previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
Part A - Prospectus. The AIM Core Strategies Fund and AIM Large Cap Core Equity
Fund Prospectuses are incorporated into this filing by reference to the electronic filing of Post-Effective Amendments No. 68 and No. 69, respectively, of this Registrant made pursuant to Rule 485(a) under the Securities Act of 1933 on October 12, 2001 and December 13, 2001, respectively.
AIM AGGRESSIVE GROWTH FUND
AIM Aggressive Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information in
this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEAR HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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--------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 Future Fund Closure 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to achieve long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing primarily in common stocks of companies whose earnings the fund's portfolio managers expect to grow more than 15% per year. The fund will invest in securities of small- and medium-sized growth companies. The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes. The fund may also invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of smaller companies, whose prices may go up and down more than equity securities of larger, more-established companies. Also, since equity securities of smaller companies may not be traded as often as equity securities of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1992.................................................................. 21.34%
1993.................................................................. 32.03%
1994.................................................................. 17.18%
1995.................................................................. 41.51%
1996.................................................................. 14.34%
1997.................................................................. 12.24%
1998.................................................................. 4.99%
1999.................................................................. 44.98%
2000.................................................................. 3.00%
2001.................................................................. -26.00%
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During the periods shown in the bar chart, the highest quarterly return was 31.35% (quarter ended December 31, 1999) and the lowest quarterly return was -24.66% (quarter ended September 30, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of broad-based securities market indices. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------------------------------------------------------------------
(for the periods ended 5 10 INCEPTION
December 31, 2001) 1 YEAR YEARS YEARS DATE
-----------------------------------------------------------------------------------------------
Class A
Return Before Taxes (30.05)% 4.24% 14.10% 05/01/84
Return After Taxes on Distributions (30.05) 2.67 12.86 05/01/84
Return After Taxes on Distributions
and Sale of Fund Shares (18.30) 3.64 12.21 05/01/84
Class B
Return Before Taxes (30.29) N/A N/A 03/01/99
Class C
Return Before Taxes (27.29) N/A N/A 03/01/99
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Russell 2500--Trademark-- Index(1) 1.22 10.34 13.13 04/30/84(2)
(reflects no deduction for fees,
expenses, or taxes)
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After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Russell 2500--Trademark-- Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered TradeMark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered TradeMark-- Index. The Russell 3000--Registered TradeMark-- Index measures the performance of the 3000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
(3) The Russell 2000--Registered TradeMark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 2,000 smallest companies in the Russell 3000--Registered TradeMark--Index.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C --------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ----------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C --------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 Other Expenses(3) 0.30 0.30 0.30 Total Annual Fund Operating Expenses 1.18 1.93 1.93 ----------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) There is no guarantee that actual expenses will be the same as those shown in the table.
(3) Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class A $664 $904 $1,163 $1,903
Class B 696 906 1,242 2,059
Class C 296 606 1,042 2,254
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class A $664 $904 $1,163 $1,903
Class B 196 606 1,042 2,059
Class C 196 606 1,042 2,254
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.63% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
SALES CHARGES
Purchases of Class A shares of AIM Aggressive Growth Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
FUTURE FUND CLOSURE
Due to the sometimes limited availability of common stocks of smaller companies that meet the investment criteria for the fund, the fund may periodically suspend or limit the offering of its shares.
During closed periods, the fund may impose different standards for additional investments. Also, during those periods the fund will continue to pay Rule 12b-1 fees.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
CLASS A(a)
--------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2001(b) 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.41 $ 13.90 $ 10.04 $ 12.49 $ 11.23
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Income from investment operations:
Net investment income (loss) (0.09) (0.13) (0.09) (0.08) (0.06)
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Net gains (losses) on securities (both realized and
unrealized) (6.34) 11.08 4.05 (1.93) 1.90
===============================================================================================================================
Total from investment operations (6.43) 10.95 3.96 (2.01) 1.84
===============================================================================================================================
Less distributions from net realized gains (3.30) (6.44) (0.10) (0.44) (0.58)
===============================================================================================================================
Net asset value, end of period $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(c) (40.51)% 47.53% 39.73% (16.36)% 17.35%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,516,407 $4,444,515 $2,808,451 $2,638,038 $3,864,257
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 1.17%(d) 1.04% 1.09% 1.06% 1.06%
===============================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.79)%(d) (0.77)% (0.69)% (0.64)% (0.65)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 89% 79% 75% 69% 73%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
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(a) Per share information and distributions prior to April 30, 2001 have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $3,304,942,591.
CLASS B(a)
--------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------- TO OCTOBER 31,
2001(b) 2000 1999
-------- -------- ----------------------
Net asset value, beginning of period $ 18.12 $ 13.81 $ 10.85
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.29) (0.07)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.20) 11.04 3.03
================================================================================================================
Total from investment operations (6.37) 10.75 2.96
================================================================================================================
Less distributions from net realized gains (3.30) (6.44) --
================================================================================================================
Net asset value, end of period $ 8.45 $ 18.12 $ 13.81
________________________________________________________________________________________________________________
================================================================================================================
Total return(c) (40.90)% 46.29% 27.27%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $294,303 $374,010 $24,914
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 1.94%(d) 1.86% 2.08%(e)
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.55)%(d) (1.59)% (1.68)%(e)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 89% 79% 75%
________________________________________________________________________________________________________________
================================================================================================================
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(a) Per share information and distributions prior to April 30, 2001 have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(d) Ratios are based on average daily net assets of $343,149,601.
(e) Annualized.
CLASS C(a)
---------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
------------------------ TO OCTOBER 31,
2001(b) 2000 1999
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Net asset value, beginning of period $ 18.11 $ 13.81 $ 10.85
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Income from investment operations:
Net investment income (loss) (0.17) (0.29) (0.07)
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Net gains (losses) on securities (both realized and
unrealized) (6.19) 11.03 3.03
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Total from investment operations (6.36) 10.74 2.96
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Less distributions from net realized gains (3.30) (6.44) --
=================================================================================================================
Net asset value, end of period $ 8.45 $ 18.11 $ 13.81
_________________________________________________________________________________________________________________
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Total return(c) (40.86)% 46.21% 27.27%
_________________________________________________________________________________________________________________
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Ratios/supplemental data:
Net assets, end of period (000s omitted) $96,640 $120,591 $ 6,807
_________________________________________________________________________________________________________________
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Ratio of expenses to average net assets 1.94%(d) 1.86% 2.08%(e)
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Ratio of net investment income (loss) to average net assets (1.55)%(d) (1.59)% (1.68)%(e)
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 89% 79% 75%
_________________________________________________________________________________________________________________
=================================================================================================================
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(a) Per share information and distributions prior to April 30, 2001 have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(d) Ratios are based on average daily net assets of $110,749,185.
(e) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
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- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
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(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
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SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
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COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
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The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
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A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
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SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com AGRO-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM BLUE CHIP FUND
|
AIM Blue Chip Fund seeks to provide long-term growth of capital and, secondarily, current income.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEAR HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVES AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's primary investment objective is long-term growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing at least 65% of its total assets in the common stocks of blue chip companies. Blue chip companies are those companies that the portfolio managers believe have the potential for above-average growth in earnings and that are well-established in their respective industries. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. When the portfolio managers believe securities other than common stocks offer the opportunity for long-term growth of capital and current income, the fund may invest in United States government securities, convertible securities and high-quality debt securities. The fund may also invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objectives.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer of the stock, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- ------
1992.................................................................. 2.64%
1993.................................................................. 4.61%
1994.................................................................. 4.66%
1995.................................................................. 32.00%
1996.................................................................. 23.75%
1997.................................................................. 31.91%
1998.................................................................. 30.42%
1999.................................................................. 25.65%
2000.................................................................. -9.29%
2001.................................................................. -22.91%
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During the periods shown in the bar chart, the highest quarterly return was 24.45% (quarter ended December 31, 1998) and the lowest quarterly return was -20.05% (quarter ended March 31, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------------------------------
(for the periods ended INCEPTION
December 31, 2001) 1 YEAR 5 YEARS 10 YEARS DATE
-------------------------------------------------------------------------------------------------------
Class A
Return Before Taxes (27.16)% 7.39% 10.12% 02/04/87
Return After Taxes on Distributions (27.16) 7.24 9.03 02/04/87
Return After Taxes on Distributions
and Sale of Fund Shares (16.54) 6.02 8.03 02/04/87
Class B
Return Before Taxes (27.22) 7.56 N/A 10/01/96
Class C
Return Before Taxes (24.15) N/A N/A 08/04/97
-------------------------------------------------------------------------------------------------------
Russell 1000--Registered Trademark--
Index(1) (12.45) 10.50 12.84 01/31/87(2)
(reflects no deduction for fees,
expenses, or taxes)
-------------------------------------------------------------------------------------------------------
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After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Russell 1000--Registered Trademark--Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark--Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees(3) 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(4) 0.30 0.30 0.30 Total Annual Fund Operating Expenses 1.28 1.93 1.93 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2)There is no guarantee that actual expenses will be the same as those shown in the table.
(3) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Termination of this agreement requires approval by the Board of Trustees.
(4)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $673 $934 $1,214 $2,010
Class B 696 906 1,242 2,085
Class C 296 606 1,042 2,254
----------------------------------------------
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $673 $934 $1,214 $2,010
Class B 196 606 1,042 2,085
Class C 196 606 1,042 2,254
----------------------------------------------
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.63% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1986.
SALES CHARGES
Purchases of Class A shares of AIM Blue Chip Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for the fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
CLASS A(a)
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2001 2000(b) 1999 1998(b) 1997(b)
---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 17.29 $ 15.49 $ 12.05 $ 10.32 $ 8.69
---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.05) 0.01 0.04 0.06
---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.03) 1.85 3.47 1.92 2.31
===========================================================================================================================
Total from investment operations (6.07) 1.80 3.48 1.96 2.37
===========================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.01) (0.02) (0.02)
---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.03) (0.21) (0.72)
===========================================================================================================================
Total distributions -- -- (0.04) (0.23) (0.74)
===========================================================================================================================
Net asset value, end of period $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(c) (35.11)% 11.60% 29.01% 19.36% 29.68%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,066,730 $3,163,453 $2,299,551 $1,085,648 $498,178
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.31%
---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.32%
===========================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.29)%(d) (0.31)% 0.03% 0.33% 0.50%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
___________________________________________________________________________________________________________________________
===========================================================================================================================
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(a)Per share information and distributions for all periods prior to October 31, 2000 have been restated to reflect a 3 for 1 stock split, effected in the form of a 200% stock dividend, on September 8, 2000.
(b)Calculated using average shares outstanding.
(c)Does not include sales charges.
(d)Ratios are based on average daily net assets of $2,647,004,665.
CLASS B(a)
----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2001 2000(b) 1999(b) 1998 1997(b)
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 16.87 $ 15.22 $ 11.91 $ 10.25 $ 8.69
---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) (0.04) (0.01)
---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.87) 1.82 3.44 1.91 2.30
===========================================================================================================================
Total from investment operations (6.00) 1.65 3.34 1.87 2.29
===========================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.01)
---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.03) (0.21) (0.72)
===========================================================================================================================
Net asset value, end of period $ 10.87 $ 16.87 $ 15.22 $ 11.91 $ 10.25
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(c) (35.57)% 10.87% 28.08% 18.52% 28.81%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,805,702 $2,746,149 $1,891,171 $745,862 $264,337
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.94%(d) 1.88% 1.91% 1.94% 2.10%
---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.94%(d) 1.88% 1.91% 1.94% 2.12%
===========================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.94)%(d) (1.00)% (0.68)% (0.38)% (0.28)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
___________________________________________________________________________________________________________________________
===========================================================================================================================
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(a)Per share information for all periods prior to October 31, 2000 has been restated to reflect a 3 for 1 stock split, effected in the form of a 200% stock dividend, on September 8, 2000.
(b)Calculated using average shares outstanding.
(c)Does not include contingent deferred sales charges.
(d)Ratios are based on average daily net assets of $2,306,598,522.
CLASS C(a)
-----------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
--------------------------------------------- TO OCTOBER 31,
2001 2000(b) 1999(b) 1998(b) 1997(B)
-------- -------- -------- ------- ----------------------
Net asset value, beginning of period $ 16.86 $ 15.21 $ 11.91 $10.25 $10.57
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) (0.04) --
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (5.86) 1.82 3.43 1.91 (0.32)
==========================================================================================================================
Total from investment operations (5.99) 1.65 3.33 1.87 (0.32)
==========================================================================================================================
Less distributions from net realized gains -- -- (0.03) (0.21) --
==========================================================================================================================
Net asset value, end of period $ 10.87 $ 16.86 $ 15.21 $11.91 $10.25
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(c) (35.53)% 10.82% 28.09% 18.52% (3.06)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $487,632 $720,186 $349,951 $87,554 $3,947
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.94%(d) 1.88% 1.90% 1.94% 2.10%(e)
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.94%(d) 1.88% 1.90% 1.94% 2.12%(e)
==========================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.94)%(d) (1.00)% (0.68)% (0.38)% (0.28)%(e)
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
__________________________________________________________________________________________________________________________
==========================================================================================================================
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(a)Per share information for all periods prior to October 31, 2000 has been restated to reflect a 3 for 1 stock split, effected in the form of a 200% stock dividend, on September 8, 2000.
(b)Calculated using average shares outstanding.
(c)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(d)Ratios are based on average daily net assets of $627,312,890.
(e)Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
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(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
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SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
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COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
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The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
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A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
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By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
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SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
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A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com BCH-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
AIM CAPITAL DEVELOPMENT FUND
AIM Capital Development Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEAR HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing primarily in securities, including common stocks, convertible securities and bonds, of small- and medium-sized companies. Among factors which the portfolio managers may consider when purchasing these securities are (1) the growth prospects for a company's products; (2) the economic outlook for its industry; (3) a company's new product development; (4) its operating management capabilities; (5) the relationship between the price of the security and its estimated fundamental value; (6) relevant market, economic and political environments; and (7) financial characteristics, such as balance sheet analysis and return on assets. The portfolio managers consider whether to sell a particular security when any one of these factors materially changes or when the securities are no longer considered medium-sized company securities. The fund may also invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of smaller companies, whose prices may go up and down more than equity securities of larger, more-established companies. Also, since equity securities of smaller companies may not be traded as often as equity securities of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURN
----------- ------
1997.................................................................. 23.69%
1998.................................................................. 4.53%
1999.................................................................. 27.78%
2000.................................................................. 9.82%
2001.................................................................. -8.65%
|
During the periods shown in the bar chart, the highest quarterly return was 30.92% (quarter ended December 31, 1999) and the lowest quarterly return was -20.93% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of broad-based securities market indices. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 2001) 1 YEAR 5 YEAR INCEPTION DATE
-------------------------------------------------------------------------------------
Class A
Return Before Taxes (13.69)% 9.38% 11.40% 06/17/96
Return After Taxes on Distributions (13.69) 8.45 10.55 06/17/96
Return After Taxes on Distributions
and Sale of Fund Shares (8.34) 7.45 9.23 06/17/96
Class B
Return Before Taxes (13.74) 9.56 9.84 10/01/96
Class C
Return Before Taxes (10.11) N/A 7.49 08/04/97
-------------------------------------------------------------------------------------
Russell 2500--Trademark--Index(1) 1.22 10.34 10.82(2) 06/30/96(2)
(reflects no deduction for fees,
expenses, or taxes)
-------------------------------------------------------------------------------------
|
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Russell 2500--Trademark--Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark--Index. The Russell 3000--Registered Trademark--Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
(3) The Russell Midcap(TM) Index measures the performance of the 800 companies in the Russell 1000--Registered Trademark--Index with the lowest market capitalization. These companies are considered representative of medium-sized companies.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.66% 0.66% 0.66% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(3) 0.33 0.33 0.33 Total Annual Fund Operating Expenses 1.34 1.99 1.99 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2)There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $679 $951 $1,244 $2,074
Class B 702 924 1,273 2,149
Class C 302 624 1,073 2,317
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $679 $951 $1,244 $2,074
Class B 202 624 1,073 2,149
Class C 202 624 1,073 2,317
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.66% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1996.
- Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
SALES CHARGES
Purchases of Class A shares of AIM Capital Development Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
CLASS A
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
2001 2000 1999(a) 1998(a) 1997(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 21.79 $ 15.24 $ 12.89 $ 14.57 $ 11.09
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment (loss) (0.04) (0.13) (0.10) (0.06) (0.10)
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.27) 6.68 2.45 (1.62) 3.58
========================================================================================================================
Total from investment operations (4.31) 6.55 2.35 (1.68) 3.48
========================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
========================================================================================================================
Net asset value, end of period $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) (21.76)% 42.98% 18.23% (11.53)% 31.38%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $576,660 $759,838 $579,514 $717,263 $577,685
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 1.33%(c) 1.28% 1.38% 1.28% 1.33%(d)
========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.21)%(c) (0.60)% (0.70)% (0.40)% (0.83)%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $677,679,853.
(d)Includes fee waiver. Ratio of expenses to average net assets excluding fee waiver was 1.38%.
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2001 2000 1999(a) 1998(a) 1997(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 21.16 $ 14.90 $ 12.70 $ 14.46 $ 11.08
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) (0.26) (0.20) (0.16) (0.20)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.12) 6.52 2.40 (1.60) 3.58
======================================================================================================================
Total from investment operations (4.27) 6.26 2.20 (1.76) 3.38
======================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
======================================================================================================================
Net asset value, end of period $ 14.10 $ 21.16 $ 14.90 $ 12.70 $ 14.46
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) (22.29)% 42.01% 17.32% (12.17)% 30.51%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $454,018 $617,576 $451,508 $493,993 $297,623
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 1.99% 2.12% 2.02% 2.09%(d)
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.87)%(c) (1.30)% (1.44)% (1.14)% (1.59)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $543,017,006.
(d)Includes fee waiver. Ratio of expenses to average net assets excluding fee waiver was 2.14%.
CLASS C
------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
---------------------------------------- TO OCTOBER 31,
2001 2000 1999(a) 1998 1997(a)
------- ------- ------- ------- ----------------------
Net asset value, beginning of period $ 21.15 $ 14.89 $12.69 $ 14.45 $ 13.48
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14) (0.25) (0.20) (0.16) (0.06)
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (4.12) 6.51 2.40 (1.60) 1.03
========================================================================================================================
Total from investment operations (4.26) 6.26 2.20 (1.76) 0.97
========================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
========================================================================================================================
Net asset value, end of period $ 14.10 $ 21.15 $14.89 $ 12.69 $ 14.45
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) (22.24)% 42.04% 17.34% (12.18)% 7.20%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $66,127 $82,982 $53,832 $48,293 $12,195
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 1.99% 2.12% 2.02% 2.14%(d)(e)
========================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.87)%(c (1.30)% (1.44)% (1.14)% (1.69)%(d)
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $77,043,292.
(d)Annualized.
(e)Includes fee waiver. Ratio of expenses to average net assets excluding fee waiver was 2.19%.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
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A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
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By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
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SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
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A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
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You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
SEC 1940 Act file number: 811-1424 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com CDV-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM CHARTER FUND
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AIM Charter Fund seeks to provide growth of capital with a secondary objective of current income.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEAR HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVES AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's primary investment objective is growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing at least 65% of its total assets in securities of established companies that have long-term above-average growth in earnings and dividends, and growth companies that the portfolio managers believe have the potential for above-average growth in earnings and dividends. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. The fund may also invest up to 20% of its total assets in foreign securities. For risk management purposes, the fund may hold a portion of its assets in cash or the following liquid assets: money market instruments, shares of affiliated money market funds, or high-quality debt instruments. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash or liquid assets.
A larger position in cash or liquid assets could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objectives. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
To the extent the fund holds cash or liquid assets rather than equity securities for risk management purposes, the fund may not achieve its investment objective.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1992.................................................................. 1.13%
1993.................................................................. 9.39%
1994.................................................................. -4.26%
1995.................................................................. 35.68%
1996.................................................................. 19.58%
1997.................................................................. 24.73%
1998.................................................................. 26.83%
1999.................................................................. 33.87%
2000.................................................................. -14.69%
2001.................................................................. -23.09%
|
During the periods shown in the bar chart, the highest quarterly return was 26.08% (quarter ended December 31, 1998) and the lowest quarterly return was -21.72% (quarter ended September 30, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended INCEPTION
December 31, 2001) 1 YEAR 5 YEARS 10 YEARS DATE
-------------------------------------------------------------------------------------------------------
Class A
Return Before Taxes (27.33)% 5.61% 8.48% 11/26/68
Return After Taxes on Distributions (27.33) 3.91 6.59 11/26/68
Return After Taxes on Distributions
and Sale of Fund Shares (16.64) 4.19 6.35 11/26/68
Class B
Return Before Taxes (27.43) 5.68 N/A 06/26/95
Class C
Return Before Taxes (24.38) N/A N/A 08/04/97
-------------------------------------------------------------------------------------------------------
S&P 500(1) (11.88) 10.70 12.93 11/30/68(2)
(reflects no deduction for fees,
expenses, or taxes)
-------------------------------------------------------------------------------------------------------
|
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 Other Expenses(3) 0.24 0.24 0.24 Total Annual Fund Operating Expenses(4) 1.17 1.87 1.87 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2)There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
(4) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Total Annual Fund Operating Expenses net of this agreement are 1.16%, 1.86% and 1.86% for Class A, Class B and Class C, respectively. Termination of this agreement requires approval by the Board of Trustees.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $663 $901 $1,158 $1,892
Class B 690 888 1,211 2,008
Class C 290 588 1,011 2,190
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $663 $901 $1,158 $1,892
Class B 190 588 1,011 2,008
Class C 190 588 1,011 2,190
----------------------------------------------
|
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the fund's operations and provide investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.62% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
SALES CHARGES
Purchases of Class A shares of AIM Charter Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
CLASS A
--------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2001 2000(a) 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.07 $ 17.16 $ 13.32 $ 13.41 $ 11.19
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) (0.04) 0.02 0.12 0.10
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (6.70) 2.30 4.39 1.23 2.91
============================================================================================================================
Total from investment operations (6.73) 2.26 4.41 1.35 3.01
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.03) (0.10) (0.12)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.67)
============================================================================================================================
Total distributions (0.88) (1.35) (0.57) (1.44) (0.79)
============================================================================================================================
Net asset value, end of period $ 10.46 $ 18.07 $ 17.16 $ 13.32 $ 13.41
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (38.75)% 13.60% 34.05% 11.20% 28.57%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,159,304 $5,801,869 $4,948,666 $3,706,938 $3,466,912
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.16%(c) 1.06% 1.05% 1.08% 1.09%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.17%(c) 1.08% 1.07% 1.10% 1.10%
============================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.24)%(c) (0.20)% 0.11% 0.95% 0.79%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $4,310,131,950.
CLASS B
--------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2001 2000(a) 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 17.72 $ 16.97 $ 13.24 $ 13.37 $ 11.18
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) 0.02 0.01
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (6.53) 2.27 4.37 1.22 2.89
============================================================================================================================
Total from investment operations (6.66) 2.10 4.27 1.24 2.90
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) (0.04)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.67)
============================================================================================================================
Total distributions (0.88) (1.35) (0.54) (1.37) (0.71)
============================================================================================================================
Net asset value, end of period $ 10.18 $ 17.72 $ 16.97 $ 13.24 $ 13.37
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (39.14)% 12.76% 33.06% 10.33% 27.54%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,719,470 $3,088,611 $2,206,752 $1,408,687 $1,056,094
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.80% 1.80% 1.84% 1.85%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.87%(c) 1.82% 1.82% 1.86% 1.86%
============================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.94)%(c) (0.94)% (0.64)% 0.19% 0.03%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $2,340,080,599.
CLASS C
------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, AUGUST 4, 1997
---------------------------------------------- (DATE SALES COMMENCED)
2001 2000(a) 1999 1998 TO OCTOBER 31, 1997
-------- -------- -------- -------- ----------------------
Net asset value, beginning of period $ 17.77 $ 17.01 $ 13.27 $ 13.39 $13.86
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.09) 0.02 --
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (6.55) 2.28 4.37 1.23 (0.45)
============================================================================================================================
Total from investment operations (6.68) 2.11 4.28 1.25 (0.45)
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) --
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.02)
============================================================================================================================
Total distributions (0.88) (1.35) (0.54) (1.37) (0.02)
============================================================================================================================
Net asset value, end of period $ 10.21 $ 17.77 $ 17.01 $ 13.27 $13.39
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (39.14)% 12.78% 33.06% 10.39% (3.24)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $248,533 $412,872 $138,467 $37,846 $5,669
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.80% 1.80% 1.84% 1.82%(d)
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 187%(c) 1.82% 1.82% 1.86% 1.83%(d)
============================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.94)%(c) (0.94)% (0.64)% 0.19% 0.06%(d)
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $333,944,060.
(d)Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
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SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
------------------------------------ AIM Charter Fund SEC 1940 Act file number: 811-1424 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com CHT-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM CONSTELLATION FUND
AIM Constellation Fund seeks to provide growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet this objective by investing principally in common stocks of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when it no longer meets these criteria. The fund will invest without regard to market capitalization. The fund may also invest up to 20% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of smaller companies, whose prices may go up and down more than equity securities of larger, more-established companies. Also, since equity securities of smaller companies may not be traded as often as equity securities of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1992.................................... 15.03%
1993.................................... 17.29%
1994.................................... 1.30%
1995.................................... 35.45%
1996.................................... 16.27%
1997.................................... 12.92%
1998.................................... 18.89%
1999.................................... 44.38%
2000.................................... -10.37%
2001.................................... -23.61%
|
During the periods shown in the bar chart, the highest quarterly return was 36.59% (quarter ended December 31, 1999) and the lowest quarterly return was -23.34% (quarter ended September 30, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------------
(for the periods ended INCEPTION
December 31, 2001) 1 YEAR 5 YEARS 10 YEARS DATE
-------------------------------------------------------------------------------------
Class A
Return Before Taxes (27.80)% 4.63% 10.44% 4/30/76
Return After Taxes on Distributions (27.80) 2.94 9.24 4/30/76
Return After Taxes on Distributions
and Sale of Fund Shares (16.93) 3.95 8.91 4/30/76
Class B
Return Before Taxes (27.94)% N/A N/A 11/03/97
Class C
Return Before Taxes (24.91)% N/A N/A 08/04/97
-------------------------------------------------------------------------------------
S&P 500(1) (11.88) 10.70 12.93 04/30/76(2)
(reflects no deduction for fees,
expenses, or taxes)
-------------------------------------------------------------------------------------
|
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used on a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES ------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) ------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 Other Expenses(3) 0.24 0.24 0.24 Total Annual Fund Operating Expenses(4) 1.17 1.87 1.87 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
(4) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Total Annual Fund Operating Expenses net of this agreement are 1.14%, 1.84% and 1.84% for Class A, Class B and Class C, respectively. Termination of this agreement requires approval by the Board of Trustees.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $663 $901 $1,158 $1,892
Class B 690 888 1,211 2,008
Class C 290 588 1,011 2,190
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $663 $901 $1,158 $1,892
Class B 190 588 1,011 2,008
Class C 190 588 1,011 2,190
----------------------------------------------
|
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the fund's operations and provide investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.60% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1990 and has been associated with the advisor and/or its affiliates since 1982.
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
- Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1990.
SALES CHARGES
Purchases of Class A shares of AIM Constellation Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
CLASS A
------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $ 43.50 $ 34.65 $ 26.37 $ 29.23 $ 25.48
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12) (0.26) (0.17) (0.14) (0.11)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (16.24) 12.39 9.18 (0.62) 4.75
============================================================================================================================
Total from investment operations (16.36) 12.13 9.01 (0.76) 4.64
============================================================================================================================
Less distributions from net realized gains (7.42) (3.28) (0.73) (2.10) (0.89)
============================================================================================================================
Net asset value, end of period $ 19.72 $ 43.50 $ 34.65 $ 26.37 $ 29.23
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(a) (43.10)% 36.56% 34.81% (2.30)% 18.86%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $9,703,277 $19,268,977 $14,292,905 $12,391,844 $14,319,441
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.14%(b) 1.08% 1.10% 1.10% 1.11%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.17%(b) 1.11% 1.12% 1.12% 1.13%
============================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.46)%(b) (0.61)% (0.50)% (0.47)% (0.40)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 75% 88% 62% 76% 67%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Does not include sales charges.
(b)Ratios are based on average daily net assets of $13,369,028,253.
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997
------------------------------------ (DATE SALES COMMENCED)
2001 2000(a) 1999 TO OCTOBER 31, 1998(a)
-------- ---------- -------- ----------------------
Net asset value, beginning of period $ 42.28 $ 34.00 $ 26.11 $ 30.04
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.28) (0.58) (0.42) (0.37)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (15.69) 12.14 9.04 (1.46)
================================================================================================================
Total from investment operations (15.97) 11.56 8.62 (1.83)
================================================================================================================
Less distributions from net realized gains (7.42) (3.28) (0.73) (2.10)
================================================================================================================
Net asset value, end of period $ 18.89 $ 42.28 $ 34.00 $ 26.11
________________________________________________________________________________________________________________
================================================================================================================
Total return(b) (43.49)% 35.51% 33.64% (5.86)%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $818,343 $1,315,524 $589,718 $275,676
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.85% 1.98% 1.98%(d)
----------------------------------------------------------------------------------------------------------------
Without fee waivers 1.89%(c) 1.88% 2.00% 2.00%(d)
================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.17)%(c) (1.38)% (1.38)% (1.36)%(d)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 75% 88% 62% 76%
________________________________________________________________________________________________________________
================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $1,033,195,333.
(d)Annualized.
CLASS C
-----------------------------------------------------------------------
YEAR ENDED OCTOBER 31, AUGUST 4, 1997
--------------------------------------------- (DATE SALES COMMENCED)
2001 2000(a) 1999 1998(a) TO OCTOBER 31, 1997
-------- -------- -------- ------- ----------------------
Net asset value, beginning of period $ 42.27 $ 33.99 $ 26.10 $ 29.18 $ 30.32
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.29) (0.59) (0.42) (0.37) (0.04)
-----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (15.68) 12.15 9.04 (0.61) (1.10)
=================================================================================================================
Total from investment operations (15.97) 11.56 8.62 (0.98) (1.14)
=================================================================================================================
Less distributions from net realized
gains (7.42) (3.28) (0.73) (2.10) --
=================================================================================================================
Net asset value, end of period $ 18.88 $ 42.27 $ 33.99 $ 26.10 $ 29.18
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(b) (43.51)% 35.52% 33.65% (3.12)% (3.76)%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $258,786 $434,544 $161,490 $76,522 $21,508
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.85% 1.98% 1.97% 1.84%(d)
-----------------------------------------------------------------------------------------------------------------
Without fee waivers 1.89%(c) 1.88% 2.00% 1.99% 1.86%(d)
=================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.17)%(c) (1.38)% (1.38)% (1.35)% (1.12)%(d)
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 75% 88% 62% 76% 67%
_________________________________________________________________________________________________________________
=================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $334,320,145.
(d)Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
------------------------------------------------------------------------------------------
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
On the Internet: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
------------------------------------ AIM Constellation Fund SEC 1940 Act file number: 811-1424 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com CST-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM Dent Demographic Trends Fund seeks to provide long-term growth
of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it before
investing and keep it for future reference.
As with all other mutual fund securities,
the Securities and Exchange Commission has
not approved or disapproved these
securities or determined whether the
information in this prospectus is adequate
or accurate. Anyone who tells you otherwise
is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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--------------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing in securities of companies that are likely to benefit from changing demographic, economic and lifestyle trends. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. The fund may also invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers purchase securities of companies that have experienced, or that they believe have the potential for, above-average, long-term growth in revenues and earnings. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
The prices of growth stocks in which the fund invests may rise and fall more than the prices of stocks generally.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURN
----------- -------
2000.................................................................. -17.22%
2001.................................................................. -32.06%
|
During the periods shown in the bar chart, the highest quarterly return was 23.26% (quarter ended December 31, 2001) and the lowest quarterly return was -31.35% (quarter ended March 31, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 2001) 1 YEAR INCEPTION DATE
-----------------------------------------------------------------------------------
Class A
Return Before Taxes (35.77)% (7.38)% 06/07/99
Return After Taxes on Distributions (35.77) (7.38) 06/07/99
Return After Taxes on Distributions
and Sale of Fund Shares (21.79) ((5.83) 06/07/99
Class B
Return Before Taxes (35.84) (7.03) 08/01/00
Class C
Return Before Taxes (33.14) (5.92) 08/01/00
----------------------------------------------------------------------------------
Russell 3000--Registered Trademark--
Index(1) (11.46) (2.59)(2) 05/31/99(2)
(reflects no deduction for fees,
expenses, or taxes)
----------------------------------------------------------------------------------
|
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Russell 3000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 3,000
largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ----------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ---------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ----------------------------------------------------------- Management Fees 0.85% 0.85% 0.85% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(3) 0.46 0.46 0.46 Total Annual Fund Operating Expenses 1.66 2.31 2.31 ---------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2)There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $709 $1,045 $1,403 $2,407
Class B 734 1,021 1,435 2,483
Class C 334 721 1,235 2,646
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $709 $1,045 $1,403 $2,407
Class B 234 721 1,235 2,483
Class C 234 721 1,235 2,646
----------------------------------------------
|
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including the fund's investment decisions, the execution of securities transactions, and obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. H.S. Dent Advisors, Inc. (the subadvisor) serves as the fund's subadvisor, and is located at 6515 Gwin Road, Oakland, California 94611. The subadvisor is responsible for providing the advisor with macroeconomic, thematic, demographic, lifestyle trends and sector research, custom reports and investment and market capitalization recommendations for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives. The subadvisor has acted as an investment advisor since 1999.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.85% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1987.
SALES CHARGES
Purchases of Class A shares of AIM Dent Demographic Trends Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
Total return information in this table has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which have had a magnified impact on the fund due to its small asset base. There is no guarantee that, as the fund's assets grow, it will continue to experience substantially similar performance.
CLASS A
----------------------------------------------
JUNE 7, 1999
YEAR ENDED OCTOBER 31, (DATE OPERATIONS
------------------------ COMMENCED) TO
2001 2000 OCTOBER 31, 1999
-------- -------- ----------------
Net asset value, beginning of period $ 15.40 $ 12.14 $ 10.00
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12) (0.11) (0.03)
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.66) 3.37 2.17
===========================================================================================================
Total from investment operations (7.78) 3.26 2.14
===========================================================================================================
Net asset value, end of period $ 7.62 $ 15.40 $ 12.14
___________________________________________________________________________________________________________
===========================================================================================================
Total return(a) (50.52)% 26.85% 21.40%
___________________________________________________________________________________________________________
===========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $312,377 $666,929 $163,872
___________________________________________________________________________________________________________
===========================================================================================================
Ratio of expenses to average net assets 1.64%(b) 1.50% 1.60%(c)(d)
===========================================================================================================
Ratio of net investment income (loss) to average net assets (1.04)%(b) (0.93)% (1.00)%(d)
___________________________________________________________________________________________________________
===========================================================================================================
Portfolio turnover rate 143% 90% 29%
___________________________________________________________________________________________________________
===========================================================================================================
|
(a)Does not deduct sales charges and is not annualized for periods less than one year.
(b)Ratios are based on average daily net assets of $458,431,927.
(c)After fee waivers and/or expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 1.65%
(annualized).
(d)Annualized.
CLASS B
--------------------------------------------
JUNE 7, 1999
YEAR ENDED OCTOBER 31, (DATE OPERATIONS
---------------------- COMMENCED) TO
2001 2000 OCTOBER 31, 1999
-------- -------- ----------------
Net asset value, beginning of period $ 15.26 $ 12.11 $ 10.00
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.18) (0.04)
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.58) 3.33 2.15
=========================================================================================================
Total from investment operations (7.76) 3.15 2.11
=========================================================================================================
Net asset value, end of period $ 7.50 $ 15.26 $ 12.11
_________________________________________________________________________________________________________
=========================================================================================================
Total return(a) (50.85)% 26.01% 21.10%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $367,494 $748,480 $177,430
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets 2.32%(b) 2.17% 2.24%(c)(d)
=========================================================================================================
Ratio of net investment income (loss) to average net assets (1.72)%(b) (1.60)% (1.64)%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 143% 90% 29%
_________________________________________________________________________________________________________
=========================================================================================================
|
(a)Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b)Ratios are based on average daily net assets of $526,342,161.
(c)After fee waivers and/or expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.29%
(annualized).
(d)Annualized.
CLASS C
--------------------------------------------
JUNE 7, 1999
YEAR ENDED OCTOBER 31, (DATE OPERATIONS
---------------------- COMMENCED) TO
2001 2000 OCTOBER 31, 1999
-------- -------- ----------------
Net asset value, beginning of period $ 15.26 $ 12.11 $ 10.00
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19) (0.17) (0.04)
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.57) 3.32 2.15
=========================================================================================================
Total from investment operations (7.76) 3.15 2.11
=========================================================================================================
Net asset value, end of period $ 7.50 $ 15.26 $ 12.11
_________________________________________________________________________________________________________
=========================================================================================================
Total return(a) (50.85)% 26.01% 21.10%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $149,925 $309,821 $51,605
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets 2.32%(b) 2.17% 2.24%(c)(d)
=========================================================================================================
Ratio of net investment income (loss) to average net assets (1.72)%(b) (1.60)% (1.64)%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 143% 90% 29%
_________________________________________________________________________________________________________
=========================================================================================================
|
(a)Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b)Ratios are based on average daily net assets of $216,964,846.
(c)After fee waivers and/or expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements was 2.29%
(annualized).
(d)Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
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REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
------------------------------------------------------------------------------------------
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
SEC 1940 Act file number: 811-1424 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com DDT-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM EMERGING GROWTH FUND
AIM Emerging Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B,
and C shares of the fund. Please
read it before investing and keep it
for future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Return 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 ------------------------------------------------------ The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 ------------------------------------------------------ Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 ------------------------------------------------------ SHAREHOLDER INFORMATION A-1 ------------------------------------------------------ Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing in securities of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants. While the fund will invest without regard to market capitalization, the fund expects to invest a significant portion of its assets in securities of small-and medium-sized companies. Under normal conditions, the top 10 holdings may comprise at least a third of the portfolio's net assets. The fund may also invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers purchase securities of companies that have experienced, or that they believe have the potential for, above-average, long-term growth. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
The fund is non-diversified, which means it can invest a greater percentage of its assets in any one issuer than a diversified fund can. With respect to 50% of its assets, a non-diversified fund is permitted to invest more than 5% of its assets in the securities of any one issuer.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Because a large percentage of the fund's assets may be invested in a limited number of securities, and because the fund is non-diversified, the fund will invest in fewer securities than if it were a diversified fund. Thus, a change in the value of these securities could significantly affect the value of your investment in the fund.
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 increase the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may decrease the fund's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows the performance of the fund's Class A shares. The bar chart does not reflect sales loads. If it did, the annual total return shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURN
----------- -------
2001.................................................................. -20.29%
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During the period shown in the bar chart, the highest quarterly return was 38.43% (quarter ended December 31, 2001) and the lowest quarterly return was -37.12% (quarter ended September 30, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- Class A Return Before Taxes (24.71)% (21.96)% 03/31/00 Return After Taxes on Distributions (24.71)% (22.81)% 03/31/00 Return After Taxes on Distributions and Sale of Fund Shares (15.05)% (17.55)% 03/31/00 Class B Return Before Taxes (24.72)% (21.65)% 03/31/00 Class C Return Before Taxes (21.68)% (19.97)% 03/31/00 --------------------------------------------------------------------------------- Russell 2500--Trademark-- Index(1) (reflects no deduction for fees, expenses, or taxes) 1.22% (2.39)%(2) 03/31/00(2) --------------------------------------------------------------------------------- |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Russell 2500--Trademark-- Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark-- Index. The Russell 3000--Registered Trademark-- Index measures the performance of the 3000 largest U.S. companies based on total market capitalization. The Fund has elected to use the Russell 2500--Trademark-- Index as its primary index rather than the Russell 2000--Registered Trademark-- Index since the Russell 2500--Trademark-- Index more closely reflects the performance of the securities in which the fund invests.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES ------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) ------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.85% 0.85% 0.85% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses 0.63 0.63 0.63 Total Annual Fund Operating Expenses 1.83% 2.48% 2.48% ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2)There is no guarantee that actual expenses will be the same as those shown in the table.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $726 $1,094 $1,486 $2,580
Class B 751 1,073 1,521 2,656
Class C 351 773 1,321 2,816
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $726 $1,094 $1,486 $2,580
Class B 251 773 1,321 2,656
Class C 251 773 1,321 2,816
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.73% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
SALES CHARGES
Purchases of Class A shares of AIM Emerging Growth Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
CLASS A
---------------------------------
MARCH 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001 2000
----------- ----------------
Net asset value, beginning of period $ 10.50 $ 10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.04)
-----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.51) 0.54
===============================================================================================
Total from investment operations (4.61) 0.50
===============================================================================================
Less distributions from net realized gains (0.43) --
===============================================================================================
Net asset value, end of period $ 5.46 $ 10.50
_______________________________________________________________________________________________
===============================================================================================
Total return(a) (45.37)% 5.00%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $81,114 $147,101
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.71%(b) 1.68%(c)
-----------------------------------------------------------------------------------------------
Without fee waivers 1.83%(b) 1.68%(c)
===============================================================================================
Ratio of net investment income (loss) to average net assets (1.32)%(b) (1.04)%(c)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 242% 111%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Does not include sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $115,116,551.
(c) Annualized.
FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------------------------
MARCH 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001 2000
----------- ----------------
Net asset value, beginning of period $ 10.47 $ 10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14) (0.07)
-----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.50) 0.54
===============================================================================================
Total from investment operations (4.64) 0.47
===============================================================================================
Less distributions from net realized gains (0.43) --
===============================================================================================
Net asset value, end of period $ 5.40 $ 10.47
_______________________________________________________________________________________________
===============================================================================================
Total return(a) (45.81)% 4.70%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $58,019 $94,740
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.36%(b) 2.37%(c)
-----------------------------------------------------------------------------------------------
Without fee waivers 2.48%(b) 2.37%(c)
===============================================================================================
Ratio of net investment income (loss) to average net assets (1.98)%(b) (1.73)%(c)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 242% 111%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $75,767,623.
(c) Annualized.
CLASS C
---------------------------------
MARCH 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001 2000
----------- ----------------
Net asset value, beginning of period $ 10.46 $ 10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14) (0.07)
-----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.49) 0.53
===============================================================================================
Total from investment operations (4.63) 0.46
===============================================================================================
Less distributions from net realized gains (0.43) --
===============================================================================================
Net asset value, end of period $ 5.40 $ 10.46
_______________________________________________________________________________________________
===============================================================================================
Total return(a) (45.76)% 4.60%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,483 $41,361
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.36%(b) 2.37%(c)
-----------------------------------------------------------------------------------------------
Without fee waivers 2.48%(b) 2.37%(c)
===============================================================================================
Ratio of net investment income (loss) to average net assets (1.98)%(b) (1.73)%(c)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 242% 111%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average daily net assets of $34,137,225.
(c) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
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A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
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You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
AIM EMERGING GROWTH FUND
SEC 1940 Act file number: 811-1424 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com EMG-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM LARGE CAP
BASIC VALUE FUND
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AIM Large Cap Basic Value Fund seeks to provide long-term growth of capital with a secondary objective of current income.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVES AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's primary investment objective is long-term growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing in large-capitalization company securities that offer potential for capital growth, and may offer potential for current income. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies with market capitalizations that are within the range of stocks in the Russell 1000--Registered Trademark-- Value Index at the time of purchase. Under normal conditions, the top 10 holdings may comprise at least a third of the portfolio's net assets. The fund may also invest up to 25% of its total assets in foreign securities. The fund may also invest in debt instruments that are consistent with its investment objectives of long-term growth of capital and current income. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers purchase securities of companies that they believe have the potential for above-average growth in revenues and earnings and that they believe are undervalued in relation to long-term earning power or other factors. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objectives.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. When interest rates rise, bond prices fall; the longer a bond's duration, the more sensitive it is to this risk.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund. Also, since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 increase the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may decrease the fund's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
12/31/00.............................................................. 21.74%
12/31/01.............................................................. 1.25
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During the periods shown in the bar chart, the highest quarterly return was 12.03% (quarter ended December 31, 2001) and the lowest quarterly return was -14.66% (quarter ended September 30, 2001).
PERFORMANCE TABLE(1)
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 2001) 1 YEAR INCEPTION DATE
-----------------------------------------------------------------------------------
Class A
Return Before Taxes (4.31)% 7.39% 06/30/99
Return After Taxes on Distributions (4.31) 6.78 06/30/99
Return After Taxes on Distributions
and Sales of Fund Shares (2.63) 5.63 06/30/99
Class B
Return Before Taxes (4.42) 5.53 08/01/00
Class C
Return Before Taxes (0.42) 8.28 08/01/00
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Russell 1000--Registered Trademark
Index(2) (reflects no deduction for
fees, expenses, or taxes) (12.45) (5.20)(3) 06/30/99(3)
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After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1)A significant portion of the fund's returns during certain periods was attributable to its investments in IPOs. These investments had a magnified impact when the fund's asset base was relatively small. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return. For additional information regarding the impact of IPO investments on the fund's performance, please see the "Financial Highlights" section of this prospectus.
(2) The Russell 1000--Registered Trademark--Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in Russell 3000--Registered Trademark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(3) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.60% 0.60% 0.60% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(3) 0.43 0.43 0.43 Total Annual Fund Operating Expenses 1.38 2.03 2.03 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $683 $963 $1,264 $2,116
Class B 706 937 1,293 2,192
Class C 306 637 1,093 2,358
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $683 $963 $1,264 $2,116
Class B 206 637 1,093 2,192
Class C 206 637 1,093 2,358
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.50% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1995 to 1998, he was Portfolio Manager for American Indemnity Company.
- Michael J. Simon, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager for Luther King Capital Management.
- Bret W. Stanley, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and Portfolio Manager for Van Kampen American Capital Asset Management, Inc.
SALES CHARGES
Purchases of Class A shares of AIM Large Cap Basic Value Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
A significant portion of the fund's returns was attributable to its investments in IPOs during the fiscal year ended October 31, 2000 which had a magnified impact on the fund due to its relatively small asset base during this period. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return.
CLASS A
--------------------------------------
JUNE 30, 1999
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
------------------ OCTOBER 31,
2001(a) 2000(a) 1999
------- ------- ----------------
Net asset value, beginning of period $ 12.05 $ 9.40 $10.00
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02 0.07 0.03
------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.07) 2.88 (0.63)
======================================================================================================
Total from investment operations (1.05) 2.95 (0.60)
======================================================================================================
Less distributions:
Dividends from net investment income (0.04) (0.18) --
------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.02) (0.12) --
======================================================================================================
Total distributions (0.06) (0.30) --
======================================================================================================
Net asset value, end of period $ 10.94 $12.05 $ 9.40
______________________________________________________________________________________________________
======================================================================================================
Total return(b) (8.74)% 32.21% (6.00)%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $68,676 $5,888 $1,153
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.27%(c) 1.25% 1.25%(d)
------------------------------------------------------------------------------------------------------
Without fee waivers 1.36%(c) 8.21% 10.02%(d)
======================================================================================================
Ratio of net investment income to average net assets 0.17%(c) 0.62% 0.87%(d)
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 18% 57% 10%
______________________________________________________________________________________________________
======================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges and is not annualized for periods less than
one year.
(c)Ratios are based on average daily net assets of $42,575,733.
(d)Annualized.
Class B
-------------------------------
August 1, 2000
(Date sales
Year ended commenced) to
October 31, October 31,
2001(a) 2000
----------- --------------
Net asset value, beginning of period $ 12.02 $10.85
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) --
===============================================================================================
Net gains (losses) on securities (both realized and
unrealized) (1.05) 1.17
===============================================================================================
Total from investment operations (1.11) 1.17
===============================================================================================
Less distributions:
Dividends from net investment income (0.03) --
-----------------------------------------------------------------------------------------------
Distributions from net realized gains (0.02) --
===============================================================================================
Total distributions (0.05)
===============================================================================================
Net asset value, end of period $ 10.86 $12.02
_______________________________________________________________________________________________
===============================================================================================
Total return(b) (9.25)% 10.78%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $58,681 $2,815
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.95%(c) 1.93%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 8.89%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.51)%(c) (0.06)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 18% 57%
_______________________________________________________________________________________________
===============================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $33,990,337.
(d)Annualized.
Class C
-------------------------------
August 1, 2000
(Date sales
Year ended commenced) to
October 31, October 31,
2001(a) 2000
----------- --------------
Net asset value, beginning of period $ 12.02 $10.85
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) --
===============================================================================================
Net gains (losses) on securities (both realized and
unrealized) (1.06) 1.17
===============================================================================================
Total from investment operations (1.12) 1.17
===============================================================================================
Less distributions:
Dividends from net investment income (0.03) --
-----------------------------------------------------------------------------------------------
Distributions from net realized gains (0.02) --
===============================================================================================
Total distributions (0.05)
===============================================================================================
Net asset value, end of period $ 10.85 $12.02
_______________________________________________________________________________________________
===============================================================================================
Total return(b) (9.33)% 10.78%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,680 $1,248
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.95%(c) 1.93%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 8.89%(d)
===============================================================================================
Ratio of net investment loss to average net assets (0.51)%(c) (0.06)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 18% 57%
_______________________________________________________________________________________________
===============================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $13,058,822.
(d)Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request by
e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
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You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com LCBV-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
AIM LARGE CAP GROWTH FUND
AIM Large Cap Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing in large-capitalization company securities. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies with market capitalizations that are within the top 50% of stocks in the Russell 1000--Registered Trademark-- Index at the time of purchase. Under normal conditions, the top 10 holdings may comprise at least a third of the portfolio's net assets. The fund may also invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers purchase securities of a limited number of large-cap companies that they believe have the potential for above-average growth in revenues and earnings. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund. Also, since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 increase the fund's total returns. As the fund's assets grow, the impact of IPO investments will decline, which may decrease the fund's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. Total return information in the bar chart and table below has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which had a magnified impact on the fund due to its small asset base. There is no guarantee that, as the fund's assets grow, it will continue to experience substantially similar performance.
ANNUAL TOTAL RETURNS(1)
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000.................................................................. 8.52%
2001.................................................................. -36.13%
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During the periods shown in the bar chart, the highest quarterly return was 26.64% (quarter ended March 31, 2000) and the lowest quarterly return was -34.26% (quarter ended March 31, 2001).
PERFORMANCE INFORMATION (CONTINUED)
PERFORMANCE TABLE(1)
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- Class A Return Before Taxes (39.62)% (3.14)% 03/01/99 Return After Taxes on Distributions (39.62) (3.14) 03/01/99 Return After Taxes on Distributions and Sale of Fund Shares (24.13) (2.50) 03/01/99 Class B Return Before Taxes (39.74) (6.61) 04/05/99 Class C Return Before Taxes (37.18) (5.53) 04/05/99 --------------------------------------------------------------------------------- Russell 1000--Registered TradeMark-- Index(2) (reflects no deduction for (fees, expenses, or taxes) (12.45) (0.95)(3) 02/28/99(3) --------------------------------------------------------------------------------- |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1)A significant portion of the fund's returns during certain periods was attributable to its investments in IPOs. These investments had a magnified impact when the fund's asset base was relatively small. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return. For additional information regarding the impact of IPO investments on the fund's performance, please see the "Financial Highlights" section of this prospectus.
(2) The Russell 1000--Registered TradeMark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered TradeMark-- Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(3) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES -------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C -------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C -------------------------------------------------------- Management Fees 0.75% 0.75% 0.75% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(3) 0.47 0.47 0.47 Total Annual Fund Operating Expenses 1.57 2.22 2.22 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2)There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class A $701 $1,018 $1,358 $2,315
Class B 725 994 1,390 2,391
Class C 325 694 1,190 2,554
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $701 $1,018 $1,358 $2,315
Class B 225 694 1,190 2,391
Class C 225 694 1,190 2,554
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.75% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Geoffrey V. Keeling, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1986.
- Robert L. Shoss, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
SALES CHARGES
Purchases of Class A shares of AIM Large Cap Growth Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
A significant portion of the fund's returns was attributable to its investments in IPOs during the fiscal year ended October 31, 2000, which had a magnified impact on the fund due to its relatively small asset base during this period. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return.
CLASS A
--------------------------------------------
MARCH 1, 1999
YEAR ENDED (DATE OPERATIONS
OCTOBER 31, COMMENCED) TO
------------------------ OCTOBER 31,
2001(a) 2000(a) 1999
-------- ----------- ----------------
Net asset value, beginning of period $ 17.74 $ 11.29 $10.00
----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.15) (0.04)
----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (8.84) 6.60 1.33
==========================================================================================================
Total from investment operations (8.92) 6.45 1.29
==========================================================================================================
Net asset value, end of period $ 8.82 $ 17.74 $11.29
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) (50.28)% 57.13% 13.70%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $138,269 $225,255 $7,785
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets 1.57%(c) 1.58% 1.53%(d)(e)
----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.72)%(c) (0.82)% (0.59)%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate 124% 113% 21%
__________________________________________________________________________________________________________
==========================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges and is not annualized for periods less than
one year.
(c)Ratios are based on average daily net assets of $186,698,739.
(d)Annualized.
(e)Including fee waiver. Ratio of expenses to average net assets prior to fee waiver was 3.63%.
CLASS B
------------------------------------------
April 5, 1999
(Date sales
YEAR ENDED OCTOBER 31, commenced) to
------------------------- October 31,
2001(a) 2000(a) 1999(a)
-------- ----------- -------------
Net asset value, beginning of period $ 17.54 $ 11.25 $11.02
----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.16) (0.27) (0.08)
----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (8.71) 6.56 0.31
==========================================================================================================
Total from investment operations (8.87) 6.29 0.23
==========================================================================================================
Net asset value, end of period $ 8.67 $ 17.54 $11.25
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) (50.57)% 55.91% 2.09%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $144,747 $210,224 $5,183
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.24% 2.23%(d)(e)
----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.39)%(c) (1.48)% (1.29)%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate 124% 113% 21%
__________________________________________________________________________________________________________
==========================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $189,770,380.
(d)Annualized.
(e)Including fee waiver. Ratio of expenses to average net assets prior to fee waiver was 4.33%.
CLASS C
-----------------------------------------
April 5, 1999
(Date sales
YEAR ENDED OCTOBER 31, commenced) to
------------------------ October 31,
2001(a) 2000(a) 1999(a)
------- ----------- -------------
Net asset value, beginning of period $17.55 $ 11.25 $11.02
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.16) (0.27) (0.08)
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (8.72) 6.57 0.31
=========================================================================================================
Total from investment operations (8.88) 6.30 0.23
=========================================================================================================
Net asset value, end of period $ 8.67 $ 17.55 $11.25
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) (50.60)% 56.00% 2.09%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $57,865 $79,392 $ 901
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.24% 2.23%(d)(e)
---------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (1.39)%(c) (1.48)% (1.29)%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 124% 113% 21%
_________________________________________________________________________________________________________
=========================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $73,957,701.
(d)Annualized.
(e)Including fee waiver. Ratio of expenses to average net assets prior to fee waiver was 4.33%.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
------------------------------------------------------------------------------------------
|
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com LCG-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
AIM MID CAP GROWTH FUND
AIM Mid Cap Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B,
and C shares of the fund. Please
read it before investing and keep it
for future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
-----------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------- PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------- PERFORMANCE INFORMATION 2 ------------------------------------------------------- Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------- Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 ------------------------------------------------------- The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 ------------------------------------------------------- Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 ------------------------------------------------------- SHAREHOLDER INFORMATION A-1 ------------------------------------------------------- Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------- |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing at least 65% of its total assets in securities of companies that have market capitalizations, at the time of purchase, within the range of market capitalizations of companies included in the Standard & Poor's MidCap 400 Index. The Standard & Poor's MidCap 400 Index is an unmanaged market-weighted index of domestic stocks that measures the performance of the mid-size company segment of the U.S. market. Under normal conditions, the top 10 holdings may comprise up to 40% of the fund's total assets. The fund will invest primarily in common stocks but may also invest in convertible securities and warrants. The fund may also invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have favorable prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of smaller companies, whose prices may go up and down more than equity securities of larger, more established companies. Also, since equity securities of smaller companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
Since a large percentage of the fund's assets will be invested in a limited number of securities, any change in value of those securities could significantly affect the value of your investment in the fund.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
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 increase the fund's total returns. As the fund's assets grow, the impact of IPO investments will decline, which may decrease the fund's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance. Total return information in the bar chart and table below has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which had a magnified impact on the fund due to its small asset base. There is no guarantee that, as the fund's assets grow, it will continue to experience substantially similar performance.
The following bar chart shows changes the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURN
----------- ------
2000.................................................................. -10.12%
2001.................................................................. -21.21%
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During the periods shown in the bar chart, the highest quarterly return was 28.02% (quarter ended March 31, 2000) and the lowest quarterly return was -30.93% (quarter ended September 30, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2001) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- Class A Return Before Taxes (25.55)% (3.80)% 11/01/99 Return After Taxes on Distributions (25.55) (3.80) 11/01/99 Return After Taxes on Distributions and Sale of Fund Shares (15.56) (3.02) 11/01/99 Class B Return Before Taxes (25.72) (3.38) 11/01/99 Class C Return Before Taxes (22.60) (2.01) 11/01/99 S&P MidCap 400 Index(1) (reflects no deduction for fees, expenses, or taxes) (0.62) 12.96(2) 10/31/99(2) --------------------------------------------------------------------------------- |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Standard & Poor's MidCap 400 Index is an unmanaged index of common stocks that measures the performance of the mid-size company segment of the U.S. market.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES ------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.80% 0.80% 0.80% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses(3) 0.52 0.52 0.52 Total Annual Fund Operating Expenses 1.67 2.32 2.32 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $710 $1,048 $1,407 $2,418
Class B 735 1,024 1,440 2,494
Class C 335 724 1,240 2,656
----------------------------------------------
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $710 $1,048 $1,407 $2,418
Class B 235 724 1,240 2,494
Class C 235 724 1,240 2,656
----------------------------------------------
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THE ADVISOR
A I M Advisors, Inc. serves as the fund's investment adviser and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment adviser since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.80% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
- Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990.
SALES CHARGES
Purchases of Class A shares of AIM Mid Cap Growth Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young, LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
CLASS A
--------------------------------
NOVEMBER 1, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001(a) 2000(a)
----------- ----------------
Net asset value, beginning of period $ 14.38 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.12)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.69) 4.50
==============================================================================================
Total from investment operations (5.80) 4.38
==============================================================================================
Net asset value, end of period $ 8.58 $ 14.38
______________________________________________________________________________________________
==============================================================================================
Total return(b) (40.33)% 43.80%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,457 $114,913
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets 1.65%(c) 1.63%
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.06)%(c) (1.76)%
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 173% 183%
______________________________________________________________________________________________
==============================================================================================
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(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $104,632,235.
CLASS B
--------------------------------
November 1, 1999
(Date operations
Year ended commenced) to
October 31, October 31,
2001(a) 2000(a)
----------- ----------------
Net asset value, beginning of period $ 14.25 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.22)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.62) 4.47
==============================================================================================
Total from investment operations (5.80) 4.25
==============================================================================================
Net asset value, end of period $ 8.45 $ 14.25
______________________________________________________________________________________________
==============================================================================================
Total return(b) (40.70)% 42.50%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $81,905 $103,893
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets 2.32%(c) 2.32%
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.73)%(c) (1.45)%
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 173% 183%
______________________________________________________________________________________________
==============================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $99,013,881.
CLASS C
--------------------------------
NOVEMBER 1, 1999
(Date operations
Year ended commenced) to
October 31, October 31,
2001(a) 2000(a)
----------- ----------------
Net asset value, beginning of period $ 14.26 $ 10.00
----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.22)
----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.63) 4.48
==============================================================================================
Total from investment operations (5.81) 4.26
==============================================================================================
Net asset value, end of period $ 8.45 $ 14.26
______________________________________________________________________________________________
==============================================================================================
Total return(b) (40.74)% 42.60%
______________________________________________________________________________________________
==============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $23,971 $29,969
______________________________________________________________________________________________
==============================================================================================
Ratio of expenses to average net assets 2.32%(c) 2.32%
==============================================================================================
Ratio of net investment income (loss) to average net assets (1.73)%(c) (1.45)%
______________________________________________________________________________________________
==============================================================================================
Portfolio turnover rate 173% 183%
______________________________________________________________________________________________
==============================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $28,908,534.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
|
The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
------------------------------------------------------------------------------------------
|
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
AIM MID CAP GROWTH FUND
SEC 1940 Act file number: 811-1424 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com MCG-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM WEINGARTEN FUND
|
AIM Weingarten Fund seeks to provide growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2002
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
-------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUND 1 ------------------------------------------------------ PERFORMANCE INFORMATION 2 ------------------------------------------------------ Annual Total Returns 2 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 ------------------------------------------------------ Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 ------------------------------------------------------ The Advisors 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 ------------------------------------------------------ Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 ------------------------------------------------------ SHAREHOLDER INFORMATION A-1 ------------------------------------------------------ Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-7 Pricing of Shares A-9 Taxes A-9 OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to provide growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund will invest primarily in common stocks of seasoned and better-capitalized companies. The portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes. The fund may also invest up to 20% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance (before and after taxes) is not necessarily an indication of its future performance.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURN
----------- -------
1992.................................................................. -1.37%
1993.................................................................. 1.53%
1994.................................................................. -0.34%
1995.................................................................. 34.76%
1996.................................................................. 17.67%
1997.................................................................. 25.96%
1998.................................................................. 33.06%
1999.................................................................. 34.90%
2000.................................................................. -20.37%
2001.................................................................. -34.10%
|
During the periods shown in the bar chart, the highest quarterly return was 28.03% (quarter ended December 31, 1998) and the lowest quarterly return was -27.65% (quarter ended March 31, 2001).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------------------- (for the periods ended December 31, INCEPTION 2001) 1 YEAR 5 YEARS 10 YEARS DATE ------------------------------------------------------------------------------------------------------- Class A Return Before Taxes (37.72)% 2.31% 5.90% 06/17/69 Return After Taxes on Distributions (37.72) 0.05 3.44 06/17/69 Return After Taxes on Distributions and Sale of Fund Shares (22.97) 2.04 4.33 06/17/69 Class B Return Before Taxes (37.83) 2.43 N/A 06/25/95 Class C Return Before Taxes (35.18) N/A N/A 08/04/97 ------------------------------------------------------------------------------------------------------- S&P 500(1) (reflects no deduction for fees, expenses, or taxes) (11.88) 10.70 12.93 06/30/69(2) ------------------------------------------------------------------------------------------------------- |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only and after-tax returns for Class B and C will vary.
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 Other Expenses(3) 0.29 0.29 0.29 Total Annual Fund Operating Expenses(4) 1.22 1.92 1.92 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) There is no guarantee that actual expenses will be the same as those shown in the table.
(3)Effective December 12, 2001, the fund adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of the revised plan.
(4) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Total Annual Fund Operating Expenses net of this agreement are 1.21%, 1.91% and 1.91% for Class A, Class B and Class C, respectively. Termination of this agreement requires approval by the Board of Trustees.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $667 $916 $1,183 $1,946
Class B 695 903 1,237 2,061
Class C 295 603 1,037 2,243
----------------------------------------------
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $667 $916 $1,183 $1,946
Class B 195 603 1,037 2,061
Class C 195 603 1,037 2,243
----------------------------------------------
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THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the fund's operations and provide investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation of 0.62% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1995.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
SALES CHARGES
Purchases of Class A shares of AIM Weingarten Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
The information for fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP. For more information regarding the change in independent auditors, see the Statement of Additional Information.
CLASS A
--------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2001 2000(a) 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 28.16 $ 28.31 $ 21.72 $ 22.72 $ 20.19
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.14) (0.10) 0.02 0.01
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.87) 3.18 8.16 2.38 4.82
============================================================================================================================
Total from investment operations (11.97) 3.04 8.06 2.40 4.83
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.01) -- (0.06)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.54) (3.19) (1.46) (3.40) (2.24)
============================================================================================================================
Total distributions (3.54) (3.19) (1.47) (3.40) (2.30)
============================================================================================================================
Net asset value, end of period $ 12.65 $ 28.16 $ 28.31 $ 21.72 $ 22.72
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (47.38)% 10.61% 38.62% 12.34% 26.83%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,001,552 $8,948,781 $8,089,739 $6,094,178 $5,810,582
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.21%(c) 1.03% 1.03% 1.04% 1.07%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.22%(c) 1.07% 1.08% 1.09% 1.11%
============================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.56)%(c) (0.45)% (0.38)% 0.07% 0.07%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
____________________________________________________________________________________________________________________________
============================================================================================================================
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(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $5,771,689,798.
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2001 2000(a) 1999(a) 1998(a) 1997(a)
-------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 26.82 $ 27.29 $ 21.12 $ 22.34 $ 19.98
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.21) (0.36) (0.30) (0.15) (0.15)
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.21) 3.08 7.93 2.33 4.75
==========================================================================================================================
Total from investment operations (11.42) 2.72 7.63 2.18 4.60
==========================================================================================================================
Less distributions from net realized gains (3.54) (3.19) (1.46) (3.40) (2.24)
==========================================================================================================================
Net asset value, end of period $ 11.86 $ 26.82 $ 27.29 $ 21.12 $ 22.34
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (47.75)% 9.76% 37.59% 11.45% 25.78%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $922,476 $1,927,514 $1,291,456 $705,750 $486,105
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(c) 1.78% 1.82% 1.83% 1.87%
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.93%(c) 1.82% 1.87% 1.87% 1.91%
==========================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.27)%(c) (1.20)% (1.17)% (0.72)% (0.73)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
__________________________________________________________________________________________________________________________
==========================================================================================================================
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(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $1,295,757,605.
CLASS C
---------------------------------------------------------------
AUGUST 4, 1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED)
--------------------------------------------- TO OCTOBER 31,
2001 2000(a) 1999(a) 1998(a) 1997(a)
-------- -------- -------- ------- --------------
Net asset value, beginning of period $ 26.85 $ 27.30 $ 21.14 $22.34 $22.83
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.21) (0.36) (0.30) (0.15) (0.04)
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.23) 3.10 7.92 2.35 (0.45)
==========================================================================================================================
Total from investment operations (11.44) 2.74 7.62 2.20 (0.49)
==========================================================================================================================
Less distributions from net realized gains (3.54) (3.19) (1.46) (3.40) --
==========================================================================================================================
Net asset value, end of period $ 11.87 $ 26.85 $ 27.30 $21.14 $22.34
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (47.77)% 9.83% 37.50% 11.54% (2.15)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $150,604 $301,590 $105,420 $23,107 $2,326
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(c) 1.78% 1.82% 1.83% 1.84%(d)
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.93%(c) 1.82% 1.87% 1.87% 1.88%(d)
==========================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.27)%(c) (1.20)% (1.17)% (0.72)% (0.70)%(d)
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $209,725,887.
(d)Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain charge on redemptions within six charge on redemptions within
purchases(1,2) years one year(2)
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares at - Does not convert to Class A
the end of the month which is shares
eight years after the date on
which shares were purchased
along with a pro rata portion
of its reinvested dividends and
distributions(3)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
(1) A contingent deferred sales charge may apply in some cases.
(2) AIM Small Cap Opportunities Fund will not accept any single purchase
order in excess of $250,000.
(3) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund at the end of the month which is seven years after the date on which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until the end of the month which is eight years after the date on which you purchased your original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Sales charges on the AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
-------------------------------------------------------------
Investor's
Sales Charge
----------------------------
AMOUNT OF INVESTMENT As a % of As a % of
IN SINGLE TRANSACTION(1) offering price investment
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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(1) AIM Small Cap Opportunities Fund will not accept any single purchase order in excess of $250,000.
A-1 MCF--1/02
CATEGORY II INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
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SHARES SOLD WITHOUT AN INITIAL SALES CHARGE
You will not pay an initial sales charge on purchases of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND
You can purchase $1,000,000 or more (a Large Purchase) of Class A shares of Category I and II Funds at net asset value. However, if you redeem these shares prior to 18 months after the date of purchase, they will be subject to a contingent deferred sales charge (CDSC) of 1%.
You can also make a Large Purchase of Class A shares of Category III Funds at net asset value. If your purchase occurs on or after November 15, 2001, the shares will be subject to a 0.25% CDSC if you redeem them prior to 12 months after the date of purchase.
If you currently own Class A shares of a Category I, II or III Fund and make additional purchases at net asset value that result in account balances of $1,000,000 or more, the additional shares purchased will be subject to a CDSC (an 18-month, 1.0% CDSC for Category I and II Fund shares, and a 12-month, 0.25% CDSC for Category III Fund shares.) The CDSC for Category III Fund shares will not apply to additional purchases made prior to November 15, 2001.
You may be charged a CDSC when you redeem AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund if you acquired those shares through an exchange, and the shares originally purchased were subject to a CDSC.
The distributor may pay a dealer concession and/or a service fee for Large Purchases.
CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
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COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with shares currently owned (Class A, B or C) for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
MCF--1/02 A-2
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privileges; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
----------------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 25
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------------
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The minimum initial investment for AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund (the Special Opportunities Funds) accounts is $10,000. The minimum subsequent investment is $1,000. The maximum amount for a single purchase order of AIM Small Cap Opportunities Fund is $250,000.
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
PURCHASE OPTIONS
----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and check to the transfer agent, slip from your confirmation
A I M Fund Services, Inc., statement to the transfer agent.
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
|
A-3 MCF--1/02
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
By AIM Bank Connection(SM) Open your account using one of the Select the AIM Bank Connection
methods described above. option on your completed account
application or complete an AIM Bank
Connection form. Mail the
application or form to the transfer
agent. Once the transfer agent has
received the form, call the
transfer agent to place your
purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $25 ($1,000 for any of the Special Opportunities Funds). You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to a Special Opportunities Fund is $1,000. The minimum amount you can exchange to another AIM Fund is $25.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
MCF--1/02 A-4
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE PRIOR TO NOVEMBER 15,
2001.
If you purchased $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund at net asset value prior to November 15, 2001, or entered into a Letter of Intent prior to November 15, 2001 to purchase $1,000,000 or more of Class A shares of a Category I, II or III Fund at net asset value, your shares may be subject to a contingent deferred sales charge (CDSC) upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - No CDSC
shares of Category III Fund
Category - Class A shares of
III Fund AIM Tax-Exempt Cash
Fund
- AIM Cash Reserve
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS A SHARES AND AIM CASH
RESERVE SHARES ACQUIRED BY EXCHANGE FOR PURCHASES MADE ON AND AFTER NOVEMBER 15,
2001
If you purchase $1,000,000 or more of Class A shares of any AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund on and after November 15, 2001, or if you make additional purchases of Class A shares or AIM Cash Reserve Shares on and after November 15, 2001 at net asset value, your shares may be subject to a CDSC upon redemption, as described below.
SHARES
INITIALLY SHARES HELD AFTER AN CDSC APPLICABLE UPON
PURCHASED EXCHANGE REDEMPTION OF SHARES
------------ --------------------- ---------------------
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category I Fund months of initial
or II Fund - Class A shares of purchase of
Category III Fund Category I or II
- AIM Cash Reserve Fund shares
Shares of AIM Money
Market Fund
- Class A - Class A shares of - 1% if shares are
shares of Category I or II redeemed within 18
Category Fund months of initial
III Fund purchase of
Category III Fund
shares
- Class A - Class A shares of - 0.25% if shares are
shares of Category III Fund redeemed within 12
Category - Class A shares of months of initial
III Fund AIM Tax-Exempt Cash purchase of
Fund Category III Fund
- AIM Cash Reserve shares
Shares of AIM Money
Market Fund
|
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
|
A-5 MCF--1/02
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $250,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
You may, with limited exceptions, redeem from an IRA account
by telephone. Redemptions from other types of retirement
accounts must be requested in writing.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $250,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
------------------------------------------------------------------------------------------
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $250,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
MCF--1/02 A-6
REINSTATEMENT PRIVILEGES
You may, within 120 days after you sell shares (except Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund), reinvest all or part of your redemption proceeds in Class A shares of any
AIM Fund at net asset value in an identically registered account.
You may, within 120 days after you sell Class A shares of a Category III Fund,
reinvest all or part of your redemption proceeds in Class A shares of that same
Category III Fund at net asset value in an identically registered account.
The reinvestment amount must meet the subsequent investment minimum as
indicated in the section "Purchasing Shares".
If you paid a contingent deferred sales charge (CDSC) on any reinstated
amount, you will not be subject to a CDSC if you later redeem that amount.
You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may also exchange Class A shares of an AIM Fund for AIM Cash Reserve Shares of AIM Money Market Fund. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange into shares that are subject to a CDSC, we will begin the holding period for purposes of calculating the CDSC on the date you made your initial purchase.
EXCHANGES NOT SUBJECT TO A SALES CHARGE
You will not pay an initial sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund with an initial sales charge for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher initial sales charges; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge.
You will not pay a CDSC or other sales charge when exchanging:
(1) Class A shares for other Class A shares;
(2) Class B shares for other Class B shares, and Class C shares for other Class C shares; or
(3) AIM Cash Reserve Shares of AIM Money Market Fund for Class C shares.
A-7 MCF--1/02
EXCHANGES NOT PERMITTED
Certain classes of shares are not covered by the exchange privilege.
For shares purchased prior to November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a contingent deferred sales charge (CDSC) for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of Category III Funds purchased at net asset value for Class A shares of a Category I or II Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund;
- AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category I or II Funds that are subject to a CDSC; or
- on or after January 15, 2002, AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of Category III Funds that are subject to a CDSC.
For shares purchased on or after November 15, 2001, you may not exchange:
- Class A shares of Category I or II Funds purchased at net asset value and subject to a CDSC for Class A shares of AIM Tax-Exempt Cash Fund;
- Class A shares of AIM Tax-Exempt Cash Fund for Class A shares of any other AIM Fund that are subject to a CDSC or for AIM Cash Reserve Shares of AIM Money Market Fund; or
- AIM Cash Reserve Shares of AIM Money Market Fund for Class B or Class C shares of any AIM Fund or for Class A shares of any AIM Fund that are subject to a CDSC, however, if you originally purchased Class A shares of a Category I or II Fund, and exchanged those shares for AIM Cash Reserve Shares of AIM Money Market Fund, you may further exchange the AIM Cash Reserve Shares for Class A shares of a Category I or II Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
MCF--1/02 A-8
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds' short-term investments are valued at
amortized cost when the security has 60 days or less to maturity. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund and AIM
Tax-Free Intermediate Fund value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges that trade on days when the AIM Funds do not price their
shares, the value of those funds' assets may change on days when you will not be
able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A-9 MCF--1/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
------------------------------------ AIM Weingarten Fund SEC 1940 Act file number: 811-1424 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com WEI-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
STATEMENT OF
ADDITIONAL INFORMATION
AIM EQUITY FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE CLASS A, CLASS B AND CLASS C SHARES OF EACH PORTFOLIO OF AIM EQUITY FUNDS LISTED BELOW. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUSES FOR THE FUNDS LISTED BELOW. YOU MAY OBTAIN A COPY OF ANY PROSPECTUS FOR ANY FUND LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
A I M FUND SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MARCH 1, 2002, RELATES TO THE
FOLLOWING PROSPECTUSES:
FUND DATED
---- -----
AIM AGGRESSIVE GROWTH FUND MARCH 1, 2002
AIM BLUE CHIP FUND MARCH 1, 2002
AIM CAPITAL DEVELOPMENT FUND MARCH 1, 2002
AIM CHARTER FUND MARCH 1, 2002
AIM CONSTELLATION FUND MARCH 1, 2002
AIM CORE STRATEGIES FUND MARCH 1, 2002
AIM DENT DEMOGRAPHIC TRENDS FUND MARCH 1, 2002
AIM EMERGING GROWTH FUND MARCH 1, 2002
AIM LARGE CAP BASIC VALUE FUND MARCH 1, 2002
AIM LARGE CAP CORE EQUITY FUND MARCH 1, 2002
AIM LARGE CAP GROWTH FUND MARCH 1, 2002
AIM MID CAP GROWTH FUND MARCH 1, 2002
AIM WEINGARTEN FUND MARCH 1, 2002
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AIM EQUITY FUNDS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION ABOUT THE TRUST....................................................1
Fund History..................................................................1
Shares of Beneficial Interest.................................................1
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS...............................2
Classification................................................................2
Investment Strategies and Risks...............................................3
Equity Investments...................................................7
Foreign Investments..................................................7
Debt Investments.....................................................9
Other Investments....................................................9
Investment Techniques...............................................10
Derivatives.........................................................14
Additional Securities or Investment Techniques......................20
Fund Policies................................................................20
Temporary Defensive Positions................................................22
Portfolio Turnover...........................................................22
MANAGEMENT OF THE TRUST...............................................................22
Board of Trustees............................................................22
Management Information.......................................................23
Ownership of Fund Shares.....................................................24
Factors Considered in Approving the Investment Advisory Agreement...24
Compensation.................................................................24
Retirement Plan For Trustees........................................25
Deferred Compensation Agreements....................................25
Purchase of Class A Shares of the Funds at Net Asset Value..........25
Codes of Ethics..............................................................26
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...................................26
INVESTMENT ADVISORY AND OTHER SERVICES................................................26
Investment Advisor...........................................................26
Investment Sub-Advisor.......................................................28
Service Agreements...........................................................29
Other Service Providers......................................................29
BROKERAGE ALLOCATION AND OTHER PRACTICES..............................................30
Brokerage Transactions.......................................................30
Commissions..................................................................30
Brokerage Selection..........................................................31
Directed Brokerage (Research Services).......................................32
Regular Brokers or Dealers...................................................32
Allocation of Portfolio Transactions.........................................32
Allocation of Equity Offering Transactions...................................32
PURCHASE, REDEMPTION AND PRICING OF SHARES............................................33
Purchase and Redemption of Shares............................................33
Offering Price...............................................................48
Redemption In Kind...........................................................49
Backup Withholding...........................................................49
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS..............................................50
Dividends and Distributions..................................................50
Tax Matters..................................................................51
DISTRIBUTION OF SECURITIES............................................................57
Distribution Plans...........................................................57
Distributor..................................................................59
CALCULATION OF PERFORMANCE DATA.......................................................60
APPENDICES:
RATINGS OF DEBT SECURITIES...........................................................A-1
TRUSTEES AND OFFICERS................................................................B-1
TRUSTEE COMPENSATION TABLE...........................................................C-1
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..................................D-1
MANAGEMENT FEES......................................................................E-1
ADMINISTRATIVE SERVICES FEES.........................................................F-1
BROKERAGE COMMISSIONS................................................................G-1
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES AND
REGULAR BROKERS OR DEALERS...........................................................H-1
AMOUNTS PAID TO A I M DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLANS..............I-1
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS........................J-1
TOTAL SALES CHARGES..................................................................K-1
PERFORMANCE DATA.....................................................................L-1
FINANCIAL STATEMENTS..................................................................FS
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GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Equity Funds (the "Trust") is a Delaware business trust which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company. The Trust currently consists of thirteen separate portfolios: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Core Strategies Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Core Equity Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund (each a "Fund" and collectively, the "Funds"). Under an Agreement and Declaration of Trust, dated December 6, 1999, as amended (the "Trust Agreement"), the Board of Trustees is authorized to create new series of shares without the necessity of a vote of shareholders of the Trust.
The Trust was originally organized on May 19, 1988 as a Maryland corporation. The Trust reorganized as a Delaware business trust on June 21, 2000. The following Funds were included in the reorganization: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund. All historical and other information contained in this Statement of Additional Information for periods prior to June 21, 2000 relating to the Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). AIM Core Strategies Fund and AIM Large Cap Core Equity Fund commenced operations as series of the Trust.
SHARES OF BENEFICIAL INTEREST
Shares of beneficial interest of the Trust are redeemable at their net asset value (subject, in certain circumstances, to a contingent deferred sales charge) at the option of the shareholder or at the option of the Trust in certain circumstances.
The Trust allocates moneys and other property it receives from the issue or sale of shares of each of its series of shares, and all income, earnings and profits from such issuance and sales, subject only to the rights of creditors, to the appropriate Fund. These assets constitute the underlying assets of each Fund, are segregated on the Trust's books of account, and are charged with the expenses of such Fund and its respective classes. The Trust allocates any general expenses of the Trust not readily identifiable as belonging to a particular Fund by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors.
Each share of each Fund represents an equal proportionate interest in that Fund with each other share and is entitled to such dividends and distributions out of the income belonging to such Fund as are declared by the Board. Each Fund offers three separate classes of shares: Class A shares, Class B shares and Class C shares. Each of AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund also offers a fourth class of shares, Institutional Class shares. This Statement of Additional Information relates solely to the Class A, Class B and Class C shares of the Funds. Each class of shares represents interests in the same portfolio of investments. Differing sales charges and expenses will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for distribution after satisfaction of outstanding liabilities of the Fund allocable to such class.
Each share of a Fund has the same voting, dividend, liquidation and other rights; however, each class of shares of a Fund is subject to different sales loads, conversion features, exchange privileges and class-specific expenses. Only shareholders of a specific class may vote on matters relating to that class' distribution plan. Because Class B shares automatically convert to Class A shares at month-end eight years after the date of purchase, the Fund's distribution plan adopted pursuant to Rule 12b-1 under the
1940 Act requires that Class B shareholders must also approve any material increase in distribution fees submitted to Class A shareholders of that Fund. A pro rata portion of shares from reinvested dividends and distributions convert along with the Class B shares.
Except as specifically noted above, shareholders of each Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the shares of a Fund. However, on matters affecting an individual Fund or class of shares, a separate vote of shareholders of that Fund or class is required. Shareholders of a Fund or class are not entitled to vote on any matter which does not affect that Fund or class but that requires a separate vote of another Fund or class. An example of a matter that would be voted on separately by shareholders of each Fund is the approval of the advisory agreement with A I M Advisors, Inc. ("AIM"), and an example of a matter that would be voted on separately by shareholders of each class of shares is approval of the distribution plans. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are freely transferable. Other than the automatic conversion of Class B shares to Class A shares, there are no conversion rights. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees.
Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations. There is a remote possibility, however, that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which a Fund is unable to meet its obligations and the complaining party is not held to be bound by the disclaimer.
The trustees and officers of the Trust will not be liable for any act, omission or obligation of the Trust or any trustee or officer; however, a trustee or officer is not protected against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office with the Trust ("Disabling Conduct"). The Trust Agreement provides for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, provided that such persons have not engaged in Disabling Conduct. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates, although the Trust in its sole discretion may issue them. A I M Fund Services, Inc. ("AFS") will not issue certificates for shares held in prototype retirement plans sponsored by AMVESCAP National Trust Company, an affiliate of AIM.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. Each of the Funds other than AIM Emerging Growth Fund is "diversified" for purposes of the 1940 Act.
INVESTMENT STRATEGIES AND RISKS
The table on the following pages identifies various securities and investment techniques used by AIM in managing The AIM Family of Funds--Registered Trademark--. The table has been marked to indicate those securities and investment techniques that AIM may use to manage a Fund. A Fund may not use all of these techniques at any one time. A Fund's transactions in a particular security or use of a particular technique is subject to limitations imposed by a Fund's investment objective, policies and restrictions described in that Fund's Prospectus and/or this Statement of Additional Information, as well as federal securities laws. The Funds' investment objectives, policies, strategies and practices are non-fundamental. A more detailed description of the securities and investment techniques, as well as the risks associated with those securities and investment techniques that the Funds utilize, follows the table. The descriptions of the securities and investment techniques in this section supplement the discussion of principal investment strategies contained in each Fund's Prospectus; where a particular type of security or investment technique is not discussed in a Fund's Prospectus, that security or investment technique is not a principal investment strategy.
AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
FUND
AIM
LARGE
AIM AIM AIM CAP
SECURITY/ AGGRESSIVE BLUE AIM CAPITAL AIM AIM AIM CORE AIM DENT EMERGING BASIC
INVESTMENT GROWTH CHIP DEVELOPMENT CHARTER CONSTELLATION STRATEGIES DEMOGRAPHIC GROWTH VALUE
TECHNIQUE FUND FUND FUND FUND FUND FUND TRENDS FUND FUND FUND
---------- ---------- ---- ----------- ------- ------------- ---------- ----------- -------- -----
EQUITY INVESTMENT
Common Stock X X X X X X X X X
Preferred Stock X X X X X X X X X
Convertible Securities X X X X X X X X X
Alternative Entity X X X X X X X X X
Securities
FOREIGN INVESTMENTS
Foreign Securities X X X X X X X X X
Foreign Government
Obligations
Foreign Exchange X X X X X X X X X
Transactions
DEBT INVESTMENTS FOR EQUITY FUNDS
U.S. Government X X X X X X X X X
Obligations
Liquid Assets X X X X X X X X X
Investment Grade
Corporate Debt X X X X X X X X X
Obligations
Junk Bonds
OTHER INVESTMENTS
REITs X X X X X X X X X
Other Investment X X X X X X X X X
Companies
Defaulted Securities
Municipal Forward
Contracts
Variable or Floating
Rate Instruments
AIM
LARGE AIM AIM
CAP LARGE MID
SECURITY/ CORE CAP CAP AIM
INVESTMENT EQUITY GROWTH GROWTH WEINGARTEN
TECHNIQUE FUND FUND FUND FUND
---------- ------ ------ ------ ----------
EQUITY INVESTMENT
Common Stock X X X X
Preferred Stock X X X X
Convertible Securities X X X X
Alternative Entity X X X X
Securities
FOREIGN INVESTMENTS
Foreign Securities X X X X
Foreign Government
Obligations
Foreign Exchange X X X X
Transactions
DEBT INVESTMENTS FOR EQUITY FUNDS
U.S. Government X X X X
Obligations
Liquid Assets X X X X
Investment Grade
Corporate Debt X X X X
Obligations
Junk Bonds
OTHER INVESTMENTS
REITs X X X X
Other Investment X X X X
Companies
Defaulted Securities
Municipal Forward
Contracts
Variable or Floating
Rate Instruments
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
FUND
AIM
LARGE
AIM AIM AIM CAP
SECURITY/ AGGRESSIVE BLUE AIM CAPITAL AIM AIM AIM CORE AIM DENT EMERGING BASIC
INVESTMENT GROWTH CHIP DEVELOPMENT CHARTER CONSTELLATION STRATEGIES DEMOGRAPHIC GROWTH VALUE
TECHNIQUE FUND FUND FUND FUND FUND FUND TRENDS FUND FUND FUND
---------- ---------- ---- ----------- ------- ------------- ---------- ----------- -------- -----
Indexed Securities
Zero-Coupon and
Pay-in-Kind Securities
Synthetic Municipal
Instruments
INVESTMENT TECHNIQUES
Delayed Delivery X X X X X X X X X
Transactions
When-Issued Securities X X X X X X X X X
Short Sales X X X X X X X X X
Margin Transactions
Swap Agreements X X X X X X X X X
Interfund Loans X X X X X X X X X
Borrowing X X X X X X X X X
Lending Portfolio X X X X X X X X X
Securities
Repurchase Agreements X X X X X X X X X
Reverse Repurchase X X X X X
Agreements
Dollar Rolls
Illiquid Securities X X X X X X X X X
Rule 144A Securities X X X X X X X X X
Unseasoned Issuers X X X X X
Sale of Money Market
Securities
Standby Commitments
FUND
AIM
LARGE AIM AIM
CAP LARGE MID
SECURITY/ CORE CAP CAP AIM
INVESTMENT EQUITY GROWTH GROWTH WEINGARTEN
TECHNIQUE FUND FUND FUND FUND
---------- ------ ------ ------ ----------
Indexed Securities
Zero-Coupon and
Pay-in-Kind Securities
Synthetic Municipal
Instruments
INVESTMENT TECHNIQUES
Delayed Delivery X X X X
Transactions
When-Issued Securities X X X X
Short Sales X X X X
Margin Transactions
Swap Agreements X X X X
Interfund Loans X X X X
Borrowing X X X X
Lending Portfolio X X X X
Securities
Repurchase Agreements X X X X
Reverse Repurchase X X
Agreements
Dollar Rolls
Illiquid Securities X X X X
Rule 144A Securities X X X X
Unseasoned Issuers X X
Sale of Money Market
Securities
Standby Commitments
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AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
FUND
AIM
LARGE
AIM AIM AIM CAP
SECURITY/ AGGRESSIVE BLUE AIM CAPITAL AIM AIM AIM CORE AIM DENT EMERGING BASIC
INVESTMENT GROWTH CHIP DEVELOPMENT CHARTER CONSTELLATION STRATEGIES DEMOGRAPHIC GROWTH VALUE
TECHNIQUE FUND FUND FUND FUND FUND FUND TRENDS FUND FUND FUND
---------- ---------- ---- ----------- ------- ------------- ---------- ----------- -------- -----
DERIVATIVES
Equity-Linked X X X X X X X X X
Derivatives
Put Options X X X X X X X X X
Call Options X X X X X X X X X
Straddles X X X X X X X X X
Warrants X X X X X X X X X
Futures Contracts and X X X X X X X X X
Options on Futures
Contracts
Forward Currency X X X X X X X X X
Contracts
Cover X X X X X X X X X
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
Special Situations X
FUND
AIM
LARGE AIM AIM
CAP LARGE MID
SECURITY/ CORE CAP CAP AIM
INVESTMENT EQUITY GROWTH GROWTH WEINGARTEN
TECHNIQUE FUND FUND FUND FUND
---------- ------ ------ ------ ----------
DERIVATIVES
Equity-Linked X X X X
Derivatives
Put Options X X X X
Call Options X X X X
Straddles X X X X
Warrants X X X X
Futures Contracts and X X X X
Options on Futures
Contracts
Forward Currency X X X X
Contracts
Cover X X X X
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
Special Situations
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Equity Investments
COMMON STOCK. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. A Fund participates in the success or failure of any company in which it holds stock. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
PREFERRED STOCK. Preferred stock, unlike common stock, often offers a stated dividend rate payable from a corporation's earnings. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, a negative feature when interest rates decline. Dividends on some preferred stock may be "cumulative," requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer's common stock. Preferred stock also generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation, and may be "participating," which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means that the interest to be paid is set by auction and will often be reset at stated intervals. The rights of preferred stocks on the distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.
CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures, notes, preferred stocks and other securities that may be converted into a prescribed amount of common stock or other equity securities at a specified price and time. The holder of convertible securities is entitled to receive interest paid or accrued on debt, or dividends paid or accrued on preferred stock, until the security matures or is converted.
The value of a convertible security depends on interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuer's capital structure. Convertible securities may be illiquid, and may be required to convert at a time and at a price that is unfavorable to the Fund. AIM Blue Chip Fund does not intend to invest more than 10% of its total assets in convertible securities.
ALTERNATIVE ENTITY SECURITIES. Companies that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate entities may issue equity securities that are similar to common or preferred stock of corporations.
Foreign Investments
FOREIGN SECURITIES. Foreign securities are equity or debt securities issued by issuers outside the United States, and include securities in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers.
Each Fund may invest up to 25% of its total assets in foreign securities, except that each of AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund may invest up to 20% of its total assets in foreign securities.
Investments by a Fund in foreign securities, whether denominated in U.S. dollars or foreign currencies, may entail all of the risks set forth below. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of the risks described below.
Currency Risk. The value of the Funds' foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in which the Funds may invest may not be as developed as the United States' economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Funds' investments.
Regulatory Risk. Foreign companies are not registered with the Securities and Exchange Commission ("SEC") and are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, corporate governance practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the Funds invest will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (such as the need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States.
On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. It is anticipated that each participating country (currently, Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain) will replace its local currency with the euro by July 1, 2002. The anticipated replacement of existing currencies with the euro on or before July 1, 2002 could cause market disruptions and could adversely affect the value of securities held by a Fund.
FOREIGN EXCHANGE TRANSACTIONS. Foreign exchange transactions include direct purchases of futures contracts with respect to foreign currency, and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange traded futures contracts.
Each Fund has authority to deal in foreign exchange between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rates between those currencies. A Fund may commit the same percentage of its total assets to foreign exchange hedges as it can invest in foreign securities.
The Funds may utilize either specific transactions ("transaction hedging") or portfolio positions ("position hedging") to hedge foreign currency exposure through foreign exchange transactions. Transaction hedging is the purchase or sale of foreign currency with respect to specific receivables or payables of a Fund accruing in connection with the purchase or sale of its portfolio securities, the sale and redemption of shares of the Fund, or the payment of dividends and distributions by the Fund. Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions (or underlying portfolio security positions, such as in an ADR) denominated or quoted in a foreign currency. Additionally, foreign exchange transactions may involve some of the risks of investments in foreign securities.
Debt Investments
U.S. GOVERNMENT OBLIGATIONS. Obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities include bills, notes and bonds issued by the U.S. Treasury, as well as "stripped" or "zero coupon" U.S. Treasury obligations representing future interest or principal payments on U.S. Treasury notes or bonds. Stripped securities are sold at a discount to their "face value," and may exhibit greater price volatility than interest-bearing securities since investors receive no payment until maturity. Obligations of certain agencies and instrumentalities of the U.S. Government, such as the Government National Mortgage Association ("GNMA"), are supported by the full faith and credit of the U.S. Treasury; others, such as those of the Federal National Mortgage Association ("FNMA"), are supported by the right of the issuer to borrow from the Treasury; others, such as those of the Student Loan Marketing Association ("SLMA"), are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations; still others, though issued by an instrumentality chartered by the U.S. Government, like the Federal Farm Credit Bureau ("FFCB"), are supported only by the credit of the instrumentality. The U.S. Government may choose not to provide financial support to U.S. Government-sponsored agencies or instrumentalities if it is not legally obligated to do so.
LIQUID ASSETS. In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the Funds may temporarily hold all or a portion of its assets in cash or the following liquid assets: money market instruments (such as certificates of deposit, time deposits, bankers' acceptances from U.S. or foreign banks, and repurchase agreements), shares of affiliated money market funds or high-quality debt obligations (such as U.S. Government obligations, commercial paper, master notes and other short-term corporate instruments, participation interests in corporate loans, and municipal obligations). For cash management purposes, the Funds may also hold a portion of its assets in cash or such liquid assets.
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. Each Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations or U.S. commercial banks, U.S. dollar-denominated obligations of foreign issuers and debt obligations of foreign issuers denominated in foreign currencies. Such debt obligations include, among others, bonds, notes, debentures and variable rate demand notes. In choosing corporate debt securities on behalf of a Fund, its investment adviser may consider (i) general economic and financial conditions; (ii) the specific issuer's (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions, (e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic or social conditions applicable to such issuer's country; and, (iii) other considerations deemed appropriate. AIM Blue Chip Fund and AIM Large Cap Growth Fund will not invest in non-convertible corporate debt securities rated below investment grade by Standard and Poor's Ratings Services ("S&P") and Moody's Investors Service ("Moody's") or in unrated non-convertible corporate debt securities believed by the Funds' investment advisor to be below investment grade quality.
Descriptions of debt securities ratings are found in Appendix A.
Other Investments
REAL ESTATE INVESTMENT TRUSTS ("REITS"). REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States, or both.
To the extent consistent with their respective investment objectives and policies, each Fund may invest up to 15% of its total assets in equity and/or debt securities issued by REITs.
To the extent that a Fund has the ability to invest in REITs, the Fund could conceivably own real estate directly as a result of a default on the securities it owns. A Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions,
adverse changes in the climate for real estate, environmental liability risks, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain an exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs.
OTHER INVESTMENT COMPANIES. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds (defined below), the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Funds have obtained an exemptive order from the SEC allowing them to invest in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds: (i) a Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Fund may not invest more than 10% of its total assets in securities issued by other investment companies.
Investment Techniques
DELAYED DELIVERY TRANSACTIONS. Delayed delivery transactions or forward commitments, involve commitments by a Fund to dealers or issuers to acquire or sell securities at a specified future date beyond the customary settlement for such securities. These commitments may fix the payment price and interest rate to be received or paid on the investment. A Fund may purchase securities on a delayed delivery basis to the extent it can anticipate having available cash on settlement date.
Investment in securities on a delayed delivery basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a delayed delivery commitment. Until the settlement date, a Fund will segregate liquid assets of a dollar value sufficient at all times to make payment for the delayed delivery transactions. Such segregated liquid assets will be marked-to-market daily, and the amount segregated will be increased if necessary to maintain adequate coverage of the delayed delivery commitments. No additional delayed delivery agreements or when-issued commitments (as described below) will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of a Fund until settlement. Absent extraordinary circumstances, a Fund will not sell or otherwise transfer the delayed delivery basis securities prior to settlement.
WHEN-ISSUED SECURITIES. Purchasing securities on a "when-issued" basis means that the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued. The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. A Fund will only make
commitments to purchase such securities with the intention of actually acquiring such securities, but the Fund may sell these securities before the settlement date if it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in a Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if a Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Fund's assets will fluctuate to a greater degree. Furthermore, when the time comes for the Fund to meet its obligations under when-issued commitments, the Fund will do so by using then available cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the Fund's payment obligation).
Investment in securities on a when-issued basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must sell another security in order to honor a when-issued commitment. If a Fund purchases a when-issued security, the Fund's custodian bank will segregate liquid assets in an amount equal to the when-issued commitment. If the market value of such segregated assets declines, additional liquid assets will be segregated on a daily basis so that the market value of the segregated assets will equal the amount of the Fund's when-issued commitments. No additional delayed delivery agreements (as described above) or when-issued commitments will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
SHORT SALES. In a short sale, a Fund does not immediately deliver the securities sold and does not receive the proceeds from the sale. A Fund is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. A Fund will make a short sale, as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Fund or a security convertible into or exchangeable for such security, or when the Fund does not want to sell the security it owns, because it wishes to defer recognition of gain or loss for federal income tax purposes. In such case, any future losses in a Fund's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount a Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the conversion premium. In determining the number of shares to be sold short against a Fund's position in a convertible security, the anticipated fluctuation in the conversion premium is considered. A Fund may also make short sales to generate additional income from the investment of the cash proceeds of short sales.
A Fund will only make short sales "against the box," meaning that at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. To secure its obligation to deliver the securities sold short, a Fund will segregate with its custodian an equal amount of the securities sold short or securities convertible into or exchangeable for such securities. A Fund may pledge no more than 10% of its total assets as collateral for short sales at any time.
MARGIN TRANSACTIONS. None of the Funds will purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin.
SWAP AGREEMENTS. Each Fund may enter into interest rate, index and currency exchange rate swap agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if it had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few
weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly used swap agreements include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or "floor"; and (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictitious basis on which to calculate the obligations that the parties to a swap agreement have agreed to exchange. Most swap agreements entered into by a Fund would calculate the obligations on a "net basis." Consequently, a Fund's obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). Obligations under a swap agreement will be accrued daily (offset against amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating liquid assets to avoid any potential leveraging of the Fund. A Fund will not enter into a swap agreement with any single party if the net amount owed to or to be received under existing contracts with that party would exceed 5% of the Fund's total assets. For a discussion of the tax considerations relating to swap agreements, see "Dividends, Distributions and Tax Matters - Swap Agreements."
INTERFUND LOANS. Each Fund may lend uninvested cash up to 15% of its net assets to other AIM Funds and each Fund may borrow from other AIM Funds to the extent permitted under such Fund's investment restrictions. During temporary or emergency periods, the percentage of a Fund's net assets that may be loaned to other AIM Funds may be increased as permitted by the SEC. If any interfund loans are outstanding, a Fund cannot make any additional investments. If a Fund has borrowed from other AIM Funds and has aggregate borrowings from all sources that exceed 10% of such Fund's total assets, such Fund will secure all of its loans from other AIM Funds. The ability of a Fund to lend its securities to other AIM Funds is subject to certain other terms and conditions.
BORROWING. Each Fund may borrow money to a limited extent for temporary or emergency purposes. If there are unusually heavy redemptions because of changes in interest rates or for any other reason, a Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling fund securities under these circumstances may result in a lower net asset value per share or decreased dividend income, or both. The Trust believes that, in the event of abnormally heavy redemption requests, the Fund's borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio securities less likely.
LENDING PORTFOLIO SECURITIES. The Funds may each lend their portfolio securities (principally to broker-dealers) where such loans are callable at any time and are continuously secured by segregated collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Each Fund may lend portfolio securities to the extent of one-third of its total assets.
The Funds would continue to receive the income on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. Any cash collateral pursuant to these loans would be invested in short-term money market instruments or Affiliated Money Market Funds. Lending securities entails a risk of loss to the Funds if and to the extent that the market value of the securities loaned increases and the collateral is not increased accordingly.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a Fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a
mutually agreed upon time and price (which is higher than the purchase price), thereby determining the yield during the Fund's holding period. A Fund may, however, enter into a "continuing contract" or "open" repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying obligation from the Fund on demand and the effective interest rate is negotiated on a daily basis. Each of the Funds may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest.
If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, a Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying security and loss of income. The securities underlying a repurchase agreement will be marked to market every business day so that the value of such securities is at least equal to the investment value of the repurchase agreement, including any accrued interest thereon.
The Funds have obtained an exemptive order from the SEC allowing them to invest their cash balances in joint accounts for the purpose of investing in repurchase agreements with maturities not to exceed 60 days, and in certain other money market instruments with remaining maturities not to exceed 90 days. Repurchase agreements are considered loans by a Fund under the 1940 Act.
AIM Charter Fund may enter into repurchase agreements (at any time up to 50% of its total net assets), using only U.S. Government securities, for the sole purpose of increasing its yield on idle cash.
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements are
agreements that involve the sale of securities held by a Fund to financial
institutions such as banks and broker-dealers, with an agreement that the Fund
will repurchase the securities at an agreed upon price and date. A Fund may
employ reverse repurchase agreements (i) for temporary emergency purposes, such
as to meet unanticipated net redemptions so as to avoid liquidating other
portfolio securities during unfavorable market conditions; (ii) to cover
short-term cash requirements resulting from the timing of trade settlements; or
(iii) to take advantage of market situations where the interest income to be
earned from the investment of the proceeds of the transaction is greater than
the interest expense of the transaction. At the time it enters into a reverse
repurchase agreement, a Fund will segregate liquid assets having a dollar value
equal to the repurchase price, and will subsequently continually monitor the
account to ensure that such equivalent value is maintained at all times. Reverse
repurchase agreements involve the risk that the market value of securities to be
purchased by the Fund may decline below the price at which it is obligated to
repurchase the securities, or that the other party may default on its
obligation, so that the Fund is delayed or prevented from completing the
transaction. Reverse repurchase agreements are considered borrowings by a Fund
under the 1940 Act.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot be disposed of within seven days in the normal course of business at the price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act"). Restricted securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities.
Each Fund may invest up to 15% of its net assets in securities that are illiquid. Limitations on the resale of restricted securities may have an adverse effect on their marketability, which may prevent a Fund from disposing of them promptly at reasonable prices. A Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations.
RULE 144A SECURITIES. Rule 144A securities are securities which, while privately placed, are eligible for purchase and resale pursuant to Rule 144A under the 1933 Act. This Rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. AIM, under the supervision of the Board of Trustees, will consider whether securities purchased under Rule 144A are illiquid and thus subject to the Funds' restriction on investment in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination AIM will consider the trading markets for the
specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes; (ii) number of dealers and potential purchasers; (iii) dealer undertakings to make a market; and (iv) nature of the security and of market place trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). AIM will also monitor the liquidity of Rule 144A securities and, if as a result of changed conditions, AIM determines that a Rule 144A security is no longer liquid, AIM will review a Fund's holdings of illiquid securities to determine what, if any, action is required to assure that such Fund complies with its restriction on investment in illiquid securities. Investing in Rule 144A securities could increase the amount of each Fund's investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities.
UNSEASONED ISSUERS. Investments in the equity securities of companies having less than three years' continuous operations (including operations of any predecessor) involve more risk than investments in the securities of more established companies because unseasoned issuers have only a brief operating history and may have more limited markets and financial resources. As a result, securities of unseasoned issuers tend to be more volatile than securities of more established companies.
Derivatives
The Funds may each invest in forward contracts, futures contracts, options on securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with each Fund's investments. The Funds may also invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. These instruments are often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least in part, from the performance of another asset (such as a security, currency or an index of securities).
EQUITY-LINKED DERIVATIVES. Equity-Linked Derivatives are interests in a securities portfolio designed to replicate the composition and performance of a particular index. Equity-Linked Derivatives are exchange traded. The performance results of Equity-Linked Derivatives will not replicate exactly the performance of the pertinent index due to transaction and other expenses, including fees to service providers, borne by the Equity-Linked Derivatives. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios As Listed Securities ("OPALS"). Investments in Equity-Linked Derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the Equity-Linked Derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in Equity-Linked Derivatives may constitute investments in other investment companies and, therefore, a Fund may be subject to the same investment restrictions with Equity-Linked Derivatives as with other investment companies. See "Other Investment Companies."
PUT AND CALL OPTIONS. A call option gives the purchaser the right to buy the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the call option, the writer of a call option is obligated to sell the underlying security, contract or foreign currency. A put option gives the purchaser the right to sell the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration date of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the put option, the writer of a put option is obligated to buy the underlying security, contract or foreign currency. The premium paid to the writer is consideration for undertaking the obligations under the option contract. Until an option expires or is offset, the option is said to be "open." When an option expires or is offset, the option is said to be "closed."
A Fund will not write (sell) options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at any time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
Pursuant to federal securities rules and regulations, if a Fund writes options, it may be required to set aside assets to reduce the risks associated with using those options. This process is described in more detail below in the section "Cover."
Writing Options. A Fund may write put and call options in an attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying security, contract, or foreign currency alone. In return for the premium received for writing a call option, the Fund foregoes the opportunity for profit from a price increase in the underlying security, contract, or foreign currency above the exercise price so long as the option remains open, but retains the risk of loss should the price of the security, contract, or foreign currency decline. In return for the premium received for writing a put option, the Fund assumes the risk that the price of the underlying security, contract, or foreign currency will decline below the exercise price, in which case the put would be exercised and the Fund would suffer a loss.
If a call option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received. A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the price it is willing to pay for the underlying security, contract or currency. The obligation imposed upon the writer of an option is terminated upon the expiration of the option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option (put or call as the case may be) identical to that previously sold.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
Purchasing Options. A Fund may purchase a call option for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected increase in the market price of the underlying security, contract or currency. If the market price does not exceed the exercise price, the Fund could purchase the security on the open market and could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Each of the Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise strike and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads."
A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon the exercise of the put option. Conversely, if the
underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost. A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
Over-The-Counter Options. Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Because OTC options in certain cases may be difficult to dispose of in a timely manner, the Fund may be required to treat some or all of these options as illiquid securities. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option position at any time prior to its expiration.
Index Options. Index options (or options on securities indices) are similar in many respects to options on securities, except that an index option gives the holder the right to receive, upon exercise, cash instead of securities, if the closing level of the securities index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset some of the risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index.
Pursuant to federal securities rules and regulations, if a Fund writes index options, it may be required to set aside assets to reduce the risks associated with writing those options. This process is described in more detail below in the section "Cover".
STRADDLES. The Fund, for hedging purposes, may write straddles (combinations of put and call options on the same underlying security) to adjust the risk and return characteristics of the Fund's overall position. A possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.
WARRANTS. Warrants are, in effect, longer-term call options. They give the holder the right to purchase a given number of shares of a particular company at specified prices within certain periods of time. The purchaser of a warrant expects that the market price of the security will exceed the purchase price of the warrant plus the exercise price of the warrant, thus giving him a profit. Since the market price may never exceed the exercise price before the expiration date of the warrant, the purchaser of the warrant risks the loss of the entire purchase price of the warrant. Warrants generally trade in the open market and may be sold rather than exercised. Warrants are sometimes sold in unit form with other securities of an issuer. Units of warrants and common stock may be employed in financing young, unseasoned companies. The purchase price of a warrant varies with the exercise price of the warrant, the current market value of the underlying security, the life of the warrant and various other investment factors.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place (collectively, "Futures Contracts"). A stock index Futures Contract provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made. Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times when a Futures Contract is outstanding.
A Fund will enter into Futures Contracts for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures Contracts will be purchased to protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to purchase. A Fund's hedging may include sales of Futures Contracts as an offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and purchases of Futures Contracts as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
The Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls. For a further discussion of the risks associated with investments in foreign securities, see "Foreign Investments" in this Statement of Additional Information.
Closing out an open Futures Contract is effected by entering into an offsetting Futures Contract for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If a Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Futures Contract.
"Margin" with respect to Futures Contracts is the amount of funds that must be deposited by a Fund in order to initiate Futures Contracts trading and maintain its open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered ("initial margin") is intended to ensure the Fund's performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures commission merchant through which a Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency or index fluctuates making the Futures Contract more or less valuable, a process known as marking-to-market.
If a Fund were unable to liquidate a Futures Contract or an option on a Futures Contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Futures Contract or option or to maintain cash or securities in a segregated account.
Options on Futures Contracts. Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the Futures Contract position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures Contract margin account.
Limitations on Futures Contracts and Options on Futures Contracts and on Certain Options on Currencies. To the extent that a Fund enters into Futures Contracts, options on Futures Contracts and options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are "in-the-money") will not exceed 5% of the total assets of the Fund, after taking into account unrealized profits and unrealized losses on any contracts it has entered into. This guideline may be modified by the Board, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
Pursuant to federal securities rules and regulations, a Fund's use of Futures Contracts and options on Futures Contracts may require that Fund to set aside assets to reduce the risks associated with using Futures Contracts and options on Futures Contracts. This process is described in more detail below in the section "Cover."
FORWARD CURRENCY CONTRACTS. A forward contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon by the parties. A Fund either may accept or make delivery of the currency at the maturity of the forward contract. A Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions.
Each of the Funds may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward contracts does not eliminate fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward contract
sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase.
Pursuant to federal securities rules and regulations, a Fund's use of forward contracts may require that Fund to set aside assets to reduce the risks associated with using forward contracts. This process is described in more detail below in the section "Cover."
COVER. Transactions using forward contracts, futures contracts and options (other than options purchased by a Fund) expose a Fund to an obligation to another party. A Fund will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward contracts or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities.
Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, a Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations.
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES. The use by the Funds of options, futures contracts and forward currency contracts involves special considerations and risks, as described below. Risks pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract or option thereon or forward contract at any particular time.
(5) As described above, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving
obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction.
Additional Securities or Investment Techniques
SPECIAL SITUATIONS. AIM Constellation Fund may invest in "special situations." A special situation arises when, in the opinion of the Fund's management, the securities of a particular company will, within a reasonably estimated period of time, be accorded market recognition at an appreciated value solely by reason of a development applicable to that company, and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among others: liquidations, reorganizations, recapitalizations, mergers, material litigation, technical breakthroughs, and new management or management policies. Although large and well-known companies may be involved, special situations more often involve comparatively small or unseasoned companies. Investments in unseasoned companies and special situations often involve much greater risk than in ordinary investment securities.
FUND POLICIES
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following investment restrictions, which may be changed only by a vote of a majority of such Fund's outstanding shares, except that AIM Emerging Growth Fund is not subject to restriction (1). Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares. Any investment restriction that involves a maximum or minimum percentage of securities or assets (other than with respect to borrowing) shall not be considered to be violated unless an excess over or a deficiency under the percentage occurs immediately after, and is caused by, an acquisition or disposition of securities or utilization of assets by the Fund.
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the 1933 Act.
(4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's
investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, or (ii) tax-exempt obligations issued by governments or political subdivisions of governments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security.
(5) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein.
(6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities.
(7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests.
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide each of the Funds with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though each of the Funds has this flexibility, the Board of Trustees has adopted non-fundamental restrictions for each of the Funds relating to certain of these restrictions which the advisor must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental investment restrictions apply to each of the Funds, except AIM Emerging Growth Fund is not subject to restriction (1). They may be changed for any Fund without approval of that Fund's voting securities.
(1) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% of its total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may (i) purchase securities of other investment companies as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities of other money market funds and lend money to other investment companies or their series portfolios that have AIM or an affiliate of AIM as an investment advisor (an "AIM Advised Fund"), subject to the terms and conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Advised Fund. Other than AIM Constellation Fund, the Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. AIM Constellation Fund may not purchase additional securities when any borrowings from an AIM Advised Fund are outstanding. Each other Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM Advised Fund are outstanding.
(3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to an AIM Advised Fund, on such terms and conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
The following non-fundamental policy applies only to AIM Constellation Fund:
The amount AIM Constellation Fund may borrow will also be limited by the applicable margin limitations imposed by the Federal Reserve Board. If at any time the value of AIM Constellation Fund's assets should fail to meet the 300% asset coverage requirement, the Fund will, within three days, reduce its borrowings to the extent necessary. AIM Constellation Fund may be required to eliminate partially or totally its outstanding borrowings at times when it may not be desirable for it to do so. Any investment gains made by AIM Constellation Fund with the borrowed monies in excess of interest paid by the Fund will cause the net asset value of AIM Constellation Fund's shares to rise faster than would otherwise be the case. On the other hand, if the investment performance of the additional securities purchased with the proceeds of such borrowings fails to cover the interest paid on the money borrowed by AIM Constellation Fund, the net asset value of AIM Constellation Fund will decrease faster than would otherwise be the case. This speculative factor is known as "leveraging."
TEMPORARY DEFENSIVE POSITIONS
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the fund may temporarily hold all or a portion of its assets in cash or the following liquid assets: money market instruments, shares of affiliated money market funds or high-quality debt obligations.
PORTFOLIO TURNOVER
The portfolio turnover rate for each of AIM Dent Demographic Trends Fund and AIM Weingarten Fund increased significantly from the fiscal year ended October 31, 2000 to the fiscal year ended October 31, 2001 because of the economic downturn, and the efforts to reposition the Funds into areas of the market that would respond favorably to a recovering economy. The portfolio turnover rate for AIM Large Cap Basic Value Fund decreased significantly from the fiscal year ended October 31, 2000 to the fiscal year ended October 31, 2001 because the Fund's stock holdings proved to be good long-term holdings, and the portfolio managers used the Fund's significant asset growth to tax-efficiently reduce positions. AIM Charter Fund anticipates an increase in its portfolio turnover rate for the fiscal year ending October 31, 2002. The management team of AIM Charter Fund changed effective January 24, 2002, and the new portfolio managers engaged in extensive trading in order to reposition the Fund's holdings. To the extent possible, the Fund exchanged securities with other AIM Funds without paying brokerage commissions, in accordance with Rule 17a-7 under the 1940 Act.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Funds and the Trust is vested in the Board of Trustees. The Board of Trustees approves all significant agreements between the Trust, on
behalf of one or more of the Funds, and persons or companies furnishing services to the Funds. The day-to-day operations of each Fund are delegated to the officers of the Trust and to AIM, subject always to the objective(s), restrictions and policies of the applicable Fund and to the general supervision of the Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
MANAGEMENT INFORMATION
The trustees and officers of the Trust, their principal occupations during the last five years and certain other information concerning them is set forth in Appendix B.
The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee, the Valuation Committee and the Committee on Directors/Trustees.
The members of the Audit Committee are Frank S. Bayley, Bruce L. Crockett, Albert R. Dowden (Vice Chair), Edward K. Dunn, Jr. (Chair), Jack M. Fields, Carl Frischling (on leave of absence), Lewis F. Pennock and Louis S. Sklar, Dr. Prema Mathai-Davis and Miss Ruth H. Quigley. The Audit Committee is responsible for: (i) considering management's recommendations of independent accountants for each Fund and evaluating such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Funds' independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Funds' independent accountants and management. During the fiscal year ended October 31, 2001, the Audit Committee held nine meetings.
The members of the Investments Committee are Messrs. Bayley, Crockett,
Dowden, Dunn, Fields, Frischling, Pennock and Sklar (Chair), Dr. Mathai-Davis
(Vice Chair) and Miss Quigley. The Investments Committee is responsible for: (i)
overseeing AIM's investment-related compliance systems and procedures to ensure
their continued adequacy; and (ii) considering and acting, on an interim basis
between meetings of the full Board, on investment-related matters requiring
Board consideration, including dividends and distributions, brokerage policies
and pricing matters. During the fiscal year ended October 31, 2001, the
Investments Committee held six meetings.
The members of the Valuation Committee are Messrs. Dunn and Pennock
(Chair), and Miss Quigley (Vice Chair). The Valuation Committee is responsible
for: (i) periodically reviewing AIM's Procedures for Valuing Securities
("Procedures"), and making any recommendations to AIM with respect thereto; (ii)
reviewing proposed changes to the Procedures recommended by AIM from time to
time; (iii) periodically reviewing information provided by AIM regarding
industry developments in connection with valuation; (iv) periodically reviewing
information from AIM regarding fair value and liquidity determinations made
pursuant to the Procedures, and making recommendations to the full Board in
connection therewith (whether such information is provided only to the Committee
or to the Committee and the full Board simultaneously); and (v) if requested by
AIM, assisting AIM's internal valuation committee and/or the full Board in
resolving particular valuation anomalies. During the fiscal year ended October
31, 2001, the Valuation Committee held no meetings.
The members of the Committee on Directors/Trustees are Messrs. Bayley, Crockett (Chair), Dowden, Dunn, Fields (Vice Chair), Pennock and Sklar, Dr. Mathai-Davis and Miss Quigley. The Committee on Directors/Trustees is responsible for: (i) considering and nominating individuals to stand for election as dis-interested trustees as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the dis-interested trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the dis-interested trustees. During the fiscal year ended October 31, 2001, the Committee on Directors/Trustees held seven meetings.
The Committee on Directors/Trustees will consider nominees recommended
by a shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Committee on Directors/Trustees or the Board, as applicable, shall
make the final determination of persons to be nominated.
OWNERSHIP OF FUND SHARES
The dollar range of equity securities beneficially owned by each trustee (i) in the Funds and (ii) on an aggregate basis, in all registered investment companies overseen by the trustee within the AIM Funds complex is set forth in Appendix B.
Factors Considered in Approving the Investment Advisory Agreement
The advisory agreement with AIM was re-approved for each Fund by the Funds' Board at a meeting held on May 8-9, 2001. In evaluating the fairness and reasonableness of the advisory agreement, the Board of Trustees considered a variety of factors for each Fund, including: the requirements of each Fund for investment supervisory and administrative services; the quality of AIM's services, including a review of each Fund's investment performance and AIM's investment personnel; the size of the fees in relationship to the extent and quality of the investment advisory services rendered; fees charged to AIM's other clients; fees charged by competitive investment advisors; the size of the fees in light of services provided other than investment advisory services; the expenses borne by each Fund as a percentage of its assets and relationship to contractual limitations; any fee waivers (or payments of Fund expenses) by AIM; AIM's profitability; the benefits received by AIM from its relationship to each Fund, including soft dollar arrangements, and the extent to which each Fund shares in those benefits; the organizational capabilities and financial condition of AIM and conditions and trends prevailing in the economy, the securities markets and the mutual fund industry; and the historical relationship between each Fund and AIM.
In considering the above factors, the Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of each Fund may be invested in money market funds advised by AIM pursuant to the terms of an exemptive order. The Board found that each Fund may realize certain benefits upon investing cash balances in AIM advised money market funds, including a higher net return, increased liquidity, increased diversification or decreased transaction costs. The Board also found that each Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board further determined that the proposed securities lending program and related procedures with respect to each of the lending Funds is in the best interests of each lending Fund and their respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of each lending Fund and its respective shareholders.
After consideration of these factors, the Board found that: (i) the services provided to each Fund and its shareholders were adequate; (ii) the agreements were fair and reasonable under the circumstances; and (iii) the fees payable under the agreements would have been obtained through arm's length negotiations. The Board therefore concluded that each Fund's advisory agreement was in the best interests of such Fund and its shareholders and continued the agreement for an additional year.
COMPENSATION
Each trustee who is not affiliated with AIM is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of other AIM Funds. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component.
Information regarding compensation paid or accrued for each trustee of the Trust who is not affiliated with AIM during the year ended December 31, 2000 is found in Appendix C.
Retirement Plan For Trustees
The trustees have adopted a retirement plan for the trustees of the Trust who are not affiliated with AIM. The retirement plan includes a retirement policy as well as retirement benefits for the non-AIM-affiliated trustees.
The retirement policy permits each non-AIM-affiliated trustee to serve until December 31 of the year in which the trustee turns 72. A majority of the trustees may extend from time to time the retirement date of a trustee.
Annual retirement benefits are available to each non-AIM-affiliated
trustee of the Trust and/or the other AIM Funds (each, a "Covered Fund") who has
at least five years of credited service as a trustee (including service to a
predecessor fund) for a Covered Fund. The retirement benefits will equal 75% of
the trustee's annual retainer paid or accrued by any Covered Fund to such
trustee during the twelve-month period prior to retirement, including the amount
of any retainer deferred under a separate deferred compensation agreement
between the Covered Fund and the trustee. The annual retirement benefits are
payable in quarterly installments for a number of years equal to the lesser of
(i) ten or (ii) the number of such trustee's credited years of service. A death
benefit is also available under the plan that provides a surviving spouse with a
quarterly installment of 50% of a deceased trustee's retirement benefits for the
same length of time that the trustee would have received based on his or her
service. A trustee must have attained the age of 65 (55 in the event of death or
disability) to receive any retirement benefit.
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (for purposes of this paragraph only, the "Deferring Trustees") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees have the option to elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the Deferring Trustees have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning on the date selected under the Compensation Agreement. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's retirement benefits commence under the Plan. The Board, in its sole discretion, also may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
Purchase of Class A Shares of the Funds at Net Asset Value
The trustees and other affiliated persons of the Trust may purchase
Class A shares of the Funds without paying an initial sales charge. AIM
Distributors permits such purchases because there is a reduced sales effort
involved in sales to such purchasers, thereby resulting in relatively low
expenses of distribution. For a complete description of the persons who will not
pay an initial sales charge on purchases of Class A shares of the Funds, see
"Purchase, Redemption and Pricing of Shares - Purchase and Redemption of Shares
- Purchases of Class A Shares and AIM Cash Reserve Shares of AIM Money Market
Fund - Purchases of Class A Shares at Net Asset Value."
CODES OF ETHICS
AIM, the Trust and A I M Distributors, Inc. ("AIM Distributors") have each adopted a Code of Ethics governing, as applicable, personal trading activities of all Directors/Trustees, officers of the Trust, persons who, in connection with their regular functions, play a role in the recommendation of any purchase or sale of a security by any of the Funds or obtain information pertaining to such purchase or sale, and certain other employees. The Codes of Ethics are intended to prohibit conflicts of interest with the Trust that may arise from personal trading. Personal trading, including personal trading involving securities that may be purchased or held by a Fund, is permitted by persons covered under the relevant Codes subject to certain restrictions; however those persons are generally required to pre-clear all security transactions with the Compliance Officer or his designee and to report all transactions on a regular basis.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Information about the ownership of each class of each Fund's shares by beneficial or record owners of such Fund and by trustees and officers as a group is found in Appendix D. A shareholder who owns beneficially 25% or more of the outstanding shares of a Fund is presumed to "control" that Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
AIM, the Funds' investment advisor, was organized in 1976, and along with its subsidiaries, manages or advises over 150 investment portfolios encompassing a broad range of investment objectives. AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect, wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent global investment management group. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management Information" herein.
As investment advisor, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds.
AIM is also responsible for furnishing to the Funds, at AIM's expense, the services of persons believes to be competent to perform all supervisory and administrative services required by the Funds, in the judgment of the trustees, to conduct their respective businesses effectively, as well as the offices, equipment and other facilities necessary for their operations. Such functions include the maintenance of each Fund's accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Master Advisory Agreement provides that the Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, including, without limitation: brokerage commissions, taxes, legal, auditing or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption, and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to trustees and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of each Fund in connection with membership in investment company organizations, and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders.
AIM, at its own expense, furnishes to the Trust office space and facilities. AIM furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to its advisory agreement with the Trust, AIM receives a monthly fee from each Fund calculated at the following annual rates, based on the average daily net assets of each Fund during the year:
FUND NAME NET ASSETS ANNUAL RATE
--------- ---------- -----------
AIM Aggressive Growth Fund First $150 million 0.80%
Amount over $150 million 0.625%
AIM Blue Chip Fund* First $350 million 0.75%
Amount over $350 million 0.625%
AIM Capital Development Fund First $350 million 0.75%
Amount over $350 million 0.625%
AIM Charter Fund* First $30 million 1.00%
AIM Constellation Fund* Next $120 million 0.75%
Amount over $150 million 0.625%
AIM Core Strategies Fund First $1 billion 0.75%
AIM Large Cap Core Equity Fund Next $1 billion 0.70%
Amount over $2 billion 0.625%
AIM Dent Demographic Trends Fund First $2 billion 0.85%
Amount over $2 billion 0.80%
AIM Emerging Growth Fund First $1 billion 0.85%
Amount over $1 billion 0.80%
AIM Large Cap Basic Value Fund First $1 billion 0.60%
Next $1 billion 0.575%
Amount over $2 billion 0.55%
AIM Large Cap Growth Fund First $1 billion 0.75%
Next $1 billion 0.70%
Amount over $2 billion 0.625%
AIM Mid Cap Growth Fund First $1 billion 0.80%
Amount over $1 billion 0.75%
AIM Weingarten Fund* First $30 million 1.00%
Next $320 million 0.75%
Amount over $350 million 0.625%
|
* See currently effective fee disclosure below.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
AIM has voluntarily agreed, effective July 1, 2000, to waive advisory fees payable by AIM Blue Chip Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund in an amount equal to
0.025% for each $5 billion increment in net assets over $5 billion, up to a maximum waiver of 0.175% on net assets in excess of $35 billion.
AIM has voluntarily agreed, effective July 1, 2001, to waive a portion of advisory fees payable by each Fund. The amount of the waiver will equal 25% of the advisory fee AIM receives from the Affiliated Money Market Funds as a result of each Fund's Investment of uninvested cash in an Affiliated Money Market Fund. See "Investment Strategies and Risks - Other Investments - Other Investment Companies."
AIM has contractually agreed, effective July 1, 2001, 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 AIM Large Cap Basic Value Fund's Class A, Class B and Class C shares to the extent necessary to limit the total operating expenses of Class A shares to 2.00% (e.g., if AIM waives 0.37% of Class A expenses, AIM will also waive 0.37% of Class B and Class C expenses). Such contractual fee waivers or reductions are set forth in the Fee Table to the Fund's Prospectus and may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
INVESTMENT SUB-ADVISOR
AIM has entered into Master Sub-Advisory contracts with A I M Capital Management, Inc. ("AIM Capital") to provide investment sub-advisory services to AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund. AIM Capital is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). AIM Capital is a wholly owned subsidiary of AIM.
For the services to be rendered by AIM Capital, Inc. under its Master Sub-Advisory Contracts, the Advisor will pay to AIM Capital a fee which will be computed daily and paid as of the last day of each month on the basis of each Fund's daily net asset value, using for each daily calculation the most recently determined net asset value of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.50% of the Advisor's compensation of the sub-advised assets per year, for each of the AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund.
AIM has entered into a Mater Sub-Advisory Agreement with H.S. Dent Advisors, Inc. ("Dent Advisors") to provide investment sub-advisory services to AIM Dent Demographic Trends Fund. Dent Advisors is registered as an investment advisor under the Advisers Act. The Fund is managed by investment managers who utilize Dent Advisors' research and analysis regarding economic and demographic trends.
For the services to be rendered by Dent Advisors under its Master Sub-Advisory Contract, the Advisor will pay to Dent Advisors a fee which will be computed daily and paid as of the last day of each month on the basis of the AIM Dent Demographic Trends Fund's daily net asset value, using for each daily calculation the most recently determined net asset value of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.13% of the first $1 billion of AIM Dent Demographic Trends Fund's average daily net assets, plus 0.10% of the Fund's average daily net assets in excess of $1 billion to and including $2 billion of the Fund's average daily net assets, plus 0.07% of the Fund's average daily net assets in excess of $2 billion.
The management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund for the last three fiscal years ended October 31 are found in Appendix E.
SECURITIES LENDING ARRANGEMENTS. If a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The advisory agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal
(the agent) in determining which specific securities are available for loan; (c)
monitoring the agent to ensure that securities loans are effected in accordance
with AIM's instructions and with procedures adopted by the Board; (d) preparing
appropriate periodic reports for, and seeking appropriate approvals from, the
Board with respect to securities lending activities; (e) responding to agent
inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fee, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee.
SERVICE AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. AIM and the Trust have entered into a Master Administrative Services Agreement ("Administrative Services Agreement") pursuant to which AIM may perform or arrange for the provision of certain accounting and other administrative services to each Fund which are not required to be performed by AIM under the advisory agreement. The Administrative Services Agreement provides that it will remain in effect and continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Administrative Services Agreement, AIM is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is reimbursed for the services of the Trust's principal financial officer and her staff, and any expenses related to fund accounting services.
Administrative services fees paid to AIM by each Fund for the last three fiscal years ended October 31 are found in Appendix F.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. A I M Fund Services, Inc. ("AFS"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046, a registered transfer agent and wholly owned subsidiary of AIM, acts as transfer and dividend disbursing agent for the Funds.
The Transfer Agency and Service Agreement between the Trust and AFS provides that AFS will perform certain shareholder services for the Funds. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares; prepare and transmit payments for dividends and distributions declared by the Funds; maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts. AFS may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), 800 Scudders Mill Road, Plainsboro, New Jersey 08536 has entered into an agreement with the Trust (and certain other AIM Funds), PFPC Inc. (formerly known as First Data Investor Service Group) and Financial Data Services, Inc., pursuant to which MLPF&S is paid a per account fee to perform certain shareholder sub-accounting services for its customers who beneficially own shares of the Fund(s).
CUSTODIAN. State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds. Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, serves as sub-custodian for retail purchases. The Bank of New York, 100 Church Street, New York, New York 10286, also serves as sub-custodian to facilitate cash management.
The Custodian is authorized to establish separate accounts in foreign countries and to cause foreign securities owned by the Funds to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and securities depositories. AIM is responsible for selecting eligible foreign securities depositories; the Custodian is responsible for monitoring eligible foreign securities depositories.
Under its contract with the Trust, the Custodian maintains the portfolio securities of the Funds, administers the purchases and sales of portfolio securities, collects interest and dividends and other distributions made on the securities held in the portfolios of the Funds and performs other ministerial duties. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets.
AUDITORS. The Funds' independent public accountants are responsible for auditing the financial statements of the Funds. The Board of Trustees has selected Ernst & Young LLP, 1221 McKinney, Suite 2400, Houston, Texas 77010, as the independent public accountants to audit the financial statements of the Funds.
COUNSEL TO THE TRUST. Legal matters for the Trust have been passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Each Sub-Advisor has adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, each Sub-Advisor's procedures do not materially differ from AIM's procedures as set forth below.
BROKERAGE TRANSACTIONS
AIM makes decisions to buy and sell securities for each Fund, selects broker-dealers, effects the Funds' investment portfolio transactions, allocates brokerage fees in such transactions and, where applicable, negotiates commissions and spreads on transactions. AIM's primary consideration in effecting a security transaction is to obtain the most favorable execution of the order, which includes the best price on the security and a low commission rate. While AIM seeks reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Brokerage Selection" below.
Some of the securities in which the Funds invest are traded in over-the-counter markets. Portfolio transactions placed in such markets may be effected at either net prices without commissions, but which include compensation to the broker-dealer in the form of a mark up or mark down, or on an agency basis, which involves the payment of negotiated brokerage commissions.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
Brokerage commissions paid by each of the Funds during the last three fiscal years ended October 31 are found in Appendix G.
COMMISSIONS
During the last three fiscal years ended October 31, 2001, none of the Funds paid brokerage commissions to brokers affiliated with the Funds, AIM, AIM Distributors, or any affiliates of such entities.
The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an
exemptive order received by the AIM Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account (and may invest in Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
BROKERAGE SELECTION
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e)(1), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which [it] exercises investment discretion." The services provided by the broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in recognition of research services provided to it, a Fund may pay a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Trust's trustees with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of electronic communications of trade information, the providing of custody services, as well as the providing of equipment used to communicate research information and the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fee paid by the Funds is not reduced because AIM receives such services. However, to the extent that AIM would have purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly.
AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker; and (3) the broker's interest in mutual funds in general and in the Funds and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds") in
particular, including sales of the Funds and of the other AIM Funds. In connection with (3) above, the Funds' trades may be executed directly by dealers that sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements, consistent with obtaining best execution. AIM will not use a specific formula in connection with any of these considerations to determine the target levels.
DIRECTED BROKERAGE (RESEARCH SERVICES)
Directed brokerage (research services) paid by each of the Funds during the last fiscal year ended October 31, 2001 are found in Appendix H.
REGULAR BROKERS OR DEALERS
Information concerning the Funds' acquisition of securities of their regular brokers or dealers during the last fiscal year ended October 31, 2001 is found in Appendix H.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among the Fund(s) and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect a Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM results in transactions which could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, AIM considers the investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the judgments of the persons responsible for recommending the investment. This procedure would apply to transactions in both equity and fixed income securities.
ALLOCATION OF EQUITY OFFERING TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed by AIM may become interested in participating in equity security distributions that are available in an equity "offering", which AIM defines as an IPO, a secondary (follow-on offering), a private placement, a direct placement or a PIPE (private investment in public equity) and occasions may arise when purchases of such securities by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. In such cases, it shall be AIM's practice to specifically combine or otherwise bunch indications of interest for offerings for all AIM Funds and accounts participating in purchase transactions for that offering, and to allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks to participate in a particular offering by reviewing a number of factors, including suitability of the investment with the AIM Fund's or account's investment objective, policies and strategies, the liquidity of the AIM Fund or account if such investment is purchased, and whether the portfolio manager intends to hold the security as a long-term investment. The allocation of limited supply securities issued in offerings will be made to eligible AIM Funds and accounts in a manner designed to be fair and equitable for the eligible AIM Funds and accounts, and so that there is equal allocation of offerings over the longer term. Where multiple
funds or accounts are eligible, rotational participation may occur, based on the extent to which an AIM Fund or account has participated in previous offerings as well as the size of the AIM Fund or account. Each eligible AIM Fund and account with an asset level of less than $500 million will be placed in one of three tiers, depending upon each AIM Fund's or account's asset level. The AIM Funds and accounts in the tier containing funds and accounts with the smallest asset levels will participate first, each receiving a 40 basis point allocation (rounded to the nearest share round lot that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or account's net assets. This process continues until all of the AIM Funds and accounts in the three tiers receive their Allocations, or until the shares are all allocated. Should securities remain after this process, eligible AIM Funds and accounts will receive their Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts not receiving a full Allocation, the Allocation may be made only to certain AIM Funds or accounts so that each may receive close to or exactly 40 basis points. Selection of those AIM Funds or accounts shall be rotational in a manner designed to allocate equally over the longer term. In addition, Incubator Funds, as described in AIM's Incubator and New Fund Investment Policy, will each be limited to a 40 basis point allocation only.
When any AIM Funds and/or accounts with substantially identical investment objectives and policies participate in offerings, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest participating AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund is participating, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such offering transactions will be the same for each AIM Fund and account.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE AND REDEMPTION OF SHARES
Purchases of Class A Shares and AIM Cash Reserve Shares of AIM Money Market Fund
INITIAL SALES CHARGES. Each AIM Fund (other than AIM Tax-Exempt Cash Fund and AIM Money Market Fund) is grouped into one of three categories to determine the applicable initial sales charge for its Class A Shares. The sales charge is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of the Funds' shares. You may also be charged a transaction or other fee by the financial institution managing your account.
Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund are sold without an initial sales charge.
CATEGORY I FUNDS
AIM Aggressive Growth Fund AIM Asian Growth Fund AIM Large Cap Core Equity Fund AIM Basic Value Fund AIM Large Cap Growth Fund AIM Blue Chip Fund AIM Large Cap Opportunities Fund AIM Capital Development Fund AIM Mid Cap Basic Value Fund AIM Charter Fund AIM Mid Cap Equity Fund AIM Constellation Fund AIM Mid Cap Growth Fund AIM Dent Demographic Trends Fund AIM Mid Cap Opportunities Fund AIM Emerging Growth Fund AIM New Technology Fund AIM European Development Fund AIM Select Equity Fund AIM European Small Company Fund AIM Small Cap Equity Fund AIM Euroland Growth Fund AIM Small Cap Growth Fund AIM Global Utilities Fund AIM Small Cap Opportunities Fund AIM International Emerging Growth Fund AIM Value Fund AIM International Equity Fund AIM Value II Fund AIM International Value Fund AIM Weingarten Fund AIM Large Cap Basic Value Fund AIM Worldwide Spectrum Fund |
Dealer
Investor's Sales Charge Concession
------------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
------------------------- ------------- ---------- -------------
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
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(1) AIM Small Cap Opportunities Fund will not accept any single purchase in excess of $250,000.
CATEGORY II FUNDS
AIM Balanced Fund AIM Basic Balanced Fund AIM Global Trends Fund AIM Developing Markets Fund AIM High Income Municipal Fund AIM Global Aggressive Growth Fund AIM High Yield Fund AIM Global Energy Fund AIM High Yield Fund II AIM Global Financial Services Fund AIM Income Fund AIM Global Growth Fund AIM Intermediate Government Fund AIM Global Health Care Fund AIM Municipal Bond Fund AIM Global Income Fund AIM Real Estate Fund AIM Global Infrastructure Fund AIM Strategic Income Fund AIM Global Telecommunications and AIM Total Return Bond Fund Technology Fund |
Dealer
Investor's Sales Charge Concession
------------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ---------- -------------
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
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CATEGORY III FUNDS
AIM Limited Maturity Treasury Fund
AIM Tax-Free Intermediate Fund
Dealer
Investor's Sales Charge Concession
----------------------- -------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ---------- -------------
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
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LARGE PURCHASES OF CLASS A SHARES. Investors who purchase $1,000,000 or more of Class A Shares of a Category I, II or III Fund do not pay an initial sales charge. In addition, investors who currently own Class A shares of Category I, II, or III Funds and make additional purchases that result in account balances of $1,000,000 or more do not pay an initial sales charge on the additional purchases. The additional purchases, as well as initial purchases of $1,000,000 or more, are referred to as Large Purchases ("Large Purchases"). If an investor makes a Large Purchase of Class A shares of a Category I or II Fund, however, the shares generally will be subject to a contingent deferred sales charge ("CDSC") if the investor redeems those shares within 18 months after purchase. Large Purchases of Class A shares of Category III Funds made on or after November 15, 2001 will be subject to a 0.25% CDSC if the investor redeems those shares within 12 months after purchase.
AIM Distributors may pay a dealer concession and/or advance a service fee on Large Purchases, as set forth below. Exchanges between the AIM Funds may affect total compensation paid.
For Large Purchases of Class A shares of Category I or II Funds, AIM Distributors may make the following payments to dealers and institutions that are dealers of record:
PERCENT OF SUCH PURCHASES
1% of the first $2 million
plus 0.80% of the next $1 million plus 0.50% of the next $17 million plus 0.25% of amounts in excess of $20 million
For Large Purchases of Class A shares of Category III Funds, AIM Distributors may make the following payments to dealers and institutions that are dealers of record:
Up to 0.10% of purchases of AIM Limited Maturity Treasury Fund; and Up to 0.25% of purchases of AIM Tax-Free Intermediate Fund
If an investor makes a Large Purchase of Class A shares of a Category III Fund on and after November 15, 2001 and exchanges those shares for Class A shares of a Category I or II Fund, AIM Distributors will pay an additional dealer concession of 0.75% upon exchange.
If an investor makes a Large Purchase of Class A shares and a Category I or II Fund on and after November 15, 2001 and exchanges those shares for Class A shares of a Category III Fund, AIM Distributors will not pay any additional dealer compensation upon the exchange.
If an investor makes a Large Purchase of Class A shares of a Category III Fund and exchanges those shares for Class A shares of another Category III Fund, AIM Distributors will not pay any additional dealer concession upon the exchange.
For annual purchases of Class A shares of Category I and II Funds, AIM Distributors may make the following payments to investment dealers or other financial service firms for sales of such shares at net asset value to employee benefit plans:
PERCENT OF SUCH PURCHASES
1% of the first $2 million
plus 0.80% of the next $1 million plus 0.50% of the next $17 million plus 0.25% of amounts in excess of $20 million
For annual purchases of Class A Shares of AIM Limited Maturity Treasury Fund, AIM Distributors may pay investment dealers or other financial service firms up to 0.10% of the net asset value of such shares sold at net asset value.
PURCHASERS QUALIFYING FOR REDUCTIONS IN INITIAL SALES CHARGES. As shown in the tables above, purchases of certain amounts of AIM Fund shares may reduce the initial sales charges. These reductions are available to purchasers that meet the qualifications listed below. We will refer to purchasers that meet these qualifications as "Qualified Purchasers."
INDIVIDUALS
o an individual (including his or her spouse or domestic partner, and children)
o any trust established exclusively for the benefit of an individual
o a pension, profit-sharing, or other retirement plan established exclusively for the benefit of an individual, such as:
a. an IRA
b. a Roth IRA
c. a single-participant money-purchase/profit-sharing plan
d. an individual participant in a 403(b) Plan (unless the 403(b) plan itself qualifies as the purchaser, as discussed below)
403(b) PLANS
o A 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the Funds will not accept contributions submitted with respect to individual participants);
b. each transmittal must be accompanied by a single check or wire transfer; and
c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal.
TRUSTEES AND FIDUCIARIES
o a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account
o a trustee or fiduciary purchasing for a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code
o a trustee or fiduciary purchasing for a 457 plan, even if more than one beneficiary or participant is involved
LINKED EMPLOYEE PLANS
o Linked Employee Plans where the employer has notified AIM Distributors in writing that all of its related employee accounts should be linked, such as:
a. Simplified Employee Pension (SEP) Plans
b. Salary Reduction and other Elective Simplified Employee Pension account (SAR-SEP) Plans
c. Savings Incentive Match Plans for Employees IRA (SIMPLE IRA)
OTHER GROUPS
o any other organized group of persons, whether incorporated or not, provided that:
a. the organization has been in existence for at least six months; and
b. the organization has some purpose other than the purchase at a discount of redeemable securities of a registered investment company.
HOW TO QUALIFY FOR REDUCTIONS IN INITIAL SALES CHARGES. The following sections discuss different ways that a purchaser can qualify for a reduction in the initial sales charges for purchases of Class A shares of the AIM Funds.
LETTERS OF INTENT
A Qualified Purchaser may pay reduced initial sales charges by:
o indicating on the account application that he or she intends to provide a Letter of Intent ("LOI"); and
o fulfilling the conditions of that LOI.
The LOI confirms the total investment in shares of the AIM Funds that the Qualified Purchaser intends to make within the next 13 months. By marking the LOI section on the account application and by signing the account application, the Qualified Purchaser indicates that he or she understands and agrees to the terms of the LOI and is bound by the provisions described below:
Calculating the Initial Sales Charge
o Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI (to determine what the applicable public offering price is, look as the Sales Charge Table in the section on "Large Purchases of Class A Shares" above).
o It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge.
o The offering price may be further reduced as described below under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment.
o Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI.
Calculating the Number of Shares to be Purchased
o Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period.
o Purchases made more than 90 days before signing an LOI will be applied toward the completion of the LOI based on the value of the shares purchased that is calculated at the public offering price on the effective date of the LOI.
o If a purchaser meets the original obligation at any time during the 13-month period, he or she may revise the intended investment amount upward by submitting a written and signed request. This revision will not change the original expiration date.
o The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI.
Fulfilling the Intended Investment
o By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the purchaser will have to pay the increased amount of sales charge.
o To assure compliance with the provisions of the 1940 Act, the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share) out of the initial purchase (or subsequent purchases if necessary). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released.
o If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the sales charge on the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he or she irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date.
Canceling the LOI
o If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he or she must give written notice to AIM Distributors.
o If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, the LOI will be automatically canceled. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time.
Other Persons Eligible for the LOI Privilege
The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992.
LOIs and Contingent Deferred Sales Charges
If an investor enters into an LOI to purchase $1,000,000 or more of Class A shares of a Category III Fund on and after November 15, 2001, such shares will be subject to a 12-month, 0.25% CDSC. Purchases of Class A shares of a Category III Fund made pursuant to an LOI to purchase $1,000,000 or more of shares entered into prior to November 15, 2001 will not be subject to this CDSC. All LOIs to purchase $1,000,000 or more of Class A shares of Category I and II Funds are subject to an 18-month, 1% CDSC.
RIGHTS OF ACCUMULATION
A Qualified Purchaser may also qualify for reduced initial sales charges based upon his or her existing investment in shares of any of the AIM Funds at the time of the proposed purchase. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds owned by such purchaser, calculated at their then current public offering price.
If a purchaser qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money being invested, even if only a portion of that amount exceeds the breakpoint for the
reduced sales charge. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund with a maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to the full $20,000 purchase and not just to the $15,000 in excess of the $25,000 breakpoint.
To qualify for obtaining the discount applicable to a particular purchase, the purchaser or his dealer must furnish the Transfer Agent with a list of the account numbers and the names in which such accounts of the purchaser are registered at the time the purchase is made.
Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contract purchased on or before June 30, 1992.
If an investor's new purchase of Class A shares of a Category I, II or III Fund is at net asset value, the newly purchased shares will be subject to a contingent deferred sales charge if the investor redeems them prior to the end of the applicable holding period (18 months for Category I and II Funds shares and 12 months for Category III Fund shares). For Class A shares of Category III Funds, the provisions of this paragraph apply only to new purchases made on and after November 15, 2001.
OTHER REQUIREMENTS FOR REDUCTIONS IN INITIAL SALES CHARGES. As discussed above, investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled to the reduced sales charge based on the definition of a Qualified Purchaser listed above. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to Qualified Purchasers.
Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund, and Class B and Class C shares of AIM Floating Rate Fund will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE. AIM Distributors permits certain categories of persons to purchase Class A shares of AIM Funds without paying an initial sales charge. These are typically categories of persons whose transactions involve little expense, such as:
o Persons who have a relationship with the funds or with AIM and its affiliates, and are therefore familiar with the funds, and who place unsolicited orders directly with AIM Distributors; or
o programs for purchase that involve little expense because of the size of the transaction and shareholder records required.
AIM Distributors believes that it is appropriate and in the Funds' best interests that such persons, and certain other persons whose purchases result in relatively low expenses of distribution, be permitted to purchase shares through AIM Distributors without payment of a sales charge.
Accordingly, the following purchasers will not pay initial sales charges on purchases of Class A shares because there is a reduced sales effort involved in sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members of their immediate family) of AIM Management, its affiliates or The AIM Family of Funds--Registered Trademark--, and any foundation, trust or employee benefit plan established exclusively for the benefit of, or by, such persons;
o Any current or retired officer, director, or employee (and members of their immediate family) of PFPC Inc. (formerly known as First Data Investor Services Group);
o Sales representatives and employees (and members of their immediate family) of selling group members of financial institutions that have arrangements with such selling group members;
o Purchases through approved fee-based programs;
o Employee benefit plans that are Qualified Purchasers, as defined above, and non-qualified plans offered in conjunction with those employee benefit plans, provided that:
a. the initial investment in the plan(s) is at least $1 million;
b. the sponsor signs a $1 million LOI;
c. the employer-sponsored plan has at least 100 eligible employees; or
d. all plan transactions are executed through a single omnibus account per Fund and the financial institution or service organization has entered into the appropriate agreement with the distributor.
o Section 403(b) plans sponsored by public educational institutions are not eligible for a sales charge exception based on the aggregate investment made by the plan or the number of eligible employees. Purchases of AIM Small Cap Opportunities Fund by such plans are subject to initial sales charges;
o Shareholders of record of Advisor Class shares of AIM International Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have continuously owned shares of the AIM Funds;
o Shareholders of record or discretionary advised clients of any investment advisor holding shares of AIM Weingarten Fund or AIM Constellation Fund on September 8, 1986, or of AIM Charter Fund on November 17, 1986, who have continuously owned shares having a market value of at least $500 and who purchase additional shares of the same Fund;
o Unitholders of G/SET series unit investment trusts investing proceeds from such trusts in shares of AIM Weingarten Fund or AIM Constellation Fund; provided, however, prior to the termination date of the trusts, a unitholder may invest proceeds from the redemption or repurchase of his units only when the investment in shares of AIM Weingarten Fund and AIM Constellation Fund is effected within 30 days of the redemption or repurchase;
o A shareholder of a fund that merges or consolidates with an AIM Fund or that sells its assets to an AIM Fund in exchange for shares of an AIM Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who since that date continually have owned shares of one or more of these funds;
o Certain former AMA Investment Advisers' shareholders who became shareholders of the AIM Global Health Care Fund in October 1989, and who have continuously held shares in the GT Global funds since that time;
o Shareholders of record of Advisor Class shares of an AIM Fund on February 11, 2000 who have continuously owned shares of that AIM Fund, and who purchase additional shares of that AIM Fund;
o Qualified Tuition Programs created and maintained in accordance with
Section 529 of the Code; and
o Participants in select brokerage programs for defined contribution plans and rollover IRAs (including rollover IRAs which accept annual IRA contributions) who purchase shares through an electronic brokerage platform offered by entities with which AIM Distributors has entered into a written agreement.
As used above, immediate family includes an individual and his or her spouse or domestic partner, children, parents and parents of spouse or domestic partner.
In addition, an investor may acquire shares of any of the AIM Funds at net asset value in connection with:
o the reinvestment of dividends and distributions from a Fund;
o exchanges of shares of certain Funds;
o use of the reinstatement privilege; or
o a merger, consolidation or acquisition of assets of a Fund.
PAYMENTS TO DEALERS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the 1933 Act.
In addition to, or instead of, amounts paid to dealers as a sales commission, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold or of average daily net assets of the AIM Fund attributable to that particular dealer. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state.
Purchases of Class B Shares
Class B shares are sold at net asset value, and are not subject to an initial sales charge. Instead, investors may pay a contingent deferred sales charge if they redeem their shares within six years after purchase. See the Prospectus for additional information regarding contingent deferred sales charges. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments will equal 4.00% of the purchase price and will consist of a sales commission equal to 3.75% plus an advance of the first year service fee of 0.25%.
Purchases of Class C Shares
Class C shares are sold at net asset value, and are not subject to an initial sales charge. Instead, investors may pay a contingent deferred sales charge if they redeem their shares within the first year after purchase. See the Prospectus for additional information regarding this contingent deferred sales charge (CDSC). AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments will equal 1.00% of the purchase price and will consist of a sales commission of 0.75% plus an advance of the first year service fee of 0.25%. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record
of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions.
Exchanges
TERMS AND CONDITIONS OF EXCHANGES. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends, and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach AFS by telephone, he may also request exchanges by fax, telegraph or use overnight courier services to expedite exchanges by mail, which will be effective on the business day received by AFS as long as such request is received prior to the close of the customary trading session of the NYSE. AFS and AIM Distributors may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction.
Redemptions
GENERAL. Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Funds at (800) 959-4246 and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value per share of the applicable Fund next determined after the repurchase order is received. Such an arrangement is subject to timely receipt by AFS, the Funds' transfer agent, of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation. While there is no charge imposed by a Fund or by AIM Distributors (other than any applicable contingent deferred sales charge) when shares are redeemed or repurchased, dealers may charge a fair service fee for handling the transaction.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of a Fund not reasonably practicable.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an investor appoints AFS as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by AFS in the designated account(s), present or future, with full power of substitution in the premises. AFS
and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that AFS and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. AFS reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any redemptions must be effected in writing by the investor.
SYSTEMATIC WITHDRAWAL PLAN. A Systematic Withdrawal Plan permits a shareholder of an AIM Fund to withdraw on a regular basis at least $50 per withdrawal. Under a Systematic Withdrawal Plan, all shares are to be held by AFS and all dividends and distributions are reinvested in shares of the applicable AIM Fund by AFS. To provide funds for payments made under the Systematic Withdrawal Plan, AFS redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the Funds), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan.
Contingent Deferred Sales Charges Imposed upon Redemption of Shares
A contingent deferred sales charge (CDSC) may be imposed upon the redemption of Large Purchases of Class A shares of Category I and II Funds or upon the redemption of Class B shares or Class C shares. On and after November 15, 2001, a CDSC also may be imposed upon the redemption of Large Purchases of Class A shares of Category III Funds. See the Prospectus for additional information regarding CDSCs.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS FOR LARGE PURCHASES OF CLASS A SHARES. An investor who has made a Large Purchase of Class A shares of a Category I or II Fund will not be subject to a CDSC upon the redemption of those shares in the following situations:
o Redemptions of shares of Category I or II Funds held more than 18 months;
o Redemptions of shares of Category III Funds purchased prior to November 15, 2001;
o Redemptions of shares of Category III Funds purchased on or after November 15, 2001 and held for more than 12 months;
o Redemptions from employee benefit plans designated as Qualified Purchasers, as defined above, where the redemptions are in connection with employee terminations or withdrawals, provided the total amount invested in the plan is at least $1,000,000; the sponsor signs a $1 million LOI; or the employer-sponsored plan has at least 100 eligible employees; provided, however, that 403(b) plans sponsored by public educational institutions shall qualify for the CDSC waiver on the basis of the value of each plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the plan or on the number of eligible employees;
o Redemptions from private foundations or endowment funds;
o Redemptions of shares by the investor where the investor's dealer waives the amounts otherwise payable to it by the distributor and notifies the distributor prior to the time of investment;
o Redemptions of shares of Category I, II or III Funds or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category I or II Fund, unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the exchange of Category I or II Fund shares;
o Redemptions of shares of Category III Funds, shares of AIM Tax-Exempt Cash Fund or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category III Fund purchased prior to November 15, 2001;
o Redemptions of shares of Category I or II Funds acquired by exchange from Class A shares of a Category III Fund purchased on and after November 15, 2001, unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the exchanged Category III Fund shares;
o Redemption of shares of Category III Funds, shares of AIM Tax-Exempt Cash Fund or AIM Cash Reserve Shares of AIM Money Market Fund acquired by exchange from Class A shares of a Category III Fund purchased on and after November 15, 2001, unless the shares acquired by exchange are redeemed within 12 months of the original purchase of the exchanged Category III Fund shares; and
o Redemptions of shares of Category I or II Funds acquired by exchange on and after November 15, 2001 from AIM Cash Reserve Shares of AIM Money Market Fund if the AIM Cash Reserve Shares were acquired by exchange from a Category I or II Fund, unless the Category I or II Fund shares acquired by exchange are redeemed within 18 months of the original purchase of the exchanged Category I or II Funds shares.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS FOR CLASS B AND C SHARES. Investors who purchased former GT Global funds Class B shares before June 1, 1998 are subject to the following waivers from the CDSC otherwise due upon redemption:
o total or partial redemptions resulting from a distribution following retirement in the case of a tax-qualified employer-sponsored retirement;
o minimum required distributions made in connection with an IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other retirement plan following attainment of age 70 1/2;
o redemptions pursuant to distributions from a tax-qualified employer-sponsored retirement plan, which is invested in the former GT Global funds, which are permitted to be made without penalty pursuant to the Code, other than tax-free rollovers or transfers of assets, and the proceeds of which are reinvested in the former GT Global funds;
o redemptions made in connection with participant-directed exchanges between options in an employer-sponsored benefit plan;
o redemptions made for the purpose of providing cash to fund a loan to a participant in a tax-qualified retirement plan;
o redemptions made in connection with a distribution from any retirement plan or account that is permitted in accordance with the provisions of Section 72(t)(2) of the Code, and the regulations promulgated thereunder;
o redemptions made in connection with a distribution from a qualified profit-sharing or stock bonus plan described in Section 401(k) of the Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon hardship of the covered employee (determined pursuant to Treasury Regulation Section 1.401(k)-1(d)(2));
o redemptions made by or for the benefit of certain states, counties or cities, or any instrumentalities, departments or authorities thereof where such entities are prohibited or limited by applicable law from paying a sales charge or commission.
CDSCs will not apply to the following redemptions of Class B or Class C shares, as applicable:
o Additional purchases of Class C shares of AIM International Value Fund and AIM Real Estate Fund by shareholders of record on April 30, 1995, of these Funds, except that shareholders whose broker-dealers maintain a single omnibus account with AFS on behalf of those shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995, from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settlor of
a living trust, of shares held in the account at the time of
death or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result from (i) required minimum distributions to
plan participants or beneficiaries who are age 70 1/2 or older,
and only with respect to that portion of such distributions that
does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund; (ii) in
kind transfers of assets where the participant or beneficiary
notifies the distributor of the transfer no later than the time
the transfer occurs; (iii) tax-free rollovers or transfers of
assets to another plan of the type described above invested in
Class B or Class C shares of one or more of the AIM Funds; (iv)
tax-free returns of excess contributions or returns of excess
deferral amounts; and (v) distributions on the death or
disability (as defined in the Code) of the participant or
beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual amount of 12% of the account value on a per fund basis, at the time the withdrawal plan is established, provided the investor reinvests his dividends;
o Liquidation by the Fund when the account value falls below the minimum required account size of $500;
o Investment account(s) of AIM;
o Class C shares where the investor's dealer of record notifies the distributor prior to the time of investment that the dealer waives the payment otherwise payable to him; and
o Redemptions of Class C shares, where such redemptions are in connection with employee terminations or withdrawals from (i) a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the Code; and (ii) a 457 plan, even if more than one beneficiary or participant is involved.
General Information Regarding Purchases, Exchanges and Redemptions
GOOD ORDER. Purchase, exchange and redemption orders must be received in good order. To be in good order, an investor must supply AFS with all required information and documentation, including signature guarantees when required. In addition, if a purchase of shares is made by check, the check must be received in good order. This means that the check must be properly completed and signed, and legible to AFS in its sole discretion.
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer or other financial intermediary to ensure that all orders are transmitted on a timely basis to AFS. Any loss resulting from the failure of the dealer or financial intermediary to submit an order within the prescribed time frame will be borne by that dealer or financial intermediary. If a check used to purchase shares does not clear, or if any investment order must be canceled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the "Shareholder Information" section of each Fund's prospectus, signature guarantees are required in the following situations: (1) requests to transfer the registration of shares to another owner; (2) telephone exchange and telephone redemption authorization forms; (3) changes in previously designated wiring or electronic funds transfer instructions; and (4) written redemptions or exchanges of shares previously reported as lost, whether or not the redemption amount is under $250,000 or the proceeds are to be sent to the address of record. AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the SEC, and further provided that such guarantor institution is listed in one of the reference guides contained in AFS' current Signature Guarantee Standards and Procedures, such as certain domestic banks, credit unions, securities dealers, or securities exchanges. AFS will also accept signatures with either: (1) a signature guaranteed with a medallion stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion Signature Program, provided that in either event, the amount of the transaction involved does not exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular institution or organization qualifies as an "eligible guarantor institution," an investor should contact the Client Services Department of AFS.
TRANSACTIONS BY TELEPHONE. By signing an account application form, an investor appoints AFS as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by AFS in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. AFS and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that AFS and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. AFS reserves the right to modify or terminate the telephone exchange privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must be effected in writing by the investor.
INTERNET TRANSACTIONS. An investor may effect transactions in his account through the internet by selecting the AIM Internet Connect option on his completed account application form or completing an AIM Internet Connect Authorization Form. By signing either form the investor acknowledges and agrees that AFS and AIM Distributors will not be liable for any loss, expense or cost arising out of any internet transaction effected in accordance with the instructions set forth in the forms if they reasonably believe such request to be genuine. Procedures for verification of internet transactions include requests for confirmation of the shareholder's personal identification number and mailing of confirmations promptly after the transactions. The investor also acknowledges that (1) if he no longer wants the AIM Internet Connect option, he will notify AFS in writing, and (2) the AIM Internet Connect option may be terminated at any time by the AIM Funds.
OFFERING PRICE
The following formula may be used to determine the public offering price per Class A share of an investor's investment:
Net Asset Value / (1 - Sales Charge as % of Offering Price ) = Offering Price.
For example, at the close of business on October 31, 2001, AIM Aggressive Growth Fund - Class A shares had a net asset value per share of $8.68. The offering price, assuming an initial sales charge of 5.50%, therefore was $9.19.
Calculation of Net Asset Value
Each Fund determines its net asset value per share once daily as of the close of the customary trading session of the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, each Fund determines its net asset value per share as of the close of the NYSE on such day. For purposes of determining net asset value per share, the Fund will generally use futures and options contract closing prices which are available fifteen (15) minutes after the close of the customary trading session of the NYSE. The Funds determine net asset value per share by dividing the value of a Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of a Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each security (excluding convertible bonds) held by a Fund is valued at its last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price on that day; option contracts are valued at the mean between the closing bid and asked prices on the exchange where the contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt securities (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, coupon rate, maturity, type of issue, 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 ask 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 investments are valued at amortized cost when the security has 60 days or less to maturity.
Foreign securities are converted into U.S. dollars using exchange rates as of the close of the NYSE. Generally, trading in foreign securities, corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the customary trading session of the NYSE. The values of such securities used in computing the net asset value of each Fund's shares are determined as of the close of the respective markets. Occasionally, events affecting the values of such securities may occur between the times at which such values are determined and the close of the customary trading session of the NYSE which will not be reflected in the computation of a Fund's net asset value. If a development/event has actually caused that closing price to no longer reflect actual value, the closing price, as of the close of the applicable market, may be adjusted to reflect the fair value of the affected securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
Fund securities primarily traded in foreign markets may be traded in such markets on days which are not business days of the Fund. Because the net asset value per share of each Fund is determined only on business days of the Fund, the net asset value per share of a Fund may be significantly affected on days when an investor cannot exchange or redeem shares of the Fund.
REDEMPTION IN KIND
AIM intends to redeem all shares of the Funds in cash. It is possible that future conditions may make it undesirable for a Fund to pay for redeemed shares in cash. In such cases, the Fund may make payment in securities or other property if the Fund has made an election under Rule 18f-1 under the 1940 Act. Rule 18f-1 obligates a Fund to redeem for cash all shares presented to such Fund for redemption by any one shareholder in an amount up to the lesser of $250,000 or 1% of that Fund's net assets in any 90-day period. Securities delivered in payment of redemptions are valued at the same value assigned to them in computing the applicable Fund's net asset value per share. Shareholders receiving such securities are likely to incur brokerage costs on their subsequent sales of such securities.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, generally must withhold as of January 1, 2002, 30% of redemption payments and reportable dividends (whether paid or accrued) in the case of any shareholder who fails to provide the Fund with a taxpayer identification number ("TIN") and a certification that he is not subject to backup withholding; however, the backup withholding rate decreases in phases to 28% for distributions made in the year 2006 and thereafter.
An investor is subject to backup withholding if:
1. the investor fails to furnish a correct TIN to the Fund, or
2. the IRS notifies the Fund that the investor furnished an incorrect TIN, or
3. the investor or the Fund is notified by the IRS that the investor is subject to backup withholding because the investor failed to report all of the interest and dividends on such investor's tax return (for reportable interest and dividends only), or
4. the investor fails to certify to the Fund that the investor is not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or
5. the investor does not certify his TIN. This applies only to non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five situations discussed above. Redemption proceeds and long-term gain distributions are subject to backup withholding only if (1), (2) or (5) above applies.
Certain payees and payments are exempt from backup withholding and information reporting. AIM or AFS will not provide Form 1099 to those payees.
Investors should contact the IRS if they have any questions concerning withholding.
IRS PENALTIES - Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS - Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 generally remains in effect for a period starting on the date the Form is signed and ending on the last day of the third succeeding calendar year. Such shareholders may, however, be subject to federal income tax withholding at a 30% rate on ordinary income dividends and other distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
It is the present policy of the Fund to declare and pay annually net investment income dividends and capital gain distributions.
It is the Fund's intention to distribute substantially all of its net investment income and realized net capital gains by the end of each taxable year. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital loss, if any, carried forward from previous fiscal periods. All dividends and distributions will be automatically reinvested in additional shares of the same class of each Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth in the Prospectus under the caption "Special Plans - Automatic Dividend Investment." Such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. If a shareholder's account does not have any shares in it on a dividend or capital gain distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested.
A dividend or distribution paid by a fund which does not declare dividends daily has the effect of reducing the net asset value per share on the ex-dividend date by the amount of the dividend or distribution. Therefore, a dividend or distribution declared shortly after a purchase of shares by an investor would represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes.
Dividends on Class B and Class C shares are expected to be lower than those for Class A shares because of higher distribution fees paid by Class B and Class C shares. Other class-specific expenses may also affect dividends on shares of those classes. Expenses attributable to a particular class ("Class
Expenses") include distribution plan expenses, which must be allocated to the class for which they are incurred. Other expenses may be allocated as Class Expenses, consistent with applicable legal principals under the 1940 Act and the Code.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY. Each Fund has elected to be taxed as a regulated investment company under Subchapter M of the Code. As a regulated investment company, each Fund is not subject to federal income tax on the portion of its net investment income (i.e., taxable interest, dividends and other taxable ordinary income, net of expenses) and capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes (i) at least 90% of its investment company taxable income (i.e., net investment income, net foreign currency ordinary gain or loss and the excess of net short-term capital gain over net long-term capital loss) and (ii) at least 90% of the excess of its tax-exempt interest income under Code Section 103(a) over its deductions disallowed under Code Sections 265 and 171(a)(2) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by a Fund made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gain of the taxable year and can therefore satisfy the Distribution Requirement.
Each Fund may use "equalization accounting" in determining the portion of its net investment income and capital gain net income that has been distributed. A Fund that elects to use equalization accounting will allocate a portion of its realized investment income and capital gain to redemptions of Fund shares and will reduce the amount of such income and gain that it distributes in cash. However, each Fund intends to make cash distributions for each taxable year in an aggregate amount that is sufficient to satisfy the Distribution Requirement without taking into account its use of equalization accounting. The Internal Revenue Service has not published any guidance concerning the methods to be used in allocating investment income and capital gain to redemptions of shares. In the event that the Internal Revenue Service determines that a Fund is using an improper method of allocation and has underdistributed its net investment income and capital gain net income for any taxable year, such Fund may be liable for additional federal income tax.
In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gain are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including, but not limited to, gain from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement").
In addition to satisfying the requirements described above, each Fund must satisfy an asset diversification test in order to qualify as a regulated investment company (the "Asset Diversification Test"). Under this test, at the close of each quarter of each Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers, as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer, and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses.
For purposes of the Asset Diversification Test, the IRS has ruled that the issuer of a purchased listed call option on stock is the issuer of the stock underlying the option. The IRS has also informally ruled that, in general, the issuers of purchased or written call and put options on securities, of long and short positions on futures contracts on securities and of options on such future contracts are the issuers of the securities underlying such financial instruments where the instruments are traded on an exchange.
Where the writer of a listed call option owns the underlying securities, the IRS has ruled that the Asset Diversification Test will be applied solely to such securities and not to the value of the option itself. With respect to options on securities indexes, futures contracts on securities indexes and options on such futures contracts, the IRS has informally ruled that the issuers of such options and futures contracts are the separate entities whose securities are listed on the index, in proportion to the weighing of securities in the computation of the index. It is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related options. It has been suggested that the issuer in each case may be the foreign central bank or the foreign government backing the particular currency. Due to this uncertainty and because the Funds may not rely on informal rulings of the IRS, the Funds may find it necessary to seek a ruling from the IRS as to the application of the Asset Diversification Test to certain of the foregoing types of financial instruments or to limit its holdings of some or all such instruments in order to stay within the limits of such test.
If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of such Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY. In general, gain or loss recognized by a Fund on the disposition of an asset will be a capital gain or loss. However, gain recognized on the disposition of a debt obligation purchased by a Fund at a market discount (generally, at a price less than its principal amount) will be treated as ordinary income to the extent of the portion of the market discount which accrued during the period of time the Fund held the debt obligation unless the Fund made an election to accrue market discount into income. If a Fund purchases a debt obligation that was originally issued at a discount, the Fund is generally required to include in gross income each year the portion of the original issue discount which accrues during such year. In addition, under the rules of Code Section 988, gain or loss recognized on the disposition of a debt obligation denominated in a foreign currency or an option with respect thereto (but only to the extent attributable to changes in foreign currency exchange rates), and gain or loss recognized on the disposition of a foreign currency forward contract or of foreign currency itself, will generally be treated as ordinary income or loss.
Certain hedging transactions that may be engaged in by certain of the Funds (such as short sales "against the box") may be subject to special tax treatment as "constructive sales" under Section 1259 of the Code if a Fund holds certain "appreciated financial positions" (defined generally as any interest (including a futures or forward contract, short sale or option) with respect to stock, certain debt instruments, or partnership interests if there would be a gain were such interest sold, assigned, or otherwise terminated at its fair market value). Upon entering into a constructive sales transaction with respect to an appreciated financial position, a Fund will generally be deemed to have constructively sold such appreciated financial position and will recognize gain as if such position were sold, assigned, or otherwise terminated at its fair market value on the date of such constructive sale (and will take into account any gain for the taxable year which includes such date).
Some of the forward foreign currency exchange contracts, options and futures contracts that certain of the Funds may enter into will be subject to special tax treatment as "Section 1256 contracts." Section 1256 contracts that a Fund holds are treated as if they are sold for their fair market value on the last business day of the taxable year, regardless of whether a taxpayer's obligations (or rights) under such contracts have terminated (by delivery, exercise, entering into a closing transaction or otherwise) as of such date. Any gain or loss recognized as a consequence of the year-end deemed disposition of
Section 1256 contracts is combined with any other gain or loss that was previously recognized upon the termination of Section 1256 contracts during that taxable year. The net amount of such gain or loss for the entire taxable year (including gain or loss arising as a consequence of the year-end deemed sale of such contracts) is deemed to be 60% long-term and 40% short-term gain or loss. However, in the case of Section 1256 contracts that are forward foreign currency exchange contracts, the net gain or loss is separately determined and (as discussed above) generally treated as ordinary income or loss. If such a future or option is held as an offsetting position and can be considered a straddle under Section 1092 of the Code, such a straddle will constitute a mixed straddle. A mixed straddle will be subject to both Section 1256 and Section 1092 unless certain elections are made by the Fund.
Other hedging transactions in which the Funds may engage may result in "straddles" or "conversion transactions" for U.S. federal income tax purposes. The straddle and conversion transaction rules may affect the character of gains (or in the case of the straddle rules, losses) realized by the Funds. In addition, losses realized by the Funds on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. Because only a few regulations implementing the straddle rules and the conversion transaction rules have been promulgated, the tax consequences to the Funds of hedging transactions are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the Funds (and, if they are conversion transactions, the amount of ordinary income) which is taxed as ordinary income when distributed to shareholders.
Because application of any of the foregoing rules governing Section 1256 contracts, constructive sales, straddle and conversion transactions may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected investment or straddle positions, the taxable income of a Fund may exceed its book income. Accordingly, the amount which must be distributed to shareholders and which will be taxed to shareholders as ordinary income or long-term capital gain may also differ from the book income of the Fund and may be increased or decreased as compared to a fund that did not engage in such transactions.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES. A 4% non-deductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income (excess of capital gains over capital losses) for the one-year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
Section 988 foreign currency gains and losses incurred after October 31 (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund generally intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, in the event that the Internal Revenue Service determines that a Fund is using an improper method of allocation for purposes of equalization accounting (as discussed above), such Fund may be liable for excise tax. Moreover, investors should note that a Fund may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability. In addition, under certain circumstances, a Fund may elect to pay a minimal amount of excise tax.
PFIC INVESTMENTS. Those Funds that are permitted to invest in foreign equity securities may invest in stocks of foreign companies that are classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income.
The application of the PFIC rules may affect, among other things, the character of gain, the amount of gain or loss and the timing of the recognition of income with respect to PFIC stock, as well as subject the Funds themselves to tax on certain income from PFIC stock. For these reasons the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to a fund that did not invest in PFIC stock.
SWAP AGREEMENTS. Each Fund may enter into swap agreements. The rules governing the tax aspects of swap agreements are in a developing stage and are not entirely clear in certain respects. Accordingly, while a Fund intends to account for such transactions in a manner deemed to be appropriate, the IRS might not accept such treatment. If it did not, the status of a Fund as a regulated investment company might be affected. Each Fund intends to monitor developments in this area. Certain requirements that must be met under the Code in order for a Fund to qualify as a regulated investment company may limit the extent to which the Fund will be able to engage in swap agreements.
FUND DISTRIBUTIONS. Each Fund anticipates distributing substantially all of its investment company taxable income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will qualify for the 70% dividends received deduction for corporations only to the extent discussed below.
A Fund may either retain or distribute to shareholders its net capital gain (net long-term capital gain over net short-term capital loss) for each taxable year. Each Fund currently intends to distribute any such amounts. If net capital gain is distributed and designated as a capital gain dividend, it will be taxable to shareholders as long-term capital gain (currently taxable at a maximum rate of 20% for noncorporate shareholders) regardless of the length of time the shareholder has held his shares or whether such gain was recognized by the Fund prior to the date on which the shareholder acquired his shares. Conversely, if a Fund elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available capital loss carry forwards) at the 35% corporate tax rate. If a Fund elects to retain its net capital gain, it is expected that the Fund also will elect to have shareholders treated as if each received a distribution of its pro rata share of such gain, with the result that each shareholder will be required to report its pro rata share of such gain on its tax return as long-term capital gain, will receive a refundable tax credit for its pro rata share of tax paid by the Fund on the gain, and will increase the tax basis for its shares by an amount equal to the deemed distribution less the tax credit.
Legislation enacted in 1997 lowers the maximum capital gain tax rate from 20% to 18% with respect to capital assets which are held for five years and for which the holding period begins after December 31, 2000. In connection with this new legislation, a Fund may make elections to treat any readily tradable stock it holds on January 1, 2001 as having been sold and reacquired on January 2, 2001 at its closing market price on that date and to treat any other security in its portfolio as having been sold and reacquired on January 1 for an amount equal to its fair market value on that date. If a Fund makes any such election (when it files its tax return), it will recognize gain, but not loss, on the deemed sale, which may cause a Fund to increase the amount of distributions that the Fund will make in comparison to a fund that did not make such an election. The Funds have not yet determined whether they will make this election with respect to any stock or securities in their respective portfolios.
Ordinary income dividends paid by a Fund with respect to a taxable year will qualify for the 70% dividends received deduction generally available to corporations (other than corporations, such as "S" corporations, which are not eligible for the deduction because of their special characteristics and other than for purposes of special taxes such as the accumulated earnings tax and the personal holding company tax) to the extent of the amount of qualifying dividends received by the Fund from domestic
corporations for the taxable year. However, the alternative minimum tax applicable to corporations may reduce the value of the dividends received deduction.
Alternative minimum tax ("AMT") is imposed in addition to, but only to the extent it exceeds, the regular tax and is computed at a maximum rate of 28% for non-corporate taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's alternative minimum taxable income ("AMTI") over an exemption amount. The corporate dividends received deduction is not itself an item of tax preference that must be added back to taxable income or is otherwise disallowed in determining a corporation's AMTI. However, corporate shareholders will generally be required to take the full amount of any dividend received from the Fund into account (without a dividend received deduction) in determining their adjusted current earnings, which are used in computing an additional corporate preference item (i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings over its AMTI (determined without regard to this item and the AMTI net operating loss deduction)) that is includable in AMTI. However, certain small corporations are wholly exempt from the AMT.
Distributions by a Fund that do not constitute earnings and profits will be treated as a return of capital to the extent of (and in reduction of) the shareholder's tax basis in his shares; any excess will be treated as gain from the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Fund (or of another Fund). Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date.
Ordinarily, shareholders are required to take distributions by a Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year in accordance with the guidance that has been provided by the IRS.
If the net asset value of shares is reduced below a shareholder's cost as a result of a distribution by a Fund, such distribution generally will be taxable even though it represents a return of invested capital. Investors should be careful to consider the tax implications of buying shares of a Fund just prior to a distribution. The price of shares purchased at this time may reflect the amount of the forthcoming distribution. Those purchasing just prior to a distribution will receive a distribution which generally will be taxable to them.
SALE OR REDEMPTION OF SHARES. A shareholder will recognize gain or loss
on the sale or redemption of shares of a Fund in an amount equal to the
difference between the proceeds of the sale or redemption and the shareholder's
adjusted tax basis in the shares. All or a portion of any loss so recognized may
be deferred if the shareholder purchases other shares of the Fund within thirty
(30) days before or after the sale or redemption. In general, any gain or loss
arising from (or treated as arising from) the sale or redemption of shares of a
Fund will be considered capital gain or loss and will be long-term capital gain
or loss if the shares were held for longer than one year. Currently, any
long-term capital gain recognized by a non-corporate shareholder will be subject
to tax at a maximum rate of 20%. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. Capital losses in any year are deductible only to the
extent of capital gains plus, in the case of a non-corporate taxpayer, $3,000 of
ordinary income.
If a shareholder (a) incurs a sales load in acquiring shares of a Fund,
(b) disposes of such shares less than 91 days after they are acquired, and (c)
subsequently acquires shares of the Fund or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load on the shares disposed of (to the extent of the reduction in the sales load on the shares subsequently acquired) shall not be taken into account in determining gain or loss on the shares disposed of, but shall be treated as incurred on the acquisition of the shares subsequently acquired. The wash sale rules may also limit the amount of loss that may be taken into account.
BACKUP WITHHOLDING. The Funds may be required to withhold as of January 1, 2002, 30% of distributions and/or redemption payments; however, this rate is reduced in phases to 28% for distributions made in the year 2006 and thereafter. For more information refer to "Purchase, Redemption and Pricing of Shares - Backup Withholding".
FOREIGN SHAREHOLDERS. Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from a Fund is "effectively connected" with a U.S. trade or business carried on by such shareholder. If the income from a Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, distributions (other than distributions of long-term capital gain) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the distribution. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gain realized on the redemption of shares of a Fund, capital gain dividends and amounts retained by a Fund that are designated as undistributed net capital gain.
If the income from a Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends and any gains realized upon the sale or redemption of shares of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, a Fund may be required to withhold U.S. federal income tax at a rate of 30% on distributions made on or after January 1, 2002 that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless such shareholders furnish the Fund with proper notification of their foreign status; however, this rate is reduced in phases to 28% for distributions made in the year 2006 and thereafter.
Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the income resulting from a Fund's election to treat any foreign income tax paid by it as paid by its shareholders, but may not be able to claim a credit or deduction with respect to the withholding tax for the foreign tax treated as having been paid by them.
Foreign persons who file a United States tax return to obtain a U.S. tax refund and who are not eligible to obtain a social security number must apply to the IRS for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or the IRS.
Transfers by gift of shares of a Fund by a foreign shareholder who is a nonresident alien individual will not be subject to U.S. federal gift tax. An individual who, at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exception applies. In the absence of a treaty, there is a $13,000 statutory estate tax credit.
The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Fund, including the applicability of foreign tax.
FOREIGN INCOME TAX. Investment income received by each Fund from sources within foreign countries may be subject to foreign income tax withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Funds to a reduced rate of, or exemption
from, tax on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, the Fund may elect to "pass through" to the Fund's shareholders the amount of foreign income tax paid by the Fund (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income tax paid by the Fund that are attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign tax in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against Federal income tax (but not both). No deduction for foreign tax may be claimed by a non-corporate shareholder who does not itemize deductions or who is subject to alternative minimum tax.
Unless certain requirements are met, a credit for foreign tax is subject to the limitation that it may not exceed the shareholder's U.S. tax (determined without regard to the availability of the credit) attributable to the shareholder's foreign source taxable income. In determining the source and character of distributions received from a Fund for this purpose, shareholders will be required to allocate Fund distributions according to the source of the income realized by the Fund. Each Fund's gain from the sale of stock and securities and certain currency fluctuation gain and loss will generally be treated as derived from U.S. sources. In addition, the limitation on the foreign tax credit is applied separately to foreign source "passive" income, such as dividend income. Individuals who have no more than $300 ($600 for married persons filing jointly) of creditable foreign tax included on Form 1099 and whose foreign source income is all "qualified passive income" may elect each year to be exempt from the foreign tax credit limitation and will be able to claim a foreign tax credit without filing Form 1116 with its corresponding requirement to report income and tax by country. Moreover, no foreign tax credit will be allowable to any shareholder who has not held his shares of the Fund for at least 16 days during the 30-day period beginning 15 days before the day such shares become ex-dividend with respect to any Fund distribution to which foreign income taxes are attributed (taking into account certain holding period reduction requirements of the Code). Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income tax paid by a Fund.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS. The foregoing general discussion of U.S. federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on the date of this Statement of Additional Information. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation for ordinary income dividends and capital gain dividends from regulated investment companies often differ from the rules for U.S. federal income taxation described above. Distributions may also be subject to additional state, local and foreign taxes depending on each shareholder's particular situation. Non-U.S. shareholders may be subject to U.S. tax rules that differ significantly from those summarized above. Shareholders are urged to consult their tax advisers as to the consequences of these and other state and local tax rules affecting investment in the Funds.
DISTRIBUTION OF SECURITIES
DISTRIBUTION PLANS
The Trust has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). Each Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate, shown immediately below, of the Fund's average daily net assets of Class A shares. Each Fund pays 1.00% of the average daily net assets of Class B shares and of Class C shares.
FUND CLASS A ---- ------- AIM Aggressive Growth Fund 0.25% AIM Blue Chip Fund 0.35% AIM Capital Development Fund 0.35% AIM Charter Fund 0.30% AIM Constellation Fund 0.30% AIM Core Strategies Fund 0.35% AIM Dent Demographic Trends Fund 0.35% AIM Emerging Growth Fund 0.35% AIM Large Cap Basic Value Fund 0.35% AIM Large Cap Core Equity Fund 0.35% AIM Large Cap Growth Fund 0.35% AIM Mid Cap Growth Fund 0.35% AIM Weingarten Fund 0.30% |
All of the Plans compensate AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of shares of the Funds. Such activities include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering each Plan.
Amounts payable by a Fund under the Plans need not be directly related to the expenses actually incurred by AIM Distributors on behalf of each Fund. The Plans do not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors at any given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A shares and Class C shares. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM Distributors will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM Distributors and the Fund.
The Funds 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, including AIM Distributors, acting as principal, who furnish continuing personal shareholder services to their customers who purchase and own the applicable class of shares of the Fund. Under the terms of a shareholder service agreement, such personal shareholder services include responding to customer inquiries and providing customers with information about their investments. Any amounts not paid as a service fee under each Plan would constitute an asset-based sales charge.
Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rate specified in each agreement based on the average daily net asset value of the Funds' shares purchased or acquired through exchange. Fees shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which such Fund's shares are held.
Selected dealers and other institutions entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one particular class over another. Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Funds on an agency basis, may receive payments from the Funds pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the Funds, in making dealer incentive and shareholder servicing payments to dealers and other financial institutions under the Plans. These payments are an obligation of the Funds and not of AIM Distributors.
Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD").
See Appendix I for a list of the amounts paid by each class of shares to AIM Distributors pursuant to the Plans for the year, or period, ended October 31, 2001 and Appendix J for an estimate by category of the allocation of actual fees paid by each class of shares of each Fund pursuant to its respective distribution plan for the year or period ended October 31, 2001.
As required by Rule 12b-1, the Plans and related forms of Shareholder Service Agreements were approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related to the Plans (the "Rule 12b-1 Trustees"). In approving the Plans in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plans would benefit each class of the Funds and its respective shareholders.
The anticipated benefits that may result from the Plans with respect to each Fund and/or the classes of each Fund and/or the classes of each Fund and its shareholders include but are not limited to the following: (1) rapid account access; (2) relatively predictable flow of cash; and (3) a well-developed, dependable network of shareholder service agents to help to curb sharp fluctuations in rates of redemptions and sales, thereby reducing the chance that an unanticipated increase in net redemptions could adversely affect the performance of each Fund.
Unless terminated earlier in accordance with their terms, the Plans continue from year to year as long as such continuance is specifically approved, in person, at least annually by the Board of Trustees, including a majority of the Rule 12b-1 Trustees. A Plan may be terminated as to any Fund or class by the vote of a majority of the Rule 12b-1 Trustees or, with respect to a particular class, by the vote of a majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution expenses paid by the applicable class requires shareholder approval; otherwise, the Plans may be amended by the trustees, including a majority of the Rule 12b-1 Trustees, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plans are in effect, the selection or nomination of the Independent Trustees is committed to the discretion of the Independent Trustees.
The Class B Plan obligates Class B shares to continue to make payments to AIM Distributors following termination of the Class B shares Distribution Agreement with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors or its predecessors, unless there has been a complete termination of the Class B Plan (as defined in such Plan) and the Class B Plan expressly authorizes AIM Distributors to assign, transfer or pledge its rights to payments pursuant to the Class B Plan.
DISTRIBUTOR
The Trust has entered into master distribution agreements, as amended, relating to the Funds (the "Distribution Agreements") with AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, pursuant to which AIM Distributors acts as the distributor of shares of the Funds. The
address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the Trust are affiliated with AIM Distributors. See "Management of the Trust."
The Distribution Agreements provide AIM Distributors with the exclusive right to distribute shares of the Funds on a continuous basis directly and through institutions with whom AIM Distributors has entered into selected dealer agreements. AIM Distributors has not undertaken to sell any specified number of shares of any classes of the Funds.
AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B and Class C shares of the Funds at the time of such sales.
Payments with respect to Class B shares will equal 4.0% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. In the future, if multiple distributors serve a Fund, each such distributor (or its assignee or transferee) would receive a share of the payments under the Class B Plan based on the portion of the Fund's Class B shares sold by or attributable to the distribution efforts of that distributor.
AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record.
The Trust (on behalf of any class of any Fund) or AIM Distributors may terminate the Distribution Agreements on sixty (60) days' written notice without penalty. The Distribution Agreements will terminate automatically in the event of their assignment. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset-based distribution fees in respect of the outstanding Class B shares attributable to the distribution efforts of AIM Distributors or its predecessors; provided, however that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments to AIM Distributors. Termination of the Class B Plan or the Distribution Agreement for Class B shares would not affect the obligation of Class B shareholders to pay contingent deferred sales charges.
Total sales charges (front end and contingent deferred sales charges) paid in connection with the sale of shares of each Fund, if applicable, for the last three fiscal years ending October 31 are found in Appendix K.
CALCULATION OF PERFORMANCE DATA
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund.
Average Annual Total Return Quotation
The standard formula for calculating average annual total return is as
follows:
n
P(1+T) = ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the
applicable maximum sales load is deducted at the
beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods
(or fractional portion of such period).
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The average annual total returns for each Fund, with respect to its Class A, Class B and Class C shares, for the one, five and ten year periods (or since inception if applicable) ended October 31 are found in Appendix L.
Total returns quoted in advertising reflect all aspects of a Fund's return, including the effect of reinvesting dividends and capital gain distributions, and any change in the Fund's net asset value per share over the period. Cumulative total return reflects the performance of a Fund over a stated period of time. Average annual total returns are calculated by determining the growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period.
Each Fund's total return is calculated in accordance with a standardized formula for computation of annualized total return. Standardized total return for Class A shares reflects the deduction of a Fund's maximum front-end sales charge at the time of purchase. Standardized total return for Class B and Class C shares reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period.
A Fund's total return shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. A cumulative total return reflects the Fund's performance over a stated period of time. An average annual total return reflects the hypothetical compounded annual rate of return that would have produced the same cumulative total return if the Fund's performance had been constant over the entire period. Because average annual returns tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its cumulative and average annual returns into income results and capital gains or losses.
Alternative Total Return Quotations
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) = ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of
only a stated portion of, or none of, the
applicable maximum sales load at the beginning of
the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
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Cumulative total return across a stated period may be calculated as follows:
P(1+V)=ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all
of, a stated portion of, or none of, the applicable
maximum sales load at the beginning of the stated
period.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
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The cumulative total returns for each Fund, with respect to its Class A, Class B and Class C shares, for the one, five and ten year periods (or since inception if applicable) ended October 31 are found in Appendix L.
Average Annual Total Return (After Taxes on Distributions) Quotation
A Fund's average annual total return (after taxes on distributions) shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. It reflects the deduction of federal income taxes on distributions, but not on redemption proceeds. Average annual total returns (after taxes on distributions) are calculated by determining the after-tax growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. Because average annual total returns (after taxes on distributions) tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its average annual total returns (after taxes on distributions) into income results and capital gains or losses.
The standard formula for calculating average annual total return (after
taxes on distributions) is:
n
P(1+T) = ATV
D
Where P = a hypothetical initial payment of $1,000;
T = average annual total return (after taxes on
distributions);
n = number of years; and
ATV = ending value of a hypothetical $1,000 payment made
D at the beginning of the 1-, 5-, or 10-year periods
(or since inception, if applicable) at the end of
the 1-, 5-, or 10-year periods (or since
inception, if applicable), after taxes on fund
distributions but not after taxes on redemption.
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Standardized average annual total return (after taxes on distributions) for Class A shares reflects the deduction of a Fund's maximum front-end sales charge at the time of purchase.
The after-tax returns assume all distributions by a Fund, less the taxes due on such distributions, are reinvested at the price calculated as stated in the prospectus on the reinvestment dates during the period. Taxes on a Fund's distributions are calculated by applying to each component of the distribution (e.g., ordinary income and long-term capital gain) the highest corresponding individual marginal federal income tax rates in effect on the reinvestment date. The taxable amount and tax character of each distribution is as specified by the Fund on the dividend declaration date, but reflects any subsequent recharacterizations of distributions. The effect of applicable tax credits, such as the foreign tax credit, are also taken into account. The calculations only reflect federal taxes, and thus do not reflect state and local taxes or the impact of the federal alternative minimum tax.
The average annual total returns (after taxes on distributions) for each Fund, with respect to its Class A shares, for the 1, 5 and 10 year periods ended October 31, 2001 are found in each Fund's prospectus.
Average Annual Total Return (After Taxes on Distributions and Sale of Fund Shares) Quotation
A Fund's average annual total return (after taxes on distributions and sale of Fund shares) shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. It reflects the deduction of federal income taxes on both distributions and proceeds. Average annual total returns (after taxes on distributions and redemption) are calculated by determining the after-tax growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. Because average annual total returns (after taxes on distributions and redemption) tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its average annual total returns (after taxes on distributions and redemption) into income results and capital gains or losses.
The standard formula for calculating average annual total return (after taxes on distributions and redemption) is:
n P(1+T) = ATV
DR
Where P = a hypothetical initial payment of $1,000;
T = average annual total return (after taxes on
distributions and redemption);
n = number of years; and
ATV = ending value of a hypothetical $1,000 payment
DR made at the beginning of the 1-, 5-, or 10-year
periods (or since inception, if applicable) at the
end of the 1-, 5-, or 10-year periods (or since
inception, if applicable), after taxes on fund
distributions and redemption.
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Standardized average annual total return (after taxes on distributions and redemption) for Class A shares reflects the deduction of a Fund's maximum front-end sales charge at the time of purchase.
The after-tax returns assume all distributions by a Fund, less the taxes due on such distributions, are reinvested at the price calculated as stated in the prospectus on the reinvestment dates during the period. Taxes due on a Fund's distributions are calculated by applying to each component of the distribution (e.g., ordinary income and long-term capital gain) the highest corresponding individual marginal federal income tax rates in effect on the reinvestment date. The taxable amount and tax character of each distribution is as specified by the Fund on the dividend declaration date, but reflects any subsequent recharacterizations of distributions. The effect of applicable tax credits, such as the foreign tax credit, are also taken into account. The calculations only reflect federal taxes, and thus do not reflect state and local taxes or the impact of the federal alternative minimum tax.
The ending values for each period assume a complete liquidation of all shares. The ending values for each period are determined by subtracting capital gains taxes resulting from the sale of Fund shares and adding the tax benefit from capital losses resulting from the sale of Fund shares. The capital gain or loss upon sale of Fund shares is calculated by subtracting the tax basis from the proceeds. Capital gains taxes (or the benefit resulting from tax losses) are calculated using the highest federal individual capital gains tax rate for gains of the appropriate character (e.g., ordinary income or long-term) in effect on the date of the sale of Fund shares and in accordance with federal tax law applicable on that date. The calculations assume that a shareholder may deduct all capital losses in full.
The basis of shares acquired through the $1,000 initial investment are tracked separately from subsequent purchases through reinvested distributions. The basis for a reinvested distribution is the distribution net of taxes paid on the distribution. Tax basis is adjusted for any distributions representing returns of capital and for any other tax basis adjustments that would apply to an individual taxpayer.
The amount and character (i.e., short-term or long-term) of capital gain or loss upon sale of Fund shares is determined separately for shares acquired through the $1,000 initial investment and each subsequent purchase through reinvested distributions. The tax character is determined by the length of the measurement period in the case of the initial $1,000 investment and the length of the period between reinvestment and the end of the measurement period in the case of reinvested distributions.
The average annual total returns (after taxes on distributions and redemption) for each Fund, with respect to its Class A shares, for the 1, 5 and 10 year periods ended October 31, 2001 are found in each Fund's prospectus.
Yield Quotation
Yield is a function of the type and quality of a Fund's investments, the maturity of the securities held in a Fund's portfolio and the operating expense ratio of the Fund. Yield is computed in accordance with standardized formulas described below and can be expected to fluctuate from time to time and is not necessarily indicative of future results. Accordingly, yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time.
Income calculated for purposes of calculating a Fund's yield differs from income as determined for other accounting purposes. Because of the different accounting methods used, and because of the compounding assumed in yield calculations, the yield quoted for a Fund may differ from the rate of distributions from the Fund paid over the same period or the rate of income reported in the Fund's financial statements.
The standard formula for calculating yield for each Fund is as follows:
Where a = dividends and interest earned during a stated 30-day
period. For purposes of this calculation, dividends are
accrued rather than recorded on the ex-dividend date.
Interest earned under this formula must generally be
calculated based on the yield to maturity of each
obligation (or, if more appropriate, based on yield to
call date).
b = expenses accrued during period (net of reimbursements).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day of
the period.
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Performance Information
All advertisements of the Funds will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of a Fund's shares. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. Further information regarding each Fund's performance is contained in that Fund's annual report to shareholders, which is available upon request and without charge.
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing that Fund's yield and total return.
Certain Funds may participate in the initial public offering (IPO) market in some market cycles. Because of these Funds' small asset bases, any investment the Funds may make in IPOs may significantly increase these Funds' total returns. As the Funds' assets grow, the impact of IPO investments will decline, which may decrease the Funds' total returns.
The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results.
Total return and yield figures for the Funds are neither fixed nor guaranteed. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. The following is a list of such publications or media entities:
Advertising Age Forbes Nation's Business Barron's Fortune New York Times Best's Review Hartford Courant Pension World Broker World Inc. Pensions & Investments Business Week Institutional Investor Personal Investor Changing Times Insurance Forum Philadelphia Inquirer Christian Science Monitor Insurance Week USA Today Consumer Reports Investor's Business Daily U.S. News & World Report Economist Journal of the American Wall Street Journal FACS of the Week Society of CLU & ChFC Washington Post Financial Planning Kiplinger Letter CNN Financial Product News Money CNBC Financial Services Week Mutual Fund Forecaster PBS Financial World |
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services:
Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper, Inc. |
Each Fund's performance may also be compared in advertising to the performance of comparative benchmarks such as the following:
Lipper Mid-Cap Growth Fund Index Russell 3000(R) Index Lipper Large Cap Value Fund Index Russell Mid Cap Index Russell 1000 Index Standard & Poor's 500 Stock Index Russell 2500(R) Index Standard & Poor's Mid Cap 400 Index Russell 2500(R) Growth Index NASDAQ Index |
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10 year Treasury Notes
90 day Treasury Bills
Advertising for the Funds may from time to time include discussions of general economic conditions and interest rates. Advertising for such Funds may also include references to the use of those Funds as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for any of the Funds may disclose: (i) the largest holdings in the Fund's portfolio; (ii) certain selling group members; (iii) certain institutional shareholders; (iv) measurements of risk, including standard deviation, Beta and Sharpe ratios; and/or (v) capitalization and sector analyses of holdings in the Funds' portfolios.
From time to time, the Funds' sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general
information about mutual funds, discussions regarding investment styles, such as the growth, value or GARP (growth at a reasonable price) styles of investing, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation.
From time to time, AIM Dent Demographic Trends Fund's sales literature and/or advertisements may quote (i) Harry S. Dent, Jr.'s theories on why the coming decade may offer unprecedented opportunities for investors, including his opinions on the stock market outlook and where growth may be strongest; (ii) Harry S. Dent, Jr.'s opinions and theories from his books and publications, including, but not limited to, Job Shock, The Great Boom Ahead and The Roaring 2000s, including his beliefs that (a) people's spending patterns may help predict the stock market, (b) the stock market has tended to perform best when a generation has reached its peak spending years from ages 45-50, and (c) as more and more baby boomers reach their peak spending age, they could propel stock prices up for the next decade; and (iii) Harry S. Dent, Jr.'s S-curve analysis, a forecasting tool used to analyze products that show remarkable growth.
APPENDIX A
RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's, S&P and Fitch:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. These are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa in its corporate bond rating system. The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Bonds in the Aa group which Moody's believes possess the strongest investment attributes are designated by the symbol Aa1.
Note: Also, Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to B. The modifier indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic category.
MOODY'S DUAL RATINGS
In the case of securities with a demand feature, two ratings are assigned: one representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the other representing an evaluation of the degree of risk associated with the demand feature.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade or (MIG). Such ratings recognize the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term ratings, while other factors of major importance in bond risk, long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand feature variable rate demand obligation (VRDO). Such ratings will be designated as VMIG or, if the demand feature is not rated, as NR. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. Additionally, investors should be alert to the fact that the source of payment may be limited to the external liquidity with no or limited legal recourse to the issuer in the event the demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such programs are characterized as having variable short-term maturities but having neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with each symbol representing a group in which the quality characteristics are broadly the same.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months.
PRIME-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
Funds employed; conservative capitalization structures with moderate reliance on
debt and
ample asset protection; broad margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or related supported institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.
Note: A Moody's commercial paper rating may also be assigned as an evaluation of the demand feature of a short-term or long-term security with a put option.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or large exposure to adverse conditions.
S&P MUNICIPAL BOND RATINGS
An S&P municipal bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees.
The ratings are based, in varying degrees, on the following considerations: likelihood of default - capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation; nature of and provisions of the obligation; and protection
afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
Note: Ratings within the AA and A major rating categories may be modified by the addition of a plus (+) sign or minus (-) sign to show relative standing.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, AAA/A-1+). With short-term demand debt, the note rating symbols are used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access risks unique to notes. Notes maturing in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment: amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue will be treated as a note); and source of payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note).
Note rating symbols and definitions are as follows:
SP-1: Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3: Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
Rating categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
B: Issues with this rating are regarded as having only speculative capacity for timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D: Debt with this rating is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless it is believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a specific debt issue in a timely manner.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Bonds carrying the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature of taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of such information. Ratings may be changed, suspended, or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds and, therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a project or the occurrence of a specific event.
SUSPENDED: A rating is suspended when Fitch deems the amount of information available from the issuer to be inadequate for rating purposes.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper and timely information.
FITCHALERT: Ratings are placed on FitchAlert to notify investors of an occurrence that is likely to result in a rating change and the likely direction of such change. These are designated as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may be raised or lowered. FitchAlert is relatively short-term, and should be resolved within 12 months.
RATINGS OUTLOOK
An outlook is used to describe the most likely direction of any rating change over the intermediate term. It is described as "Positive" or "Negative." The absence of a designation indicates a stable outlook.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings ("BB" to "C") represent Fitch's assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an assessment of the ultimate recovery value through reorganization of liquidation.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer or possible recovery value in bankruptcy, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical credit quality since rating categories cannot fully reflect the differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified, which could assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. "DDD" represents the highest potential for recovery on these bonds, and "D" represents the lowest potential for recovery.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "DDD," "DD," or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could cause these securities to be rated below investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank.
APPENDIX B
TRUSTEES AND OFFICERS
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE OFFICER DIRECTORSHIP(S)
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
------------------------- ------- ------------------------------------------- ---------------
INTERESTED PERSON
Robert H. Grahan* -- 1946 1988 Chairman, President and Chief Executive None
Trustee, Chairman and Officer, A I M Management Group Inc.
President (financial services holding company);
Chairman and President, A I M Advisors, Inc.
(registered investment advisor); Chairman,
A I M Capital Management, Inc. (registered
investment advisor), A I M Distributors,
Inc. (registered broker dealer), A I M Fund
Services, Inc., (registered transfer agent);
and Fund Management Company (registered
broker dealer); and Director and Vice
Chairman, AMVESCAP PLC (parent of AIM and a
global investment management firm)
INDEPENDENT TRUSTEES
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds,
Trustee Inc. (registered
investment
company)
Bruce L. Crockett -- 1944 1993 Chairman, Crockett Technology Associates ACE Limited
Trustee (technology consulting company) (insurance
company); and
Captaris, Inc.
(unified messaging
provider)
Albert R. Dowden -- 1941 2000 Chairman, Cortland Trust, Inc. (registered None
Trustee investment company) and DHJ Media, Inc.;
Director, Magellan Insurance Company; Member
of Advisory Board of Rotary Power
International (designer, manufacturer, and
seller of rotary power engines); formerly,
Director, President and CEO, Volvo Group
North America, Inc.; and director of
various affiliated Volvo companies
|
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE OFFICER DIRECTORSHIP(S)
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
------------------------- ------- ------------------------------------------- ---------------
INDEPENDENT TRUSTEES
Edward K. Dunn, Jr. -- 1935 1998 Formerly, Chairman, Mercantile Mortgage None
Trustee Corp.; Vice Chairman, President and
Chief Operating Officer, Mercantile-Safe
Deposit & Trust Co.; and President,
Mercantile Bankshares Corp.
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Administaff
Trustee Century Group, Inc. (government affairs
company)
Carl Frischling** -- 1937 1988 Partner, law firm of Kramer Levin Naftalis Cortland Trust,
Trustee and Frankel LLP Inc. (registered
investment company)
Prema Mathai-Davis -- 1950 1998 Formerly, Chief Executive Officer, YWCA None
Trustee of the USA
Lewis F. Pennock -- 1942 1988 Partner, law firm of Pennock & Cooper None
Trustee
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
Louis S. Sklar -- 1939 1989 Executive Vice President, Development and None
Trustee Operations, Hines Interests Limited
Partnership (real estate development
company)
OTHER OFFICERS
Gary T. Crum -- 1947 1988 Director, Chief Executive Officer - N/A
Senior Vice President Director of Investments, A I M Capital
Management, Inc.; Director and Executive
Vice President, A I M Management Group
Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and
AMVESCAP PLC (parent of AIM and a global
investment management firm)
|
TRUSTEE
NAME, YEAR OF BIRTH AND AND/OR OTHER
POSITION(S) HELD WITH THE OFFICER DIRECTORSHIP(S)
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
------------------------- ------- ------------------------------------------- ---------------
OTHER OFFICERS
Carol F. Relihan -- 1954 1988 Director, Senior Vice President, General N/A
Senior Vice President and Counsel and Secretary, A I M Advisors,
Secretary Inc. and A I M Management Group Inc.;
Director, Vice President and General
Counsel, Fund Management Company; and
Vice President, A I M Fund Services,
Inc., A I M Capital Management, Inc. and
A I M Distributors, Inc.
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance N/A
Vice President Officer, A I M Advisors, Inc. and A I M
Capital Management, Inc.; and Vice
President, A I M Fund Services, Inc.
Edgar M. Larsen -- 1940 1999 Vice President, A I M Advisors, Inc.; N/A
Vice President and President and Chief Investment
Officer, A I M Capital Management, Inc.
Dana R. Sutton -- 1959 1988 Vice President and Fund Treasurer, A I M N/A
Vice President and Treasurer Advisors, Inc.
|
TRUSTEE OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2001
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
INVESTMENT COMPANIES OVERSEEN BY
NAME OF TRUSTEE DOLLAR RANGE OF EQUITY SECURITIES TRUSTEE IN THE AIM FAMILY OF
PER FUND FUNDS--Registered Trademark--
--------------------- ------------------------------------------------ --------------------------------
Robert H. Graham Aggressive Growth Over $100,000 Over $100,000(1)
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation Over $100,000
Emerging Growth $50,001 - $100,000
Weingarten Over $100,000
Frank S. Bayley - 0 - $10,001 - $50,000
Bruce L. Crockett Aggressive Growth $1 - $10,000 $1 - $10,000
Charter $1 - $10,000
Constellation $1 - $10,000
Weingarten $1 - $10,000
Owen Daly II Aggressive Growth $1 - $10,000 Over $100,000(1)
Blue Chip $10,001 - $50,000
Charter $50,001 - $100,000
Constellation $1 - $10,000
Large Cap Basic Value Over $100,000
Albert R. Dowden Blue Chip $10,001 - $50,000 Over $100,000(1)
Edward K. Dunn, Jr. Capital Development Over $100,000 Over $100,000(1)
Jack M. Fields Blue Chip $10,001 - $50,000 Over $100,000(1)
Charter $50,001 - $100,000
Constellation $50,001 - $100,000
Weingarten $50,001 - $100,000
|
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
INVESTMENT COMPANIES OVERSEEN BY
NAME OF TRUSTEE DOLLAR RANGE OF EQUITY SECURITIES TRUSTEE IN THE AIM FAMILY OF
PER FUND FUNDS--Registered Trademark--
--------------------- ------------------------------------------------ --------------------------------
Carl Frischling Aggressive Growth $50,001 - $100,000 Over $100,000(1)
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation Over $100,000
Weingarten $50,001 - $100,000
Prema Mathai-Davis Aggressive Growth $50,001 - $100,000 Over $100,000(1)
Blue Chip $10,001 - $50,000
Large Cap Basic Value $10,001 - $50,000
Lewis F. Pennock Charter $10,001 - $50,000 $10,001 - $50,000
Ruth H. Quigley -0- $1 - $10,000
Louis S. Sklar Aggressive Growth $50,001 - $100,000 Over $100,000(1)
Charter Over $100,000
Constellation Over $100,000
Weingarten Over $100,000
|
APPENDIX C
TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with AIM during the year ended December 31, 2001:
RETIREMENT
AGGREGATE BENEFITS ESTIMATED TOTAL
COMPENSATION FROM ACCRUED ANNUAL COMPENSATION
THE BY ALL BENEFITS UPON FROM ALL AIM
TRUSTEE TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4)(5)
------------------- ----------------- ------------ -------------- -------------
Frank S. Bayley(6) $ 2,213 -0- $75,000 $ 112,000
Bruce L. Crockett 28,969 $ 36,312 75,000 126,500
Owen Daly II(7) 28,969 33,318 75,000 126,500
Albert R. Dowden 25,600 3,193 75,000 126,500
Edward K. Dunn, Jr. 28,969 8,174 75,000 126,500
Jack M. Fields 28,616 19,015 75,000 126,000
Carl Frischling(8) 28,873 54,394 75,000 126,000
Prema Mathai-Davis 28,969 21,056 75,000 126,500
Lewis F. Pennock 28,969 37,044 75,000 126,500
Ruth H. Quigley(6) 2,309 -0- 75,000 112,500
Louis S. Sklar 28,108 53,911 75,000 123,000
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended October 31, 2001, including earnings, was $257,401.
(2) During the fiscal year ended October 31, 2001, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $116,956.
(3) Amounts shown assume each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as directors or trustees of sixteen registered investment companies advised by AIM.
(5) During the fiscal year ended October 31, 2001, the Trust received reimbursement for compensation paid to the trustees of $8,101. During the year ended December 31, 2001, all AIM Funds received reimbursement of total compensation paid to trustees of $31, 500.
(6) Mr. Bayley and Miss Quigley were elected to serve as trustees on September 28, 2001.
(7) Mr. Daly retired as trustee on December 31, 2001.
(8) During the fiscal year ended October 31, 2001, the Trust paid $98,704 in legal fees to Kramer Levin Naftalis & Frankel LLP for services rendered by such firm as counsel to the independent trustees of the Trust. Mr. Frischling is a partner of such firm.
APPENDIX D
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding shares of each class of the Trust's equity securities and the percentage of the outstanding shares held by such holders are set forth below. Unless otherwise indicated below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
A shareholder who owns beneficially 25% or more of the outstanding securities of a Fund is presumed to "control" that Fund as defined in the 1940 Act. Such control may affect the voting rights of other shareholders.
All information listed below is as of February 4, 2002.
AIM AGGRESSIVE GROWTH FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith 10.12% -- 15.31% N/A
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
The Manufacturers Life Insurance Company'
C/O Manulife Financial USA 8.47% -- -- N/A
Attn: Rosie Chuck SRS Acctg
250 Bloor St East, 7th Floor
Toronto, Ontario, Canada M4WIE5
|
AIM BLUE CHIP FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 8.60% 9.37% 17.70% N/A
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Banc One Securities Corp FBO
The One Investment Solution -- -- 7.05% N/A
Attn: Wrap Processing OH1-1244
1111 Polaris Pkwy, Suite J-2
Columbus, OH 43240-1244
|
AIM CAPITAL DEVELOPMENT FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 10.25% 12.27% 15.46% N/A
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
Coastgear & Company
State Street Bank & Trust -- -- 7.45% N/A
Attn: Kevin Smith
105 Rosemont Avenue
Westwood, MA 02090
|
AIM CHARTER FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 11.18% 7.63% 14.85% --
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
Great-West Life and Annuity Insurance
Company 6.74% -- -- --
401(k) Unit Valuations
Attn Mutual Fund Trading 2T2
8515 E. Orchard
Englewood, CO 80111
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Ruth and Ted Bauer
Family Foundation -- -- -- 11.60%
11 Greenway Plaza, Suite 2600
Houston, TX 77046-1173
City National Bank
Attn: Trust Operations/Mutual Funds -- -- -- 8.91%
P.O. Box 60520
Los Angeles, CA 90060-0520
City of Springfield, Trustee, FBO
City of Springfield, 457 DCP -- -- -- 6.13%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
Town of Watertown, Trustee
FBO: Town of Watertown -- -- -- 6.02%
457 Deferred Compensation Plan
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
Steamship Authority, Trustee
FBO: Woods Hole, Martha's Vineyard's -- -- -- 5.19%
Nantucket 456 DCP
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
|
AIM CONSTELLATION FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 13.16% 6.39% 20.21% --
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
Banc One Securities Corp FBO
The One Investment Solution -- -- 5.99% --
Attn: Wrap Processing OH1-1244
1111 Polaris Pkwy, Suite J-2
Columbus, OH 43240-1244
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Ohio Public
Employees Deferred Compensation -- -- -- 65.53%
172 E. State Street
Columbus, OH 43215
Wells Fargo Bank West NA Cust.
City of Houston -- -- -- 12.48%
457 Deferred Compensation Plan
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
Nationwide Insurance Company-DCVA
C/O IPO Portfolio Accounting -- -- -- 8.83%
P.O. Box 182029
Columbus, OH 43218
State of Vermont Deferred Comp
C/O Copeland Companies -- -- -- 7.59%
Attn: Planned Valuation Services
2 Tower Center
East Brunswick, NJ 08816-0000
|
AIM CORE STRATEGIES FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
------------------- ---------- ---------- ----------
A I M Advisors, Inc.**
Attn: David Hessel 100.00%* 100.00%* 100.00%*
11 Greenway Plaza, Suite 100
Houston, TX 77046
|
* Owned of record and beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM DENT DEMOGRAPHIC TRENDS FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
------------------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 7.22% 13.76% 19.79%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM EMERGING GROWTH FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
------------------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 9.08% 8.30% 24.26%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM LARGE CAP BASIC VALUE FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
------------------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 32.12% 16.38% 20.56%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM LARGE CAP CORE EQUITY FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
------------------- ---------- ---------- ----------
A I M Advisors, Inc.**
Attn: David Hessel 54.03%* 65.47%* 98.35%*
11 Greenway Plaza, Suite 100
Houston, TX 77046
Gary Saginor TTEE
The Nina Firestone Trust DTD -- 10.86% --
11/07/2001
2500 N Military Trail, Suite 285
Boca Raton, FL 33431-0000
Alberta M. Flynt -- 6.15% --
1427 Oak Street
Flowood, MS 39208-0000
Willie Thomas Havard
Credit Shelter Tr -- 5.49% --
U/W DTD 02/12/1998
137 Villa Way
Clinton, MS 39056-0000
|
* Owned of record and beneficially.
** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM LARGE CAP GROWTH FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
------------------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 10.22% 9.76% 16.28%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM MID CAP GROWTH FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
------------------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 7.04% 13.74% 18.00%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM WEINGARTEN FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 13.49% 7.72% 17.91% --
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
Great-West Life and Annuity Insurance Co.
401(k) Unit Valuations 5.36% -- -- --
Attn: Mutual Fund Trading 2T2
8515 E. Orchard Rd
Englewood, CO 80111-0000
Fleet National Bank
Attn: Various C/R -- -- -- 28.51%
P.O. Box 92800
Rochester, NY 14692
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
------------------- ---------- ---------- ---------- ----------
AIM Foundation
Attn: Patricia Lewis -- -- -- 20.38%
11 Greenway Plaza, Suite 2600
Houston, TX 77046
David, Leary, Trustee
FBO: Town of Weymouth -- -- -- 7.43%
457 Deferred Compensation Plan
C/O. Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
Town of Watertown, Trustee
FBO: Town of Watertown -- -- -- 6.33%
457 Deferred Compensation Plan
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
Obie & Co. FBO
Joshua Michael Grayson Trust -- -- -- 6.24%
Mutual Fund Unit 16 HCB 40
P.O. Box 200547
Houston, TX 77216
|
MANAGEMENT OWNERSHIP
As of February 4, 2002, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of AIM Aggressive Growth Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Core Strategies Fund, AIM Dent Demographic Trends Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Core Equity Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund, and AIM Weingarten Fund. In addition, as of February 4, 2002, the trustees and officers as a group owned 1.03% of Class A shares of AIM Emerging Growth Fund and 1.51% of Class A shares of AIM Blue Chip Fund.
APPENDIX E
MANAGEMENT FEES
For the last three fiscal years ended October 31, the management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund were as follows:
2001 2000
------------------------------------------- -------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
--------- ------------- ------------ -------------- ------------ ------------ --------------
AIM Aggressive $ 23,755,259 $ 7,508 $ 23,747,751 $ 26,977,097 -0- $ 26,977,097
Growth Fund
AIM Blue Chip Fund $ 35,318,225 $ 153,216 $ 35,165,009 $ 36,923,601 $ 70,387 $ 36,853,214
AIM Capital $ 8,548,376 $ 3,281 $ 8,545,095 $ 9,200,414 -0- $ 9,200,414
Development Fund
AIM Charter Fund $ 43,928,613 $ 504,457 $ 43,424,156 $ 56,142,463 $ 1,484,073 $ 54,658,390
AIM Constellation $ 93,618,688 $ 3,749,927 $ 89,868,761 $128,677,520 $ 6,187,566 $122,489,954
Fund
AIM Core N/A N/A N/A N/A N/A N/A
Strategies Fund*
AIM Dent
Demographic Trends $ 10,214,781 $ 1,945 $ 10,212,836 $ 10,757,633 -0- $ 10,757,633
Fund
AIM Emerging $ 1,912,682 $ 261,774 $ 1,650,908 $ 908,443 -0- $ 908,443
Growth Fund**
AIM Large Cap $ 537,749 $ 85,532 $ 452,217 $ 12,555 $ 12,555 -0-
Basic Value Fund
AIM Large Cap Core N/A N/A N/A N/A N/A N/A
Equity Fund*
AIM Large Cap $ 3,378,201 $ 1,590 $ 3,376,611 $ 1,064,335 -0- $ 1,064,335
Growth Fund
AIM Mid Cap Growth $ 1,860,437 $ 875 $ 1,859,562 $ 1,125,851 -0- $ 1,125,851
Fund***
AIM Weingarten Fund $ 46,064,764 $ 584,500 $ 45,480,264 $ 75,218,931 $ 5,181,384 $ 70,073,547
1999
---------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAID
--------- ------------ ------------- --------------
AIM Aggressive $ 17,085,022 -0- $ 17,085,022
Growth Fund
AIM Blue Chip Fund $ 21,592,076 -0- $ 21,592,076
AIM Capital $ 8,102,504 -0- $ 8,102,504
Development Fund
AIM Charter Fund $ 41,014,707 $ 1,130,089 $ 39,884,618
AIM Constellation $ 90,458,750 $ 3,107,849 $ 87,350,901
Fund
AIM Core N/A N/A N/A
Strategies Fund*
AIM Dent
Demographic Trends $ 690,278 $ 43,724 $ 646,554
Fund
AIM Emerging N/A N/A N/A
Growth Fund**
AIM Large Cap $ 2,279 $ 2,279 -0-
Basic Value Fund
AIM Large Cap Core N/A N/A N/A
Equity Fund*
AIM Large Cap $ 42,255 $ 32,079 $ 10,176
Growth Fund
AIM Mid Cap Growth N/A NA N/A
Fund***
AIM Weingarten Fund $ 54,999,214 $ 4,288,405 $ 50,710,809
|
* Commenced operations on December 31, 2001
** Commenced operations on March 31, 2000
*** Commenced operations on November 1, 1999
For the last three fiscal periods or years ended October 31, the sub-advisory fees paid by AIM Advisors to H.S. Dent Advisors, Inc. with respect to services provided to the AIM Dent Demographic Trends Funds were as follows:
2001 2000 1999
---- ---- ----
AIM Dent Demographic Trends Fund....... $2,403,478 $2,531,208 $105,572
|
APPENDIX F
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last three fiscal years ended October 31:
FUND NAME 2001 2000 1999
--------- ---- ---- ----
AIM Aggressive Growth Fund $276,738 $233,230 $126,956
AIM Blue Chip Fund $331,400 $280,996 $153,309
AIM Capital Development Fund $160,775 $147,339 $111,632
AIM Charter Fund $383,570 $383,224 $235,274
AIM Constellation Fund $622,082 $731,392 $431,120
AIM Core Strategies Fund* N/A N/A N/A
AIM Dent Demographic Trends Fund $151,955 $142,614 $ 16,849
AIM Emerging Growth Fund** $ 50,000 $ 29,235 N/A
AIM Large Cap Basic Value Fund $ 50,000 $ 50,000 $ 16,849
AIM Large Cap Core Equity Fund* N/A N/A N/A
AIM Large Cap Growth Fund $110,085 $ 50,000 $ 29,197
AIM Mid Cap Growth Fund*** $ 50,000 $ 50,000 N/A
AIM Weingarten Fund $392,623 $473,764 $281,500
|
* Commenced operations on December 31, 2001 ** Commenced operations on March 31, 2000 *** Commenced operations on November 1, 1999
APPENDIX G
BROKERAGE COMMISSIONS
Brokerage commissions paid by each of the Funds listed below during the last three fiscal years or period ended October 31, were as follows:
FUND 2001 2000 1999
---- ---- ---- ----
AIM Aggressive Growth Fund $ 6,473,868 $ 4,003,829 $ 3,536,558
AIM Blue Chip Fund 3,838,893 3,087,012 2,695,856
AIM Capital Development Fund 4,153,032 2,924,761 3,324,179
AIM Charter Fund 12,104,855 10,479,914 11,856,871
AIM Constellation Fund 23,003,818 25,382,535 20,108,956
AIM Core Strategies Fund* N/A N/A N/A
AIM Dent Demographic Trends Fund 3,053,966 1,831,365 250,423
AIM Emerging Growth Fund** 1,016,711 136,048 N/A
AIM Large Cap Basic Value Fund 235,562 8,679 1,021
AIM Large Cap Core Equity Fund* N/A N/A N/A
AIM Large Cap Growth Fund 891,255 284,025 6,178
AIM Mid Cap Growth Fund*** 801,920 361,741 N/A
AIM Weingarten Fund 30,640,967 21,922,844 20,226,511
|
* Commenced operations on December 31, 2001 ** Commenced operations on March 31, 2000. *** Commenced operations on November 1, 1999.
The increase in the brokerage commissions paid by each of AIM Aggressive Growth Fund, AIM Dent Demographic Trends Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund and AIM Weingarten Fund for the fiscal year ended October 31, 2001, as compared to the two prior fiscal years, was due to fluctuations in asset levels, increased portfolio turnover and record market volatility.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended October 31, 2001, each Fund allocated the following amount of transactions to broker-dealers that provided AIM with certain research, statistics and other information:
Related
Fund Transactions Brokerage Commissions
---- ------------ ---------------------
AIM Aggressive Growth Fund $ 761,312,304 $ 1,218,904
AIM Blue Chip Fund 360,119,191 425,758
AIM Capital Development Fund 229,225,331 368,662
AIM Charter Fund 992,753,189 1,258,184
AIM Constellation Fund 1,356,784,301 1,734,767
AIM Core Strategies Fund* N/A N/A
AIM Dent Demographic Trends Fund 246,687,551 315,786
AIM Emerging Growth Fund 72,094,813 131,754
AIM Large Cap Basic Value Fund 6,447,087 10,915
AIM Large Cap Core Equity Fund* N/A N/A
AIM Large Cap Growth Fund 78,971,057 88,942
AIM Mid Cap Growth Fund 58,924,933 93,873
AIM Weingarten Fund 3,297,364,386 3,239,006
|
* Commenced operations on December 31, 2001
During the last fiscal year ended October 31, 2001, the Funds held securities issued by the following companies, which are "regular" brokers or dealers of one or more of the Funds identified below:
Fund Security Market Value
---- -------- ------------
AIM Aggressive Growth Fund
Legg Mason Common Stock $ 16,844,000
AIM Blue Chip Fund
Merrill Lynch & Co., Inc. Common Stock 63,379,500
Morgan Stanley Dean Witter & Co. Common Stock 70,934,000
AIM Capital Development Fund
Legg Mason Common Stock 6,110,161
AIM Charter Fund
Goldman Sachs Group, Inc. Common Stock 50,804,000
Merrill Lynch & Co., Inc. Common Stock 76,492,500
Morgan Stanley Dean Witter & Co. Common Stock 146,760,000
AIM Constellation Fund
Goldman Sachs Group, Inc. Common Stock 265,744,000
Merrill Lynch & Co., Inc. Common Stock 180,085,200
Morgan Stanley Dean Witter & Co. Common Stock 195,680,000
AIM Dent Demographic Trends Fund
Goldman Sachs Group, Inc. Common Stock 11,724,000
Lehman Brothers Holdings Inc. Common Stock 6,246,000
|
Merrill Lynch & Co., Inc. Common Stock 12,020,250 Morgan Stanley Dean Witter & Co. Common Stock 14,676,000 AIM Large Cap Growth Fund Goldman Sachs Group, Inc. Common Stock 4,533,280 Morgan Stanley Dean Witter & Co. Common Stock 5,185,520 AIM Mid Cap Growth Fund Lehman Brothers Holdings Inc. Common Stock 936,900 |
APPENDIX I
AMOUNTS PAID TO A I M DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLANS
LIST OF AMOUNTS PAID BY EACH CLASS OF SHARES TO AIM DISTRIBUTORS
PURSUANT TO THE PLANS FOR THE FISCAL YEAR OR PERIOD ENDED OCTOBER 31, 2001.
CLASS A CLASS B CLASS C
FUND SHARES SHARES SHARES
---- ------- ------- -------
AIM Aggressive Growth Fund $ 8,262,356 $ 3,431,496 $ 1,107,492
AIM Blue Chip Fund 9,264,516 23,065,985 6,273,129
AIM Capital Development Fund 2,371,880 5,430,170 770,433
AIM Charter Fund 12,930,396 23,400,806 3,339,941
AIM Constellation Fund 40,107,085 10,331,953 3,343,201
AIM Core Strategies Fund* N/A N/A N/A
AIM Dent Demographic Trends Fund 1,604,512 5,263,422 2,169,648
AIM Emerging Growth Fund 402,908 757,676 341,372
AIM Large Cap Basic Value Fund 149,015 339,904 130,588
AIM Large Cap Core Equity Fund* N/A N/A N/A
AIM Large Cap Growth Fund 653,446 1,897,704 739,577
AIM Mid Cap Growth Fund 366,213 990,139 289,085
AIM Weingarten Fund 17,315,069 12,957,576 2,097,259
|
* Commenced operations on December 31, 2001
APPENDIX J
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS
An estimate by category of the allocation of actual fees paid by Class A Shares of the Funds during the fiscal year ended October 31, 2001, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
----------- ---------- -------- ------------ ------------
AIM Aggressive Growth Fund $ -0- -0- -0- -0- 8,262,356
AIM Blue Chip Fund 797,223 54,839 211,364 -0- 8,201,090
AIM Capital Development Fund 235,815 17,242 70,056 -0- 2,048,766
AIM Charter Fund 850,892 57,781 220,689 -0- 11,801,034
AIM Constellation Fund 2,600,033 175,435 668,002 -0- 36,663,615
AIM Core Strategies Fund* N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 236,619 15,376 58,372 -0- 1,294,145
AIM Emerging Growth Fund 48,715 3,003 10,844 -0- 340,346
AIM Large Cap Basic Value Fund 13,557 958 4,354 -0- 130,146
AIM Large Cap Core Equity Fund* N/A N/A N/A N/A N/A
AIM Large Cap Growth Fund 81,307 5,041 17,503 -0- 549,595
AIM Mid Cap Growth Fund 45,429 3,082 10,463 -0- 307,239
AIM Weingarten Fund 1,273,346 85,711 325,167 -0- 15,630,845
|
* Commenced operations on December 31, 2001.
An estimate by category of the allocation of actual fees paid by Class B Shares of the Funds during the fiscal year ended October 31, 2001, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
----------- ---------- -------- ------------ ------------
AIM Aggressive Growth Fund $ 236,068 15,570 58,978 2,573,622 547,258
AIM Blue Chip Fund 773,422 51,838 194,647 17,299,489 4,746,589
AIM Capital Development Fund 63,651 4,365 18,335 4,072,628 1,271,191
AIM Charter Fund 631,035 41,867 159,030 17,550,604 5,018,270
AIM Constellation Fund 426,152 28,741 106,831 7,748,965 2,021,264
AIM Core Strategies Fund* N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 249,312 16,183 58,999 3,947,566 991,362
AIM Emerging Growth Fund 60,743 3,877 12,565 568,257 112,234
AIM Large Cap Basic Value Fund 15,604 1,093 5,313 254,928 62,965
AIM Large Cap Core Equity Fund* N/A N/A N/A N/A N/A
AIM Large Cap Growth Fund 197,066 11,943 41,470 1,423,278 223,947
AIM Mid Cap Growth Fund 62,140 3,966 15,739 742,604 165,690
AIM Weingarten Fund 412,120 27,162 100,599 9,718,182 2,699,513
|
* Commenced operations on December 31, 2001.
An estimate by category of the allocation of actual fees paid by Class C shares of the Funds during the fiscal year ended October 31, 2001, follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION
----------- ---------- -------- ------------ ------------
AIM Aggressive Growth Fund $ 82,043 5,470 21,878 486,265 511,836
AIM Blue Chip Fund 284,034 19,040 71,311 1,663,676 4,235,068
AIM Capital Development Fund 16,000 1,212 4,490 102,644 646,087
AIM Charter Fund 200,101 13,273 48,637 1,135,076 1,942,854
AIM Constellation Fund 152,709 10,177 37,693 820,085 2,322,537
AIM Core Strategies Fund* N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 143,802 9,494 34,615 796,325 1,185,413
AIM Emerging Growth Fund 25,723 1,550 7,177 146,628 160,294
AIM Large Cap Basic Value Fund 7,604 533 2,219 51,039 69,193
AIM Large Cap Core Equity Fund* N/A N/A N/A N/A N/A
AIM Large Cap Growth Fund 85,119 5,015 18,027 437,560 193,856
AIM Mid Cap Growth Fund 24,045 1,433 4,777 128,982 129,848
AIM Weingarten Fund 114,303 7,296 27,022 650,979 1,297,659
|
* Commenced operations on December 31, 2001.
APPENDIX K
TOTAL SALES CHARGES
The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by AIM Distributors for the last three fiscal periods or years ending October 31:
2001 2000 1999
---- ---- ----
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
------- -------- ------- -------- ------- --------
AIM Aggressive Growth Fund $ 6,941,065 $ 1,042,378 $13,013,259 $ 2,075,726 $ 4,551,806 $ 11,447
AIM Blue Chip Fund 10,186,805 1,504,443 18,764,141 2,876,209 17,947,219 2,766,794
AIM Capital Development Fund 1,471,704 217,702 1,986,868 309,839 2,418,486 386,856
AIM Charter Fund 8,482,508 1,267,570 21,686,299 3,447,012 13,015,260 2 030,454
AIM Constellation Fund 18,221,618 2,721,593 32,281,350 5,088,774 20,107,015 3,182,696
AIM Core Strategies Fund* N/A N/A N/A N/A N/A N/A
AIM Dent Demographic Trends Fund 3,448,426 505,337 13,202,030 2,007,746 3,822,764 551,702
AIM Emerging Growth Fund** 711,947 108,381 2,135,371 336,338 N/A N/A
AIM Large Cap Basic Value Fund 838,531 120,808 80,721 12,029 0 0
AIM Large Cap Core Equity Fund* N/A N/A N/A N/A N/A N/A
AIM Large Cap Growth Fund* 2,588,386 403,111 3,837,030 577,198 80,087 12,562
AIM Mid Cap Growth Fund*** 1,057,009 162,126 2,652,130 422,379 N/A N/A
AIM Weingarten Fund 9,137,102 1,394,055 23,882,434 3,854,495 13,839,324 2,209,013
|
* Commended operations on December 31, 2001 ** Commenced operations on March 31,2000 *** Commenced operations on November 1, 1999
The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C shareholders and retained by AIM Distributors for the last three fiscal periods or years ended October 31:
2001 2000 1999
---- ---- ----
AIM Aggressive Growth Fund $127,954 $ 55,615 $ 45,944
AIM Blue Chip Fund 251,600 197,230 177,813
AIM Capital Development Fund 19,079 22,923 120,769
AIM Charter Fund 191,689 148,823 96,080
AIM Constellation Fund 317,491 411,140 605,519
AIM Core Strategies Fund* N/A N/A N/A
AIM Dent Demographic Trends Fund 152,995 91,369 3,886
AIM Emerging Growth Fund** 50,717 9,199 N/A
AIM Large Cap Basic Value Fund 31,559 502 0
AIM Large Cap Core Equity Fund* N/A N/A N/A
AIM Large Cap Growth Fund 97,612 15,696 373
AIM Mid Cap Growth Fund*** 26,251 23,692 N/A
AIM Weingarten Fund 163,986 139,887 156,642
|
* Commended operations on December 31, 2001 ** Commenced operations on March 31,2000 *** Commenced operations on November 1, 1999
APPENDIX L
PERFORMANCE DATA
The average annual total returns (with sales load) for each Fund, with respect to its Class A shares, for the periods ended October 31, 2001, are as follows:
PERIODS ENDED
OCTOBER 31, 2001
----------------
SINCE INCEPTION
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION DATE
--------------- ------ ------- -------- -------- -------- --------- ---------
AIM Aggressive Growth Fund -43.77% 2.61% 13.77% 12.95% N/A 12.78% 05/01/84
AIM Blue Chip Fund -38.69% 6.44% 10.28% N/A N/A 10.27% 02/04/87
AIM Capital Development Fund -26.07% 7.75% N/A N/A N/A 9.29% 06/17/96
AIM Charter Fund -42.12% 4.73% 8.29% 11.00% 11.83% 12.26% 11/26/68
AIM Constellation Fund -46.23% 2.83% 10.47% 13.38% 13.46% 15.62% 04/30/76
AIM Core Strategies Fund N/A N/A N/A N/A N/A N/A 12/31/01
AIM Dent Demographic Trends Fund -53.25% N/A N/A N/A N/A -12.78% 06/07/99
AIM Emerging Growth Fund -48.42% N/A N/A N/A N/A -32.02% 03/31/00
AIM Large Cap Basic Value Fund -13.67% N/A N/A N/A N/A 3.06% 06/30/99
AIM Large Cap Core Equity Fund N/A N/A N/A N/A N/A N/A 12/31/01
AIM Large Cap Growth Fund -53.01% N/A N/A N/A N/A -6.36% 03/01/99
AIM Mid Cap Growth Fund -43.63% N/A N/A N/A N/A -9.95% 11/01/99
AIM Weingarten Fund -50.28% 1.66% 6.53% 10.07% 12.78% 12.69% 06/17/69
|
The average annual total returns (with sales load) for each Fund, with respect to its Class B shares, for the periods ended October 31, 2001, are as follows:
PERIODS ENDED
OCTOBER 31, 2001
----------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS INCEPTION DATE
-------------- ------ ------- --------- ---------
AIM Aggressive Growth Fund -43.23% N/A 2.82% 03/01/99
AIM Blue Chip Fund -38.79% 6.60% 7.01% 10/01/96
AIM Capital Development Fund -25.62% 7.92% 7.59% 10/01/96
AIM Charter Fund -42.01% 4.84% 7.85% 06/26/95
AIM Constellation Fund -45.73% N/A -1.42% 11/03/97
AIM Core Strategies Fund N/A N/A N/A 12/31/01
AIM Dent Demographic Trends Fund -53.31% N/A -12.41% 06/07/99
AIM Emerging Growth Fund -48.39% N/A -31.73% 03/31/00
AIM Large Cap Basic Value Fund -13.77% N/A -2.78% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A 12/31/01
AIM Large Cap Growth Fund -53.04% N/A -9.97% 04/05/99
AIM Mid Cap Growth Fund -43.67% N/A -9.93% 11/01/99
AIM Weingarten Fund -49.96% 1.82% 5.17% 06/26/95
|
The average annual total returns (with sales load) for each Fund, with respect to its Class C shares, for the periods ended October 31, 2001, are as follows:
PERIODS ENDED
OCTOBER 31, 2001
----------------
INCEPTION
CLASS C SHARES: 1 YEAR SINCE INCEPTION DATE
-------------- ------ --------------- ---------
AIM Aggressive Growth Fund -41.32% 3.65% 03/01/99
AIM Blue Chip Fund -36.17% 1.19% 08/04/97
AIM Capital Development Fund -22.96% 4.78% 08/04/97
AIM Charter Fund -39.78% -0.61% 08/04/97
AIM Constellation Fund -43.95% -1.10% 08/04/97
AIM Core Strategies Fund N/A N/A 12/31/01
AIM Dent Demographic Trends Fund -51.34% -11.30% 06/07/99
AIM Emerging Growth Fund -46.27% -30.04% 03/31/00
AIM Large Cap Basic Value Fund -10.15% 0.43% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A 12/31/01
AIM Large Cap Growth Fund -51.09% -8.90% 04/05/99
AIM Mid Cap Growth Fund -41.34% -8.08% 11/01/99
AIM Weingarten Fund -48.21% -3.47% 08/04/97
|
The cumulative total returns (with sales load) for each Fund, with respect to its Class A shares, for the periods ended October 31, 2001 are as follows:
PERIODS ENDED
OCTOBER 31, 2001
----------------
SINCE INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION DATE
-------------- ------ ------- -------- -------- -------- --------- ---------
AIM Aggressive Growth Fund -43.77% 13.77% 263.35% 521.64% N/A 720.20% 05/01/84
AIM Blue Chip Fund -38.69% 36.64% 165.93% N/A N/A 322.19% 02/04/87
AIM Capital Development Fund -26.07% 45.22% N/A N/A N/A 61.14% 06/17/96
AIM Charter Fund -42.12% 26.02% 121.72% 378.64% 835.26% 4405.37% 11/26/68
AIM Constellation Fund -46.23% 14.96% 170.79% 557.84% 1148.88% 3949.79% 04/30/76
AIM Core Strategies Fund N/A N/A N/A N/A N/A N/A 12/31/01
AIM Dent Demographic Trends Fund -53.25% N/A N/A N/A N/A -27.98% 06/07/99
AIM Emerging Growth Fund -48.42% N/A N/A N/A N/A -45.79% 03/31/00
AIM Large Cap Basic Value Fund -13.67% N/A N/A N/A N/A 7.29% 06/30/99
AIM Large Cap Core Equity Fund N/A N/A N/A N/A N/A N/A 12/31/01
AIM Large Cap Growth Fund -53.01% N/A N/A N/A N/A -16.08% 03/01/99
AIM Mid Cap Growth Fund -43.63% N/A N/A N/A N/A -18.90% 11/01/99
AIM Weingarten Fund -50.28% 8.60% 88.18% 321.57% 1007.36% 4683.39% 06/17/69
|
The cumulative total returns (with sales load) for each Fund, with respect to its Class B shares, for the periods ended October 31, 2001 are as follows:
PERIODS ENDED
OCTOBER 31, 2000
----------------
SINCE INCEPTION
CLASS B SHARES: 1 YEAR 5 YEARS INCEPTION DATE
-------------- ------ ------- --------- ---------
AIM Aggressive Growth Fund -43.23% N/A 7.70% 03/01/99
AIM Blue Chip Fund -38.79% 37.67% 41.07% 10/01/96
AIM Capital Development Fund -25.62% 46.42% 45.04% 10/01/96
AIM Charter Fund -42.01% 26.67% 61.54% 06/26/95
AIM Constellation Fund -45.73% N/A -5.55% 11/03/97
AIM Core Strategies Fund N/A N/A N/A 12/31/01
AIM Dent Demographic Trends Fund -53.31% N/A -27.25% 06/07/99
AIM Emerging Growth Fund -48.39% N/A -45.42% 03/31/00
AIM Large Cap Basic Value Fund -13.77% N/A -3.46% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A N/A 12/31/01
AIM Large Cap Growth Fund 53.04% N/A -23.69% 04/05/99
AIM Mid Cap Growth Fund -43.67% N/A -18.88% 11/01/99
AIM Weingarten Fund -49.96% 9.43% 37.73% 06/26/95
|
The cumulative total returns (with sales load) for each Fund, with respect to its Class C shares, for the periods ended October 31, 2001 are as follows:
SINCE INCEPTION
CLASS C SHARES: 1 YEAR INCEPTION DATE
-------------- ------ --------- ---------
AIM Aggressive Growth Fund -41.32% 10.05% 03/01/99
AIM Blue Chip Fund -36.17% 5.15% 08/04/97
AIM Capital Development Fund -22.96% 21.92% 08/04/97
AIM Charter Fund -39.78% -2.54% 08/04/97
AIM Constellation Fund -43.95% -4.59% 08/04/97
AIM Core Strategies Fund N/A N/A 12/31/01
AIM Dent Demographic Trends Fund -51.34% -25.00% 06/07/99
AIM Emerging Growth Fund -46.27% -43.26% 03/31/00
AIM Large Cap Basic Value Fund -10.15% 0.54% 08/01/00
AIM Large Cap Core Equity Fund N/A N/A 12/31/01
AIM Large Cap Growth Fund -51.09% -21.32% 04/05/99
AIM Mid Cap Growth Fund -41.34% -15.50% 11/01/99
AIM Weingarten Fund -48.21% -13.90% 08/04/97
|
FINANCIAL STATEMENTS
FS
AGGRESSIVE GROWTH FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Aggressive Growth Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Aggressive Growth Fund (a portfolio
AIM Equity Funds), including the schedule of investments,
as of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the periods presented through October 31,
2000 were audited by other auditors whose report dated
December 6, 2000, expressed an unqualified opinion on
those statements and financial highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Aggressive Growth Fund at October 31, 2001, and the
results of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-1
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Aggressive Growth Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Aggressive Growth Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-2
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY
INTERESTS-97.33%
ADVERTISING-0.29%
Catalina Marketing Corp.(a) 300,000 $ 8,295,000
==========================================================================
AIR FREIGHT & COURIERS-0.23%
Expeditors International of Washington, Inc. 150,000 6,780,000
==========================================================================
APPAREL & ACCESSORIES-0.25%
Quicksilver, Inc.(a) 556,100 7,323,837
==========================================================================
APPAREL RETAIL-2.21%
American Eagle Outfitters, Inc.(a) 1,041,800 28,545,320
--------------------------------------------------------------------------
Genesco, Inc.(a) 500,000 9,125,000
--------------------------------------------------------------------------
Too Inc.(a) 1,000,000 26,610,000
==========================================================================
64,280,320
==========================================================================
APPLICATION SOFTWARE-6.81%
Activision, Inc.(a) 425,000 15,363,750
--------------------------------------------------------------------------
Aspen Technology, Inc.(a) 500,000 6,625,000
--------------------------------------------------------------------------
Cerner Corp.(a) 500,000 26,875,000
--------------------------------------------------------------------------
Citrix Systems, Inc.(a) 667,200 15,612,480
--------------------------------------------------------------------------
Compuware Corp.(a) 1,000,000 10,280,000
--------------------------------------------------------------------------
Electronic Arts Inc.(a) 325,000 16,724,500
--------------------------------------------------------------------------
Henry (Jack) & Associates, Inc. 2,000,000 49,320,000
--------------------------------------------------------------------------
Kronos, Inc.(a) 400,000 22,956,000
--------------------------------------------------------------------------
National Instruments Corp.(a) 500,000 14,405,000
--------------------------------------------------------------------------
NetIQ Corp.(a) 180,400 5,078,260
--------------------------------------------------------------------------
Secure Computing Corp.(a) 900,000 14,715,000
==========================================================================
197,954,990
==========================================================================
AUTO PARTS & EQUIPMENT-0.74%
Gentex Corp.(a) 900,000 21,420,000
==========================================================================
BANKS-2.68%
Investors Financial Services Corp. 750,000 39,675,000
--------------------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 816,400 23,422,516
--------------------------------------------------------------------------
TCF Financial Corp. 350,000 14,700,000
==========================================================================
77,797,516
==========================================================================
BIOTECHNOLOGY-0.70%
Invitrogen Corp.(a) 200,000 12,268,000
--------------------------------------------------------------------------
Techne Corp.(a) 269,000 8,107,660
==========================================================================
20,375,660
==========================================================================
BROADCASTING & CABLE TV-0.56%
Hispanic Broadcasting Corp.(a) 500,000 8,380,000
--------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 313,600 7,840,000
==========================================================================
16,220,000
==========================================================================
|
MARKET
SHARES VALUE
BUILDING PRODUCTS-0.31%
Simpson Manufacturing Co., Inc.(a) 178,000 $ 9,149,200
==========================================================================
CASINOS & GAMING-0.61%
International Game Technology(a) 350,000 17,867,500
==========================================================================
COMPUTER & ELECTRONICS RETAIL-1.11%
CDW Computer Centers, Inc.(a) 700,000 32,235,000
==========================================================================
CONSTRUCTION & ENGINEERING-3.22%
Insituform Technologies, Inc.-Class A(a) 875,000 16,765,000
--------------------------------------------------------------------------
Jacobs Engineering Group Inc.(a) 650,000 42,601,000
--------------------------------------------------------------------------
Shaw Group Inc. (The)(a) 1,250,000 34,375,000
==========================================================================
93,741,000
==========================================================================
CONSUMER FINANCE-1.09%
AmeriCredit Corp.(a) 700,000 10,850,000
--------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 300,000 11,979,000
--------------------------------------------------------------------------
Doral Financial Corp. 250,000 8,717,500
==========================================================================
31,546,500
==========================================================================
DATA PROCESSING SERVICES-2.89%
Concord EFS, Inc.(a) 1,000,000 27,370,000
--------------------------------------------------------------------------
Fiserv, Inc.(a) 750,000 27,892,500
--------------------------------------------------------------------------
Paychex, Inc. 900,000 28,854,000
==========================================================================
84,116,500
==========================================================================
DEPARTMENT STORES-0.57%
Kohl's Corp.(a) 300,000 16,683,000
==========================================================================
DIVERSIFIED COMMERCIAL SERVICES-4.77%
Apollo Group, Inc.-Class A(a) 1,000,000 40,650,000
--------------------------------------------------------------------------
Cintas Corp. 175,000 7,073,500
--------------------------------------------------------------------------
DeVry, Inc.(a) 1,000,000 26,950,000
--------------------------------------------------------------------------
DiamondCluster International, Inc.-Class A(a) 1,000,000 10,300,000
--------------------------------------------------------------------------
IMS Health Inc. 1,000,000 21,370,000
--------------------------------------------------------------------------
Iron Mountain Inc.(a) 825,000 32,216,250
==========================================================================
138,559,750
==========================================================================
DIVERSIFIED FINANCIAL SERVICES-4.22%
Affiliated Managers Group, Inc.(a) 500,000 30,850,000
--------------------------------------------------------------------------
Eaton Vance Corp. 750,000 21,075,000
--------------------------------------------------------------------------
Federated Investors, Inc.-Class B 500,000 13,050,000
--------------------------------------------------------------------------
Legg Mason, Inc. 400,000 16,844,000
--------------------------------------------------------------------------
SEI Investments Co. 500,000 15,375,000
--------------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 1,000,000 25,490,000
==========================================================================
122,684,000
==========================================================================
|
FS-3
MARKET
SHARES VALUE
ELECTRONIC EQUIPMENT &
INSTRUMENTS-2.93%
Jabil Circuit, Inc.(a) 600,000 $ 12,720,000
--------------------------------------------------------------------------
PerkinElmer, Inc. 525,000 14,127,750
--------------------------------------------------------------------------
Plexus Corp.(a) 500,000 12,500,000
--------------------------------------------------------------------------
Tektronix, Inc.(a) 750,000 14,775,000
--------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 412,700 7,787,649
--------------------------------------------------------------------------
Waters Corp.(a) 659,900 23,419,851
==========================================================================
85,330,250
==========================================================================
EMPLOYMENT SERVICES-2.26%
Administaff, Inc.(a) 287,800 6,472,622
--------------------------------------------------------------------------
Hall, Kinion & Associates, Inc.(a)(b) 1,000,000 5,090,000
--------------------------------------------------------------------------
On Assignment, Inc.(a) 167,400 2,713,554
--------------------------------------------------------------------------
Robert Half International Inc.(a) 2,500,000 51,575,000
==========================================================================
65,851,176
==========================================================================
ENVIRONMENTAL SERVICES-2.14%
Tetra Tech, Inc.(a)(b) 2,400,000 62,112,000
==========================================================================
FOOTWEAR-0.62%
Vans, Inc.(a)(b) 1,250,000 17,950,000
==========================================================================
GAS UTILITIES-1.11%
Kinder Morgan, Inc. 650,000 32,259,500
==========================================================================
GENERAL MERCHANDISE STORES-1.12%
BJ's Wholesale Club, Inc.(a) 500,000 25,385,000
--------------------------------------------------------------------------
99 Cents Only Stores(a) 200,400 7,124,220
==========================================================================
32,509,220
==========================================================================
HEALTH CARE DISTRIBUTORS &
SERVICES-8.68%
AdvancePCS(a) 300,000 18,231,000
--------------------------------------------------------------------------
AmerisourceBergen Corp. 300,000 19,068,000
--------------------------------------------------------------------------
Apria Healthcare Group Inc.(a) 1,400,000 32,200,000
--------------------------------------------------------------------------
Express Scripts, Inc.(a) 1,000,000 40,940,000
--------------------------------------------------------------------------
Henry Schein, Inc.(a) 400,000 13,500,000
--------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 300,000 25,860,000
--------------------------------------------------------------------------
Lincare Holdings Inc.(a) 1,200,000 30,840,000
--------------------------------------------------------------------------
McKesson Corp. 706,000 26,114,940
--------------------------------------------------------------------------
Patterson Dental Co.(a) 450,000 17,100,000
--------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 438,100 28,642,978
==========================================================================
252,496,918
==========================================================================
HEALTH CARE EQUIPMENT-1.37%
Cytyc Corp.(a) 750,000 19,665,000
--------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 300,000 20,130,000
==========================================================================
39,795,000
==========================================================================
HEALTH CARE FACILITIES-3.49%
Community Health Systems, Inc.(a) 128,100 3,132,045
--------------------------------------------------------------------------
Health Management Associates, Inc.-Class A(a) 1,450,000 28,260,500
--------------------------------------------------------------------------
|
MARKET
SHARES VALUE
HEALTH CARE FACILITIES-(CONTINUED)
LifePoint Hospitals, Inc.(a) 631,700 $ 19,696,406
--------------------------------------------------------------------------
Province Healthcare Co.(a) 640,700 17,651,285
--------------------------------------------------------------------------
RehabCare Group, Inc.(a) 645,400 16,393,160
--------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 601,900 16,191,110
==========================================================================
101,324,506
==========================================================================
INDUSTRIAL MACHINERY-0.25%
Danaher Corp. 130,000 7,246,200
==========================================================================
INSURANCE BROKERS-0.83%
Brown & Brown 164,900 9,465,260
--------------------------------------------------------------------------
Gallagher (Arthur J.) & Co. 400,000 14,616,000
==========================================================================
24,081,260
==========================================================================
INTERNET SOFTWARE & SERVICES-0.93%
SmartForce Public Ltd. Co.-ADR(a) 350,000 5,761,000
--------------------------------------------------------------------------
SonicWALL, Inc.(a) 1,500,000 21,300,000
==========================================================================
27,061,000
==========================================================================
IT CONSULTING & SERVICES-3.65%
Investment Technology Group, Inc.(a) 750,000 48,307,500
--------------------------------------------------------------------------
Keane, Inc.(a) 525,000 7,434,000
--------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 2,000,000 50,400,000
==========================================================================
106,141,500
==========================================================================
LIFE & HEALTH INSURANCE-0.23%
Nationwide Financial Services, Inc.-Class A 200,000 6,804,000
==========================================================================
MANAGED HEALTH CARE-1.86%
First Health Group Corp.(a) 2,000,000 54,000,000
==========================================================================
MOVIES & ENTERTAINMENT-0.34%
Macrovision Corp.(a) 400,000 9,844,000
==========================================================================
MULTI-LINE INSURANCE-1.18%
HCC Insurance Holdings, Inc. 1,250,000 34,362,500
==========================================================================
NETWORKING EQUIPMENT-0.30%
Brocade Communications Systems, Inc.(a) 350,000 8,592,500
==========================================================================
OIL & GAS DRILLING-2.60%
Cooper Cameron Corp.(a) 500,000 19,500,000
--------------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 1,500,000 27,030,000
--------------------------------------------------------------------------
Pride International, Inc.(a) 2,250,000 28,935,000
==========================================================================
75,465,000
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-3.61%
Cal Dive International, Inc.(a) 1,000,000 20,890,000
--------------------------------------------------------------------------
Core Laboratories N.V. (Netherlands)(a) 900,000 14,670,000
--------------------------------------------------------------------------
Hanover Compressor Co.(a) 1,300,000 35,854,000
--------------------------------------------------------------------------
National-Oilwell, Inc.(a) 1,000,000 18,520,000
--------------------------------------------------------------------------
Varco International, Inc.(a) 1,000,000 15,000,000
==========================================================================
104,934,000
==========================================================================
|
FS-4
MARKET
SHARES VALUE
OIL & GAS EXPLORATION &
PRODUCTION-0.60%
Newfield Exploration Co.(a) 500,000 $ 17,405,000
==========================================================================
PHARMACEUTICALS-1.30%
CIMA Labs Inc.(a) 300,000 16,215,000
--------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 375,000 21,633,750
==========================================================================
37,848,750
==========================================================================
PROPERTY & CASUALTY INSURANCE-0.52%
ACE Ltd. (Bermuda) 425,000 14,981,250
==========================================================================
RESTAURANTS-3.44%
CBRL Group, Inc. 1,000,000 25,110,000
--------------------------------------------------------------------------
CEC Entertainment Inc.(a) 380,000 14,721,200
--------------------------------------------------------------------------
Sonic Corp.(a) 1,000,000 33,510,000
--------------------------------------------------------------------------
Starbucks Corp.(a) 1,564,500 26,784,240
==========================================================================
100,125,440
==========================================================================
SEMICONDUCTOR EQUIPMENT-1.36%
Axcelis Technologies, Inc.(a) 750,000 9,832,500
--------------------------------------------------------------------------
EMCORE Corp.(a) 221,600 2,473,056
--------------------------------------------------------------------------
Lam Research Corp.(a) 400,000 7,584,000
--------------------------------------------------------------------------
LTX Corp.(a) 650,000 10,699,000
--------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 300,000 9,012,000
==========================================================================
39,600,556
==========================================================================
SEMICONDUCTORS-6.56%
Alpha Industries, Inc.(a) 1,100,000 25,608,000
--------------------------------------------------------------------------
Applied Micro Circuits Corp.(a) 1,600,000 17,648,000
--------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 675,000 23,226,750
--------------------------------------------------------------------------
Cree, Inc.(a) 400,000 7,180,000
--------------------------------------------------------------------------
Intersil Corp.-Class A(a) 500,000 16,375,000
--------------------------------------------------------------------------
Micrel, Inc.(a) 500,000 12,575,000
--------------------------------------------------------------------------
Microchip Technology Inc.(a) 1,000,000 31,220,000
--------------------------------------------------------------------------
QLogic Corp.(a) 500,000 19,675,000
--------------------------------------------------------------------------
RF Micro Devices, Inc.(a) 625,000 12,775,000
--------------------------------------------------------------------------
Semtech Corp.(a) 650,000 24,537,500
==========================================================================
190,820,250
==========================================================================
SPECIALTY CHEMICALS-1.25%
OM Group, Inc. 600,000 36,330,000
==========================================================================
|
MARKET
SHARES VALUE
SPECIALTY STORES-3.85%
AutoZone, Inc.(a) 200,000 $ 11,706,000
--------------------------------------------------------------------------
Barnes & Noble, Inc.(a) 750,000 27,562,500
--------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 850,000 21,301,000
--------------------------------------------------------------------------
Venator Group, Inc.(a) 3,000,000 43,500,000
--------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 300,000 7,770,000
==========================================================================
111,839,500
==========================================================================
TELECOMMUNICATIONS EQUIPMENT-3.91%
Anaren Microwave, Inc.(a) 899,900 13,759,471
--------------------------------------------------------------------------
CommScope, Inc.(a) 750,000 14,662,500
--------------------------------------------------------------------------
Comverse Technology, Inc.(a) 500,000 9,405,000
--------------------------------------------------------------------------
Polycom, Inc.(a) 1,000,000 29,980,000
--------------------------------------------------------------------------
Scientific-Atlanta, Inc. 850,000 17,739,500
--------------------------------------------------------------------------
UTStarcom, Inc.(a) 1,200,000 28,176,000
==========================================================================
113,722,471
==========================================================================
TRADING COMPANIES & DISTRIBUTORS-0.61%
Fastenal Co. 300,000 17,715,000
==========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.17%
AirGate PCS, Inc.(a) 500,000 25,730,000
--------------------------------------------------------------------------
American Tower Corp.-Class A(a) 750,000 8,265,000
==========================================================================
33,995,000
==========================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,753,858,690) 2,829,573,520
==========================================================================
MONEY MARKET FUNDS-2.85%
STIC Liquid Assets Portfolio(c) 41,476,328 41,476,328
--------------------------------------------------------------------------
STIC Prime Portfolio(c) 41,476,328 41,476,328
==========================================================================
Total Money Market Funds (Cost
$82,952,656) 82,952,656
==========================================================================
TOTAL INVESTMENTS-100.18% (Cost
$2,836,811,346) 2,912,526,176
==========================================================================
OTHER ASSETS LESS LIABILITIES-(0.18%) (5,176,212)
==========================================================================
NET ASSETS-100.00% $2,907,349,964
__________________________________________________________________________
==========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuer in which the Fund's holdings of the issuer represent 5%
or more of the outstanding voting securities of the issuer. The Fund has
not owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer.
The aggregate market value of affiliated issuers as of 10/31/01 was
$85,152,000 which represented 2.93% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-5
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$2,836,811,346)* $2,912,526,176
-------------------------------------------------------------
Receivables for:
Investments sold 23,258,480
-------------------------------------------------------------
Fund shares sold 2,402,147
-------------------------------------------------------------
Dividends 632,352
-------------------------------------------------------------
Investment for deferred compensation plan 95,160
-------------------------------------------------------------
Collateral for securities loaned 311,796,716
-------------------------------------------------------------
Other assets 35,695
=============================================================
Total assets 3,250,746,726
=============================================================
LIABILITIES:
Payables for:
Investments purchased 22,981,404
-------------------------------------------------------------
Fund shares reacquired 6,493,242
-------------------------------------------------------------
Deferred compensation plan 95,160
-------------------------------------------------------------
Collateral upon return of securities loaned 311,796,716
-------------------------------------------------------------
Accrued distribution fees 1,282,229
-------------------------------------------------------------
Accrued trustees' fees 2,881
-------------------------------------------------------------
Accrued transfer agent fees 583,308
-------------------------------------------------------------
Accrued operating expenses 161,822
=============================================================
Total liabilities 343,396,762
=============================================================
Net assets applicable to shares outstanding $2,907,349,964
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,516,406,835
_____________________________________________________________
=============================================================
Class B $ 294,303,205
_____________________________________________________________
=============================================================
Class C $ 96,639,924
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 289,826,192
_____________________________________________________________
=============================================================
Class B 34,843,023
_____________________________________________________________
=============================================================
Class C 11,442,349
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 8.68
-------------------------------------------------------------
Offering price per share:
(Net asset value of $8.68 divided by
94.50%) $ 9.19
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 8.45
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 8.45
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $309,207,982 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends from affiliated money market funds $ 6,721,845
-------------------------------------------------------------
Dividends 3,570,756
-------------------------------------------------------------
Interest 11,967
-------------------------------------------------------------
Security lending income 4,106,821
=============================================================
Total investment income 14,411,389
=============================================================
EXPENSES:
Advisory fees 23,755,259
-------------------------------------------------------------
Administrative services fees 276,738
-------------------------------------------------------------
Custodian fees 260,290
-------------------------------------------------------------
Distribution fees -- Class A 8,262,356
-------------------------------------------------------------
Distribution fees -- Class B 3,431,496
-------------------------------------------------------------
Distribution fees -- Class C 1,107,492
-------------------------------------------------------------
Transfer agent fees -- Class A 7,926,292
-------------------------------------------------------------
Transfer agent fees -- Class B 857,333
-------------------------------------------------------------
Transfer agent fees -- Class C 276,699
-------------------------------------------------------------
Trustees' fees 23,404
-------------------------------------------------------------
Total other expenses 1,393,669
=============================================================
Total expenses 47,571,028
=============================================================
Less: Fees waived (7,508)
-------------------------------------------------------------
Expenses paid indirectly (98,463)
=============================================================
Net expenses 47,465,057
=============================================================
Net investment income (loss) (33,053,668)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (655,234,334)
=============================================================
Change in net unrealized appreciation
(depreciation) of investment securities (1,352,849,651)
=============================================================
Net gain (loss) from investment securities (2,008,083,985)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(2,041,137,653)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-6
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- --------------
OPERATIONS:
Net investment income (loss) $ (33,053,668) $ (34,890,410)
-----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (655,234,334) 978,195,173
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,352,849,651) 362,410,770
===============================================================================================
Net increase (decrease) in net assets resulting from
operations (2,041,137,653) 1,305,715,533
===============================================================================================
Distributions to shareholders from net realized gains:
Class A (805,640,320) (320,367,821)
-----------------------------------------------------------------------------------------------
Class B (74,578,792) (4,413,088)
-----------------------------------------------------------------------------------------------
Class C (23,638,642) (1,287,521)
-----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 676,696,702 663,429,973
-----------------------------------------------------------------------------------------------
Class B 177,773,085 343,326,602
-----------------------------------------------------------------------------------------------
Class C 58,760,112 112,539,912
===============================================================================================
Net increase (decrease) in net assets (2,031,765,508) 2,098,943,590
===============================================================================================
NET ASSETS:
Beginning of year 4,939,115,472 2,840,171,882
===============================================================================================
End of year $ 2,907,349,964 $4,939,115,472
_______________________________________________________________________________________________
===============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 3,487,258,638 $2,607,070,149
-----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (202,093) (174,108)
-----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (655,421,411) 903,654,950
-----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 75,714,830 1,428,564,481
===============================================================================================
$ 2,907,349,964 $4,939,115,472
_______________________________________________________________________________________________
===============================================================================================
|
See Notes to Financial Statements.
FS-7
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. 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 to achieve long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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 Directors.
B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2001, undistributed net investment income was increased by $33,025,683, undistributed net realized gains increased by $15,727 and paid in capital decreased by $33,041,410 as a result of net operation loss reclassifications and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
FS-8
The fund has a capital loss carryforward of $636,872,876 as of October 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. AIM has agreed to
waive advisory fees payable by the Fund to AIM at the annual rate of 0.025% for
each $5 billion increment in net assets over $5 billion, up to a maximum waiver
of 0.175% on net assets in excess of $35 billion. Effective July 1, 2001, 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 fund of which
the Fund has invested. For the year ended October 31, 2001, AIM waived fees of
$7,508.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $276,738 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 year ended October 31, 2001, AFS
was paid $4,434,848 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
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $8,262,356,
$3,431,496 and $1,107,492, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,095,640 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $127,954 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $8,787 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $65,345 and reductions in custodian fees of $33,118 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $98,463.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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
FS-9
of the collateral may be temporarily less than the value of the securities on
loan.
At October 31, 2001, securities with an aggregate value of $309,207,982 were
on loan to brokers. The loans were secured by cash collateral of $311,796,716
received by the Fund and invested in affiliated money market funds as follows:
$155,898,358 in STIC Liquid Assets Portfolio and $155,898,358 in STIC Prime
Portfolio. For the year ended October 31, 2001, the Fund received fees of
$4,106,821 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2001 was $3,260,841,615 and $3,253,198,052, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 414,174,670 ----------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (357,008,375) ============================================================================= Net unrealized appreciation of investment securities $ 57,166,295 _____________________________________________________________________________ ============================================================================= Cost of investments for tax purposes is $2,855,359,881. |
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000*
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
Sold:
Class A 66,113,301 $ 764,231,772 204,998,037 $1,165,506,524
---------------------------------------------------------------------------------------------------------------------------
Class B 16,139,430 187,252,162 21,294,813 379,822,496
---------------------------------------------------------------------------------------------------------------------------
Class C 6,138,899 70,314,475 6,866,314 122,159,297
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 59,903,743 755,374,108 5,280,778 297,990,645
---------------------------------------------------------------------------------------------------------------------------
Class B 5,828,105 71,964,367 72,296 4,045,318
---------------------------------------------------------------------------------------------------------------------------
Class C 1,838,406 22,685,441 19,260 1,076,149
===========================================================================================================================
Reacquired:
Class A (77,634,743) (842,909,178) (19,341,399) (800,067,196)
---------------------------------------------------------------------------------------------------------------------------
Class B (7,763,426) (81,443,444) (1,179,153) (40,541,212)
---------------------------------------------------------------------------------------------------------------------------
Class C (3,192,257) (34,239,804) (351,490) (10,695,534)
===========================================================================================================================
67,371,458 $ 913,229,899 217,659,456 $1,119,296,487
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
* Shares have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
FS-10
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(a)
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2001(b) 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.41 $ 13.90 $ 10.04 $ 12.49 $ 11.23
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.13) (0.09) (0.08) (0.06)
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.34) 11.08 4.05 (1.93) 1.90
================================================================================================================================
Total from investment operations (6.43) 10.95 3.96 (2.01) 1.84
================================================================================================================================
Less distributions from net realized gains (3.30) (6.44) (0.10) (0.44) (0.58)
================================================================================================================================
Net asset value, end of period $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(c) (40.51)% 47.53% 39.73% (16.36)% 17.35%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,516,407 $4,444,515 $2,808,451 $2,638,038 $3,864,257
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets 1.17%(d) 1.04% 1.09% 1.06% 1.06%
================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.79)%(d) (0.77)% (0.69)% (0.64)% (0.65)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 89% 79% 75% 69% 73%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Per share information and distributions prior to April 30, 2001 have been
restated to reflect a 4 for 1 stock split, effected in the form of a 300%
stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $3,304,942,591.
CLASS B(a)
-------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------- TO OCTOBER 31,
2001(b) 2000 1999
--------- --------- ----------------------
Net asset value, beginning of period $ 18.12 $ 13.81 $ 10.85
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.29) (0.07)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.20) 11.04 3.03
================================================================================================================
Total from investment operations (6.37) 10.75 2.96
================================================================================================================
Less distributions from net realized gains (3.30) (6.44) --
================================================================================================================
Net asset value, end of period $ 8.45 $ 18.12 $ 13.81
________________________________________________________________________________________________________________
================================================================================================================
Total return(c) (40.90)% 46.29% 27.27%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $294,303 $374,010 $24,914
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 1.94%(d) 1.86% 2.08%(e)
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.55)%(d) (1.59)% (1.68)%(e)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 89% 79% 75%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Per share information and distributions prior to April 30, 2001 have been
restated to reflect a 4 for 1 stock split, effected in the form of a 300%
stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $343,149,601.
(e) Annualized.
FS-11
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C(a)
-------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------- TO OCTOBER 31,
2001(b) 2000 1999
--------- --------- ----------------------
Net asset value, beginning of period $ 18.11 $ 13.81 $10.85
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.29) (0.07)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.19) 11.03 3.03
================================================================================================================
Total from investment operations (6.36) 10.74 2.96
================================================================================================================
Less distributions from net realized gains (3.30) (6.44) --
================================================================================================================
Net asset value, end of period $ 8.45 $ 18.11 $13.81
________________________________________________________________________________________________________________
================================================================================================================
Total return(c) (40.86)% 46.21% 27.27%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 96,640 $120,591 $6,807
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 1.94%(d) 1.86% 2.08%(e)
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.55)%(d) (1.59)% (1.68)%(e)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 89% 79% 75%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Per share information and distributions prior to April 30, 2001 have been
restated to reflect a 4 for 1 stock split, effected in the form of a 300%
stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $110,749,185.
(e) Annualized.
FS-12
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Blue Chip Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Blue Chip Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2001, and the related statement of operations, statement of changes in net assets, and financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statements of changes in net assets for the year ended October 31, 2000, and the financial highlights for each of the four years in the period then ended were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2001, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Blue Chip Fund at October 31, 2001, and the results of its operations, changes in its net assets, and financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-13
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Blue Chip Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Blue Chip Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-14
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-97.06%
ADVERTISING-0.52%
Interpublic Group of Cos., Inc. (The) 1,000,000 $ 22,450,000
==========================================================================
AEROSPACE & DEFENSE-1.37%
General Dynamics Corp. 300,000 24,480,000
--------------------------------------------------------------------------
United Technologies Corp. 650,000 35,028,500
==========================================================================
59,508,500
==========================================================================
ALUMINUM-0.65%
Alcoa Inc. 875,000 28,236,250
==========================================================================
BANKS-2.24%
Fifth Third Bancorp 1,000,000 56,420,000
--------------------------------------------------------------------------
Wells Fargo & Co. 1,050,000 41,475,000
==========================================================================
97,895,000
==========================================================================
BIOTECHNOLOGY-1.66%
Amgen Inc.(a) 1,275,000 72,445,500
==========================================================================
COMPUTER HARDWARE-2.00%
Dell Computer Corp.(a) 450,000 10,791,000
--------------------------------------------------------------------------
International Business Machines Corp. 460,000 49,712,200
--------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,650,000 26,897,500
==========================================================================
87,400,700
==========================================================================
COMPUTER STORAGE & PERIPHERALS-0.28%
EMC Corp.(a) 1,000,000 12,320,000
==========================================================================
DATA PROCESSING SERVICES-2.40%
First Data Corp. 1,000,000 67,570,000
--------------------------------------------------------------------------
Fiserv, Inc.(a) 1,000,000 37,190,000
==========================================================================
104,760,000
==========================================================================
DEPARTMENT STORES-0.51%
Kohl's Corp.(a) 400,000 22,244,000
==========================================================================
DIVERSIFIED FINANCIAL SERVICES-12.51%
Citigroup Inc. 3,625,000 165,010,000
--------------------------------------------------------------------------
Fannie Mae 1,150,000 93,104,000
--------------------------------------------------------------------------
Freddie Mac 1,150,000 77,993,000
--------------------------------------------------------------------------
J.P. Morgan Chase & Co. 2,125,000 75,140,000
--------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,450,000 63,379,500
--------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 1,450,000 70,934,000
==========================================================================
545,560,500
==========================================================================
DRUG RETAIL-0.48%
Walgreen Co. 650,000 21,047,000
==========================================================================
ELECTRIC UTILITIES-1.31%
Calpine Corp.(a) 600,000 14,850,000
--------------------------------------------------------------------------
|
MARKET
SHARES VALUE
ELECTRIC UTILITIES-(CONTINUED)
Duke Energy Corp. 1,100,000 $ 42,251,000
==========================================================================
57,101,000
==========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.76%
Sanmina Corp.(a) 2,200,000 33,308,000
==========================================================================
FOOD DISTRIBUTORS-1.08%
SYSCO Corp. 1,950,000 47,014,500
==========================================================================
FOOD RETAIL-1.19%
Safeway Inc.(a) 1,250,000 52,062,500
==========================================================================
GAS UTILITIES-0.84%
El Paso Corp. 750,000 36,795,000
==========================================================================
GENERAL MERCHANDISE STORES-4.09%
Costco Wholesale Corp.(a) 500,000 18,915,000
--------------------------------------------------------------------------
Target Corp. 1,575,000 49,061,250
--------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,150,000 110,510,000
==========================================================================
178,486,250
==========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.31%
Cardinal Health, Inc. 850,000 57,043,500
==========================================================================
HEALTH CARE EQUIPMENT-2.51%
Baxter International Inc. 900,000 43,533,000
--------------------------------------------------------------------------
Medtronic, Inc. 1,450,000 58,435,000
--------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 250,000 7,727,500
==========================================================================
109,695,500
==========================================================================
HEALTH CARE FACILITIES-1.27%
HCA Inc. 1,400,000 55,524,000
==========================================================================
HOME IMPROVEMENT RETAIL-2.24%
Home Depot, Inc. (The) 2,550,000 97,486,500
==========================================================================
HOUSEHOLD PRODUCTS-1.15%
Colgate-Palmolive Co. 875,000 50,330,000
==========================================================================
INDUSTRIAL CONGLOMERATES-8.04%
General Electric Co. 5,850,000 212,998,500
--------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 2,800,000 137,592,000
==========================================================================
350,590,500
==========================================================================
INDUSTRIAL GASES-0.64%
Air Products & Chemicals, Inc. 700,000 28,028,000
==========================================================================
INTEGRATED OIL & GAS-3.71%
Exxon Mobil Corp. 3,625,000 143,006,250
--------------------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR (Netherlands) 375,000 18,941,250
==========================================================================
161,947,500
==========================================================================
|
FS-15
MARKET
SHARES VALUE
INTEGRATED TELECOMMUNICATION SERVICES-2.06%
BellSouth Corp. 625,000 $ 23,125,000
--------------------------------------------------------------------------
SBC Communications Inc. 1,750,000 66,692,500
==========================================================================
89,817,500
==========================================================================
MANAGED HEALTH CARE-0.95%
UnitedHealth Group Inc. 630,000 41,422,500
==========================================================================
MOVIES & ENTERTAINMENT-3.23%
AOL Time Warner Inc.(a) 3,000,000 93,630,000
--------------------------------------------------------------------------
Viacom Inc.-Class B(a) 1,300,000 47,463,000
==========================================================================
141,093,000
==========================================================================
MULTI-LINE INSURANCE-3.02%
American International Group, Inc. 1,675,000 131,655,000
==========================================================================
MULTI-UTILITIES-0.78%
Dynegy Inc.-Class A 750,000 26,925,000
--------------------------------------------------------------------------
Enron Corp. 500,000 6,950,000
==========================================================================
33,875,000
==========================================================================
NETWORKING EQUIPMENT-2.37%
Cisco Systems, Inc.(a) 6,100,000 103,212,000
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-1.11%
Halliburton Co. 925,000 22,838,250
--------------------------------------------------------------------------
Schlumberger Ltd. 525,000 25,420,500
==========================================================================
48,258,750
==========================================================================
PHARMACEUTICALS-12.90%
Abbott Laboratories 550,000 29,139,000
--------------------------------------------------------------------------
Allergan, Inc. 1,050,000 75,379,500
--------------------------------------------------------------------------
American Home Products Corp. 650,000 36,289,500
--------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,275,000 68,148,750
--------------------------------------------------------------------------
Johnson & Johnson 1,775,000 102,790,250
--------------------------------------------------------------------------
Pfizer Inc. 4,000,000 167,600,000
--------------------------------------------------------------------------
Pharmacia Corp. 725,000 29,377,000
--------------------------------------------------------------------------
Schering-Plough Corp. 1,450,000 53,911,000
==========================================================================
562,635,000
==========================================================================
PROPERTY & CASUALTY INSURANCE-0.45%
ACE Ltd. (Bermuda) 290,000 10,222,500
--------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 110,000 9,554,600
==========================================================================
19,777,100
==========================================================================
RAILROADS-0.45%
Canadian National Railroad Co. (Canada) 500,000 19,800,000
==========================================================================
|
MARKET
SHARES VALUE
SEMICONDUCTOR EQUIPMENT-2.29%
Applied Materials, Inc.(a) 1,550,000 $ 52,870,500
--------------------------------------------------------------------------
KLA-Tencor Corp.(a) 1,150,000 46,989,000
==========================================================================
99,859,500
==========================================================================
SEMICONDUCTORS-4.00%
Altera Corp.(a) 1,000,000 20,200,000
--------------------------------------------------------------------------
Analog Devices, Inc.(a) 800,000 30,400,000
--------------------------------------------------------------------------
Intel Corp. 1,500,000 36,630,000
--------------------------------------------------------------------------
Linear Technology Corp. 300,000 11,640,000
--------------------------------------------------------------------------
Texas Instruments Inc. 1,550,000 43,384,500
--------------------------------------------------------------------------
Xilinx, Inc.(a) 1,050,000 31,941,000
==========================================================================
174,195,500
==========================================================================
SOFT DRINKS-1.31%
PepsiCo, Inc. 1,175,000 57,234,250
==========================================================================
SPECIALTY STORES-0.46%
Bed Bath & Beyond Inc.(a) 800,000 20,048,000
==========================================================================
SYSTEMS SOFTWARE-5.10%
Microsoft Corp.(a) 2,300,000 133,745,000
--------------------------------------------------------------------------
Oracle Corp.(a) 3,600,000 48,816,000
--------------------------------------------------------------------------
VERITAS Software Corp.(a) 1,400,000 39,732,000
==========================================================================
222,293,000
==========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.85%
Nokia Oyj-ADR (Finland) 1,800,000 36,918,000
==========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.97%
Vodafone Group PLC-ADR (United Kingdom) 1,825,000 42,194,000
==========================================================================
Total Common Stocks & Other Equity
Interests (Cost $4,063,887,651) 4,233,568,300
==========================================================================
MONEY MARKET FUNDS-3.09%
STIC Liquid Assets Portfolio(b) 67,493,023 67,493,023
--------------------------------------------------------------------------
STIC Prime Portfolio(b) 67,493,023 67,493,023
==========================================================================
Total Money Market Funds (Cost
$134,986,046) 134,986,046
==========================================================================
TOTAL INVESTMENTS-100.15% (Cost
$4,198,873,697) 4,368,554,346
==========================================================================
OTHER ASSETS LESS LIABILITIES-(0.15)% (6,650,271)
==========================================================================
NET ASSETS-100.00% $4,361,904,075
__________________________________________________________________________
==========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-16
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$4,198,873,697)* $4,368,554,346
-------------------------------------------------------------
Foreign currencies, at value (cost $2,940) 2,828
-------------------------------------------------------------
Receivables for:
Investments sold 5,701,080
-------------------------------------------------------------
Fund shares sold 3,693,825
-------------------------------------------------------------
Dividends and interest 2,884,682
-------------------------------------------------------------
Investment for deferred compensation plan 65,489
-------------------------------------------------------------
Collateral for securities loaned 140,006,800
-------------------------------------------------------------
Other assets 50,271
=============================================================
Total assets 4,520,959,321
=============================================================
LIABILITIES:
Payables for:
Investments purchased 1,438,635
-------------------------------------------------------------
Fund shares reacquired 11,623,593
-------------------------------------------------------------
Deferred compensation plan 65,489
-------------------------------------------------------------
Collateral upon return of securities loaned 140,006,800
-------------------------------------------------------------
Accrued distribution fees 3,960,564
-------------------------------------------------------------
Accrued trustees' fees 2,915
-------------------------------------------------------------
Accrued transfer agent fees 1,596,362
-------------------------------------------------------------
Accrued operating expenses 360,888
=============================================================
Total liabilities 159,055,246
=============================================================
Net assets applicable to shares outstanding $4,361,904,075
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,067,602,167
_____________________________________________________________
=============================================================
Class B $1,806,464,028
_____________________________________________________________
=============================================================
Class C $ 487,837,880
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 184,210,827
_____________________________________________________________
=============================================================
Class B 166,113,892
_____________________________________________________________
=============================================================
Class C 44,862,086
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 11.22
-------------------------------------------------------------
Offering price per share:
(Net asset value of $11.22 divided by
94.50%) $ 11.87
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 10.87
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 10.87
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $133,915,521 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$287,888) $ 42,874,285
-------------------------------------------------------------
Dividends from affiliated money market funds 12,134,556
-------------------------------------------------------------
Interest 166,170
-------------------------------------------------------------
Security lending income 245,142
=============================================================
Total investment income 55,420,153
=============================================================
EXPENSES:
Advisory fees 35,318,225
-------------------------------------------------------------
Administrative services fees 331,400
-------------------------------------------------------------
Custodian fees 318,803
-------------------------------------------------------------
Distribution fees -- Class A 9,264,516
-------------------------------------------------------------
Distribution fees -- Class B 23,065,985
-------------------------------------------------------------
Distribution fees -- Class C 6,273,129
-------------------------------------------------------------
Transfer agent fees -- Class A 6,703,381
-------------------------------------------------------------
Transfer agent fees -- Class B 6,041,346
-------------------------------------------------------------
Transfer agent fees -- Class C 1,643,032
-------------------------------------------------------------
Trustees' fees 29,498
-------------------------------------------------------------
Other 1,943,980
=============================================================
Total expenses 90,933,295
=============================================================
Less: Fees waived (153,216)
-------------------------------------------------------------
Expenses paid indirectly (97,797)
=============================================================
Net expenses 90,682,282
=============================================================
Net investment income (loss) (35,262,129)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (875,677,465)
-------------------------------------------------------------
Foreign currencies (168)
-------------------------------------------------------------
Futures contracts (102,691)
=============================================================
(875,780,324)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (1,586,303,937)
-------------------------------------------------------------
Foreign currencies 6,224
=============================================================
(1,586,297,713)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and futures contracts (2,462,078,037)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(2,497,340,166)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-17
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- --------------
OPERATIONS:
Net investment income (loss) $ (35,262,129) $ (38,897,346)
-----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and options
contracts (875,780,324) (192,471,545)
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, futures
contracts and options contracts (1,586,297,713) 713,644,598
===============================================================================================
Net increase (decrease) in net assets resulting from
operations (2,497,340,166) 482,275,707
===============================================================================================
Share transactions-net:
Class A 81,644,114 608,764,340
-----------------------------------------------------------------------------------------------
Class B 98,738,160 660,832,200
-----------------------------------------------------------------------------------------------
Class C 49,072,979 337,243,562
===============================================================================================
Net increase (decrease) in net assets (2,267,884,913) 2,089,115,809
===============================================================================================
NET ASSETS:
Beginning of year 6,629,788,988 4,540,673,179
===============================================================================================
End of year $ 4,361,904,075 $6,629,788,988
_______________________________________________________________________________________________
===============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 5,301,981,761 $5,107,761,635
-----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (133,954) (106,761)
-----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
options contracts (1,109,616,802) (233,836,669)
-----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 169,673,070 1,755,970,783
===============================================================================================
$ 4,361,904,075 $6,629,788,988
_______________________________________________________________________________________________
===============================================================================================
|
See Notes to Financial Statements.
FS-18
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of eleven separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
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 with a secondary objective of current income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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. On October 31, 2001, undistributed net investment income (loss) was increased by $35,234,936, undistributed net realized gains increased by $191 and paid in capital decreased by $35,235,127 as a result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the
requirements of the Internal Revenue Code necessary to qualify as a regulated
investment company and, as such, will not be subject to federal income taxes
on otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund's capital loss carryforward of $1,058,100,548 is broken down by
expiration date as follows:
CAPITAL
LOSS CARRYFORWARD EXPIRATION
----------------- ----------------
$ 38,614,683 October 31, 2007
===================================
185,511,022 October 31, 2008
===================================
833,974,843 October 31, 2009
===================================
$1,058,100,548
___________________________________
===================================
|
FS-19
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for the portion of the results of operations resulting
from changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. 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.
H. 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 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
include the possibility of an illiquid market and that a change in value of
the contracts may not correlate with changes in the value of the securities
being hedged.
I. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes, based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. AIM has agreed to
waive advisory fees payable by the Fund to AIM at the annual rate of 0.025% for
each $5 billion increment in net assets over $5 billion, up to a maximum waiver
of 0.175% on net assets in excess of $35 billion. Effective July 1, 2001 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 fund of which the
Fund has invested. For the year ended October 31, 2001, AIM waived fees of
$153,216.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $331,400 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 year ended October 31, 2001, AFS
was paid $7,316,456 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the
FS-20
Class A, Class B and Class C shares paid AIM Distributors $9,264,516,
$23,065,985 and $6,273,129, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,579,184 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $251,600 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $11,278
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $97,051 and reductions in custodian fees of $746 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $97,797.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $133,915,521 were
on loan to brokers. The loans were secured by cash collateral of $140,006,800
received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated
money market fund. For the year ended October 31, 2001, the Fund received fees
of $245,142 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$2,188,599,269 and $1,644,779,358, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 493,198,321 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (375,033,298) ========================================================= Net unrealized appreciation of investment securities $ 118,164,393 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $4,250,389,953. |
FS-21
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
Sold:
Class A 59,896,009 $ 859,547,781 148,715,420 $1,263,107,272
---------------------------------------------------------------------------------------------------------------------------
Class B 38,414,696 544,596,082 129,401,524 992,150,930
---------------------------------------------------------------------------------------------------------------------------
Class C 15,458,538 219,941,831 37,286,271 429,625,653
===========================================================================================================================
Reacquired:
Class A (58,620,165) (777,903,667) (15,253,996) (654,342,932)
---------------------------------------------------------------------------------------------------------------------------
Class B (35,112,835) (445,857,922) (8,016,409) (331,318,730)
---------------------------------------------------------------------------------------------------------------------------
Class C (13,300,112) (170,868,852) (2,250,850) (92,382,091)
===========================================================================================================================
6,736,131 $ 229,455,253 289,881,960 $1,606,840,102
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(a)
----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2001 2000(b) 1999 1998(b) 1997(b)
---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 17.29 $ 15.49 $ 12.05 $ 10.32 $ 8.69
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.05) 0.01 0.04 0.06
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.03) 1.85 3.47 1.92 2.31
==============================================================================================================================
Total from investment operations (6.07) 1.80 3.48 1.96 2.37
==============================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.01) (0.02) (0.02)
------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.03) (0.21) (0.72)
==============================================================================================================================
Total distributions -- -- (0.04) (0.23) (0.74)
==============================================================================================================================
Net asset value, end of period $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(c) (35.11)% 11.60% 29.01% 19.36% 29.68%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,067,602 $3,163,453 $2,299,551 $1,085,648 $498,178
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.31%
------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.32%
==============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.29)%(d) (0.31)% 0.03% 0.33% 0.50%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 has been
restated to reflect a 3 for 1 stock split, effected in the form of a 200%
stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $2,647,004,665.
FS-22
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B(a)
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2001 2000(b) 1999(b) 1998 1997(b)
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 16.87 $ 15.22 $ 11.91 $ 10.25 $ 8.69
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) (0.04) (0.01)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.87) 1.82 3.44 1.91 2.30
============================================================================================================================
Total from investment operations (6.00) 1.65 3.34 1.87 2.29
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.01)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.03) (0.21) (0.72)
============================================================================================================================
Net asset value, end of period $ 10.87 $ 16.87 $ 15.22 $ 11.91 $ 10.25
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) (35.57)% 10.87% 28.08% 18.52% 28.81%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,806,464 $2,746,149 $1,891,171 $745,862 $264,337
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.94%(d) 1.88% 1.91% 1.94% 2.10%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.94%(d) 1.88% 1.91% 1.94% 2.12%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(d) (1.00)% (0.68)% (0.38)% (0.28)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 has been
restated to reflect a 3 for 1 stock split, effected in the form of a 200%
stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $2,306,598,522.
CLASS C(a)
--------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
------------------------------------------ TO OCTOBER 31,
2001 2000 (b) 1999(b) 1998(b) 1997(b)
------- -------- -------- ------- ----------------------
Net asset value, beginning of period $ 16.86 $ 15.21 $ 11.91 $ 10.25 $10.57
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) (0.04) --
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.86) 1.82 3.43 1.91 (0.32)
=================================================================================================================================
Total from investment operations (5.99) 1.65 3.33 1.87 (0.32)
=================================================================================================================================
Less distributions from net realized gains -- -- (0.03) (0.21) --
=================================================================================================================================
Net asset value, end of period $ 10.87 $ 16.86 $ 15.21 $ 11.91 $10.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (35.53)% 10.82% 28.09% 18.52% (3.06)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $487,838 $720,186 $349,951 $87,554 $3,947
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.94%(d) 1.88% 1.90% 1.94% 2.10%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.94%(d) 1.88% 1.90% 1.94% 2.12%(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(d) (1.00)% (0.68)% (0.38)% (0.28)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 has been
restated to reflect a 3 for 1 stock split, effected in the form of a 200%
stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $627,312,890.
(e) Annualized.
FS-23
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Capital Development Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Capital Development Fund (a portfolio
AIM Equity Funds), including the schedule of investments,
as of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the four years in the period then ended were
audited by other auditors whose report dated December 6,
2000, expressed an unqualified opinion on those
statements and financial highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Capital Development Fund at October 31, 2001, and the
results of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-24
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Capital Development Fund (a series portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Capital Development Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-25
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-93.17%
ADVERTISING-0.91%
Lamar Advertising Co.(a) 318,500 $ 10,000,900
======================================================================
AEROSPACE & DEFENSE-0.47%
Aeroflex Inc.(a) 350,100 5,135,967
======================================================================
AGRICULTURAL PRODUCTS-0.63%
Bunge Ltd. 391,400 6,896,468
======================================================================
APPAREL RETAIL-1.64%
Abercrombie & Fitch Co.-Class A(a) 324,900 6,114,618
----------------------------------------------------------------------
Ross Stores, Inc. 378,200 11,837,660
======================================================================
17,952,278
======================================================================
APPLICATION SOFTWARE-3.22%
Intuit Inc.(a) 333,200 13,401,304
----------------------------------------------------------------------
Peregrine Systems, Inc.(a) 181,000 2,613,640
----------------------------------------------------------------------
Secure Computing Corp.(a) 410,400 6,710,040
----------------------------------------------------------------------
Synopsys, Inc.(a) 268,900 12,638,300
======================================================================
35,363,284
======================================================================
AUTO PARTS & EQUIPMENT-1.09%
Gentex Corp.(a) 286,300 6,813,940
----------------------------------------------------------------------
Lear Corp.(a) 167,800 5,151,460
======================================================================
11,965,400
======================================================================
BANKS-2.16%
Compass Bancshares, Inc. 485,400 12,149,562
----------------------------------------------------------------------
Zions Bancorp 241,500 11,572,680
======================================================================
23,722,242
======================================================================
BROADCASTING & CABLE TV-3.79%
Cablevision Systems Corp.-Class A(a) 300,000 10,275,000
----------------------------------------------------------------------
Charter Communications, Inc.-Class A(a) 347,300 4,910,822
----------------------------------------------------------------------
Cox Radio, Inc.-Class A(a) 300,000 6,510,000
----------------------------------------------------------------------
Entercom Communications Corp.(a) 100,000 3,370,000
----------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 390,300 6,541,428
----------------------------------------------------------------------
Mediacom Communications Corp.(a) 739,700 9,926,774
======================================================================
41,534,024
======================================================================
BUILDING PRODUCTS-1.12%
American Standard Cos. Inc.(a) 212,600 12,309,540
======================================================================
CASINOS & GAMING-1.08%
Harrah's Entertainment, Inc.(a) 406,200 11,832,606
======================================================================
CATALOG RETAIL-0.32%
Insight Enterprises, Inc.(a) 218,550 3,551,438
======================================================================
|
MARKET
SHARES VALUE
COMPUTER & ELECTRONICS RETAIL-2.18%
Best Buy Co., Inc.(a) 197,400 $ 10,837,260
----------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 285,000 13,124,250
======================================================================
23,961,510
======================================================================
COMPUTER HARDWARE-0.57%
Apple Computer, Inc.(a) 354,500 6,225,020
======================================================================
CONSUMER FINANCE-2.06%
AmeriCredit Corp.(a) 262,900 4,074,950
----------------------------------------------------------------------
Countrywide Credit Industries, Inc. 242,900 9,698,997
----------------------------------------------------------------------
Metris Companies Inc. 351,300 5,694,573
----------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $3,120,900)(a)(b) 309,000 3,128,625
======================================================================
22,597,145
======================================================================
DATA PROCESSING SERVICES-3.35%
BISYS Group, Inc. (The)(a) 137,300 7,142,346
----------------------------------------------------------------------
Ceridian Corp.(a) 664,700 10,960,903
----------------------------------------------------------------------
Certegy Inc.(a) 385,250 10,979,625
----------------------------------------------------------------------
Concord EFS, Inc.(a) 279,400 7,647,178
======================================================================
36,730,052
======================================================================
DIVERSIFIED COMMERCIAL SERVICES-3.41%
Edison Schools Inc.(a) 669,100 12,612,535
----------------------------------------------------------------------
Equifax Inc. 502,300 11,231,428
----------------------------------------------------------------------
Iron Mountain Inc.(a) 250,000 9,762,500
----------------------------------------------------------------------
Pre-Paid Legal Services, Inc.(a) 249,700 3,807,925
======================================================================
37,414,388
======================================================================
DIVERSIFIED FINANCIAL SERVICES-8.13%
Affiliated Managers Group, Inc.(a) 197,500 12,185,750
----------------------------------------------------------------------
Alliance Data Systems Corp.(a) 826,100 13,217,600
----------------------------------------------------------------------
Allied Capital Corp. 285,800 6,436,216
----------------------------------------------------------------------
Ambac Financial Group, Inc. 240,600 11,548,800
----------------------------------------------------------------------
American Capital Strategies, Ltd. 413,600 10,244,872
----------------------------------------------------------------------
Legg Mason, Inc. 145,100 6,110,161
----------------------------------------------------------------------
Phoenix Cos., Inc. (The)(a) 658,100 8,456,585
----------------------------------------------------------------------
SEI Investments Co. 261,600 8,044,200
----------------------------------------------------------------------
USA Education Inc. 159,100 12,976,196
======================================================================
89,220,380
======================================================================
DRUG RETAIL-0.87%
Duane Reade, Inc.(a) 317,400 9,496,608
======================================================================
ELECTRIC UTILITIES-2.20%
Constellation Energy Group, Inc. 432,400 9,672,788
----------------------------------------------------------------------
Orion Power Holdings, Inc.(a) 560,600 14,469,086
======================================================================
24,141,874
======================================================================
|
FS-26
MARKET
SHARES VALUE
ELECTRICAL COMPONENTS & EQUIPMENT-0.99%
Cooper Industries, Inc. 279,100 $ 10,801,170
======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-4.54%
Celestica Inc. (Canada)(a) 300,000 10,296,000
----------------------------------------------------------------------
Garmin Ltd.(a) 495,000 8,320,950
----------------------------------------------------------------------
Mettler-Toledo International Inc.(a) 289,200 13,277,172
----------------------------------------------------------------------
Tektronix, Inc.(a) 460,000 9,062,000
----------------------------------------------------------------------
Varian Inc.(a) 350,000 8,869,000
======================================================================
49,825,122
======================================================================
ENVIRONMENTAL SERVICES-0.95%
Republic Services, Inc.(a) 636,100 10,419,318
======================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.96%
Monsanto Co. 335,600 10,504,280
======================================================================
FOREST PRODUCTS-1.09%
Plum Creek Timber Company, Inc. 434,400 12,002,472
======================================================================
GAS UTILITIES-0.56%
Kinder Morgan, Inc.(c) 123,700 6,139,231
======================================================================
GENERAL MERCHANDISE STORES-1.27%
BJ's Wholesale Club, Inc.(a)(c) 160,500 8,148,585
----------------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 256,700 5,768,049
======================================================================
13,916,634
======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-3.28%
Apria Healthcare Group Inc.(a) 450,700 10,366,100
----------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 170,200 14,671,240
----------------------------------------------------------------------
Lincare Holdings Inc.(a) 426,300 10,955,910
======================================================================
35,993,250
======================================================================
HEALTH CARE FACILITIES-1.43%
LifePoint Hospitals, Inc.(a) 149,100 4,648,938
----------------------------------------------------------------------
Triad Hospitals, Inc.(a) 408,700 10,994,030
======================================================================
15,642,968
======================================================================
INSURANCE BROKERS-1.04%
Aon Corp. 301,000 11,450,040
======================================================================
IT CONSULTING & SERVICES-2.48%
Affiliated Computer Services, Inc.-Class A(a) 149,000 13,119,450
----------------------------------------------------------------------
SunGard Data Systems Inc.(a) 169,800 4,278,960
----------------------------------------------------------------------
Titan Corp. (The)(a) 373,400 9,756,942
======================================================================
27,155,352
======================================================================
LEISURE PRODUCTS-1.20%
Mattel, Inc.(a) 694,700 13,150,671
======================================================================
LIFE & HEALTH INSURANCE-0.79%
Nationwide Financial Services, Inc.-Class A 203,900 6,936,678
----------------------------------------------------------------------
Principal Financial Group, Inc. (The)(a) 76,800 1,728,000
======================================================================
8,664,678
======================================================================
|
MARKET
SHARES VALUE
MANAGED HEALTH CARE-3.42%
Anthem, Inc.(a) 267,800 $ 11,215,464
----------------------------------------------------------------------
First Health Group Corp.(a) 517,800 13,980,600
----------------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 392,400 9,900,252
----------------------------------------------------------------------
Trigon Healthcare, Inc.(a) 39,000 2,394,210
======================================================================
37,490,526
======================================================================
MULTI-UTILITIES-1.41%
Aquila, Inc.(a) 277,800 5,097,630
----------------------------------------------------------------------
UtiliCorp United Inc. 348,300 10,320,129
======================================================================
15,417,759
======================================================================
NETWORKING EQUIPMENT-0.32%
Lantronix, Inc.(a) 550,000 3,536,500
======================================================================
OIL & GAS DRILLING-0.54%
Santa Fe International Corp. 243,200 5,919,488
======================================================================
OIL & GAS EQUIPMENT & SERVICES-1.21%
BJ Services Co.(a) 334,000 8,547,060
----------------------------------------------------------------------
Key Energy Services, Inc.(a) 539,500 4,693,650
======================================================================
13,240,710
======================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.63%
Kerr-McGee Corp. 204,300 11,767,680
----------------------------------------------------------------------
Murphy Oil Corporation 76,400 6,073,800
======================================================================
17,841,480
======================================================================
PACKAGED FOODS-0.51%
Hershey Foods Corporation 88,100 5,614,613
======================================================================
PAPER PRODUCTS-1.03%
Bowater Inc. 253,000 11,314,160
======================================================================
PHARMACEUTICALS-5.02%
Altana A.G. (Germany) 246,500 11,538,123
----------------------------------------------------------------------
Biovail Corp. (Canada)(a) 342,200 16,172,372
----------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 410,600 9,940,626
----------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 262,400 11,729,280
----------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 118,800 5,664,384
======================================================================
55,044,785
======================================================================
PROPERTY & CASUALTY INSURANCE-2.38%
ACE Ltd. (Bermuda) 319,917 11,277,074
----------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda)(c) 170,900 14,844,374
======================================================================
26,121,448
======================================================================
REAL ESTATE INVESTMENT TRUSTS-1.98%
Apartment Investment & Management Co.-Class A 251,090 10,538,247
----------------------------------------------------------------------
Mack-Cali Realty Corp. 358,800 11,122,800
======================================================================
21,661,047
======================================================================
|
FS-27
MARKET
SHARES VALUE
REINSURANCE-1.44%
Annuity and Life Reassurance Holdings, Ltd.
(Bermuda) 170,700 $ 3,967,068
-------------------------------------------------------------------------
Everest Re Group, Ltd. (Bermuda) 177,700 11,879,245
=========================================================================
15,846,313
=========================================================================
RESTAURANTS-2.93%
Brinker International, Inc.(a) 456,400 11,592,560
-------------------------------------------------------------------------
CEC Entertainment Inc.(a) 134,100 5,195,034
-------------------------------------------------------------------------
Jack in the Box Inc.(a) 159,700 3,928,620
-------------------------------------------------------------------------
Starbucks Corp.(a) 668,000 11,436,160
=========================================================================
32,152,374
=========================================================================
SEMICONDUCTOR EQUIPMENT-0.94%
Novellus Systems, Inc.(a) 153,300 5,063,499
-------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 175,000 5,257,000
=========================================================================
10,320,499
=========================================================================
SEMICONDUCTORS-4.54%
Alpha Industries, Inc.(a) 284,700 6,627,816
-------------------------------------------------------------------------
International Rectifier Corp.(a) 376,500 13,218,915
-------------------------------------------------------------------------
Micrel, Incorporated(a)(c) 152,000 3,822,800
-------------------------------------------------------------------------
Microchip Technology Inc.(a) 447,975 13,985,780
-------------------------------------------------------------------------
Semtech Corp.(a) 321,000 12,117,750
=========================================================================
49,773,061
=========================================================================
SPECIALTY STORES-1.29%
Copart, Inc.(a) 133,700 3,924,095
-------------------------------------------------------------------------
Venator Group, Inc.(a) 705,400 10,228,300
=========================================================================
14,152,395
=========================================================================
SYSTEMS SOFTWARE-1.61%
Adobe Systems Inc. 433,000 11,431,200
-------------------------------------------------------------------------
Symantec Corp.(a) 112,500 6,186,375
=========================================================================
17,617,575
=========================================================================
|
MARKET
SHARES VALUE
TELECOMMUNICATIONS EQUIPMENT-0.60%
Comverse Technology, Inc.(a) 352,100 $ 6,623,001
=========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.59%
Telephone and Data Systems, Inc. 73,900 6,495,810
=========================================================================
Total Common Stocks & Other Equity
Interests (Cost $862,235,426) 1,021,899,854
_________________________________________________________________________
=========================================================================
|
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
PUT OPTIONS PURCHASED-0.04%
GAS UTILITIES-0.01%
Kinder Morgan, Inc. 1,237 45 Nov-01 46,387
=========================================================================
GENERAL MERCHANDISE STORES-0.01%
BJ's Wholesale Club, Inc. 800 50 Nov-01 114,000
=========================================================================
SEMICONDUCTORS-0.02%
Micrel, Incorporated 1,520 25 Nov-01 239,400
=========================================================================
Total Put Options Purchased
(Cost $831,576) 399,787
_________________________________________________________________________
=========================================================================
|
SHARES
MONEY MARKET FUNDS-7.01%
STIC Liquid Assets Portfolio(d) 38,451,632 38,451,632
-------------------------------------------------------------------------
STIC Prime Portfolio(d) 38,451,632 38,451,632
=========================================================================
Total Money Market Funds (Cost
$76,903,264) 76,903,264
=========================================================================
TOTAL INVESTMENTS-100.22% (Cost $939,970,266) 1,099,202,905
=========================================================================
OTHER ASSETS LESS LIABILITIES-(0.22%) (2,398,433)
=========================================================================
NET ASSETS-100.00% $1,096,804,472
_________________________________________________________________________
=========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 10/31/01 represented
0.29% of the Fund's net assets.
(c) A portion of this security is subject to call options written. See Note 8.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-28
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$939,970,266)* $1,099,202,905
----------------------------------------------------------------------
Receivables for:
Investments sold 14,301,949
----------------------------------------------------------------------
Fund shares sold 709,238
----------------------------------------------------------------------
Dividends 676,916
----------------------------------------------------------------------
Investment for deferred compensation plan 40,005
----------------------------------------------------------------------
Collateral for securities loaned 108,019,789
----------------------------------------------------------------------
Other assets 16,990
======================================================================
Total assets 1,222,967,792
======================================================================
LIABILITIES:
Payables for:
Investments purchased 12,977,906
----------------------------------------------------------------------
Fund shares reacquired 2,710,734
----------------------------------------------------------------------
Options written (premiums received
$1,099,367) 810,408
----------------------------------------------------------------------
Deferred compensation plan 40,005
----------------------------------------------------------------------
Collateral upon return of securities loaned 108,019,789
----------------------------------------------------------------------
Accrued distribution fees 1,012,825
----------------------------------------------------------------------
Accrued trustees' fees 1,376
----------------------------------------------------------------------
Accrued transfer agent fees 443,051
----------------------------------------------------------------------
Accrued operating expenses 147,226
======================================================================
Total liabilities 126,163,320
======================================================================
Net assets applicable to shares outstanding $1,096,804,472
______________________________________________________________________
======================================================================
NET ASSETS:
Class A $ 576,659,604
______________________________________________________________________
======================================================================
Class B $ 454,017,599
______________________________________________________________________
======================================================================
Class C $ 66,127,269
______________________________________________________________________
======================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 39,244,317
______________________________________________________________________
======================================================================
Class B 32,190,014
______________________________________________________________________
======================================================================
Class C 4,691,502
______________________________________________________________________
======================================================================
Class A:
Net asset value per share $ 14.69
----------------------------------------------------------------------
Offering price per share: for the division
symbol]
(Net asset value of $14.69 divided by 94.50%) $ 15.54
______________________________________________________________________
======================================================================
Class B:
Net asset value and offering price per
share $ 14.10
______________________________________________________________________
======================================================================
Class C:
Net asset value and offering price per
share $ 14.10
______________________________________________________________________
======================================================================
|
* At October 31, 2001, securities with an aggregate market value of $105,883,145 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$4,980) $ 8,028,457
------------------------------------------------------------
Dividends from affiliated money market funds 4,072,797
------------------------------------------------------------
Interest 201,533
------------------------------------------------------------
Security lending income 2,216,701
============================================================
Total investment income 14,519,488
============================================================
EXPENSES:
Advisory fees 8,548,376
------------------------------------------------------------
Administrative services fees 160,775
------------------------------------------------------------
Custodian fees 107,468
------------------------------------------------------------
Distribution fees -- Class A 2,371,880
------------------------------------------------------------
Distribution fees -- Class B 5,430,170
------------------------------------------------------------
Distribution fees -- Class C 770,433
------------------------------------------------------------
Transfer agent fees -- Class A 1,804,999
------------------------------------------------------------
Transfer agent fees -- Class B 1,478,333
------------------------------------------------------------
Transfer agent fees -- Class C 209,746
------------------------------------------------------------
Trustees' fees 12,820
------------------------------------------------------------
Other 471,840
============================================================
Total expenses 21,366,840
============================================================
Less: Fees waived (3,281)
------------------------------------------------------------
Expenses paid indirectly (25,515)
============================================================
Net expenses 21,338,044
============================================================
Net investment income (loss) (6,818,556)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (7,222,320)
------------------------------------------------------------
Foreign currencies (52,237)
------------------------------------------------------------
Option contracts written 2,472,279
============================================================
(4,802,278)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (304,959,228)
------------------------------------------------------------
Foreign currencies (9,726)
------------------------------------------------------------
Option contracts written (1,233,187)
============================================================
(306,202,141)
============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (311,004,419)
============================================================
Net increase (decrease) in net assets
resulting from operations $(317,822,975)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-29
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
-------------- --------------
OPERATIONS:
Net investment income (loss) $ (6,818,556) $ (13,081,906)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (4,802,278) 213,082,772
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (306,202,141) 244,363,492
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (317,822,975) 444,364,358
==============================================================================================
Distributions to shareholders from net realized gains:
Class A (96,954,437) --
----------------------------------------------------------------------------------------------
Class B (81,364,674) --
----------------------------------------------------------------------------------------------
Class C (11,018,702) --
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 77,378,574 (58,539,325)
----------------------------------------------------------------------------------------------
Class B 52,952,759 (17,710,466)
----------------------------------------------------------------------------------------------
Class C 13,238,100 7,427,062
==============================================================================================
Net increase (decrease) in net assets (363,591,355) 375,541,629
==============================================================================================
NET ASSETS:
Beginning of year 1,460,395,827 1,084,854,198
==============================================================================================
End of year $1,096,804,472 $1,460,395,827
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 950,485,964 $ 813,799,595
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (62,566) (49,180)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (13,130,799) 180,931,398
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 159,511,873 465,714,014
==============================================================================================
$1,096,804,472 $1,460,395,827
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-30
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Capital Development Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income (loss) was
increased by $6,805,170, undistributed net realized gains increased by
$77,894 and paid in capital decreased by $6,883,064 as a result of foreign
currency transactions, net operating loss reclassifications, and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The fund has a capital loss carryforward of $11,152,255 as of October 31,
2001 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2009.
FS-31
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. 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.
H. Put Options -- The Fund may purchase put options. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option's underlying instrument may be a security or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund's resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the securities hedged.
I. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. Effective July 1,
2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $3,281.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $160,775 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 year ended October 31, 2001, AFS
was paid $1,981,565 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $2,371,880,
$5,430,170 and $770,433, respectively, as compensation under the Plans.
AIM Distributors received commissions of $233,900 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $19,079 in contingent deferred sales charges imposed
on redemptions of Fund shares.
FS-32
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $5,081 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $22,028 and reductions in custodian fees of $3,487 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $25,515.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $105,883,145 were
on loan to brokers. The loans were secured by cash collateral of $108,019,789
received by the Fund and invested in affiliated money market funds as follows:
$54,009,894 in STIC Liquid Assets Portfolio and $54,009,895 in STIC Prime
Portfolio. For the year ended October 31, 2001, the Fund received fees of
$2,216,701 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$1,581,209,021 and $1,609,231,992, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $196,016,893 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (38,762,798) ========================================================= Net unrealized appreciation of investment securities $157,254,095 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $941,948,810. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
Beginning of year 7,963 $6,226,953
---------------------------------------------------------
Written 8,299 3,114,723
---------------------------------------------------------
Closed (9,758) (6,236,434)
---------------------------------------------------------
Expired (2,437) (2,005,875)
=========================================================
End of year 4,067 $1,099,367
_________________________________________________________
=========================================================
|
FS-33
NOTE 8-CALL OPTION CONTRACTS (CONTINUED)
Open call option contracts written at October 31, 2001 were as follows:
OCTOBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 2001 MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- ---------- ------------ --------------
BJ's Wholesale Club, Inc. Dec-01 $60 810 $ 159,565 $ 30,375 $129,190
---------------------------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc. Nov-01 55 1,237 76,691 27,833 48,858
---------------------------------------------------------------------------------------------------------------------------
Micrel Inc. Feb-02 30 1,520 314,629 357,200 (42,571)
---------------------------------------------------------------------------------------------------------------------------
XL Capital Ltd -- Class A Nov-01 80 500 548,482 395,000 153,482
===========================================================================================================================
4,067 $1,099,367 $810,408 $288,959
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
------------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ------------- ---------- -------------
Sold:
Class A 10,419,720 $ 176,330,665 5,210,489 $ 111,276,526
---------------------------------------------------------------------------------------------------------------------------
Class B 3,656,256 60,895,695 3,984,927 81,378,727
---------------------------------------------------------------------------------------------------------------------------
Class C 1,125,563 18,758,747 1,124,727 23,107,989
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 5,235,028 90,980,110 -- --
---------------------------------------------------------------------------------------------------------------------------
Class B 4,475,584 75,098,584 -- --
---------------------------------------------------------------------------------------------------------------------------
Class C 616,947 10,344,899 -- --
===========================================================================================================================
Reacquired:
Class A (11,277,708) (189,932,201) (8,381,526) (169,815,851)
---------------------------------------------------------------------------------------------------------------------------
Class B (5,128,289) (83,041,520) (5,105,919) (99,089,193)
---------------------------------------------------------------------------------------------------------------------------
Class C (974,815) (15,865,546) (816,459) (15,680,927)
===========================================================================================================================
8,148,286 $ 143,569,433 (3,983,761) $ (68,822,729)
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Class A
-----------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
2001 2000 1999(a) 1998(a) 1997(a)
-------- -------- --------- --------- ---------
Net asset value, beginning of period $ 21.79 $ 15.24 $ 12.89 $ 14.57 $ 11.09
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.04) (0.13) (0.10) (0.06) (0.10)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.27) 6.68 2.45 (1.62) 3.58
=========================================================================================================================
Total from investment operations (4.31) 6.55 2.35 (1.68) 3.48
=========================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
=========================================================================================================================
Net asset value, end of period $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) (21.76)% 42.98% 18.23% (11.53)% 31.38%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $576,660 $759,838 $ 579,514 $ 717,263 $ 577,685
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 1.33%(c) 1.28% 1.38% 1.28% 1.33%(d)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.21)%(c) (0.60)% (0.70)% (0.40)% (0.83)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $677,679,853.
(d) Includes fee waiver. Ratio of expenses to average net assets excluding fee
waiver was 1.38%.
FS-34
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2001 2000 1999(a) 1998(a) 1997(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 21.16 $ 14.90 $ 12.70 $ 14.46 $ 11.08
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) (0.26) (0.20) (0.16) (0.20)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.12) 6.52 2.40 (1.60) 3.58
======================================================================================================================
Total from investment operations (4.27) 6.26 2.20 (1.76) 3.38
======================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
======================================================================================================================
Net asset value, end of period $ 14.10 $ 21.16 $ 14.90 $ 12.70 $ 14.46
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) (22.29)% 42.01% 17.32% (12.17)% 30.51%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $454,018 $617,576 $451,508 $493,993 $297,623
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 1.99% 2.12% 2.02% 2.09%(d)
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.87)%(c) (1.30)% (1.44)% (1.14)% (1.59)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $543,017,006.
(d) Includes fee waiver. Ratio of expenses to average net assets excluding fee
waiver was 2.14%.
CLASS C
------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------------------------- TO OCTOBER 31,
2001 2000 1999(a) 1998 1997(a)
------- ------- ------- ------- ----------------------
Net asset value, beginning of period $ 21.15 $ 14.89 $ 12.69 $ 14.45 $ 13.48
----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14) (0.25) (0.20) (0.16) (0.06)
----------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.12) 6.51 2.40 (1.60) 1.03
==================================================================================================================================
Total from investment operations (4.26) 6.26 2.20 (1.76) 0.97
==================================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
==================================================================================================================================
Net asset value, end of period $ 14.10 $ 21.15 $ 14.89 $ 12.69 $ 14.45
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Total return(b) (22.24)% 42.04% 17.34% (12.18)% 7.20%
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $66,127 $82,982 $53,832 $48,293 $12,195
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 1.99% 2.12% 2.02% 2.14%(d)(e)
==================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.87)%(c) (1.30)% (1.44)% (1.14)% (1.69)%(d)
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
__________________________________________________________________________________________________________________________________
==================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $77,043,292.
(d) Annualized.
(e) Includes fee waiver. Ratio of expenses to average net assets excluding fee
waiver was 2.19%.
FS-35
CHARTER FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Charter Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Charter Fund (a portfolio AIM Equity
Funds), including the schedule of investments, as of
October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the four years in the period then ended were
audited by other auditors whose report dated December 6,
2000, expressed an unqualified opinion on those
statements and financial highlights
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Charter Fund at October 31, 2001, and the results of its
operations, changes in its net assets, and financial
highlights for the year then ended in conformity with
accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-36
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Charter Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Charter Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-37
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
STOCKS & OTHER EQUITY
INTERESTS-97.69%
ADVERTISING-0.75%
Interpublic Group of Cos., Inc. (The) 350,000 $ 7,857,500
---------------------------------------------------------------------------
Omnicom Group Inc. 400,000 30,712,000
===========================================================================
38,569,500
===========================================================================
AEROSPACE & DEFENSE-1.43%
Boeing Co. (The) 550,000 17,930,000
---------------------------------------------------------------------------
General Dynamics Corp. 350,000 28,560,000
---------------------------------------------------------------------------
United Technologies Corp. 500,000 26,945,000
===========================================================================
73,435,000
===========================================================================
AIRLINES-0.31%
Southwest Airlines Co. 1,000,000 15,900,000
===========================================================================
APPAREL RETAIL-0.51%
Gap, Inc. (The) 2,000,000 26,140,000
===========================================================================
AUTO PARTS & EQUIPMENT-0.28%
Johnson Controls, Inc. 200,000 14,464,000
===========================================================================
BANKS-3.00%
Bank of America Corp. 500,000 29,495,000
---------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 1,500,000 51,015,000
---------------------------------------------------------------------------
Fifth Third Bancorp 400,000 22,568,000
---------------------------------------------------------------------------
Washington Mutual, Inc. 700,000 21,133,000
---------------------------------------------------------------------------
Wells Fargo & Co. 750,000 29,625,000
===========================================================================
153,836,000
===========================================================================
BIOTECHNOLOGY-0.55%
Amgen Inc.(a) 500,000 28,410,000
===========================================================================
BREWERS-0.41%
Anheuser-Busch Cos., Inc. 500,000 20,830,000
===========================================================================
BROADCASTING & CABLE TV-0.93%
Clear Channel Communications, Inc.(a) 500,000 19,060,000
---------------------------------------------------------------------------
Comcast Corp.-Class A(a) 800,000 28,672,000
===========================================================================
47,732,000
===========================================================================
BUILDING PRODUCTS-0.33%
Masco Corp. 850,000 16,855,500
===========================================================================
COMPUTER & ELECTRONICS RETAIL-0.21%
Best Buy Co., Inc.(a) 200,000 10,980,000
===========================================================================
COMPUTER HARDWARE-2.77%
Dell Computer Corp.(a) 1,500,000 35,970,000
---------------------------------------------------------------------------
International Business Machines Corp. 725,000 78,350,750
---------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,750,000 27,912,500
===========================================================================
142,233,250
===========================================================================
|
MARKET
SHARES VALUE
COMPUTER STORAGE & PERIPHERALS-0.30%
EMC Corp.(a) 1,250,000 $ 15,400,000
===========================================================================
CONSUMER FINANCE-0.94%
Capital One Financial Corp. 600,000 24,786,000
---------------------------------------------------------------------------
MBNA Corp. 500,000 13,805,000
---------------------------------------------------------------------------
Providian Financial Corp. 2,500,000 9,725,000
===========================================================================
48,316,000
===========================================================================
DATA PROCESSING SERVICES-0.23%
Paychex, Inc. 362,800 11,631,368
===========================================================================
DEPARTMENT STORES-1.08%
Kohl's Corp.(a) 1,000,000 55,610,000
===========================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.95%
Cendant Corp.(a) 3,750,000 48,600,000
===========================================================================
DIVERSIFIED FINANCIAL SERVICES-16.23%
American Express Co. 500,000 14,715,000
---------------------------------------------------------------------------
Citigroup Inc. 4,500,000 204,840,000
---------------------------------------------------------------------------
Fannie Mae 650,000 52,624,000
---------------------------------------------------------------------------
Freddie Mac 1,500,000 101,730,000
---------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 650,000 50,804,000
---------------------------------------------------------------------------
J.P. Morgan Chase & Co. 3,000,000 106,080,000
---------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,750,000 76,492,500
---------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 3,000,000 146,760,000
---------------------------------------------------------------------------
State Street Corp. 400,000 18,216,000
---------------------------------------------------------------------------
Stilwell Financial, Inc. 3,000,000 60,330,000
===========================================================================
832,591,500
===========================================================================
DRUG RETAIL-1.16%
CVS Corp. 450,000 10,755,000
---------------------------------------------------------------------------
Walgreen Co. 1,500,000 48,570,000
===========================================================================
59,325,000
===========================================================================
ELECTRIC UTILITIES-0.86%
Calpine Corp.(a) 650,000 16,087,500
---------------------------------------------------------------------------
Edison International(a) 350,000 4,973,500
---------------------------------------------------------------------------
Mirant Corp.(a) 600,000 15,600,000
---------------------------------------------------------------------------
PG&E Corp.(a) 400,000 7,224,000
===========================================================================
43,885,000
===========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.65%
Celestica Inc. (Canada)(a) 2,000,000 68,640,000
---------------------------------------------------------------------------
Jabil Circuit, Inc.(a) 400,000 8,480,000
---------------------------------------------------------------------------
Sanmina Corp.(a) 500,000 7,570,000
===========================================================================
84,690,000
===========================================================================
EMPLOYMENT SERVICES-0.14%
Robert Half International Inc.(a) 350,000 7,220,500
===========================================================================
|
FS-38
MARKET
SHARES VALUE
ENVIRONMENTAL SERVICES-0.36%
Waste Management, Inc. 750,000 $ 18,375,000
===========================================================================
FOOD DISTRIBUTORS-0.30%
Sysco Corp. 650,000 15,671,500
===========================================================================
FOOD RETAIL-0.61%
Kroger Co. (The)(a) 600,000 14,676,000
---------------------------------------------------------------------------
Safeway Inc.(a) 400,000 16,660,000
===========================================================================
31,336,000
===========================================================================
GENERAL MERCHANDISE STORES-4.44%
Family Dollar Stores, Inc. 350,000 10,101,000
---------------------------------------------------------------------------
Target Corp. 5,000,000 155,750,000
---------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1,200,000 61,680,000
===========================================================================
227,531,000
===========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.52%
Cardinal Health, Inc. 400,000 26,844,000
===========================================================================
HEALTH CARE EQUIPMENT-1.94%
Baxter International Inc. 1,000,000 48,370,000
---------------------------------------------------------------------------
Medtronic, Inc. 1,000,000 40,300,000
---------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 350,000 10,818,500
===========================================================================
99,488,500
===========================================================================
HOME IMPROVEMENT RETAIL-1.88%
Home Depot, Inc. (The) 1,500,000 57,345,000
---------------------------------------------------------------------------
Lowe's Cos., Inc. 1,150,000 39,215,000
===========================================================================
96,560,000
===========================================================================
HOTELS-0.90%
Carnival Corp. 800,000 17,424,000
---------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 2,000,000 22,000,000
---------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 300,000 6,612,000
===========================================================================
46,036,000
===========================================================================
HOUSEHOLD PRODUCTS-0.34%
Colgate-Palmolive Co. 300,000 17,256,000
===========================================================================
INDUSTRIAL CONGLOMERATES-6.92%
General Electric Co. 5,500,000 200,255,000
---------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 3,150,000 154,791,000
===========================================================================
355,046,000
===========================================================================
INDUSTRIAL MACHINERY-0.33%
Danaher Corp. 300,000 16,722,000
===========================================================================
INSURANCE BROKERS-0.47%
Marsh & McLennan Cos., Inc. 250,000 24,187,500
===========================================================================
INTEGRATED OIL & GAS-1.29%
ChevronTexaco Corp. 300,000 26,565,000
---------------------------------------------------------------------------
Exxon Mobil Corp. 1,000,000 39,450,000
===========================================================================
66,015,000
===========================================================================
|
MARKET
SHARES VALUE
INTEGRATED TELECOMMUNICATION SERVICES-0.74%
SBC Communications Inc. 1,000,000 $ 38,110,000
===========================================================================
LEISURE PRODUCTS-0.22%
Mattel, Inc.(a) 600,000 11,358,000
===========================================================================
LIFE & HEALTH INSURANCE-0.35%
AFLAC, Inc. 300,000 7,338,000
---------------------------------------------------------------------------
Conseco, Inc.(a) 3,500,000 10,465,000
===========================================================================
17,803,000
===========================================================================
MANAGED HEALTH CARE-0.51%
UnitedHealth Group Inc. 400,000 26,300,000
===========================================================================
MOTORCYCLE MANUFACTURERS-0.53%
Harley-Davidson, Inc. 600,000 27,156,000
===========================================================================
MOVIES & ENTERTAINMENT-2.99%
AOL Time Warner Inc.(a) 3,500,000 109,235,000
---------------------------------------------------------------------------
Viacom Inc.-Class B(a) 1,000,000 36,510,000
---------------------------------------------------------------------------
Walt Disney Co. (The) 400,000 7,436,000
===========================================================================
153,181,000
===========================================================================
MULTI-LINE INSURANCE-3.06%
American International Group, Inc. 2,000,000 157,200,000
===========================================================================
MULTI-UTILITIES-1.27%
Dynegy Inc.-Class A 650,000 23,335,000
---------------------------------------------------------------------------
Enron Corp. 3,000,000 41,700,000
===========================================================================
65,035,000
===========================================================================
NETWORKING EQUIPMENT-1.57%
Cisco Systems, Inc.(a) 4,750,000 80,370,000
===========================================================================
OIL & GAS DRILLING-0.44%
Transocean Sedco Forex Inc. 750,000 22,612,500
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.52%
Baker Hughes Inc. 400,000 14,332,000
---------------------------------------------------------------------------
Halliburton Co. 500,000 12,345,000
===========================================================================
26,677,000
===========================================================================
PERSONAL PRODUCTS-0.39%
Gillette Co. 650,000 20,208,500
===========================================================================
PHARMACEUTICALS-11.75%
Abbott Laboratories 500,000 26,490,000
---------------------------------------------------------------------------
Allergan, Inc. 600,000 43,074,000
---------------------------------------------------------------------------
American Home Products Corp. 700,000 39,081,000
---------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,500,000 80,175,000
---------------------------------------------------------------------------
Johnson & Johnson 1,850,000 107,133,500
---------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 500,000 19,495,000
---------------------------------------------------------------------------
Pfizer Inc. 3,750,000 157,125,000
---------------------------------------------------------------------------
Pharmacia Corp. 400,000 16,208,000
---------------------------------------------------------------------------
Pharmacia Corp.-$2.60 Conv. Pfd. ACES 1,000,000 39,500,000
---------------------------------------------------------------------------
|
FS-39
MARKET
SHARES VALUE
PHARMACEUTICALS-(CONTINUED)
Schering-Plough Corp. 2,000,000 $ 74,360,000
===========================================================================
602,641,500
===========================================================================
PROPERTY & CASUALTY INSURANCE-0.98%
ACE Ltd. (Bermuda) 375,000 13,218,750
---------------------------------------------------------------------------
MGIC Investment Corp. 200,000 10,348,000
---------------------------------------------------------------------------
St. Paul Co., Inc. (The) 250,000 11,475,000
---------------------------------------------------------------------------
XL Captial Ltd.-Class A (Bermuda) 175,000 15,200,500
===========================================================================
50,242,250
===========================================================================
SEMICONDUCTOR EQUIPMENT-2.41%
Applied Materials, Inc.(a) 2,000,000 68,220,000
---------------------------------------------------------------------------
KLA-Tencor Corp.(a) 1,350,000 55,161,000
===========================================================================
123,381,000
===========================================================================
SEMICONDUCTORS-5.51%
Altera Corp.(a) 1,250,000 25,250,000
---------------------------------------------------------------------------
Analog Devices, Inc.(a) 1,350,000 51,300,000
---------------------------------------------------------------------------
Intel Corp. 3,300,000 80,586,000
---------------------------------------------------------------------------
Linear Technology Corp. 800,000 31,040,000
---------------------------------------------------------------------------
Texas Instruments Inc. 2,500,000 69,975,000
---------------------------------------------------------------------------
Xilinx, Inc.(a) 800,000 24,336,000
===========================================================================
282,487,000
===========================================================================
SOFT DRINKS-1.89%
Coca-Cola Co. (The) 400,000 19,152,000
---------------------------------------------------------------------------
PepsiCo, Inc. 1,600,000 77,936,000
===========================================================================
97,088,000
===========================================================================
SPECIALTY STORES-0.49%
Bed Bath & Beyond Inc.(a) 625,000 15,662,500
---------------------------------------------------------------------------
Tiffany & Co. 400,000 9,356,000
===========================================================================
25,018,500
===========================================================================
SYSTEMS SOFTWARE-4.50%
Computer Associates International, Inc. 500,000 15,460,000
---------------------------------------------------------------------------
Microsoft Corp.(a) 3,000,000 174,450,000
---------------------------------------------------------------------------
Oracle Corp.(a) 3,000,000 40,680,000
===========================================================================
230,590,000
===========================================================================
|
MARKET
SHARES VALUE
TELECOMMUNICATIONS EQUIPMENT-1.53%
Motorola, Inc. 3,000,000 $ 49,110,000
---------------------------------------------------------------------------
QUALCOMM Inc.(a) 600,000 29,472,000
===========================================================================
78,582,000
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.72%
Sprint Corp. (PCS Group)(a) 1,650,000 36,795,000
===========================================================================
Total Stocks & Other Equity Interests
(Cost $4,700,032,339) 5,010,559,368
===========================================================================
PRINCIPAL
AMOUNT
CONVERTIBLE NOTES-1.13%
COMPUTER HARDWARE-0.21%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Putable, Sub. Deb.,
8.00%, 05/01/03 (Acquired 03/07/00-
04/19/01; Cost $10,476,000)(b)(c)(d) $17,900,000 3,222,000
---------------------------------------------------------------------------
8.00%, 05/01/03 (Acquired 04/17/98-
04/19/01; Cost $37,053,750)(b)(c)(d) 42,800,000 7,704,000
===========================================================================
10,926,000
===========================================================================
SYSTEMS SOFTWARE-0.58%
VERITAS Software Corp., Conv. Unsec. Notes,
5.25%, 11/01/04 10,000,000 29,700,000
===========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.34%
Lucent Technologies Inc., Conv. Pfd. Notes,
8.00%, 08/15/31 (Acquired 08/01/01;
Cost $15,000,000)(b) 15,000 17,381,250
===========================================================================
Total Convertible Notes
(Cost $76,114,568) 58,007,250
===========================================================================
SHARES
MONEY MARKET FUNDS-2.00%
STIC Liquid Assets Portfolio(e) 51,095,980 51,095,980
---------------------------------------------------------------------------
STIC Prime Portfolio(e) 51,095,980 51,095,980
===========================================================================
Total Money Market Funds
(Cost $102,191,960) 102,191,960
===========================================================================
TOTAL INVESTMENTS-100.82%
(Cost $4,878,338,867) 5,170,758,578
===========================================================================
OTHER ASSETS LESS LIABILITIES-(0.82)% (41,803,588)
===========================================================================
NET ASSETS-100.00% $5,128,954,990
___________________________________________________________________________
===========================================================================
|
Investment Abbreviations:
ACES - Automatically Convertible Equity Security Conv. - Convertible Deb. - Debentures Gtd. - Guaranteed Pfd. - Preferred Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
10/31/01 was $28,307,250, which represented 0.55% of the Fund's net assets.
(c) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-40
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$4,878,338,867)* $5,170,758,578
-------------------------------------------------------------
Receivables for:
Investments sold 1,054,271
-------------------------------------------------------------
Fund shares sold 2,481,747
-------------------------------------------------------------
Dividends and interest 3,369,978
-------------------------------------------------------------
Investment for deferred compensation plan 141,930
-------------------------------------------------------------
Collateral for securities loaned 157,871,000
-------------------------------------------------------------
Other assets 63,412
=============================================================
Total assets 5,335,740,916
=============================================================
LIABILITIES:
Payables for:
Investments purchased 29,422,955
-------------------------------------------------------------
Fund shares reacquired 13,505,626
-------------------------------------------------------------
Deferred compensation plan 141,930
-------------------------------------------------------------
Collateral upon return of securities loaned 157,871,000
-------------------------------------------------------------
Accrued distribution fees 3,766,293
-------------------------------------------------------------
Accrued trustees' fees 2,588
-------------------------------------------------------------
Accrued transfer agent fees 1,757,658
-------------------------------------------------------------
Accrued operating expenses 317,876
=============================================================
Total liabilities 206,785,926
=============================================================
Net assets applicable to shares outstanding $5,128,954,990
=============================================================
NET ASSETS:
Class A $3,159,303,778
_____________________________________________________________
=============================================================
Class B $1,719,470,450
_____________________________________________________________
=============================================================
Class C $ 248,533,219
_____________________________________________________________
=============================================================
Institutional Class $ 1,647,543
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 301,921,398
_____________________________________________________________
=============================================================
Class B 168,970,042
_____________________________________________________________
=============================================================
Class C 24,353,446
_____________________________________________________________
=============================================================
Institutional Class 154,347
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 10.46
-------------------------------------------------------------
Offering price per share:
(Net asset value of $10.46 divided by
94.50%) $ 11.07
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 10.18
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 10.21
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value and offering price per
share $ 10.67
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $147,803,828 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$167,987) $ 51,939,068
-------------------------------------------------------------
Dividends from affiliated money market funds 9,708,350
-------------------------------------------------------------
Interest 2,430,943
-------------------------------------------------------------
Security lending income 493,642
=============================================================
Total investment income 64,572,003
=============================================================
EXPENSES:
Advisory fees 43,928,613
-------------------------------------------------------------
Administrative services fees 383,570
-------------------------------------------------------------
Custodian fees 381,521
-------------------------------------------------------------
Distribution fees -- Class A 12,930,396
-------------------------------------------------------------
Distribution fees -- Class B 23,400,806
-------------------------------------------------------------
Distribution fees -- Class C 3,339,941
-------------------------------------------------------------
Transfer agent fees -- Class A 8,527,137
-------------------------------------------------------------
Transfer agent fees -- Class B 4,737,943
-------------------------------------------------------------
Transfer agent fees -- Class C 676,235
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 335
-------------------------------------------------------------
Trustees' fees 33,996
-------------------------------------------------------------
Other 2,084,211
=============================================================
Total expenses 100,424,704
=============================================================
Less: Fees waived (504,457)
-------------------------------------------------------------
Expenses paid indirectly (130,329)
=============================================================
Net expenses 99,789,918
=============================================================
Net investment income (loss) (35,217,915)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,053,979,957)
-------------------------------------------------------------
Option contracts written 2,143,751
=============================================================
(1,051,836,206)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (2,495,927,588)
-------------------------------------------------------------
Foreign currencies 32,252
=============================================================
(2,495,895,336)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (3,547,731,542)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(3,582,949,457)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-41
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- --------------
OPERATIONS:
Net investment income (loss) $ (35,217,915) $ (40,843,340)
--------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities and option contracts (1,051,836,206) 471,954,499
--------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities
and foreign currencies (2,495,895,336) 506,889,736
================================================================================
Net increase (decrease) in net assets
resulting from operations (3,582,949,457) 938,000,895
================================================================================
Distributions to shareholders from net
realized gains:
Class A (282,256,150) (388,576,691)
--------------------------------------------------------------------------------
Class B (155,149,624) (178,887,093)
--------------------------------------------------------------------------------
Class C (21,295,588) (12,095,934)
--------------------------------------------------------------------------------
Institutional Class (157,658) (5,231,737)
--------------------------------------------------------------------------------
Share transactions-net:
Class A (161,661,243) 584,181,510
--------------------------------------------------------------------------------
Class B (2,882,485) 797,259,785
--------------------------------------------------------------------------------
Class C 28,949,621 277,016,670
--------------------------------------------------------------------------------
Institutional Class (227,735) (65,767,394)
================================================================================
Net increase (decrease) in net assets (4,177,630,319) 1,945,900,011
================================================================================
NET ASSETS:
Beginning of year 9,306,585,309 7,360,685,298
================================================================================
End of year $ 5,128,954,990 $9,306,585,309
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 5,916,415,607 $6,086,848,912
--------------------------------------------------------------------------------
Undistributed net investment income (loss) (892,327) (265,564)
--------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (1,078,954,767) 431,720,148
--------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 292,386,477 2,788,281,813
================================================================================
$ 5,128,954,990 $9,306,585,309
________________________________________________________________________________
================================================================================
|
See Notes to Financial Statements.
FS-42
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of eleven separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers four different classes of shares: Class A shares, Class B shares, Class C
shares and the Institutional Class. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a contingent
deferred sales charge. 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 growth of capital with a secondary objective
of current income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted
securities, are valued according to the following policy. A security listed
or traded on an exchange (except convertible bonds) is valued at its last
sales price as of the close of the customary trading session on the exchange
where the security is principally traded, or lacking any sales on a
particular day, the security is valued at the closing bid price on that day.
Each security reported on the NASDAQ National Market System is valued at the
last sales price as of the close of the customary trading session on the
valuation date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate and
maturity date. Securities for which market prices are not provided by any of
the above methods are valued based upon quotes furnished by independent
sources and are valued at the last bid price in the case of equity securities
and in the case of debt obligations, the mean between the last bid and asked
prices. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued at amortized cost which approximates market
value. For purposes of determining net asset value per share, futures and
option contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income was increased by
$34,591,152, undistributed net realized gains increased by $20,311 and paid
in capital decreased by $34,611,463 as a result of net operating loss
reclassifications and other reclassifications. Net assets of the Fund were
unaffected by the reclassifications noted above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the
requirements of the Internal Revenue Code necessary to qualify as a regulated
investment company and, as such, will not be subject to federal income taxes
on otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The fund has a capital loss carryforward of $1,010,857,488 as of October
31, 2001 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2009.
FS-43
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. 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.
H. Bond Premiums -- It has been the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. In November 2000, a revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was issued and is effective for fiscal years beginning after December 15, 2000. The revised Guide will require the Fund to amortize premium and discount on all fixed-income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding. Adopting this accounting principle will not effect the Fund's net asset value, but will change the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. The Fund expects that the impact of the adoption of this principle will not be material to the financial statements.
I. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
agreed to waive advisory fees payable by the Fund to AIM at the annual rate of
0.025% for each $5 billion increment in net assets over $5 billion, up to a
maximum waiver of 0.175% on net assets in excess of $35 billion. Effective July
1, 2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $504,457. Under the terms of a master sub-advisory agreement
between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM
Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $383,570 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 year ended October 31, 2001, AFS
was paid $6,916,602 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and the Institutional Class 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 0.30% 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
FS-44
the Plans would constitute an asset-based sales charge. The Plans also impose a
cap on the total sales charges, including asset-based sales charges that may be
paid by the respective classes. For the year ended October 31, 2001, the Class
A, Class B and Class C shares paid AIM Distributors $12,930,396, $23,400,806 and
$3,339,941, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,328,439 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $191,689 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $13,632
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $122,815 and reductions in custodian fees of $7,514 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $130,329.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $147,803,828 were
on loan to brokers. The loans were secured by cash collateral of $157,871,000
received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated
money market fund. For the year ended October 31, 2001, the Fund received fees
of $493,642 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$5,289,825,997 and $5,527,271,604, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $756,700,389 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (532,958,136) ========================================================= Net unrealized appreciation of investment securities $223,742,253 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $4,947,016,325. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of year -- $ --
----------------------------------------------------------
Written 15,000 3,870,757
----------------------------------------------------------
Closed (15,000) (3,870,757)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
FS-45
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
Sold:
Class A 37,578,186 $ 517,083,181 57,178,653 $1,066,455,209
---------------------------------------------------------------------------------------------------------------------------
Class B 24,357,854 333,276,040 53,229,017 974,381,372
---------------------------------------------------------------------------------------------------------------------------
Class C 7,575,697 105,353,193 16,418,781 302,161,441
---------------------------------------------------------------------------------------------------------------------------
Institutional Class 21,223 287,988 579,610 10,786,891
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 17,611,530 266,615,003 21,344,032 366,468,078
---------------------------------------------------------------------------------------------------------------------------
Class B 9,886,847 146,422,053 9,983,505 169,088,645
---------------------------------------------------------------------------------------------------------------------------
Class C 1,369,533 20,351,280 672,773 11,427,814
---------------------------------------------------------------------------------------------------------------------------
Institutional Class 8,709 133,843 294,477 5,109,184
===========================================================================================================================
Reacquired:
Class A (74,345,004) (945,359,427) (45,774,876) (848,741,777)
---------------------------------------------------------------------------------------------------------------------------
Class B (39,590,160) (482,580,578) (18,927,570) (346,210,232)
---------------------------------------------------------------------------------------------------------------------------
Class C (7,831,344) (96,754,852) (1,991,214) (36,572,585)
---------------------------------------------------------------------------------------------------------------------------
Institutional Class (52,054) (649,566) (4,553,078) (81,663,469)
===========================================================================================================================
(23,408,983) $(135,821,842) 88,454,110 $1,592,690,571
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
2001 2000(a) 1999 1998 1997
----------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.07 $ 17.16 $ 13.32 $ 13.41 $ 11.19
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) (0.04) 0.02 0.12 0.10
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.70) 2.30 4.39 1.23 2.91
=================================================================================================================================
Total from investment operations (6.73) 2.26 4.41 1.35 3.01
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.03) (0.10) (0.12)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.67)
=================================================================================================================================
Total distributions (0.88) (1.35) (0.57) (1.44) (0.79)
=================================================================================================================================
Net asset value, end of period $ 10.46 $ 18.07 $ 17.16 $ 13.32 $ 13.41
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (38.75)% 13.60% 34.05% 11.20% 28.57%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 3,159,304 $5,801,869 $4,948,666 $3,706,938 $3,466,912
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.16%(c) 1.06% 1.05% 1.08% 1.09%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.17%(c) 1.08% 1.07% 1.10% 1.10%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.24)%(c) (0.20)% 0.11% 0.95% 0.79%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $4,310,131,950.
FS-46
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2001 2000(a) 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 17.72 $ 16.97 $ 13.24 $ 13.37 $ 11.18
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) 0.02 0.01
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.53) 2.27 4.37 1.22 2.89
================================================================================================================================
Total from investment operations (6.66) 2.10 4.27 1.24 2.90
================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) (0.04)
--------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.67)
================================================================================================================================
Total distributions (0.88) (1.35) (0.54) (1.37) (0.71)
================================================================================================================================
Net asset value, end of period $ 10.18 $ 17.72 $ 16.97 $ 13.24 $ 13.37
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) (39.14)% 12.76% 33.06% 10.33% 27.54%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,719,470 $3,088,611 $2,206,752 $1,408,687 $1,056,094
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.80% 1.80% 1.84% 1.85%
--------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.87%(c) 1.82% 1.82% 1.86% 1.86%
================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(c) (0.94)% (0.64)% 0.19% 0.03%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $2,340,080,599.
CLASS C
---------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
------------------------------------------- TO OCTOBER 31,
2001 2000(a) 1999 1998 1997
-------- -------- -------- ------- ----------------------
Net asset value, beginning of period $ 17.77 $ 17.01 $ 13.27 $ 13.39 $13.86
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.09) 0.02 --
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.55) 2.28 4.37 1.23 (0.45)
=================================================================================================================================
Total from investment operations (6.68) 2.11 4.28 1.25 (0.45)
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.03) --
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.02)
=================================================================================================================================
Total distributions (0.88) (1.35) (0.54) (1.37) (0.02)
=================================================================================================================================
Net asset value, end of period $ 10.21 $ 17.77 $ 17.01 $ 13.27 $13.39
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (39.14)% 12.78% 33.06% 10.39% (3.24)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $248,533 $412,872 $138,467 $37,846 $5,669
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.80% 1.80% 1.84% 1.82%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.87%(c) 1.82% 1.82% 1.86% 1.83%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.94)%(c) (0.94)% (0.64)% 0.19% 0.06%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $333,944,060.
(d) Annualized.
FS-47
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Constellation Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Constellation Fund (a portfolio of AIM
Equity Funds), including the schedule of investments, as
of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statements of changes in net assets for
the year ended October 31, 2000, and the financial
highlights for each of the four years in the period then
ended were audited by other auditors whose report dated
December 6, 2000, expressed an unqualified opinion on
those statements and financial highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Constellation Fund at October 31, 2001, and the results
of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-48
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Constellation Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Constellation Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-49
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-97.93%
ADVERTISING-3.05%
Lamar Advertising Co.(a)(b) 4,500,000 $ 141,300,000
----------------------------------------------------------------------------
Omnicom Group Inc. 2,500,000 191,950,000
============================================================================
333,250,000
============================================================================
AEROSPACE & DEFENSE-2.90%
General Dynamics Corp. 1,124,400 91,751,040
----------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 910,000 79,051,700
----------------------------------------------------------------------------
Lockheed Martin Corp. 3,000,000 146,310,000
============================================================================
317,112,740
============================================================================
APPAREL RETAIL-1.71%
Ross Stores, Inc. 1,500,000 46,950,000
----------------------------------------------------------------------------
Talbots, Inc. (The) 1,333,500 38,004,750
----------------------------------------------------------------------------
TJX Cos., Inc. (The) 3,029,800 102,407,240
============================================================================
187,361,990
============================================================================
APPLICATION SOFTWARE-3.26%
Cadence Design Systems, Inc.(a) 1,500,000 31,710,000
----------------------------------------------------------------------------
Citrix Systems, Inc.(a) 2,000,000 46,800,000
----------------------------------------------------------------------------
Electronic Arts Inc.(a) 1,500,000 77,190,000
----------------------------------------------------------------------------
Intuit Inc.(a) 5,000,000 201,100,000
============================================================================
356,800,000
============================================================================
BROADCASTING & CABLE TV-2.37%
Comcast Corp.-Class A(a) 4,000,000 143,360,000
----------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 2,186,500 36,645,740
----------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 3,180,900 79,522,500
============================================================================
259,528,240
============================================================================
COMPUTER & ELECTRONICS RETAIL-0.81%
CDW Computer Centers, Inc.(a) 1,929,000 88,830,450
============================================================================
COMPUTER HARDWARE-2.36%
Dell Computer Corp.(a) 4,000,000 95,920,000
----------------------------------------------------------------------------
International Business Machines Corp. 1,500,000 162,105,000
============================================================================
258,025,000
============================================================================
CONSUMER FINANCE-2.62%
Capital One Financial Corp. 3,389,200 140,007,852
----------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 1,000,000 39,930,000
----------------------------------------------------------------------------
MBNA Corp. 3,836,900 105,936,809
============================================================================
285,874,661
============================================================================
DATA PROCESSING SERVICES-3.82%
Concord EFS, Inc.(a) 960,400 26,286,148
----------------------------------------------------------------------------
Fiserv, Inc.(a) 9,000,000 334,710,000
----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
DATA PROCESSING SERVICES-(CONTINUED)
Paychex, Inc. 1,767,000 $ 56,650,020
============================================================================
417,646,168
============================================================================
DEPARTMENT STORES-1.75%
Kohl's Corp.(a) 3,449,400 191,821,134
============================================================================
DIVERSIFIED FINANCIAL SERVICES-12.88%
American Express Co. 3,000,000 88,290,000
----------------------------------------------------------------------------
Citigroup Inc. 4,550,000 207,116,000
----------------------------------------------------------------------------
Fannie Mae 750,000 60,720,000
----------------------------------------------------------------------------
Freddie Mac 2,106,200 142,842,484
----------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 3,400,000 265,744,000
----------------------------------------------------------------------------
J.P. Morgan Chase & Co. 5,000,000 176,800,000
----------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 4,120,000 180,085,200
----------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 4,000,000 195,680,000
----------------------------------------------------------------------------
State Street Corp. 2,000,000 91,080,000
============================================================================
1,408,357,684
============================================================================
DRUG RETAIL-0.59%
Walgreen Co. 2,000,000 64,760,000
============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.77%
Celestica Inc. (Canada)(a) 4,767,100 163,606,872
----------------------------------------------------------------------------
Sanmina Corp.(a) 2,000,000 30,280,000
============================================================================
193,886,872
============================================================================
ENVIRONMENTAL SERVICES-0.34%
Waste Management, Inc. 1,500,000 36,750,000
============================================================================
FOOD RETAIL-0.95%
Safeway Inc.(a) 2,500,000 104,125,000
============================================================================
FOOTWEAR-1.13%
NIKE, Inc.-Class B 2,500,000 123,400,000
============================================================================
GENERAL MERCHANDISE STORES-1.46%
Family Dollar Stores, Inc. 1,953,800 56,386,668
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,000,000 102,800,000
============================================================================
159,186,668
============================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.44%
Cardinal Health, Inc. 712,500 47,815,875
============================================================================
HEALTH CARE EQUIPMENT-2.04%
Biomet, Inc.(a) 4,000,075 122,002,288
----------------------------------------------------------------------------
Medtronic, Inc. 2,500,000 100,750,000
============================================================================
222,752,288
============================================================================
|
FS-50
MARKET
SHARES VALUE
HEALTH CARE FACILITIES-2.68%
HCA Inc. 3,000,000 $ 118,980,000
----------------------------------------------------------------------------
Health Management Associates, Inc.- Class
A(a) 6,000,000 116,940,000
----------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,000,000 57,520,000
============================================================================
293,440,000
============================================================================
HOME IMPROVEMENT RETAIL-2.92%
Home Depot, Inc. (The) 3,000,000 114,690,000
----------------------------------------------------------------------------
Lowe's Cos., Inc. 6,000,000 204,600,000
============================================================================
319,290,000
============================================================================
HOUSEHOLD APPLIANCES-0.31%
Whirlpool Corp. 566,100 33,411,222
============================================================================
INDUSTRIAL CONGLOMERATES-1.17%
General Electric Co. 3,500,000 127,435,000
============================================================================
INDUSTRIAL MACHINERY-0.77%
Danaher Corp. 1,500,000 83,610,000
============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.80%
WorldCom, Inc.-WorldCom Group(a) 6,500,000 87,425,000
============================================================================
INTERNET SOFTWARE & SERVICES-0.53%
VeriSign, Inc.(a) 1,500,000 58,065,000
============================================================================
INVESTMENTS-0.93%
Nasdaq-100 Index Tracking Stock(a) 3,000,000 101,700,000
============================================================================
IT CONSULTING & SERVICES-2.92%
Electronic Data Systems Corp. 3,000,000 193,110,000
----------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 5,000,000 126,000,000
============================================================================
319,110,000
============================================================================
LIFE & HEALTH INSURANCE-1.05%
AFLAC, Inc. 3,978,900 97,323,894
----------------------------------------------------------------------------
Principal Financial Group, Inc. (The)(a) 774,300 17,421,750
============================================================================
114,745,644
============================================================================
MANAGED HEALTH CARE-2.99%
Caremark Rx, Inc.(a) 5,000,000 67,000,000
----------------------------------------------------------------------------
First Health Group Corp.(a) 1,000,000 27,000,000
----------------------------------------------------------------------------
UnitedHealth Group Inc. 1,000,000 65,750,000
----------------------------------------------------------------------------
Wellpoint Health Networks Inc.(a) 1,500,000 167,385,000
============================================================================
327,135,000
============================================================================
MOTORCYCLE MANUFACTURERS-1.45%
Harley-Davidson, Inc. 3,500,000 158,410,000
============================================================================
MOVIES & ENTERTAINMENT-2.63%
AOL Time Warner Inc.(a) 6,000,000 187,260,000
----------------------------------------------------------------------------
Viacom Inc.-Class B(a) 2,750,000 100,402,500
============================================================================
287,662,500
============================================================================
|
MARKET
SHARES VALUE
MULTI-LINE INSURANCE-2.73%
American International Group, Inc. 3,800,000 $ 298,680,000
============================================================================
MULTI-UTILITIES-0.33%
Dynegy Inc.-Class A 1,000,000 35,900,000
============================================================================
NETWORKING EQUIPMENT-1.76%
Cisco Systems, Inc.(a) 10,000,000 169,200,000
----------------------------------------------------------------------------
McDATA Corp.-Class A(a) 1,564,420 23,012,618
============================================================================
192,212,618
============================================================================
OIL & GAS DRILLING-0.81%
Noble Drilling Corp.(a) 2,900,000 88,595,000
============================================================================
PHARMACEUTICALS-6.79%
Elan Corp. PLC-ADR (Ireland)(a) 3,000,000 136,950,000
----------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 1,500,000 111,570,000
----------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 2,000,000 115,380,000
----------------------------------------------------------------------------
Pfizer Inc. 6,000,000 251,400,000
----------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 773,600 34,579,920
----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 1,500,000 92,700,000
============================================================================
742,579,920
============================================================================
PROPERTY & CASUALTY INSURANCE-1.41%
ACE Ltd. (Bermuda) 2,509,800 88,470,450
----------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 750,000 65,145,000
============================================================================
153,615,450
============================================================================
RESTAURANTS-1.53%
Brinker International, Inc.(a) 3,000,000 76,200,000
----------------------------------------------------------------------------
Darden Restaurants, Inc. 1,250,000 40,025,000
----------------------------------------------------------------------------
Outback Steakhouse, Inc.(a) 544,300 15,703,055
----------------------------------------------------------------------------
Tricon Global Restaurants, Inc.(a) 688,800 34,846,392
============================================================================
166,774,447
============================================================================
SEMICONDUCTOR EQUIPMENT-1.65%
Applied Materials, Inc.(a) 2,000,000 68,220,000
----------------------------------------------------------------------------
Novellus Systems, Inc.(a) 2,000,000 66,060,000
----------------------------------------------------------------------------
Teradyne, Inc.(a) 2,000,000 46,100,000
============================================================================
180,380,000
============================================================================
SEMICONDUCTORS-5.10%
Altera Corp.(a) 3,000,000 60,600,000
----------------------------------------------------------------------------
Analog Devices, Inc.(a) 4,658,000 177,004,000
----------------------------------------------------------------------------
Intel Corp. 1,000,000 24,420,000
----------------------------------------------------------------------------
Linear Technology Corp. 2,490,900 96,646,920
----------------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 1,437,700 65,774,775
----------------------------------------------------------------------------
Microchip Technology Inc.(a) 4,246,968 132,590,341
============================================================================
557,036,036
============================================================================
|
FS-51
MARKET
SHARES VALUE
SPECIALTY STORES-3.23%
AutoZone, Inc.(a) 605,900 $ 35,463,327
----------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 8,000,000 200,480,000
----------------------------------------------------------------------------
Borders Group, Inc.(a) 4,000,000 62,360,000
----------------------------------------------------------------------------
Office Depot, Inc.(a) 4,000,000 54,400,000
============================================================================
352,703,327
============================================================================
SYSTEMS SOFTWARE-3.99%
Microsoft Corp.(a) 7,500,000 436,125,000
============================================================================
TELECOMMUNICATIONS EQUIPMENT-0.28%
Nokia Oyj-ADR (Finland) 1,500,000 30,765,000
============================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.92%
Sprint Corp. (PCS Group)(a) 4,500,000 100,350,000
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $10,765,157,040) 10,704,440,934
============================================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS-3.05%
STIC Liquid Assets Portfolio(c) 167,018,637 $ 167,018,637
----------------------------------------------------------------------------
STIC Prime Portfolio(c) 167,018,637 167,018,637
============================================================================
Total Money Market Funds (Cost
$334,037,274) 334,037,274
============================================================================
TOTAL INVESTMENTS-100.98% (Cost
$11,099,194,314) 11,038,478,208
============================================================================
OTHER ASSETS LESS LIABILITIES-(0.98%) (107,463,292)
============================================================================
NET ASSETS-100.00% $10,931,014,916
____________________________________________________________________________
============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuer in which the Fund's holdings of the issuer represent 5%
or more of the outstanding voting securities of the issuer. The Fund has
not owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer.
The market value as of 10/31/01 represented 1.29% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-52
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$11,099,194,314)* $11,038,478,208
-------------------------------------------------------------
Receivables for:
Investments sold 55,794,179
-------------------------------------------------------------
Fund shares sold 5,542,976
-------------------------------------------------------------
Dividends 3,203,885
-------------------------------------------------------------
Investment for deferred compensation plan 299,778
-------------------------------------------------------------
Collateral for securities loaned 82,388,055
-------------------------------------------------------------
Other assets 91,742
=============================================================
Total assets 11,185,798,823
=============================================================
LIABILITIES:
Payables for:
Investments purchased 123,237,702
-------------------------------------------------------------
Fund shares reacquired 36,973,947
-------------------------------------------------------------
Deferred compensation plan 299,778
-------------------------------------------------------------
Collateral upon return of securities
loaned 82,388,055
-------------------------------------------------------------
Accrued distribution fees 6,352,435
-------------------------------------------------------------
Accrued trustees' fees 4,710
-------------------------------------------------------------
Accrued transfer agent fees 4,349,945
-------------------------------------------------------------
Accrued operating expenses 1,177,335
=============================================================
Total liabilities 254,783,907
=============================================================
Net assets applicable to shares outstanding $10,931,014,916
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 9,703,277,317
_____________________________________________________________
=============================================================
Class B $ 818,342,827
_____________________________________________________________
=============================================================
Class C $ 258,786,001
_____________________________________________________________
=============================================================
Institutional Class $ 150,608,771
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 492,027,970
_____________________________________________________________
=============================================================
Class B 43,330,146
_____________________________________________________________
=============================================================
Class C 13,706,725
_____________________________________________________________
=============================================================
Institutional Class 7,172,708
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 19.72
-------------------------------------------------------------
Offering price per share:
(Net asset value of $19.72 divided by
94.50%) $ 20.87
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 18.89
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 18.88
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value offering and redemption
price per share $ 21.00
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $81,311,797 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$19,950) $ 52,609,362
-------------------------------------------------------------
Dividends from affiliated money market funds 48,646,039
-------------------------------------------------------------
Interest 811,984
-------------------------------------------------------------
Security lending income 700,894
=============================================================
Total investment income 102,768,279
=============================================================
EXPENSES:
Advisory fees 93,618,688
-------------------------------------------------------------
Administrative services fees 622,082
-------------------------------------------------------------
Custodian fees 659,500
-------------------------------------------------------------
Distribution fees -- Class A 40,107,085
-------------------------------------------------------------
Distribution fees -- Class B 10,331,953
-------------------------------------------------------------
Distribution fees -- Class C 3,343,201
-------------------------------------------------------------
Transfer agent fees -- Class A 27,877,105
-------------------------------------------------------------
Transfer agent fees -- Class B 2,296,337
-------------------------------------------------------------
Transfer agent fees -- Class C 743,046
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 30,126
-------------------------------------------------------------
Trustees' fees 62,240
-------------------------------------------------------------
Other 3,984,782
=============================================================
Total expenses 183,676,145
=============================================================
Less: Fees waived (3,749,927)
-------------------------------------------------------------
Expenses paid indirectly (264,049)
=============================================================
Net expenses 179,662,169
=============================================================
Net investment income (loss) (76,893,890)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,231,927,356)
-------------------------------------------------------------
Foreign currencies (1,459)
-------------------------------------------------------------
Option contracts written 6,689,775
=============================================================
(1,225,239,040)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (7,717,580,233)
-------------------------------------------------------------
Foreign currencies 1,921
=============================================================
(7,717,578,312)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (8,942,817,352)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(9,019,711,242)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-53
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
---------------- ---------------
OPERATIONS:
Net investment income (loss) $ (76,893,890) $ (134,563,472)
-------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (1,225,239,040) 3,997,300,240
-------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, and foreign currencies (7,717,578,312) 1,649,711,807
=================================================================================================
Net increase (decrease) in net assets resulting from
operations (9,019,711,242) 5,512,448,575
=================================================================================================
Distributions to shareholders from net realized gains:
Class A (3,284,079,983) (1,341,534,330)
-------------------------------------------------------------------------------------------------
Class B (239,710,222) (59,304,397)
-------------------------------------------------------------------------------------------------
Class C (79,328,549) (16,589,886)
-------------------------------------------------------------------------------------------------
Institutional Class (47,688,484) (23,400,833)
-------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,798,697,583 1,156,513,412
-------------------------------------------------------------------------------------------------
Class B 360,350,428 575,351,569
-------------------------------------------------------------------------------------------------
Class C 104,195,656 231,744,660
-------------------------------------------------------------------------------------------------
Institutional Class 31,147,864 (16,568,699)
=================================================================================================
Net increase (decrease) in net assets (10,376,126,949) 6,018,660,071
=================================================================================================
NET ASSETS:
Beginning of year 21,307,141,865 15,288,481,794
=================================================================================================
End of year $ 10,931,014,916 $21,307,141,865
_________________________________________________________________________________________________
=================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 12,227,372,518 $10,009,800,678
-------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (744,944) (652,603)
-------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (1,234,896,552) 3,641,131,584
-------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (60,716,106) 7,656,862,206
=================================================================================================
$ 10,931,014,916 $21,307,141,865
_________________________________________________________________________________________________
=================================================================================================
|
See Notes to Financial Statements.
FS-54
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers four different classes of shares: Class A shares, Class B
shares, Class C shares and the Institutional Class. Class A shares are sold with
a front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. 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 growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in a manner specifically authorized by the Board of Trustees. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income (loss) was increased by $76,801,549, undistributed net realized gains were increased by $18,142 and paid in capital was decreased by $76,819,691 as a result of book/tax differences due to foreign currency gain/loss and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
The fund has a capital loss carryforward of $1,224,074,030 as of October 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
FS-55
E. 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.
F. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
agreed to waive advisory fees payable by the Fund to AIM at the annual rate of
0.025% for each $5 billion increment in net assets over $5 billion, up to a
maximum waiver of 0.175% on net assets in excess of $35 billion. Effective July
1, 2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $3,749,927. Under the terms of a master sub-advisory agreement
between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM
Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $622,082 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 year ended October 31, 2001, AFS
was paid $14,673,763 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and the Institutional Class 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 0.30% of the Fund's average daily net assets
of Class A shares and 1.00% of the average daily net assets of Class B and C
shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class A, Class B or Class C shares to selected dealers
and financial institutions who furnish continuing personal shareholder services
to their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. For the year ended October 31, 2001, the Class A, Class B and Class C
shares paid AIM Distributors $40,107,085, $10,331,953 and $3,343,201,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,879,056 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $317,491 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $25,883
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $264,049 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $264,049.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed
FS-56
line. The commitment fee is allocated among the funds based on their respective average net assets for the period.
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 October 31, 2001, securities with an aggregate value of $81,311,797 were on
loan to brokers. The loans were secured by cash collateral of $82,388,055
received by the Fund and invested in affiliated money market funds as follows:
$57,449,572 in STIC Liquid Assets Portfolio and $24,938,483 in STIC Prime
Portfolio. For the year ended October 31, 2001, the Fund received fees of
$700,894 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$10,627,583,666 and $10,541,501,562, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,650,840,736 ---------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,722,379,365) ========================================================== Net unrealized appreciation (depreciation) of investment securities $ (71,538,629) __________________________________________________________ ========================================================== Cost of investments for tax purposes is $11,110,016,837. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of year -- $ --
----------------------------------------------------------
Written 15,000 6,689,775
----------------------------------------------------------
Expired (15,000) (6,689,775)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- ---------------
Sold:
Class A 69,882,787 $ 1,870,548,957 86,430,817 $ 3,725,450,424
-----------------------------------------------------------------------------------------------------------------------------
Class B 12,298,051 324,078,409 16,075,085 679,865,751
-----------------------------------------------------------------------------------------------------------------------------
Class C 4,478,320 117,760,474 6,309,791 266,777,259
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,273,391 37,026,988 3,694,065 165,186,338
=============================================================================================================================
Issued as reinvestment of dividends:
Class A 107,528,397 3,125,797,826 34,136,740 1,274,304,836
-----------------------------------------------------------------------------------------------------------------------------
Class B 8,229,796 230,503,608 1,560,370 57,000,776
-----------------------------------------------------------------------------------------------------------------------------
Class C 2,703,433 75,693,277 430,722 15,725,642
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,529,945 47,137,606 593,714 23,119,167
=============================================================================================================================
Reacquired:
Class A (128,320,077) (3,197,649,200) (90,168,284) (3,843,241,848)
-----------------------------------------------------------------------------------------------------------------------------
Class B (8,314,571) (194,231,589) (3,863,116) (161,514,958)
-----------------------------------------------------------------------------------------------------------------------------
Class C (3,756,367) (89,258,095) (1,210,375) (50,758,241)
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class (1,955,216) (53,016,730) (4,750,277) (204,874,204)
=============================================================================================================================
65,577,889 $ 2,294,391,531 49,239,252 $ 1,947,040,942
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
FS-57
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $ 43.50 $ 34.65 $ 26.37 $ 29.23 $ 25.48
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12) (0.26) (0.17) (0.14) (0.11)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (16.24) 12.39 9.18 (0.62) 4.75
=================================================================================================================================
Total from investment operations (16.36) 12.13 9.01 (0.76) 4.64
=================================================================================================================================
Less distributions from net realized gains (7.42) (3.28) (0.73) (2.10) (0.89)
=================================================================================================================================
Net asset value, end of period $ 19.72 $ 43.50 $ 34.65 $ 26.37 $ 29.23
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(a) (43.10)% 36.56% 34.81% (2.30)% 18.86%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $9,703,277 $19,268,977 $14,292,905 $12,391,844 $14,319,441
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.14%(b) 1.08% 1.10% 1.10% 1.11%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.17%(b) 1.11% 1.12% 1.12% 1.13%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.46)%(b) (0.61)% (0.50)% (0.47)% (0.40)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 75% 88% 62% 76% 67%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Does not include sales charges.
(b) Ratios are based on average daily net assets of $13,369,028,253.
CLASS B
---------------------------------------------------------------
NOVEMBER 3, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
---------------------------------- TO OCTOBER 31,
2001 2000(a) 1999 1998(a)
-------- ---------- -------- -------------------------
Net asset value, beginning of period $ 42.28 $ 34.00 $ 26.11 $ 30.04
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.28) (0.58) (0.42) (0.37)
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (15.69) 12.14 9.04 (1.46)
=============================================================================================================================
Total from investment operations (15.97) 11.56 8.62 (1.83)
=============================================================================================================================
Less distributions from net realized gains (7.42) (3.28) (0.73) (2.10)
=============================================================================================================================
Net asset value, end of period $ 18.89 $ 42.28 $ 34.00 $ 26.11
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Total return(b) (43.49)% 35.51% 33.64% (5.86)%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $818,343 $1,315,524 $589,718 $275,676
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.85% 1.98% 1.98%(d)
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.89%(c) 1.88% 2.00% 2.00%(d)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.17)%(c) (1.38)% (1.38)% (1.36)%(d)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate 75% 88% 62% 76%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $1,033,195,333.
(d) Annualized.
FS-58
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
------------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
------------------------------------------- TO OCTOBER 31,
2001 2000(a) 1999 1998(a) 1997
-------- -------- -------- ------- -------------------------
Net asset value, beginning of period $ 42.27 $ 33.99 $ 26.10 $ 29.18 $ 30.32
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.29) (0.59) (0.42) (0.37) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (15.68) 12.15 9.04 (0.61) (1.10)
=================================================================================================================================
Total from investment operations (15.97) 11.56 8.62 (0.98) (1.14)
=================================================================================================================================
Less distributions from net realized gains (7.42) (3.28) (0.73) (2.10) --
=================================================================================================================================
Net asset value, end of period $ 18.88 $ 42.27 $ 33.99 $ 26.10 $ 29.18
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (43.51)% 35.52% 33.65% (3.12)% (3.76)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $258,786 $434,544 $161,490 $76,522 $21,508
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 1.85% 1.98% 1.97% 1.84%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.89%(c) 1.88% 2.00% 1.99% 1.86%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.17)%(c) (1.38)% (1.38)% (1.35)% (1.12)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 75% 88% 62% 76% 67%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $334,320,145.
(d) Annualized.
FS-59
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Dent Demographics Fund
and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Dent Demographics Fund (a portfolio
AIM Equity Funds), including the schedule of investments,
as of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the periods presented from commencement of
operations through October 31, 2000 were audited by other
auditors whose report dated December 6, 2000, expressed
an unqualified opinion on those statements and financial
highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM Dent
Demographics Fund at October 31, 2001, and the results of
its operations, changes in its net assets, and financial
highlights for the year then ended in conformity with
accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-60
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Dent Demographics Trends Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for the one-year period ended October 31, 2000 and the period June 7, 1999 (date operations commenced) through October 31, 1999. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Dent Demographics Trends Fund for the year ended October 31, 2000 and the financial highlights for the one-year period ended October 31, 2000 and the period June 7, 1999 (date operations commenced) through October 31, 1999, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-61
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-86.34%
APPAREL RETAIL-1.43%
Abercrombie & Fitch Co.-Class A(a) 425,000 $ 7,998,500
------------------------------------------------------------------------
AnnTaylor Stores Corp.(a) 175,000 3,850,000
========================================================================
11,848,500
========================================================================
APPLICATION SOFTWARE-2.02%
Citrix Systems, Inc.(a) 100,000 2,340,000
------------------------------------------------------------------------
Electronic Arts Inc.(a) 165,000 8,490,900
------------------------------------------------------------------------
PeopleSoft, Inc.(a) 200,000 5,954,000
========================================================================
16,784,900
========================================================================
BIOTECHNOLOGY-4.04%
Affymetrix, Inc.(a) 75,000 2,253,750
------------------------------------------------------------------------
Amgen Inc.(a) 175,000 9,943,500
------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 85,000 5,098,300
------------------------------------------------------------------------
Invitrogen Corp.(a) 85,000 5,213,900
------------------------------------------------------------------------
Protein Design Labs, Inc.(a) 200,000 6,602,000
------------------------------------------------------------------------
Transkaryotic Therapies, Inc.(a) 115,000 4,376,900
========================================================================
33,488,350
========================================================================
BROADCASTING & CABLE TV-2.34%
Hispanic Broadcasting Corp.(a) 450,000 7,542,000
------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 475,000 11,875,000
========================================================================
19,417,000
========================================================================
CASINOS & GAMING-0.46%
International Game Technology(a) 75,000 3,828,750
========================================================================
COMPUTER & ELECTRONICS RETAIL-0.83%
Best Buy Co., Inc.(a) 125,000 6,862,500
========================================================================
COMPUTER HARDWARE-2.16%
Dell Computer Corp.(a) 450,000 10,791,000
------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 700,000 7,105,000
========================================================================
17,896,000
========================================================================
CONSUMER FINANCE-0.23%
AmeriCredit Corp.(a) 125,000 1,937,500
========================================================================
DEPARTMENT STORES-1.01%
Kohl's Corp.(a) 150,000 8,341,500
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.09%
Cendant Corp.(a) 700,000 9,072,000
========================================================================
DIVERSIFIED FINANCIAL SERVICES-12.22%
Citigroup Inc. 600,000 27,312,000
------------------------------------------------------------------------
Freddie Mac 175,000 11,868,500
------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 150,000 11,724,000
------------------------------------------------------------------------
J.P. Morgan Chase & Co. 125,000 4,420,000
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
Lehman Brothers Holdings Inc. 100,000 $ 6,246,000
------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 275,000 12,020,250
------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 300,000 14,676,000
------------------------------------------------------------------------
Stilwell Financial, Inc. 550,000 11,060,500
------------------------------------------------------------------------
USA Education Inc. 25,000 2,039,000
========================================================================
101,366,250
========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.68%
Jabil Circuit, Inc.(a) 100,000 2,120,000
------------------------------------------------------------------------
Waters Corp.(a) 100,000 3,549,000
========================================================================
5,669,000
========================================================================
GENERAL MERCHANDISE STORES-2.70%
Family Dollar Stores, Inc. 150,000 4,329,000
------------------------------------------------------------------------
Target Corp. 250,000 7,787,500
------------------------------------------------------------------------
Wal-Mart Stores, Inc. 200,000 10,280,000
========================================================================
22,396,500
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.08%
AmerisourceBergen Corp. 60,000 3,813,600
------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 60,000 5,172,000
========================================================================
8,985,600
========================================================================
HEALTH CARE EQUIPMENT-1.79%
Baxter International Inc. 160,000 7,739,200
------------------------------------------------------------------------
Medtronic, Inc. 100,000 4,030,000
------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 100,000 3,091,000
========================================================================
14,860,200
========================================================================
HEALTH CARE FACILITIES-1.43%
HCA Inc. 100,000 3,966,000
------------------------------------------------------------------------
HEALTHSOUTH Corp.(a) 300,000 3,906,000
------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 150,000 4,035,000
========================================================================
11,907,000
========================================================================
HOME IMPROVEMENT RETAIL-1.03%
Lowe's Cos., Inc. 250,000 8,525,000
========================================================================
HOTELS-1.06%
Royal Caribbean Cruises Ltd. 800,000 8,800,000
========================================================================
INTERNET RETAIL-0.54%
eBay Inc.(a) 85,000 4,460,800
========================================================================
IT CONSULTING & SERVICES-0.76%
SunGard Data Systems Inc.(a) 250,000 6,300,000
========================================================================
LIFE & HEALTH INSURANCE-0.52%
AFLAC, Inc. 175,000 4,280,500
========================================================================
|
FS-62
MARKET
SHARES VALUE
MANAGED HEALTH CARE-0.88%
Caremark Rx, Inc.(a) 250,000 $ 3,350,000
------------------------------------------------------------------------
UnitedHealth Group Inc. 60,000 3,945,000
========================================================================
7,295,000
========================================================================
MOTORCYCLE MANUFACTURERS-1.36%
Harley-Davidson, Inc. 250,000 11,315,000
========================================================================
MOVIES & ENTERTAINMENT-2.26%
AOL Time Warner Inc.(a) 600,000 18,726,000
========================================================================
MULTI-LINE INSURANCE-3.21%
American International Group, Inc. 270,000 21,222,000
------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 100,000 5,400,000
========================================================================
26,622,000
========================================================================
NETWORKING EQUIPMENT-5.24%
Brocade Communications Systems, Inc.(a) 350,000 8,592,500
------------------------------------------------------------------------
Cisco Systems, Inc.(a) 1,500,000 25,380,000
------------------------------------------------------------------------
Finisar Corp.(a) 650,000 5,083,000
------------------------------------------------------------------------
Juniper Networks, Inc.(a) 200,000 4,458,000
========================================================================
43,513,500
========================================================================
PHARMACEUTICALS-8.02%
Abbott Laboratories 200,000 10,596,000
------------------------------------------------------------------------
Allergan, Inc. 125,000 8,973,750
------------------------------------------------------------------------
Andrx Group(a) 90,000 5,843,700
------------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 298,500 7,226,685
------------------------------------------------------------------------
ImClone Systems Inc.(a) 80,000 4,895,200
------------------------------------------------------------------------
Johnson & Johnson 350,000 20,268,500
------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 225,000 8,772,750
========================================================================
66,576,585
========================================================================
RESTAURANTS-1.20%
Brinker International, Inc.(a) 225,000 5,715,000
------------------------------------------------------------------------
Starbucks Corp.(a) 250,000 4,280,000
========================================================================
9,995,000
========================================================================
SEMICONDUCTOR EQUIPMENT-5.62%
Applied Materials, Inc.(a) 400,000 13,644,000
------------------------------------------------------------------------
Axcelis Technologies, Inc.(a) 500,000 6,555,000
------------------------------------------------------------------------
Brooks Automation, Inc.(a) 175,000 5,649,000
------------------------------------------------------------------------
KLA-Tencor Corp.(a) 300,000 12,258,000
------------------------------------------------------------------------
Lam Research Corp.(a) 450,000 8,532,000
========================================================================
46,638,000
========================================================================
SEMICONDUCTORS-10.91%
Altera Corp.(a) 575,000 11,615,000
------------------------------------------------------------------------
Analog Devices, Inc.(a) 225,000 8,550,000
------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 175,000 6,021,750
------------------------------------------------------------------------
Conexant Systems, Inc.(a) 550,000 5,582,500
------------------------------------------------------------------------
Intel Corp. 475,000 11,599,500
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
SEMICONDUCTORS-(CONTINUED)
Linear Technology Corp. 150,000 $ 5,820,000
------------------------------------------------------------------------
Microchip Technology Inc.(a) 275,000 8,585,500
------------------------------------------------------------------------
RF Micro Devices, Inc.(a) 300,000 6,132,000
------------------------------------------------------------------------
Texas Instruments Inc. 700,000 19,593,000
------------------------------------------------------------------------
TriQuint Semiconductor, Inc.(a) 400,000 7,072,000
========================================================================
90,571,250
========================================================================
SOFT DRINKS-0.59%
PepsiCo, Inc. 100,000 4,871,000
========================================================================
SPECIALTY STORES-1.19%
Bed Bath & Beyond Inc.(a) 300,000 7,518,000
------------------------------------------------------------------------
Tiffany & Co. 100,000 2,339,000
========================================================================
9,857,000
========================================================================
SYSTEMS SOFTWARE-4.38%
Microsoft Corp.(a) 400,000 23,260,000
------------------------------------------------------------------------
Oracle Corp.(a) 650,000 8,814,000
------------------------------------------------------------------------
VERITAS Software Corp.(a) 150,000 4,257,000
========================================================================
36,331,000
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.33%
QUALCOMM Inc.(a) 225,000 11,052,000
========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.73%
Sprint Corp. (PCS Group)(a) 270,000 6,021,000
========================================================================
Total Domestic Common Stocks (Cost
$787,789,972) 716,412,185
========================================================================
FOREIGN STOCKS & OTHER EQUITY INTERESTS-9.82%
BERMUDA-1.55%
ACE Ltd. (Property & Casualty Insurance) 180,000 6,345,000
------------------------------------------------------------------------
XL Capital Ltd.-Class A (Property & Casualty
Insurance) 75,000 6,514,500
========================================================================
12,859,500
========================================================================
CANADA-2.63%
Celestica Inc. (Electronic Equipment &
Instruments)(a) 500,000 17,160,000
------------------------------------------------------------------------
Genesis Microchip Inc. (Semiconductors)(a) 100,000 4,621,000
========================================================================
21,781,000
========================================================================
FINLAND-0.62%
Nokia Oyj-ADR (Telecommunications Equipment) 250,000 5,127,500
========================================================================
HONG KONG-1.46%
Dah Sing Financial Group (Banks) 2,802,800 12,145,700
========================================================================
ISRAEL-1.51%
Taro Pharmaceutical Industries Ltd.
(Pharmaceuticals)(a) 100,000 4,210,000
------------------------------------------------------------------------
|
FS-63
MARKET
SHARES VALUE
ISRAEL-(CONTINUED)
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 135,000 $ 8,343,000
========================================================================
12,553,000
========================================================================
TAIWAN-1.24%
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Semiconductors) 800,000 10,328,000
========================================================================
UNITED KINGDOM-0.81%
Shire Pharmaceuticals Group PLC-ADR
(Pharmaceuticals)(a) 150,000 6,705,000
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $79,427,995) 81,499,700
========================================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS-4.63%
STIC Liquid Assets Portfolio(b) 19,211,473 $ 19,211,473
------------------------------------------------------------------------
STIC Prime Portfolio(b) 19,211,473 19,211,473
========================================================================
Total Money Market Funds (Cost
$38,422,946) 38,422,946
========================================================================
TOTAL INVESTMENTS-100.79% (Cost $905,640,913) 836,334,831
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.79%) (6,538,121)
========================================================================
NET ASSETS-100.00% $829,796,710
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-64
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$905,640,913)* $836,334,831
------------------------------------------------------------
Receivables for:
Investments sold 15,068,102
------------------------------------------------------------
Fund shares sold 1,044,409
------------------------------------------------------------
Dividends 198,060
------------------------------------------------------------
Investment for deferred compensation plan 19,221
------------------------------------------------------------
Collateral for securities loaned 67,125,200
------------------------------------------------------------
Other assets 32,109
============================================================
Total assets 919,821,932
============================================================
LIABILITIES:
Payables for:
Investments purchased 18,940,340
------------------------------------------------------------
Fund shares reacquired 2,656,648
------------------------------------------------------------
Deferred compensation plan 19,221
------------------------------------------------------------
Collateral upon return of securities loaned 67,125,200
------------------------------------------------------------
Accrued distribution fees 852,849
------------------------------------------------------------
Accrued trustees' fees 1,200
------------------------------------------------------------
Accrued transfer agent fees 325,767
------------------------------------------------------------
Accrued operating expenses 103,997
============================================================
Total liabilities 90,025,222
============================================================
Net assets applicable to shares outstanding $829,796,710
____________________________________________________________
============================================================
NET ASSETS:
Class A $312,377,465
____________________________________________________________
============================================================
Class B $367,494,337
____________________________________________________________
============================================================
Class C $149,924,908
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 40,978,556
____________________________________________________________
============================================================
Class B 48,976,556
____________________________________________________________
============================================================
Class C 19,981,184
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 7.62
------------------------------------------------------------
Offering price per share:
(Net asset value of $7.62 divided by
94.50%) $ 8.06
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 7.50
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 7.50
____________________________________________________________
============================================================
|
* At October 31,2001, securities with an aggregate market value of $63,390,853 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$90,245) $ 4,526,403
------------------------------------------------------------
Dividends from affiliated money market funds 2,463,296
------------------------------------------------------------
Interest 81,320
------------------------------------------------------------
Security lending income 102,396
============================================================
Total investment income 7,173,415
============================================================
EXPENSES:
Advisory fees 10,214,781
------------------------------------------------------------
Administrative services fees 151,955
------------------------------------------------------------
Custodian fees 133,864
------------------------------------------------------------
Distribution fees -- Class A 1,604,512
------------------------------------------------------------
Distribution fees -- Class B 5,263,422
------------------------------------------------------------
Distribution fees -- Class C 2,169,648
------------------------------------------------------------
Transfer agent fees -- Class A 1,656,884
------------------------------------------------------------
Transfer agent fees -- Class B 2,031,830
------------------------------------------------------------
Transfer agent fees -- Class C 837,546
------------------------------------------------------------
Trustees' fees 13,013
------------------------------------------------------------
Other 672,764
============================================================
Total expenses 24,750,219
============================================================
Less: Fees waived (1,945)
------------------------------------------------------------
Expenses paid indirectly (37,927)
============================================================
Net expenses 24,710,347
============================================================
Net investment income (loss) (17,536,932)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (546,175,139)
------------------------------------------------------------
Foreign currencies 56,084
------------------------------------------------------------
Option contracts written 836,373
============================================================
(545,282,682)
============================================================
Change in net unrealized appreciation
(depreciation) of investment securities (352,555,160)
============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (897,837,842)
============================================================
Net increase (decrease) in net assets
resulting from operations $(915,374,774)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-65
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
-------------- --------------
OPERATIONS:
Net investment income (loss) $ (17,536,932) $ (16,886,666)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (545,282,682) (151,974,988)
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (352,555,160) 243,388,002
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (915,374,774) 74,526,348
==============================================================================================
Share transactions-net:
Class A (4,824,124) 467,782,934
----------------------------------------------------------------------------------------------
Class B 19,065,645 537,342,137
----------------------------------------------------------------------------------------------
Class C 5,699,957 252,670,086
==============================================================================================
Net increase (decrease) in net assets (895,433,296) 1,332,321,505
==============================================================================================
NET ASSETS:
Beginning of year 1,725,230,006 392,908,501
==============================================================================================
End of year $ 829,796,710 $1,725,230,006
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,599,864,940 $1,597,415,192
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (27,556) (38,438)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (700,734,593) (155,395,827)
----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (69,306,081) 283,249,079
==============================================================================================
$ 829,796,710 $1,725,230,006
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-66
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Dent Demographic Trends Fund (the "Fund") is a series portfolio of AIM
Equity Funds (the "Trust"). The Trust is a Delaware business trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of eleven separate
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers three different classes of shares: Class A shares,
Class B shares and Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a contingent
deferred sales charge. Matters affecting each portfolio or class will be voted
on exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income (loss) was
increased by $17,547,814, undistributed net realized gains decreased by
$56,084 and paid in capital decreased by $17,491,730 as a result of differing
book/tax treatment of foreign currency transactions, net operating loss and
nondeductible organizational expenses reclassifications. Net assets of the
Fund were unaffected by the reclassifications discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
FS-67
The Fund's capital loss carryforward of $689,760,879 is broken down by expiration date as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 3,389,675 October 31, 2007 ------------------------------------------- 144,576,334 October 31, 2008 ------------------------------------------- 541,794,870 October 31, 2009 =========================================== $689,760,879 ___________________________________________ =========================================== |
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. 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.
H. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). H.S. Dent Advisors, Inc. ("H.S. Dent") is the Fund's
subadvisor. Under the terms of the master investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $2
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily net assets exceeding $2 billion. Under the terms of a subadvisory
agreement between AIM and H.S. Dent, AIM pays H.S. Dent at the annual rate of
0.13% of the first $1 billion of the Fund's average daily net assets, plus 0.10%
of the next $1 billion of the Fund's average daily net assets, plus 0.07% of the
Fund's average daily net assets exceeding $2 billion. Effective July 1, 2001,
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 fund of
which the Fund has invested. For the year ended October 31, 2001, AIM waived
fees of $1,945.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $151,955 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 year ended October 31, 2001, AFS
was paid $2,598,045 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $1,604,512,
$5,263,422 and $2,169,648, respectively, as compensation under the Plans.
AIM Distributors received commissions of $524,490 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $152,995 in contingent deferred sales charges imposed
on redemptions of Fund shares.
FS-68
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $5,105 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $21,444 and reductions in custodian fees of $16,483 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $37,927.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $63,390,853 were on
loan to brokers. The loans were secured by cash collateral of $67,125,200
received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated
money market fund. For the year ended October 31, 2001, the Fund received fees
of $102,396 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$1,713,368,772 and $1,655,874,341, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 33,858,636 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (114,138,432) ========================================================= Net unrealized appreciation (depreciation) of investment securities $ (80,279,796) _________________________________________________________ ========================================================= Cost of investments for tax purposes is $916,614,627. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of year -- $ --
----------------------------------------------------------
Written 5,500 2,123,571
----------------------------------------------------------
Closed (2,750) (1,286,849)
----------------------------------------------------------
Exercised (2,750) (836,722)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
FS-69
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- --------------
Sold:
Class A 12,849,753 $ 144,467,400 34,788,634 $ 547,265,482
--------------------------------------------------------------------------------------------------------
Class B 11,680,092 132,373,521 37,284,984 583,389,114
--------------------------------------------------------------------------------------------------------
Class C 6,058,052 68,141,585 17,532,275 276,260,624
========================================================================================================
Reacquired:
Class A (15,179,735) (149,291,524) (4,975,363) (79,482,548)
--------------------------------------------------------------------------------------------------------
Class B (11,736,735) (113,307,876) (2,900,834) (46,046,977)
--------------------------------------------------------------------------------------------------------
Class C (6,377,405) (62,441,628) (1,492,566) (23,590,538)
========================================================================================================
(2,705,978) $ 19,941,478 80,237,130 $1,257,795,157
________________________________________________________________________________________________________
========================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------------
JUNE 7,1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------- OCTOBER 31,
2001 2000 1999
--------- --------- ----------------
Net asset value, beginning of period $ 15.40 $ 12.14 $ 10.00
----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12) (0.11) (0.03)
----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.66) 3.37 2.17
==========================================================================================================
Total from investment operations (7.78) 3.26 2.14
==========================================================================================================
Net asset value, end of period $ 7.62 $ 15.40 $ 12.14
__________________________________________________________________________________________________________
==========================================================================================================
Total return(a) (50.52)% 26.85% 21.40%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $312,377 $666,929 $163,872
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets 1.64%(b) 1.50% 1.60%(c)(d)
==========================================================================================================
Ratio of net investment income (loss) to average net assets (1.04)%(b) (0.93)% (1.00)%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate 143% 90% 29%
__________________________________________________________________________________________________________
==========================================================================================================
|
(a) Does not include sales charges and is not annualized for periods less than
one year.
(b) Ratios are based on average daily net assets of $458,431,927.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.65% (annualized).
(d) Annualized.
FS-70
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------
JUNE 7,1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------- OCTOBER 31,
2001 2000 1999
--------- --------- ----------------
Net asset value, beginning of period $ 15.26 $ 12.11 $ 10.00
----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.18) (0.04)
----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.58) 3.33 2.15
==========================================================================================================
Total from investment operations (7.76) 3.15 2.11
==========================================================================================================
Net asset value, end of period $ 7.50 $ 15.26 $ 12.11
__________________________________________________________________________________________________________
==========================================================================================================
Total return(a) (50.85)% 26.01% 21.10%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $367,494 $748,480 $177,430
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets 2.32%(b) 2.17% 2.24%(c)(d)
==========================================================================================================
Ratio of net investment income (loss) to average net assets (1.72)%(b) (1.60)% (1.64)%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate 143% 90% 29%
__________________________________________________________________________________________________________
==========================================================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(b) Ratios are based on average daily net assets of $526,342,161.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.29% (annualized).
(d) Annualized.
CLASS C
----------------------------------------
JUNE 7,1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------- OCTOBER 31,
2001 2000 1999
-------- ---------- ---------------
Net asset value, beginning of period $ 15.26 $ 12.11 $ 10.00
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.19) (0.17) (0.04)
------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.57) 3.32 2.15
======================================================================================================
Total from investment operations (7.76) 3.15 2.11
======================================================================================================
Net asset value, end of period $ 7.50 $ 15.26 $ 12.11
______________________________________________________________________________________________________
======================================================================================================
Total return(a) (50.85)% 26.01% 21.10%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $149,925 $309,821 $51,605
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets 2.32%(b) 2.17% 2.24%(c)(d)
======================================================================================================
Ratio of net investment income (loss) to average net assets (1.72)%(b) (1.60)% (1.64)%(d)
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 143% 90% 29%
______________________________________________________________________________________________________
======================================================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(b) Ratios are based on average daily net assets of $216,964,846.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.29% (annualized).
(d) Annualized.
FS-71
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Emerging Growth Fund
and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Emerging Growth Fund (a portfolio AIM
Equity Funds), including the schedule of investments, as
of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the periods presented from commencement of
operations through October 31, 2000 were audited by other
auditors whose report dated December 6, 2000, expressed
an unqualified opinion on those statements and financial
highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Emerging Growth Fund at October 31, 2001, and the results
of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-72
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets and financial highlights of AIM Emerging Growth Fund (a portfolio of AIM Equity Funds) for the period March 31, 2000 (date operations commenced) through October 31, 2000. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets and the financial highlights of AIM Emerging Growth Fund for the period March 31, 2000 (date operations commenced) through October 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-73
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-96.71%
ADVERTISING-1.42%
Lamar Advertising Co.(a) 75,000 $ 2,355,000
=======================================================================
APPAREL RETAIL-1.14%
Abercrombie & Fitch Co.-Class A(a) 100,000 1,882,000
=======================================================================
APPLICATION SOFTWARE-5.12%
BEA Systems, Inc.(a) 100,000 1,214,000
-----------------------------------------------------------------------
Cerner Corp.(a) 10,000 537,500
-----------------------------------------------------------------------
Citrix Systems, Inc.(a) 65,000 1,521,000
-----------------------------------------------------------------------
National Instruments Corp.(a) 40,000 1,152,400
-----------------------------------------------------------------------
SeaChange International, Inc.(a) 75,000 1,845,000
-----------------------------------------------------------------------
Siebel Systems, Inc.(a) 50,000 816,500
-----------------------------------------------------------------------
Take-Two Interactive Software, Inc.(a) 100,000 1,393,000
=======================================================================
8,479,400
=======================================================================
BIOTECHNOLOGY-5.29%
Affymetrix, Inc.(a) 35,000 1,051,750
-----------------------------------------------------------------------
Albany Molecular Research, Inc.(a) 45,000 1,246,500
-----------------------------------------------------------------------
Cephalon, Inc.(a) 25,000 1,576,250
-----------------------------------------------------------------------
COR Therapeutics, Inc.(a) 50,000 1,126,500
-----------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 25,000 1,499,500
-----------------------------------------------------------------------
Invitrogen Corp.(a) 25,000 1,533,500
-----------------------------------------------------------------------
Novavax, Inc.(a) 60,000 734,400
=======================================================================
8,768,400
=======================================================================
BROADCASTING & CABLE TV-4.44%
Adelphia Communications Corp.-Class A(a) 50,000 1,106,500
-----------------------------------------------------------------------
Charter Communications, Inc.-Class A(a) 90,000 1,272,600
-----------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 100,000 1,676,000
-----------------------------------------------------------------------
Radio One, Inc.-Class A(a) 100,000 1,165,000
-----------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 85,000 2,125,000
=======================================================================
7,345,100
=======================================================================
CASINOS & GAMING-2.00%
International Game Technology(a) 65,000 3,318,250
=======================================================================
COMPUTER & ELECTRONICS RETAIL-0.97%
CDW Computer Centers, Inc.(a) 35,000 1,611,750
=======================================================================
CONSTRUCTION & ENGINEERING-1.16%
Shaw Group Inc. (The)(a) 70,000 1,925,000
=======================================================================
CONSUMER FINANCE-1.31%
AmeriCredit Corp.(a) 90,000 1,395,000
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
CONSUMER FINANCE-(CONTINUED)
Providian Financial Corp. 200,000 $ 778,000
=======================================================================
2,173,000
=======================================================================
DATA PROCESSING SERVICES-0.48%
Paychex, Inc. 25,000 801,500
=======================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.60%
Career Education Corp.(a) 40,000 1,042,800
-----------------------------------------------------------------------
IMS Health Inc. 75,000 1,602,750
=======================================================================
2,645,550
=======================================================================
DRUG RETAIL-0.65%
CVS Corp. 45,000 1,075,500
=======================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.72%
Power-One, Inc.(a) 150,000 1,186,500
=======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-4.34%
Merix Corp.(a) 100,000 1,688,000
-----------------------------------------------------------------------
Millipore Corp. 30,000 1,569,000
-----------------------------------------------------------------------
Optimal Robotics Corp.-Class A (Canada)(a) 35,000 1,031,800
-----------------------------------------------------------------------
SCI Systems, Inc.(a) 55,000 1,117,050
-----------------------------------------------------------------------
Tektronix, Inc.(a) 90,000 1,773,000
=======================================================================
7,178,850
=======================================================================
ENVIRONMENTAL SERVICES-0.70%
Tetra Tech, Inc.(a) 45,000 1,164,600
=======================================================================
FOOTWEAR-0.75%
Reebok International Ltd.(a) 60,000 1,245,600
=======================================================================
GENERAL MERCHANDISE STORES-1.08%
Dollar General Corp. 125,000 1,786,250
=======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-3.85%
Apria Healthcare Group Inc.(a) 30,000 690,000
-----------------------------------------------------------------------
Express Scripts, Inc.(a) 55,000 2,251,700
-----------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 20,000 1,724,000
-----------------------------------------------------------------------
Specialty Laboratories, Inc.(a) 40,000 1,152,400
-----------------------------------------------------------------------
Women First HealthCare, Inc.(a) 80,000 556,000
=======================================================================
6,374,100
=======================================================================
HEALTH CARE EQUIPMENT-3.77%
Given Imaging Ltd. (Israel)(a) 75,000 671,250
-----------------------------------------------------------------------
Integra LifeSciences Holdings(a) 25,000 735,000
-----------------------------------------------------------------------
Lumenis Ltd. (Israel)(a) 90,000 1,791,000
-----------------------------------------------------------------------
Med-Design Corp. (The)(a) 110,000 2,205,500
-----------------------------------------------------------------------
|
FS-74
MARKET
SHARES VALUE
HEALTH CARE EQUIPMENT-(CONTINUED)
Ventana Medical Systems, Inc.(a) 40,000 $ 847,600
=======================================================================
6,250,350
=======================================================================
HEALTH CARE FACILITIES-3.25%
Community Health Systems, Inc.(a) 50,000 1,250,000
-----------------------------------------------------------------------
Triad Hospitals, Inc.(a) 90,000 2,421,000
-----------------------------------------------------------------------
United Surgical Partners International
Inc.(a) 50,000 900,000
-----------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 20,000 807,800
=======================================================================
5,378,800
=======================================================================
HOTELS-0.63%
Intrawest Corp. (Canada) 75,000 1,048,500
=======================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.41%
Intrado Inc.(a) 25,000 678,750
=======================================================================
INTERNET SOFTWARE & SERVICES-1.62%
Check Point Software Technologies Ltd.
(Israel)(a) 55,000 1,623,600
-----------------------------------------------------------------------
SonicWALL, Inc.(a) 75,000 1,065,000
=======================================================================
2,688,600
=======================================================================
MANAGED HEALTH CARE-1.14%
Pediatrix Medical Group, Inc.(a) 65,000 1,887,600
=======================================================================
MARINE-0.40%
A.C.L.N. Ltd. (Cyprus)(a) 25,000 668,250
=======================================================================
MOVIES & ENTERTAINMENT-1.11%
Macrovision Corp.(a) 75,000 1,845,750
=======================================================================
MULTI-UTILITIES-0.84%
Enron Corp. 100,000 1,390,000
=======================================================================
NETWORKING EQUIPMENT-3.39%
Brocade Communications Systems, Inc.(a) 75,000 1,841,250
-----------------------------------------------------------------------
Corvis Corp.(a) 300,000 675,000
-----------------------------------------------------------------------
Finisar Corp.(a) 225,000 1,759,500
-----------------------------------------------------------------------
Juniper Networks, Inc.(a) 60,000 1,337,400
=======================================================================
5,613,150
=======================================================================
OIL & GAS EQUIPMENT & SERVICES-0.83%
Hanover Compressor Co.(a) 50,000 1,379,000
=======================================================================
PACKAGED FOODS-0.69%
Dreyer's Grand Ice Cream, Inc. 35,000 1,144,500
=======================================================================
PHARMACEUTICALS-9.55%
Andrx Group(a) 15,000 973,950
-----------------------------------------------------------------------
Angiotech Pharmaceuticals, Inc. (Canada)(a) 25,000 1,192,500
-----------------------------------------------------------------------
CIMA Labs Inc.(a) 40,000 2,162,000
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
PHARMACEUTICALS-(CONTINUED)
ICN Pharmaceuticals, Inc. 75,000 $ 1,815,750
-----------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 25,000 974,750
-----------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 42,500 2,451,825
-----------------------------------------------------------------------
Pharmaceutical Resources, Inc.(a) 25,000 857,500
-----------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 45,000 2,011,500
-----------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Israel)(a) 80,000 3,368,000
=======================================================================
15,807,775
=======================================================================
RESTAURANTS-2.54%
Brinker International, Inc.(a) 75,000 1,905,000
-----------------------------------------------------------------------
P.F. Chang's China Bistro, Inc.(a) 40,000 1,585,200
-----------------------------------------------------------------------
Starbucks Corp.(a) 41,700 713,904
=======================================================================
4,204,104
=======================================================================
SEMICONDUCTOR EQUIPMENT-4.41%
KLA-Tencor Corp.(a) 50,000 2,043,000
-----------------------------------------------------------------------
Lam Research Corp.(a) 90,000 1,706,400
-----------------------------------------------------------------------
Novellus Systems, Inc.(a) 55,000 1,816,650
-----------------------------------------------------------------------
Teradyne, Inc.(a) 75,000 1,728,750
=======================================================================
7,294,800
=======================================================================
SEMICONDUCTORS-11.53%
Applied Micro Circuits Corp.(a) 150,000 1,654,500
-----------------------------------------------------------------------
Broadcom Corp.-Class A(a) 50,000 1,720,500
-----------------------------------------------------------------------
Cree, Inc.(a) 50,000 897,500
-----------------------------------------------------------------------
Genesis Microchip Inc. (Canada)(a) 20,000 924,200
-----------------------------------------------------------------------
Integrated Circuit Systems, Inc.(a) 140,000 2,381,400
-----------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 55,000 1,531,750
-----------------------------------------------------------------------
Microchip Technology Inc.(a) 80,000 2,497,600
-----------------------------------------------------------------------
NVIDIA Corp.(a) 20,000 857,200
-----------------------------------------------------------------------
RF Micro Devices, Inc.(a) 85,000 1,737,400
-----------------------------------------------------------------------
Semtech Corp.(a) 50,000 1,887,500
-----------------------------------------------------------------------
TriQuint Semiconductor, Inc.(a) 170,000 3,005,600
=======================================================================
19,095,150
=======================================================================
SPECIALTY CHEMICALS-0.68%
Sigma-Aldrich Corp. 30,000 1,125,600
=======================================================================
SPECIALTY STORES-0.55%
Linens 'n Things, Inc.(a) 50,000 910,000
=======================================================================
SYSTEMS SOFTWARE-1.45%
BMC Software, Inc.(a) 75,000 1,130,250
-----------------------------------------------------------------------
VERITAS Software Corp.(a) 45,000 1,277,100
=======================================================================
2,407,350
=======================================================================
|
FS-75
MARKET
SHARES VALUE
TELECOMMUNICATIONS EQUIPMENT-10.43%
ADC Telecommunications, Inc.(a) 225,000 $ 1,023,750
-----------------------------------------------------------------------
Anaren Microwave, Inc.(a) 50,000 764,500
-----------------------------------------------------------------------
C-COR.net Corp.(a) 175,000 1,198,750
-----------------------------------------------------------------------
CommScope, Inc.(a) 125,000 2,443,750
-----------------------------------------------------------------------
Comverse Technology, Inc.(a) 60,000 1,128,600
-----------------------------------------------------------------------
Harmonic Inc.(a) 250,000 2,017,500
-----------------------------------------------------------------------
JDS Uniphase Corp.(a) 120,000 958,800
-----------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 75,000 1,147,500
-----------------------------------------------------------------------
Scientific-Atlanta, Inc. 85,000 1,773,950
-----------------------------------------------------------------------
UTStarcom, Inc.(a) 205,000 4,813,400
=======================================================================
17,270,500
=======================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.47%
AirGate PCS, Inc.(a) 15,000 771,900
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $180,727,691) 160,176,779
=======================================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS-5.25%
STIC Liquid Assets Portfolio(b) 4,345,253 $ 4,345,253
-----------------------------------------------------------------------
STIC Prime Portfolio(b) 4,345,253 4,345,253
=======================================================================
Total Money Market Funds (Cost
$8,690,506) 8,690,506
=======================================================================
TOTAL INVESTMENTS-101.96% (Cost $189,418,197) 168,867,285
=======================================================================
OTHER ASSETS LESS LIABILITIES-(1.96%) (3,252,133)
=======================================================================
NET ASSETS-100.00% $165,615,152
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-76
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$189,418,197)* $168,867,285
------------------------------------------------------------
Receivables for:
Investments sold 1,796,430
------------------------------------------------------------
Fund shares sold 331,238
------------------------------------------------------------
Dividends 26,011
------------------------------------------------------------
Investment for deferred compensation plan 8,265
------------------------------------------------------------
Collateral for securities loaned 45,730,707
------------------------------------------------------------
Other assets 15,496
============================================================
Total assets 216,775,432
============================================================
LIABILITIES:
Payables for:
Investments purchased 4,537,979
------------------------------------------------------------
Fund shares reacquired 577,043
------------------------------------------------------------
Deferred compensation plan 8,265
------------------------------------------------------------
Collateral upon return of securities loaned 45,730,707
------------------------------------------------------------
Accrued distribution fees 163,990
------------------------------------------------------------
Accrued trustees' fees 954
------------------------------------------------------------
Accrued transfer agent fees 93,711
------------------------------------------------------------
Accrued operating expenses 47,631
============================================================
Total liabilities 51,160,280
============================================================
Net assets applicable to shares outstanding $165,615,152
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 81,113,585
____________________________________________________________
============================================================
Class B $ 58,018,585
____________________________________________________________
============================================================
Class C $ 26,482,982
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 14,864,771
____________________________________________________________
============================================================
Class B 10,736,943
____________________________________________________________
============================================================
Class C 4,904,888
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 5.46
------------------------------------------------------------
Offering price per share:
(Net asset value of $5.46 divided by
94.50%) $ 5.78
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 5.40
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 5.40
____________________________________________________________
============================================================
|
* At October 31, 2001, securities with an aggregate market value of $44,752,486 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends from affiliated money market funds $ 755,526
------------------------------------------------------------
Dividends 63,504
------------------------------------------------------------
Interest 4,602
------------------------------------------------------------
Security lending income 39,582
============================================================
Total investment income 863,214
============================================================
EXPENSES:
Advisory fees 1,912,682
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 65,736
------------------------------------------------------------
Distribution fees -- Class A 402,908
------------------------------------------------------------
Distribution fees -- Class B 757,676
------------------------------------------------------------
Distribution fees -- Class C 341,372
------------------------------------------------------------
Transfer agent fees -- Class A 468,259
------------------------------------------------------------
Transfer agent fees -- Class B 314,279
------------------------------------------------------------
Transfer agent fees -- Class C 141,599
------------------------------------------------------------
Trustees' fees 9,185
------------------------------------------------------------
Other 366,947
============================================================
Total expenses 4,830,643
============================================================
Less: Fees waived (261,774)
------------------------------------------------------------
Expenses paid indirectly (20,090)
============================================================
Net expenses 4,548,779
============================================================
Net investment income (loss) (3,685,565)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (129,204,045)
============================================================
Change in net unrealized appreciation
(depreciation) of investment securities (11,516,298)
============================================================
Net gain (loss) from investment securities (140,720,343)
============================================================
Net increase (decrease) in net assets
resulting from operations $(144,405,908)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-77
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and the period March 31, 2000 (date
operations commenced) through October 31, 2000
2001 2000
------------- ------------
OPERATIONS:
Net investment income (loss) $ (3,685,565) $ (1,459,473)
-------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (129,204,045) 10,994,086
-------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (11,516,298) (9,034,614)
===========================================================================================
Net increase (decrease) in net assets resulting from
operations (144,405,908) 499,999
===========================================================================================
Distributions to shareholders from net realized gains:
Class A (6,485,823) --
-------------------------------------------------------------------------------------------
Class B (4,157,366) --
-------------------------------------------------------------------------------------------
Class C (1,871,035) --
-------------------------------------------------------------------------------------------
Share transactions-net:
Class A 14,714,393 145,911,913
-------------------------------------------------------------------------------------------
Class B 15,848,783 95,639,839
-------------------------------------------------------------------------------------------
Class C 8,770,527 41,149,830
===========================================================================================
Net increase (decrease) in net assets (117,586,429) 283,201,581
===========================================================================================
NET ASSETS:
Beginning of year 283,201,581 --
===========================================================================================
End of year $ 165,615,152 $283,201,581
___________________________________________________________________________________________
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 318,987,409 $283,472,289
-------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,286) (138,021)
-------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (132,812,059) 8,901,927
-------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (20,550,912) (9,034,614)
===========================================================================================
$ 165,615,152 $283,201,581
___________________________________________________________________________________________
===========================================================================================
|
See Notes to Financial Statements.
FS-78
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Emerging Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted
securities, are valued according to the following policy. A security listed
or traded on an exchange (except convertible bonds) is valued at its last
sales price as of the close of the customary trading session on the exchange
where the security is principally traded, or lacking any sales on a
particular day, the security is valued at the closing bid price on that day.
Each security reported on the NASDAQ National Market System is valued at the
last sales price as of the close of the customary trading session on the
valuation date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate and
maturity date. Securities for which market prices are not provided by any of
the above methods are valued based upon quotes furnished by independent
sources and are valued at the last bid price in the case of equity securities
and in the case of debt obligations, the mean between the last bid and asked
prices. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued at amortized cost which approximates market
value. For purposes of determining net asset value per share, futures and
option contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income was increased by
$3,814,300, undistributed net realized gains increased by $4,283 and paid in
capital decreased by $3,818,583 as a result of differing book/tax treatment
of net operating loss and nondeductible organizational expenses. Net assets
of the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
FS-79
The fund has a capital loss carryforward of $128,445,323 as of October 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the 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 net assets over $1 billion. Effective July 1, 2001, 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 fund of which the
Fund has invested. For the year ended October 31, 2001, AIM waived fees of
$261,774.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended October 31, 2001, AFS
was paid $494,569 for such services.
The Company 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 Company 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 C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $402,908, $757,676
and $341,372, respectively, as compensation under the Plans.
AIM Distributors received commissions of $112,530 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $50,717 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $3,612 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $3,900 and reductions in custodian fees of $16,190 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $20,090.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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.
FS-80
NOTE 6-PORTFOLIO SECURITIES LOANED (CONTINUED)
At October 31, 2001, securities with an aggregate value of $44,752,486 were on loan to brokers. The loans were secured by cash collateral of $45,730,707 received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated money market fund. For the year ended October 31, 2001, the Fund received fees of $39,582 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$619,095,105 and $552,790,880, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 7,586,609 ---------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (32,504,257) ============================================================================ Net unrealized appreciation (depreciation) of investment securities $(24,917,648) ____________________________________________________________________________ ============================================================================ Cost of investments for tax purposes is $193,784,933. |
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the year ended October 31, 2001 and the period March 31, 2000 (date operations commenced) through October 31, 2000 were as follows:
2001 2000
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------
Sold:
Class A 10,878,561 $ 81,971,539 18,240,329 $192,061,883
-----------------------------------------------------------------------------------------------------------------------
Class B 4,634,109 35,853,848 9,701,917 102,240,743
-----------------------------------------------------------------------------------------------------------------------
Class C 2,272,711 17,218,224 4,148,798 43,170,645
=======================================================================================================================
Issued as reinvestment of dividends:
Class A 735,802 6,291,110 -- --
-----------------------------------------------------------------------------------------------------------------------
Class B 472,976 4,025,501 -- --
-----------------------------------------------------------------------------------------------------------------------
Class C 208,202 1,771,798 -- --
=======================================================================================================================
Reacquired:
Class A (10,760,676) (73,548,256) (4,229,245) (46,149,970)
-----------------------------------------------------------------------------------------------------------------------
Class B (3,422,165) (24,030,566) (649,894) (6,600,904)
-----------------------------------------------------------------------------------------------------------------------
Class C (1,530,116) (10,219,495) (194,707) (2,020,815)
=======================================================================================================================
3,489,404 $ 39,333,703 27,017,198 $282,701,582
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
FS-81
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------
MARCH 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001 2000
----------- ----------------
Net asset value, beginning of period $ 10.50 $ 10.00
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.04)
---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.51) 0.54
=============================================================================================
Total from investment operations (4.61) 0.50
=============================================================================================
Less distributions from net realized gains (0.43) --
=============================================================================================
Net asset value, end of period $ 5.46 $ 10.50
_____________________________________________________________________________________________
=============================================================================================
Total return(a) (45.37)% 5.00%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $81,114 $147,101
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.71%(b) 1.68%(c)
---------------------------------------------------------------------------------------------
Without fee waivers 1.83%(b) 1.68%(c)
=============================================================================================
Ratio of net investment income (loss) to average net assets (1.32)%(b) (1.04)%(c)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 242% 111%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Does not include sales charges and is not annualized for periods less than
one year.
(b) Ratios are based on average daily net assets of $115,116,551.
(c) Annualized.
CLASS B
-------------------------------
MARCH 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001 2000
----------- ----------------
Net asset value, beginning of period $ 10.47 $ 10.00
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14) (0.07)
---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.50) 0.54
=============================================================================================
Total from investment operations (4.64) 0.47
=============================================================================================
Less distributions from net realized gains (0.43) --
=============================================================================================
Net asset value, end of period $ 5.40 $ 10.47
_____________________________________________________________________________________________
=============================================================================================
Total return(a) (45.81)% 4.70%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $58,019 $94,740
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.36%(b) 2.37%(c)
---------------------------------------------------------------------------------------------
Without fee waivers 2.48%(b) 2.37%(c)
=============================================================================================
Ratio of net investment income (loss) to average net assets (1.98)%(b) (1.73)%(c)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 242% 111%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(b) Ratios are based on average daily net assets of $75,767,623.
(c) Annualized.
FS-82
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
-------------------------------
MARCH 31, 2000
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001 2000
----------- ----------------
Net asset value, beginning of period $ 10.46 $ 10.00
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14) (0.07)
---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.49) 0.53
=============================================================================================
Total from investment operations (4.63) 0.46
=============================================================================================
Less distributions from net realized gains (0.43) --
=============================================================================================
Net asset value, end of period $ 5.40 $ 10.46
_____________________________________________________________________________________________
=============================================================================================
Total return(a) (45.76)% 4.60%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,483 $41,361
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.36%(b) 2.37%(c)
---------------------------------------------------------------------------------------------
Without fee waivers 2.48%(b) 2.37%(c)
=============================================================================================
Ratio of net investment income (loss) to average net assets (1.98)%(b) (1.73)%(c)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 242% 111%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(b) Ratios are based on average daily net assets of $34,137,225.
(c) Annualized.
FS-83
LARGE CAP BASIC VALUE FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Large Cap Basic Value Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Large Cap Basic Value Fund (a
portfolio AIM Equity Funds), including the schedule of
investments, as of October 31, 2001, and the related
statement of operations, statement of changes in net
assets, and financial highlights for the year then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for the periods presented from commencement of operations
through October 31, 2000 were audited by other auditors
whose report dated December 6, 2000, expressed an
unqualified opinion on those statements and financial
highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Large Cap Basic Value Fund at October 31, 2001, and the
results of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-84
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Large Cap Basic Value Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for the one-year period ended October 31, 2000 and the period June 30, 1999 (date operations commenced) through October 31, 1999. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Large Cap Basic Value Fund for the year ended October 31, 2000 and the financial highlights for the one-year period ended October 31, 2000 and the period June 30, 1999 (date operations commenced) through October 31, 1999, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-85
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY
INTERESTS-96.47%
ADVERTISING-1.91%
Interpublic Group of Cos., Inc. (The) 125,800 $ 2,824,210
========================================================================
ALUMINUM-3.30%
Alcoa Inc. 151,200 4,879,224
========================================================================
APPAREL RETAIL-2.52%
Gap, Inc. (The) 286,000 3,738,020
========================================================================
BANKS-8.68%
Bank of America Corp. 92,500 5,456,575
------------------------------------------------------------------------
Bank One Corp. 80,800 2,681,752
------------------------------------------------------------------------
FleetBoston Financial Corp. 143,300 4,708,838
========================================================================
12,847,165
========================================================================
BUILDING PRODUCTS-2.95%
Masco Corp. 220,000 4,362,600
========================================================================
CONSTRUCTION & FARM MACHINERY-1.17%
Deere & Co. 46,700 1,727,433
========================================================================
CONSUMER ELECTRONICS-1.64%
Koninklijke (Royal) Philips Electronics
N.V.-ADR (Netherlands) 107,870 2,432,468
========================================================================
CONSUMER FINANCE-0.21%
Providian Financial Corp. 78,700 306,143
========================================================================
DATA PROCESSING SERVICES-4.66%
Ceridian Corp.(a) 180,300 2,973,147
------------------------------------------------------------------------
First Data Corp. 58,100 3,925,817
========================================================================
6,898,964
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-2.37%
H&R Block, Inc. 103,000 3,510,240
========================================================================
DIVERSIFIED FINANCIAL SERVICES-9.35%
Citigroup Inc. 103,893 4,729,209
------------------------------------------------------------------------
Freddie Mac 68,500 4,645,670
------------------------------------------------------------------------
J.P. Morgan Chase & Co. 126,500 4,473,040
========================================================================
13,847,919
========================================================================
ELECTRIC UTILITIES-3.93%
Edison International(a) 67,700 962,017
------------------------------------------------------------------------
Orion Power Holdings, Inc.(a) 80,100 2,067,381
------------------------------------------------------------------------
PG&E Corp.(a) 154,300 2,786,658
========================================================================
5,816,056
========================================================================
ENVIRONMENTAL SERVICES-3.18%
Waste Management, Inc. 192,450 4,715,025
========================================================================
|
MARKET
SHARES VALUE
FOOD RETAIL-3.27%
Kroger Co. (The)(a) 198,100 $ 4,845,526
========================================================================
GENERAL MERCHANDISE STORES-1.73%
Target Corp. 82,000 2,554,300
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.10%
McKesson Corp. 44,100 1,631,259
========================================================================
HEALTH CARE FACILITIES-1.90%
HCA Inc. 49,000 1,943,340
------------------------------------------------------------------------
Health Management Associates, Inc.-Class A(a) 44,900 875,101
========================================================================
2,818,441
========================================================================
HOTELS-1.00%
Starwood Hotels & Resorts Worldwide, Inc. 67,100 1,478,884
========================================================================
INDUSTRIAL CONGLOMERATES-3.44%
Tyco International Ltd. (Bermuda) 103,600 5,090,904
========================================================================
INDUSTRIAL GASES-1.03%
Air Products & Chemicals, Inc. 38,150 1,527,526
========================================================================
INDUSTRIAL MACHINERY-2.45%
Illinois Tool Works Inc. 63,400 3,626,480
========================================================================
INSURANCE BROKERS-1.28%
Marsh & McLennan Cos., Inc. 19,550 1,891,463
========================================================================
INTEGRATED OIL & GAS-1.03%
Exxon Mobil Corp. 38,592 1,522,454
========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.95%
AT&T Corp. 188,900 2,880,725
========================================================================
IT CONSULTING & SERVICES-2.31%
Electronic Data Systems Corp. 53,100 3,418,047
========================================================================
LIFE & HEALTH INSURANCE-1.95%
UnumProvident Corp. 129,000 2,893,470
========================================================================
MANAGED HEALTH CARE-2.60%
Anthem, Inc.(a) 45,000 1,884,600
------------------------------------------------------------------------
UnitedHealth Group Inc. 29,900 1,965,925
========================================================================
3,850,525
========================================================================
MOVIES & ENTERTAINMENT-2.08%
Walt Disney Co. (The) 165,600 3,078,504
========================================================================
MULTI-LINE INSURANCE-1.21%
American International Group, Inc. 22,747 1,787,914
========================================================================
OIL & GAS DRILLING-3.69%
ENSCO International Inc. 92,800 1,837,440
------------------------------------------------------------------------
|
FS-86
MARKET
SHARES VALUE
OIL & GAS DRILLING-(CONTINUED)
Transocean Sedco Forex Inc. 120,177 $ 3,623,337
========================================================================
5,460,777
========================================================================
OIL & GAS EQUIPMENT & SERVICES-2.43%
Schlumberger Ltd. 74,300 3,597,606
========================================================================
PAPER PRODUCTS-2.04%
International Paper Co. 84,500 3,025,100
========================================================================
PHARMACEUTICALS-1.33%
Pharmacia Corp. 48,757 1,975,634
========================================================================
PHOTOGRAPHIC PRODUCTS-1.05%
Eastman Kodak Co. 60,800 1,554,656
========================================================================
PROPERTY & CASUALTY INSURANCE-4.73%
ACE Ltd. (Bermuda) 74,000 2,608,500
------------------------------------------------------------------------
MGIC Investment Corp. 28,300 1,464,242
------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 33,800 2,935,868
========================================================================
7,008,610
========================================================================
|
MARKET
SHARES VALUE
SYSTEMS SOFTWARE-3.29%
Computer Associates International, Inc. 157,500 $ 4,869,900
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.71%
Motorola, Inc. 154,300 2,525,891
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $154,415,069) 142,820,063
========================================================================
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES-4.53%
FEDERAL HOME LOAN BANK-4.53%
Unsec. Disc. Notes,
2.46%, 11/01/01 (Cost $6,704,000)(b) $6,704,000 6,704,000
========================================================================
TOTAL INVESTMENTS-101.00%
(Cost $161,119,069) 149,524,063
========================================================================
OTHER ASSETS LESS LIABILITIES-(1.00%) (1,486,672)
========================================================================
NET ASSETS-100.00% $148,037,391
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Disc. - Discounted Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The interest rate shown represents the rate of discount paid or received at
the time of purchase by the Fund.
See Notes to Financial Statements.
FS-87
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$161,119,069)* $149,524,063
------------------------------------------------------------
Receivables for:
Investments sold 2,638,798
------------------------------------------------------------
Fund shares sold 1,079,889
------------------------------------------------------------
Dividends 92,441
------------------------------------------------------------
Investment for deferred compensation plan 12,340
------------------------------------------------------------
Collateral for securities loaned 1,522,800
------------------------------------------------------------
Other assets 26,678
============================================================
Total assets 154,897,009
============================================================
LIABILITIES:
Payables for:
Investments purchased 4,422,697
------------------------------------------------------------
Fund shares reacquired 712,505
------------------------------------------------------------
Deferred compensation plan 12,340
------------------------------------------------------------
Collateral upon return of securities loaned 1,522,800
------------------------------------------------------------
Accrued distribution fees 137,512
------------------------------------------------------------
Accrued trustees' fees 916
------------------------------------------------------------
Accrued transfer agent fees 19,382
------------------------------------------------------------
Accrued operating expenses 31,466
============================================================
Total liabilities 6,859,618
============================================================
Net assets applicable to shares outstanding $148,037,391
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 68,676,118
____________________________________________________________
============================================================
Class B $ 58,681,395
____________________________________________________________
============================================================
Class C $ 20,679,878
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 6,275,056
____________________________________________________________
============================================================
Class B 5,405,744
____________________________________________________________
============================================================
Class C 1,905,196
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 10.94
------------------------------------------------------------
Offering price per share:
(Net asset value of $10.94 divided
by 94.50%) $ 11.58
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 10.86
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 10.85
____________________________________________________________
============================================================
|
* At October 31, 2001, securities with an aggregate market value of $736,240 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,943) $ 1,002,629
------------------------------------------------------------
Interest 279,820
------------------------------------------------------------
Security lending income 354
============================================================
Total investment income 1,282,803
============================================================
EXPENSES:
Advisory fees 537,749
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 33,258
------------------------------------------------------------
Distribution fees -- Class A 149,015
------------------------------------------------------------
Distribution fees -- Class B 339,904
------------------------------------------------------------
Distribution fees -- Class C 130,588
------------------------------------------------------------
Transfer agent fees -- Class A 79,224
------------------------------------------------------------
Transfer agent fees -- Class B 73,035
------------------------------------------------------------
Transfer agent fees -- Class C 28,060
------------------------------------------------------------
Trustees' fees 8,744
------------------------------------------------------------
Other 110,136
============================================================
Total expenses 1,539,713
============================================================
Less: Fees waived (85,532)
------------------------------------------------------------
Expenses paid indirectly (1,581)
============================================================
Net expenses 1,452,600
============================================================
Net investment income (loss) (169,797)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (3,741,164)
------------------------------------------------------------
Option contracts written 17,886
============================================================
(3,723,278)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (12,281,495)
============================================================
Net gain (loss) from investment securities and
option contracts (16,004,773)
============================================================
Net increase (decrease) in net assets
resulting from operations $(16,174,570)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-88
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
------------ ----------
OPERATIONS:
Net investment income (loss) $ (169,797) $ 10,051
----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts (3,723,278) 25
----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (12,281,495) 771,563
========================================================================================
Net increase (decrease) in net assets resulting from
operations (16,174,570) 781,639
========================================================================================
Distributions to shareholders from net investment income:
Class A (42,840) (19,234)
----------------------------------------------------------------------------------------
Class B (23,006) --
----------------------------------------------------------------------------------------
Class C (9,037) --
----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (23,272) (12,288)
----------------------------------------------------------------------------------------
Class B (16,266) --
----------------------------------------------------------------------------------------
Class C (6,794) --
----------------------------------------------------------------------------------------
Share transactions-net:
Class A 70,108,784 4,188,609
----------------------------------------------------------------------------------------
Class B 62,478,722 2,671,623
----------------------------------------------------------------------------------------
Class C 21,795,123 1,187,091
========================================================================================
Net increase in net assets 138,086,844 8,797,440
========================================================================================
NET ASSETS:
Beginning of year 9,950,547 1,153,107
========================================================================================
End of year $148,037,391 $9,950,547
________________________________________________________________________________________
========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $163,417,511 $9,238,062
----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (12,543) 29,765
----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and option contracts (3,772,572) (3,770)
----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (11,595,005) 686,490
========================================================================================
$148,037,391 $9,950,547
________________________________________________________________________________________
========================================================================================
|
See Notes to Financial Statements.
FS-89
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Basic Value Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. 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 with a secondary
objective of current income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income was increased by
$202,372, undistributed net realized gains were increased by $808 and paid in
capital was decreased by $203,180 as a result of book/tax differences due to
net operating loss reclassifications and other reclassifications. Net assets
of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The fund has a capital loss carryforward of $2,651,488 as of October 31,
2001 which may be carried forward to offset
FS-90
future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. 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.
F. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.60% of
the first $1 billion of the Fund's average daily net assets, plus 0.575% over $1
billion to and including $2 billion of the Fund's average daily net assets and
0.55% of the Fund's average daily net assets over $2 billion. Effective July 1,
2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $85,532.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended October 31, 2001, AFS
was paid $93,534 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $149,015, $339,904
and $130,588, respectively, as compensation under the Plans.
AIM Distributors received commissions of $131,050 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $31,559 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $3,341 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,183 and reductions in custodian fees of $398 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $1,581.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
FS-91
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 October 31, 2001, securities with an aggregate value of $736,240 were on
loan to brokers. The loans were secured by cash collateral of $1,522,800
received by the Fund and invested in STIC Liquid Assets Portfolio. For the year
ended October 31, 2001, the Fund received fees of $354 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$164,529,811 and $14,704,540, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 318,005 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (13,034,095) ========================================================= Net unrealized appreciation (depreciation) of investment securities $(12,716,090) _________________________________________________________ ========================================================= Cost of investments for tax purposes is $162,240,153. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Beginning of year -- $ --
--------------------------------------------------------
Written 85 20,144
--------------------------------------------------------
Closed (85) (20,144)
--------------------------------------------------------
End of year -- $ --
________________________________________________________
========================================================
|
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
-------------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ------- ----------
Sold:
Class A 7,153,461 $ 86,201,459 406,940 $4,618,456
-----------------------------------------------------------------------------------------------------------------
Class B 6,008,413 71,939,323 238,116 2,718,547
-----------------------------------------------------------------------------------------------------------------
Class C 2,229,528 26,797,760 104,697 1,197,020
=================================================================================================================
Issued as reinvestment of dividends:
Class A 5,215 60,966 3,346 31,522
-----------------------------------------------------------------------------------------------------------------
Class B 3,133 36,546 -- --
-----------------------------------------------------------------------------------------------------------------
Class C 1,248 14,550 -- --
=================================================================================================================
Reacquired:
Class A (1,372,417) (16,153,641) (44,224) (461,369)
-----------------------------------------------------------------------------------------------------------------
Class B (839,944) (9,497,147) (3,974) (46,924)
-----------------------------------------------------------------------------------------------------------------
Class C (429,406) (5,017,187) (871) (9,929)
=================================================================================================================
12,759,231 $154,382,629 704,030 $8,047,323
_________________________________________________________________________________________________________________
=================================================================================================================
|
FS-92
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------------
JUNE 30, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------- OCTOBER 31,
2001(a) 2000(a) 1999
-------- -------- ----------------
Net asset value, beginning of period $ 12.05 $ 9.40 $10.00
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02 0.07 0.03
--------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.07) 2.88 (0.63)
========================================================================================================
Total from investment operations (1.05) 2.95 (0.60)
========================================================================================================
Less distributions:
Dividends from net investment income (0.04) (0.18) --
--------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.02) (0.12) --
========================================================================================================
Total distributions (0.06) (0.30) --
========================================================================================================
Net asset value, end of period $ 10.94 $12.05 $ 9.40
________________________________________________________________________________________________________
========================================================================================================
Total return(b) (8.74)% 32.21% (6.00)%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $68,676 $5,888 $1,153
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.27%(c) 1.25% 1.25%(d)
--------------------------------------------------------------------------------------------------------
Without fee waivers 1.36%(c) 8.21% 10.02%(d)
========================================================================================================
Ratio of net investment income to average net assets 0.17%(c) 0.62% 0.87%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate 18% 57% 10%
________________________________________________________________________________________________________
========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $42,575,733.
(d) Annualized.
CLASS B
-----------------------------
AUGUST 1, 2000
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001(a) 2000
----------- --------------
Net asset value, beginning of period $ 12.02 $10.85
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) --
-------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.05) 1.17
===========================================================================================
Total from investment operations (1.11) 1.17
===========================================================================================
Less distributions:
Dividends from net investment income (0.03) --
-------------------------------------------------------------------------------------------
Distributions from net realized gains (0.02) --
===========================================================================================
Total distributions (0.05) --
===========================================================================================
Net asset value, end of period $ 10.86 $12.02
___________________________________________________________________________________________
===========================================================================================
Total return(b) (9.25)% 10.78%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $58,681 $2,815
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.95%(c) 1.93%(d)
-------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 8.89%(d)
===========================================================================================
Ratio of net investment loss to average net assets (0.51)%(c) (0.06)%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 18% 57%
___________________________________________________________________________________________
===========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $33,990,337.
(d) Annualized.
FS-93
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
-----------------------------
AUGUST 1, 2000
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001(a) 2000
----------- --------------
Net asset value, beginning of period $ 12.02 $10.85
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) --
-------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.06) 1.17
===========================================================================================
Total from investment operations (1.12) 1.17
===========================================================================================
Less distributions:
Dividends from net investment income (0.03) --
-------------------------------------------------------------------------------------------
Distributions from net realized gains (0.02) --
===========================================================================================
Total distributions (0.05) --
===========================================================================================
Net asset value, end of period $ 10.85 $12.02
___________________________________________________________________________________________
===========================================================================================
Total return(b) (9.33)% 10.78%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,680 $1,248
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.95%(c) 1.93%(d)
-------------------------------------------------------------------------------------------
Without fee waivers 2.04%(c) 8.89%(d)
===========================================================================================
Ratio of net investment loss to average net assets (0.51)%(c) (0.06)%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 18% 57%
___________________________________________________________________________________________
===========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $13,058,822.
(d) Annualized.
FS-94
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Large Cap Growth Fund
and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Large Cap Growth Fund (a portfolio AIM
Equity Funds), including the schedule of investments, as
of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for the periods presented from commencement of operations
through October 31, 2000 were audited by other auditors
whose report dated December 6, 2000, expressed an
unqualified opinion on those statements and financial
highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Large Cap Growth Fund at October 31, 2001, and the
results of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-95
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Large Cap Growth Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for the one-year period then ended and the period March 1, 1999 (date operations commenced) through October 31, 1999. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Large Cap Growth Fund for the year ended October 31, 2000 and the financial highlights for the one-year period then ended and the period March 1, 1999 (date operations commenced) through October 31, 1999, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-96
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-94.24%
ADVERTISING-0.79%
Omnicom Group Inc. 35,000 $ 2,687,300
=======================================================================
AEROSPACE & DEFENSE-1.26%
General Dynamics Corp. 25,000 2,040,000
-----------------------------------------------------------------------
Lockheed Martin Corp. 46,000 2,243,420
=======================================================================
4,283,420
=======================================================================
APPLICATION SOFTWARE-1.76%
Citrix Systems, Inc.(a) 104,000 2,433,600
-----------------------------------------------------------------------
Electronic Arts Inc.(a) 33,000 1,698,180
-----------------------------------------------------------------------
PeopleSoft, Inc.(a) 63,000 1,875,510
=======================================================================
6,007,290
=======================================================================
BIOTECHNOLOGY-2.94%
Amgen Inc.(a) 94,000 5,341,080
-----------------------------------------------------------------------
Genzyme Corp.(a) 42,000 2,265,900
-----------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 40,000 2,399,200
=======================================================================
10,006,180
=======================================================================
COMPUTER & ELECTRONICS RETAIL-1.29%
Best Buy Co., Inc.(a) 80,000 4,392,000
=======================================================================
COMPUTER HARDWARE-2.80%
International Business Machines Corp. 65,000 7,024,550
-----------------------------------------------------------------------
Sun Microsystems, Inc.(a) 250,000 2,537,500
=======================================================================
9,562,050
=======================================================================
DATA PROCESSING SERVICES-1.43%
Concord EFS, Inc.(a) 72,000 1,970,640
-----------------------------------------------------------------------
First Data Corp. 43,000 2,905,510
=======================================================================
4,876,150
=======================================================================
DEPARTMENT STORES-0.59%
Kohl's Corp.(a) 36,000 2,001,960
=======================================================================
DIVERSIFIED FINANCIAL SERVICES-13.30%
Citigroup Inc. 180,000 8,193,600
-----------------------------------------------------------------------
Fannie Mae 109,000 8,824,640
-----------------------------------------------------------------------
Freddie Mac 220,000 14,920,400
-----------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 58,000 4,533,280
-----------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 106,000 5,185,520
-----------------------------------------------------------------------
USA Education Inc. 45,000 3,670,200
=======================================================================
45,327,640
=======================================================================
GENERAL MERCHANDISE STORES-1.54%
Target Corp. 168,000 5,233,200
=======================================================================
|
MARKET
SHARES VALUE
HEALTH CARE DISTRIBUTORS & SERVICES-0.43%
AmerisourceBergen Corp. 23,000 $ 1,461,880
=======================================================================
HEALTH CARE EQUIPMENT-2.87%
Baxter International Inc. 102,000 4,933,740
-----------------------------------------------------------------------
Medtronic, Inc. 50,000 2,015,000
-----------------------------------------------------------------------
St. Jude Medical, Inc.(a) 40,000 2,840,000
=======================================================================
9,788,740
=======================================================================
HEALTH CARE FACILITIES-3.22%
HCA Inc. 65,000 2,577,900
-----------------------------------------------------------------------
Tenet Healthcare Corp.(a) 146,000 8,397,920
=======================================================================
10,975,820
=======================================================================
INDUSTRIAL CONGLOMERATES-5.45%
General Electric Co. 510,000 18,569,100
=======================================================================
INTERNET RETAIL-0.68%
eBay Inc.(a) 44,000 2,309,120
=======================================================================
INVESTMENTS-1.46%
Nasdaq-100 Index Tracking Stock(a) 147,000 4,983,300
=======================================================================
MANAGED HEALTH CARE-0.94%
UnitedHealth Group Inc. 49,000 3,221,750
=======================================================================
MOTORCYCLE MANUFACTURERS-1.66%
Harley-Davidson, Inc. 125,000 5,657,500
=======================================================================
MOVIES & ENTERTAINMENT-2.02%
AOL Time Warner Inc.(a) 150,000 4,681,500
-----------------------------------------------------------------------
Viacom Inc.-Class B(a) 60,000 2,190,600
=======================================================================
6,872,100
=======================================================================
MULTI-LINE INSURANCE-4.38%
American International Group, Inc. 190,000 14,934,000
=======================================================================
NETWORKING EQUIPMENT-2.31%
Cisco Systems, Inc.(a) 466,000 7,884,720
=======================================================================
PHARMACEUTICALS-19.82%
Allergan, Inc. 82,000 5,886,780
-----------------------------------------------------------------------
American Home Products Corp. 63,000 3,517,290
-----------------------------------------------------------------------
Biovail Corp. (Canada)(a) 70,000 3,308,200
-----------------------------------------------------------------------
Forest Laboratories, Inc.(a) 120,000 8,925,600
-----------------------------------------------------------------------
Johnson & Johnson 105,000 6,080,550
-----------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 185,000 7,213,150
-----------------------------------------------------------------------
Pfizer Inc. 473,000 19,818,700
-----------------------------------------------------------------------
Pharmacia Corp. 144,000 5,834,880
-----------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 113,000 6,983,400
=======================================================================
67,568,550
=======================================================================
|
FS-97
MARKET
SHARES VALUE
PROPERTY & CASUALTY INSURANCE-0.78%
ACE Ltd. (Bermuda) 75,000 $ 2,643,750
=======================================================================
SEMICONDUCTOR EQUIPMENT-3.64%
Applied Materials, Inc.(a) 80,000 2,728,800
-----------------------------------------------------------------------
KLA-Tencor Corp.(a) 94,000 3,840,840
-----------------------------------------------------------------------
Novellus Systems, Inc.(a) 100,000 3,303,000
-----------------------------------------------------------------------
Teradyne, Inc.(a) 110,000 2,535,500
=======================================================================
12,408,140
=======================================================================
SEMICONDUCTORS-7.59%
Agere Systems Inc.-Class A(a) 510,000 2,346,000
-----------------------------------------------------------------------
Analog Devices, Inc.(a) 155,000 5,890,000
-----------------------------------------------------------------------
Linear Technology Corp. 60,000 2,328,000
-----------------------------------------------------------------------
LSI Logic Corp.(a) 256,000 4,339,200
-----------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan) 340,000 4,389,400
-----------------------------------------------------------------------
Texas Instruments Inc. 152,000 4,254,480
-----------------------------------------------------------------------
Xilinx, Inc.(a) 77,000 2,342,340
=======================================================================
25,889,420
=======================================================================
SOFT DRINKS-2.07%
PepsiCo, Inc. 145,000 7,062,950
=======================================================================
SPECIALTY STORES-2.08%
AutoZone, Inc.(a) 40,000 2,341,200
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
SPECIALTY STORES-(CONTINUED)
Bed Bath & Beyond Inc.(a) 190,000 $ 4,761,400
=======================================================================
7,102,600
=======================================================================
SYSTEMS SOFTWARE-3.40%
Microsoft Corp.(a) 120,000 6,978,000
-----------------------------------------------------------------------
Oracle Corp.(a) 340,000 4,610,400
=======================================================================
11,588,400
=======================================================================
TELECOMMUNICATIONS EQUIPMENT-0.76%
QUALCOMM Inc.(a) 53,000 2,603,360
=======================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.98%
Sprint Corp. (PCS Group)(a) 150,000 3,345,000
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $362,855,175) 321,247,390
=======================================================================
MONEY MARKET FUNDS-5.14%
STIC Liquid Assets Portfolio(b) 8,759,130 8,759,130
-----------------------------------------------------------------------
STIC Prime Portfolio(b) 8,759,130 8,759,130
=======================================================================
Total Money Market Funds (Cost
$17,518,260) 17,518,260
=======================================================================
TOTAL INVESTMENTS-99.38% (Cost $380,373,435) 338,765,650
=======================================================================
OTHER ASSETS LESS LIABILITIES-0.62% 2,114,823
=======================================================================
NET ASSETS-100.00% $340,880,473
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-98
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$380,373,435)* $338,765,650
------------------------------------------------------------
Receivables for:
Investments sold 3,446,435
------------------------------------------------------------
Fund shares sold 390,327
------------------------------------------------------------
Dividends 113,468
------------------------------------------------------------
Investment for deferred compensation plan 16,751
------------------------------------------------------------
Collateral for securities loaned 7,090,260
------------------------------------------------------------
Other assets 18,274
============================================================
Total assets 349,841,165
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,262,120
------------------------------------------------------------
Deferred compensation plan 16,751
------------------------------------------------------------
Collateral upon return of securities loaned 7,090,260
------------------------------------------------------------
Accrued distribution fees 339,041
------------------------------------------------------------
Accrued trustees' fees 796
------------------------------------------------------------
Accrued transfer agent fees 182,475
------------------------------------------------------------
Accrued operating expenses 69,249
============================================================
Total liabilities 8,960,692
============================================================
Net assets applicable to shares outstanding $340,880,473
____________________________________________________________
============================================================
NET ASSETS:
Class A $138,269,170
____________________________________________________________
============================================================
Class B $144,746,707
____________________________________________________________
============================================================
Class C $ 57,864,596
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 15,677,446
____________________________________________________________
============================================================
Class B 16,697,322
____________________________________________________________
============================================================
Class C 6,670,571
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 8.82
------------------------------------------------------------
Offering price per share:
(Net asset value of $8.82 divided by
94.50%) $ 9.33
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 8.67
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 8.67
____________________________________________________________
============================================================
|
* At October 31, 2001, securities with an aggregate market value of $6,777,927 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends from affiliated money market funds $ 1,850,217
------------------------------------------------------------
Dividends (net of foreign withholding tax of
$27,937) 1,735,647
------------------------------------------------------------
Interest 180,870
------------------------------------------------------------
Security lending income 17,182
============================================================
Total investment income 3,783,916
============================================================
EXPENSES:
Advisory fees 3,378,201
------------------------------------------------------------
Administrative services fees 110,085
------------------------------------------------------------
Custodian fees 62,034
------------------------------------------------------------
Distribution fees -- Class A 653,446
------------------------------------------------------------
Distribution fees -- Class B 1,897,704
------------------------------------------------------------
Distribution fees -- Class C 739,577
------------------------------------------------------------
Transfer agent fees -- Class A 665,443
------------------------------------------------------------
Transfer agent fees -- Class B 698,602
------------------------------------------------------------
Transfer agent fees -- Class C 272,261
------------------------------------------------------------
Trustees' fees 9,925
------------------------------------------------------------
Other 315,979
============================================================
Total expenses 8,803,257
============================================================
Less: Fees waived (1,590)
------------------------------------------------------------
Expenses paid indirectly (8,494)
============================================================
Net expenses 8,793,173
============================================================
Net investment income (loss) (5,009,257)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FUTURES
CONTRACTS:
Net realized gain (loss) from:
Investment securities (265,028,647)
------------------------------------------------------------
Futures contracts (6,869,542)
============================================================
(271,898,189)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (66,011,036)
------------------------------------------------------------
Futures contracts (306,162)
============================================================
(66,317,198)
============================================================
Net gain (loss) from investment securities
and futures contracts (338,215,387)
============================================================
Net increase (decrease) in net assets
resulting from operations $(343,224,644)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-99
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
------------- ------------
OPERATIONS:
Net investment income (loss) $ (5,009,257) $ (1,661,635)
-------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts and
futures contracts (271,898,189) (30,744,986)
-------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and futures contracts (66,317,198) 23,255,276
===========================================================================================
Net increase (decrease) in net assets resulting from
operations (343,224,644) (9,151,345)
===========================================================================================
Share transactions-net:
Class A 55,385,107 219,794,733
-------------------------------------------------------------------------------------------
Class B 79,498,885 210,225,885
-------------------------------------------------------------------------------------------
Class C 34,349,074 80,133,352
===========================================================================================
Net increase (decrease) in net assets (173,991,578) 501,002,625
===========================================================================================
NET ASSETS:
Beginning of year 514,872,051 13,869,426
===========================================================================================
End of year $ 340,880,473 $514,872,051
___________________________________________________________________________________________
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 685,573,543 $521,366,964
-------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (18,489) (35,719)
-------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts and futures contracts (303,066,796) (31,168,607)
-------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and futures contracts (41,607,785) 24,709,413
===========================================================================================
$ 340,880,473 $514,872,051
___________________________________________________________________________________________
===========================================================================================
|
See Notes to Financial Statements.
FS-100
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income was increased by
$5,026,487 and paid in capital was decreased by $5,026,487 as a result of
differing book/tax treatment of net operating loss and nondeductible stock
issuance costs reclassifications. Net assets of the Fund were unaffected by
the reclassifications discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
FS-101
The Fund's capital loss carryforward of $294,886,250 is broken down by expiration date as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 380,100 October 31, 2007 ------------------------------ 27,182,658 October 31, 2008 ------------------------------ 267,323,492 October 31, 2009 ============================== $294,886,250 ______________________________ ============================== |
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. 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 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 include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
G. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $1 billion of the Fund's average daily net assets, plus 0.70% over $1
billion to and including $2 billion of the Fund's average daily net assets and
0.625% of the Fund's average daily net assets over $2 billion. Effective July 1,
2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $1,590.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $110,085 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 year ended October 31, 2001, AFS
was paid $888,990 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $653,446,
$1,897,704 and 739,577, respectively, as compensation under the Plans.
AIM Distributors received commissions of $414,262 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $97,612 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $3,923 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $7,960 and reductions in custodian fees of $534 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $8,494.
FS-102
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $6,777,927 were on
loan to brokers. The loans were secured by cash collateral of $7,090,260
received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated
money market fund. For the year ended October 31, 2001, the Fund received fees
of $17,182 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$718,087,793 and $507,943,655, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of: Investment securities $ 0 --------------------------------------------------------- Aggregate unrealized (depreciation) of: Investment securities (49,788,331) ========================================================= Net unrealized appreciation (depreciation) of investment securities $ (49,788,331) _________________________________________________________ ========================================================= Cost of investments for tax purposes is $388,553,981. |
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- ------------
Sold:
Class A 12,973,656 $ 170,871,961 13,372,376 $243,408,072
-----------------------------------------------------------------------------------------------------------------------
Class B 10,999,634 148,982,917 12,077,582 219,734,204
-----------------------------------------------------------------------------------------------------------------------
Class C 4,827,150 63,219,920 4,575,100 82,410,277
=======================================================================================================================
Reacquired:
Class A (9,996,104) (115,486,854) (1,361,845) (23,613,339)
-----------------------------------------------------------------------------------------------------------------------
Class B (6,284,953) (69,484,032) (555,702) (9,508,319)
-----------------------------------------------------------------------------------------------------------------------
Class C (2,680,111) (28,870,846) (131,632) (2,276,925)
=======================================================================================================================
9,839,272 $ 169,233,066 27,975,879 $510,153,970
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
FS-103
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-------------------------------------------
MARCH 1, 1999
(DATE OPERATIONS
YEAR ENDED OCTOBER 31, COMMENCED) TO
----------------------- OCTOBER 31,
2001(a) 2000(a) 1999
--------- --------- ----------------
Net asset value, beginning of period $ 17.74 $ 11.29 $10.00
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.15) (0.04)
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (8.84) 6.60 1.33
=========================================================================================================
Total from investment operations (8.92) 6.45 1.29
=========================================================================================================
Net asset value, end of period $ 8.82 $ 17.74 $11.29
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) (50.28)% 57.13% 13.70%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $138,269 $225,255 $7,785
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets 1.57%(c) 1.58% 1.53%(d)(e)
=========================================================================================================
Ratio of net investment income (loss) to average net assets (0.72)%(c) (0.82)% (0.59)%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 124% 113% 21%
_________________________________________________________________________________________________________
=========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $186,698,739.
(d) Annualized.
(e) Including fee waiver. Ratio of expenses to average net assets prior to fee
waiver was 3.63%.
CLASS B
----------------------------------------
APRIL 5, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
----------------------- OCTOBER 31,
2001(a) 2000(a) 1999(a)
--------- --------- -------------
Net asset value, beginning of period $ 17.54 $ 11.25 $11.02
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.16) (0.27) (0.08)
------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (8.71) 6.56 0.31
======================================================================================================
Total from investment operations (8.87) 6.29 0.23
======================================================================================================
Net asset value, end of period $ 8.67 $ 17.54 $11.25
______________________________________________________________________________________________________
======================================================================================================
Total return(b) (50.57)% 55.91% 2.09%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $144,747 $210,224 $5,183
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.24% 2.23%(d)(e)
======================================================================================================
Ratio of net investment income (loss) to average net assets (1.39)%(c) (1.48)% (1.29)%(d)
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 124% 113% 21%
______________________________________________________________________________________________________
======================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $189,770,380.
(d) Annualized.
(e) Including fee waiver. Ratio of expenses to average net assets prior to fee
waiver was 4.33%.
FS-104
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
---------------------------------------
APRIL 5, 1999
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------- OCTOBER 31,
2001(a) 2000(a) 1999(a)
-------- -------- -------------
Net asset value, beginning of period $ 17.55 $ 11.25 $11.02
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.16) (0.27) (0.08)
-----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (8.72) 6.57 0.31
=====================================================================================================
Total from investment operations (8.88) 6.30 0.23
=====================================================================================================
Net asset value, end of period $ 8.67 $ 17.55 $11.25
_____________________________________________________________________________________________________
=====================================================================================================
Total return(b) (50.60)% 56.00% 2.09%
_____________________________________________________________________________________________________
=====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $57,865 $79,392 $ 901
_____________________________________________________________________________________________________
=====================================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.24% 2.23%(d)(e)
=====================================================================================================
Ratio of net investment income (loss) to average net assets (1.39)%(c) (1.48)% (1.29)%(d)
_____________________________________________________________________________________________________
=====================================================================================================
Portfolio turnover rate 124% 113% 21%
_____________________________________________________________________________________________________
=====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $73,957,701.
(d) Annualized.
(e) Including fee waiver. Ratio of expenses to average net assets prior to fee
waiver was 4.33%.
FS-105
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Mid Cap Growth Fund
and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Mid Cap Growth Fund (a portfolio AIM
Equity Funds), including the schedule of investments, as
of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the periods presented from commencement of
operations through October 31, 2000 were audited by other
auditors whose report dated December 6, 2000, expressed
an unqualified opinion on those statements and financial
highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM Mid
Cap Growth Fund at October 31, 2001, and the results of
its operations, changes in its net assets, and financial
highlights for the year then ended in conformity with
accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-106
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets and financial highlights of AIM Mid Cap Growth Fund (a portfolio of AIM Equity Funds) for the period November 1, 1999 (date operations commenced) through October 31, 2000. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets and the financial highlights of AIM Mid Cap Growth Fund for the period November 1, 1999 (date operations commenced) through October 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-107
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-91.76%
ADVERTISING-1.18%
Lamar Advertising Co.(a) 75,000 $ 2,355,000
========================================================================
AIRLINES-0.48%
Southwest Airlines Co. 60,000 954,000
========================================================================
APPAREL RETAIL-1.49%
Abercrombie & Fitch Co.-Class A(a) 100,000 1,882,000
------------------------------------------------------------------------
TJX Cos., Inc. (The) 32,600 1,101,880
========================================================================
2,983,880
========================================================================
APPLICATION SOFTWARE-3.02%
BEA Systems, Inc.(a) 100,000 1,214,000
------------------------------------------------------------------------
Cerner Corp.(a) 17,500 940,625
------------------------------------------------------------------------
Citrix Systems, Inc.(a) 75,000 1,755,000
------------------------------------------------------------------------
Electronic Arts Inc.(a) 22,500 1,157,850
------------------------------------------------------------------------
Siebel Systems, Inc.(a) 60,000 979,800
========================================================================
6,047,275
========================================================================
BIOTECHNOLOGY-3.28%
Cephalon, Inc.(a) 30,000 1,891,500
------------------------------------------------------------------------
COR Therapeutics, Inc.(a) 60,000 1,351,800
------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 30,000 1,799,400
------------------------------------------------------------------------
Invitrogen Corp.(a) 25,000 1,533,500
========================================================================
6,576,200
========================================================================
BROADCASTING & CABLE TV-3.32%
Adelphia Communications Corp.-Class A(a) 50,000 1,106,500
------------------------------------------------------------------------
Charter Communications, Inc.-Class A(a) 85,000 1,201,900
------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 125,000 2,095,000
------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 90,000 2,250,000
========================================================================
6,653,400
========================================================================
CASINOS & GAMING-1.78%
International Game Technology(a) 70,000 3,573,500
========================================================================
COMPUTER & ELECTRONICS RETAIL-0.92%
CDW Computer Centers, Inc.(a) 40,000 1,842,000
========================================================================
CONSTRUCTION & ENGINEERING-1.37%
Shaw Group Inc. (The)(a) 100,000 2,750,000
========================================================================
CONSUMER FINANCE-2.97%
AmeriCredit Corp.(a) 130,000 2,015,000
------------------------------------------------------------------------
Capital One Financial Corp. 50,000 2,065,500
------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 25,000 998,250
------------------------------------------------------------------------
Providian Financial Corp. 225,000 875,250
========================================================================
5,954,000
========================================================================
|
MARKET
SHARES VALUE
DATA PROCESSING SERVICES-1.85%
Fiserv, Inc.(a) 65,250 $ 2,426,647
------------------------------------------------------------------------
Paychex, Inc. 40,000 1,282,400
========================================================================
3,709,047
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.07%
IMS Health Inc. 100,000 2,137,000
========================================================================
DIVERSIFIED FINANCIAL SERVICES-1.47%
Lehman Brothers Holdings Inc. 15,000 936,900
------------------------------------------------------------------------
SEI Investments Co. 65,000 1,998,750
========================================================================
2,935,650
========================================================================
DRUG RETAIL-0.60%
CVS Corp. 50,000 1,195,000
========================================================================
ELECTRIC UTILITIES-1.41%
Calpine Corp.(a) 50,000 1,237,500
------------------------------------------------------------------------
NRG Energy, Inc.(a) 90,000 1,590,300
========================================================================
2,827,800
========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-5.41%
Celestica Inc. (Canada)(a) 80,000 2,745,600
------------------------------------------------------------------------
Jabil Circuit, Inc.(a) 60,000 1,272,000
------------------------------------------------------------------------
Millipore Corp. 32,500 1,699,750
------------------------------------------------------------------------
PerkinElmer, Inc. 40,000 1,076,400
------------------------------------------------------------------------
Sanmina Corp.(a) 50,000 757,000
------------------------------------------------------------------------
SCI Systems, Inc.(a) 65,000 1,320,150
------------------------------------------------------------------------
Tektronix, Inc.(a) 100,000 1,970,000
========================================================================
10,840,900
========================================================================
GAS UTILITIES-1.12%
Kinder Morgan, Inc. 45,000 2,233,350
========================================================================
GENERAL MERCHANDISE STORES-2.90%
BJ's Wholesale Club, Inc.(a) 25,000 1,269,250
------------------------------------------------------------------------
Dollar General Corp. 160,000 2,286,400
------------------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 100,000 2,247,000
========================================================================
5,802,650
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-3.76%
AmerisourceBergen Corp. 15,000 953,400
------------------------------------------------------------------------
Express Scripts, Inc.(a) 60,000 2,456,400
------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 30,000 2,586,000
------------------------------------------------------------------------
Lincare Holdings Inc.(a) 60,000 1,542,000
========================================================================
7,537,800
========================================================================
HEALTH CARE EQUIPMENT-0.70%
Apogent Technologies Inc.(a) 60,000 1,405,200
========================================================================
|
FS-108
MARKET
SHARES VALUE
HEALTH CARE FACILITIES-2.60%
Community Health Systems, Inc.(a) 55,000 $ 1,375,000
------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 90,000 2,421,000
------------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 35,000 1,413,650
========================================================================
5,209,650
========================================================================
HOTELS-0.55%
Starwood Hotels & Resorts Worldwide, Inc. 50,000 1,102,000
========================================================================
INSURANCE BROKERS-1.09%
Aon Corp. 30,000 1,141,200
------------------------------------------------------------------------
Willis Group Holdings Ltd. (United
Kingdom)(a) 45,000 1,048,050
========================================================================
2,189,250
========================================================================
INTERNET SOFTWARE & SERVICES-0.88%
Check Point Software Technologies Ltd.
(Israel)(a) 60,000 1,771,200
========================================================================
IT CONSULTING & SERVICES-0.57%
SunGard Data Systems Inc.(a) 45,000 1,134,000
========================================================================
LIFE & HEALTH INSURANCE-0.56%
Principal Financial Group, Inc. (The)(a) 50,000 1,125,000
========================================================================
MANAGED HEALTH CARE-2.57%
Anthem, Inc.(a) 28,000 1,172,640
------------------------------------------------------------------------
Caremark Rx, Inc.(a) 130,000 1,742,000
------------------------------------------------------------------------
Wellpoint Health Networks Inc.(a) 20,000 2,231,800
========================================================================
5,146,440
========================================================================
MOTORCYCLE MANUFACTURERS-0.45%
Harley-Davidson, Inc. 20,000 905,200
========================================================================
MOVIES & ENTERTAINMENT-1.04%
Macrovision Corp.(a) 85,000 2,091,850
========================================================================
MULTI-UTILITIES-1.38%
Dynegy Inc.-Class A 25,000 897,500
------------------------------------------------------------------------
Enron Corp. 135,000 1,876,500
========================================================================
2,774,000
========================================================================
NETWORKING EQUIPMENT-2.42%
Brocade Communications Systems, Inc.(a) 70,000 1,718,500
------------------------------------------------------------------------
Finisar Corp.(a) 200,000 1,564,000
------------------------------------------------------------------------
Juniper Networks, Inc.(a) 70,000 1,560,300
========================================================================
4,842,800
========================================================================
OIL & GAS DRILLING-1.16%
ENSCO International Inc. 57,800 1,144,440
------------------------------------------------------------------------
Rowan Cos., Inc.(a) 70,000 1,182,300
========================================================================
2,326,740
========================================================================
OIL & GAS EQUIPMENT & SERVICES-3.17%
Hanover Compressor Co.(a) 80,000 2,206,400
------------------------------------------------------------------------
National-Oilwell, Inc.(a) 75,000 1,389,000
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
OIL & GAS EQUIPMENT & SERVICES-(CONTINUED)
Smith International, Inc.(a) 34,300 $ 1,622,390
------------------------------------------------------------------------
Weatherford International, Inc.(a) 33,000 1,129,590
========================================================================
6,347,380
========================================================================
PHARMACEUTICALS-7.84%
Andrx Group(a) 35,000 2,272,550
------------------------------------------------------------------------
CIMA Labs Inc.(a) 40,000 2,162,000
------------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 85,000 2,057,850
------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 45,000 1,754,550
------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 60,000 3,461,400
------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 55,000 2,458,500
------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 25,000 1,545,000
========================================================================
15,711,850
========================================================================
PROPERTY & CASUALTY INSURANCE-1.39%
ACE Ltd. (Bermuda) 50,000 1,762,500
------------------------------------------------------------------------
Radian Group Inc. 30,000 1,016,100
========================================================================
2,778,600
========================================================================
RESTAURANTS-1.71%
Brinker International, Inc.(a) 80,000 2,032,000
------------------------------------------------------------------------
Starbucks Corp.(a) 81,500 1,395,280
========================================================================
3,427,280
========================================================================
SEMICONDUCTOR EQUIPMENT-3.60%
KLA-Tencor Corp.(a) 60,000 2,451,600
------------------------------------------------------------------------
Lam Research Corp.(a) 85,000 1,611,600
------------------------------------------------------------------------
Novellus Systems, Inc.(a) 50,000 1,651,500
------------------------------------------------------------------------
Teradyne, Inc.(a) 65,000 1,498,250
========================================================================
7,212,950
========================================================================
SEMICONDUCTORS-9.62%
Altera Corp.(a) 55,000 1,111,000
------------------------------------------------------------------------
Applied Micro Circuits Corp.(a) 150,000 1,654,500
------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 65,000 2,236,650
------------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 65,000 1,810,250
------------------------------------------------------------------------
Microchip Technology Inc.(a) 75,000 2,341,500
------------------------------------------------------------------------
NVIDIA Corp.(a) 28,000 1,200,080
------------------------------------------------------------------------
QLogic Corp.(a) 25,000 983,750
------------------------------------------------------------------------
RF Micro Devices, Inc.(a) 110,000 2,248,400
------------------------------------------------------------------------
Semtech Corp.(a) 65,000 2,453,750
------------------------------------------------------------------------
TriQuint Semiconductor, Inc.(a) 183,113 3,237,438
========================================================================
19,277,318
========================================================================
SPECIALTY CHEMICALS-0.66%
Sigma-Aldrich Corp. 35,000 1,313,200
========================================================================
SPECIALTY STORES-1.42%
Bed Bath & Beyond Inc.(a) 70,000 1,754,200
------------------------------------------------------------------------
|
FS-109
MARKET
SHARES VALUE
SPECIALTY STORES-(CONTINUED)
Venator Group, Inc.(a) 75,000 $ 1,087,500
========================================================================
2,841,700
========================================================================
SYSTEMS SOFTWARE-1.16%
BMC Software, Inc.(a) 60,000 904,200
------------------------------------------------------------------------
VERITAS Software Corp.(a) 50,000 1,419,000
========================================================================
2,323,200
========================================================================
TELECOMMUNICATIONS EQUIPMENT-5.82%
ADC Telecommunications, Inc.(a) 400,000 1,820,000
------------------------------------------------------------------------
Comverse Technology, Inc.(a) 60,000 1,128,600
------------------------------------------------------------------------
JDS Uniphase Corp.(a) 135,000 1,078,650
------------------------------------------------------------------------
Scientific-Atlanta, Inc. 90,000 1,878,300
------------------------------------------------------------------------
UTStarcom, Inc.(a) 245,000 5,752,600
========================================================================
11,658,150
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $203,270,996) 183,823,410
========================================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS-10.55%
STIC Liquid Assets Portfolio(b) 10,568,825 $ 10,568,825
------------------------------------------------------------------------
STIC Prime Portfolio(b) 10,568,825 10,568,825
========================================================================
Total Money Market Funds (Cost
$21,137,650) 21,137,650
========================================================================
TOTAL INVESTMENTS-102.31% (Cost $224,408,646) 204,961,060
========================================================================
OTHER ASSETS LESS LIABILITIES-(2.31%) (4,628,264)
========================================================================
NET ASSETS-100.00% $200,332,796
________________________________________________________________________
========================================================================
|
Investment Abbreviation:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-110
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$224,408,646)* $204,961,060
------------------------------------------------------------
Receivables for:
Investments sold 557,828
------------------------------------------------------------
Fund shares sold 2,233,092
------------------------------------------------------------
Dividends 49,318
------------------------------------------------------------
Investment for deferred compensation plan 11,220
------------------------------------------------------------
Collateral for securities loaned 6,242,800
------------------------------------------------------------
Other assets 40,697
============================================================
Total assets 214,096,015
============================================================
LIABILITIES:
Payables for:
Investments purchased 6,753,626
------------------------------------------------------------
Fund shares reacquired 465,810
------------------------------------------------------------
Deferred compensation plan 11,220
------------------------------------------------------------
Collateral upon return of securities loaned 6,242,800
------------------------------------------------------------
Accrued distribution fees 184,684
------------------------------------------------------------
Accrued trustees' fees 960
------------------------------------------------------------
Accrued transfer agent fees 75,959
------------------------------------------------------------
Accrued operating expenses 28,160
============================================================
Total liabilities 13,763,219
============================================================
Net assets applicable to shares outstanding $200,332,796
============================================================
NET ASSETS:
Class A $ 94,457,086
____________________________________________________________
============================================================
Class B $ 81,904,905
____________________________________________________________
============================================================
Class C $ 23,970,805
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 11,008,694
____________________________________________________________
============================================================
Class B 9,693,371
____________________________________________________________
============================================================
Class C 2,836,105
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 8.58
------------------------------------------------------------
Offering price per share:
(Net asset value of $8.58 divided by
94.50%) $ 9.08
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 8.45
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 8.45
____________________________________________________________
============================================================
|
* At October 31, 2001, securities with an aggregate market value of $5,499,930 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends from affiliated money market funds $ 1,045,084
------------------------------------------------------------
Dividends (net of foreign withholding tax of
$200) 313,193
------------------------------------------------------------
Security lending income 14,867
============================================================
Total investment income 1,373,144
============================================================
EXPENSES:
Advisory fees 1,860,437
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 54,143
------------------------------------------------------------
Distribution fees -- Class A 366,213
------------------------------------------------------------
Distribution fees -- Class B 990,139
------------------------------------------------------------
Distribution fees -- Class C 289,085
------------------------------------------------------------
Transfer agent fees -- Class A 392,091
------------------------------------------------------------
Transfer agent fees -- Class B 392,436
------------------------------------------------------------
Transfer agent fees -- Class C 114,577
------------------------------------------------------------
Trustees' fees 9,501
------------------------------------------------------------
Other 186,323
============================================================
Total expenses 4,704,945
============================================================
Less: Fees waived (875)
------------------------------------------------------------
Expenses paid indirectly (9,532)
============================================================
Net expenses 4,694,538
============================================================
Net investment income (loss) (3,321,394)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (85,635,863)
------------------------------------------------------------
Foreign currencies (15,438)
============================================================
(85,651,301)
============================================================
Change in net unrealized appreciation
(depreciation) of investment securities (34,496,810)
============================================================
Net gain (loss) from investment securities
and foreign currencies (120,148,111)
============================================================
Net increase (decrease) in net assets
resulting from operations $(123,469,505)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-111
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
------------- ------------
OPERATIONS:
Net investment income (loss) $ (3,321,394) $ (1,563,639)
-------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (85,651,301) (25,504,927)
-------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (34,496,810) 15,049,224
===========================================================================================
Net increase (decrease) in net assets resulting from
operations (123,469,505) (12,019,342)
===========================================================================================
Share transactions-net:
Class A 35,302,179 119,193,513
-------------------------------------------------------------------------------------------
Class B 30,599,965 110,167,503
-------------------------------------------------------------------------------------------
Class C 9,125,015 31,433,468
===========================================================================================
Net increase (decrease) in net assets (48,442,346) 248,775,142
===========================================================================================
NET ASSETS:
Beginning of year 248,775,142 --
===========================================================================================
End of year $ 200,332,796 $248,775,142
___________________________________________________________________________________________
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 330,937,475 $259,252,997
-------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (12,365) (18,214)
-------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (111,144,728) (25,508,865)
-------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (19,447,586) 15,049,224
===========================================================================================
$ 200,332,796 $248,775,142
___________________________________________________________________________________________
===========================================================================================
|
See Notes to Financial Statements.
FS-112
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted
securities, are valued according to the following policy. A security listed
or traded on an exchange (except convertible bonds) is valued at its last
sales price as of the close of the customary trading session on the exchange
where the security is principally traded, or lacking any sales on a
particular day, the security is valued at the closing bid price on that day.
Each security reported on the NASDAQ National Market System is valued at the
last sales price as of the close of the customary trading session on the
valuation date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate and
maturity date. Securities for which market prices are not provided by any of
the above methods are valued based upon quotes furnished by independent
sources and are valued at the last bid price in the case of equity securities
and in the case of debt obligations, the mean between the last bid and asked
prices. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued at amortized cost which approximates market
value. For purposes of determining net asset value per share, futures and
option contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income was increased by
$3,327,243, undistributed net realized gains increased by $15,438 and paid in
capital decreased by $3,342,681 as a result of differing book/tax treatment
of foreign currency transactions, disallowed stock issuance cost adjustments
and net operating loss reclassifications. Net assets of the Fund were
unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
FS-113
The Fund's capital loss carryforward of $110,343,357 is broken down by expiration date as follows:
CAPITAL LOSS CARRYFORWARD EXPIRATION ------------ ---------- $ 23,619,065 October 31, 2008 ------------------------------ 86,724,292 October 31, 2009 ============================== $110,343,357 ______________________________ ============================== |
E. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $1 billion of the Fund's average daily net assets plus 0.75% of the
Fund's average daily net assets over $1 billion. Effective July 1, 2001, 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 fund of which the
Fund has invested. For the year ended October 31, 2001, AIM waived fees of $875.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. During the year ended October 31, 2001, AFS
was paid $530,388 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $366,213, $990,139
and $289,085, respectively, as compensation under the Plans.
AIM Distributors received commissions of $169,636 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $26,251 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $3,597 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $3,951 and reductions in custodian fees of $5,581 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $9,532.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $5,499,930 were on
loan to brokers. The loans were secured by cash collateral of $6,242,800
received by the Fund and subsequently invested in the STIC Liquid Assets
Portfolio, an affiliated money market fund. For the year ended October 31, 2001,
the Fund received fees of $14,867 for securities lending.
FS-114
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2001 was $441,646,363 and $368,135,502, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 13,774,657 ---------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (34,023,614) ---------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investment securities $(20,248,957) ____________________________________________________________________________ ============================================================================ Cost of investments for tax purposes is $225,210,017. |
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the year ended October 31, 2001 and the year ended October 31, 2000 were as follows:
2001 2000
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 7,467,674 $ 81,492,237 9,973,512 $148,793,995
----------------------------------------------------------------------------------------------------------------------
Class B 5,024,132 57,335,690 7,790,721 117,866,319
----------------------------------------------------------------------------------------------------------------------
Class C 1,707,494 19,292,222 2,332,138 34,964,988
======================================================================================================================
Reacquired:
Class A (4,452,029) (46,190,058) (1,980,463) (29,600,482)
----------------------------------------------------------------------------------------------------------------------
Class B (2,619,664) (26,735,725) (501,818) (7,698,816)
----------------------------------------------------------------------------------------------------------------------
Class C (973,019) (10,167,207) (230,508) (3,531,520)
======================================================================================================================
6,154,588 $ 75,027,159 17,383,582 $260,794,484
______________________________________________________________________________________________________________________
======================================================================================================================
|
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------
NOVEMBER 1, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001(a) 2000(a)
-------------- ----------------
Net asset value, beginning of period $ 14.38 $ 10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.12)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.69) 4.50
================================================================================================
Total from investment operations (5.80) 4.38
================================================================================================
Net asset value, end of period $ 8.58 $ 14.38
________________________________________________________________________________________________
================================================================================================
Total return(b) (40.33)% 43.80%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,457 $114,913
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets 1.65%(c) 1.63%
================================================================================================
Ratio of net investment income (loss) to average net assets (1.06)%(c) (0.76)%
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 173% 183%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $104,632,235.
FS-115
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------
NOVEMBER 1, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001(a) 2000(a)
-------------- ----------------
Net asset value, beginning of period $ 14.25 $ 10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.22)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.62) 4.47
================================================================================================
Total from investment operations (5.80) 4.25
================================================================================================
Net asset value, end of period $ 8.45 $ 14.25
________________________________________________________________________________________________
================================================================================================
Total return(b) (40.70)% 42.50%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $81,905 $103,893
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets 2.32%(c) 2.32%
================================================================================================
Ratio of net investment income (loss) to average net assets (1.73)%(c) (1.45)%
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 173% 183%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $99,013,881.
CLASS C
----------------------------------
NOVEMBER 1, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2001(a) 2000(a)
-------------- ----------------
Net asset value, beginning of period $ 14.26 $ 10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.22)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.63) 4.48
================================================================================================
Total from investment operations (5.81) 4.26
================================================================================================
Net asset value, end of period $ 8.45 $ 14.26
________________________________________________________________________________________________
================================================================================================
Total return(b) (40.74)% 42.60%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $23,971 $29,969
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets 2.32%(c) 2.32%
================================================================================================
Ratio of net investment income (loss) to average net assets (1.73)%(c) (1.45)%
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 173% 183%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $28,908,534.
FS-116
WEINGARTEN FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Weingarten Fund
and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Weingarten Fund (a portfolio AIM
Equity Funds), including the schedule of investments, as
of October 31, 2001, and the related statements of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for
the year ended October 31, 2000, and the financial
highlights for each of the four years in the period then
ended were audited by other auditors whose report dated
December 6, 2000, expressed an unqualified opinion on
those statements and financial highlights
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures
in the financial statements and financial highlights.
Our procedures included confirmation of securities owned
as of October 31, 2001, by correspondence with the
custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates
made by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly,
in all material respects, the financial position of AIM
Weingarten Fund at October 31, 2001, and the results of
its operations, changes in its net assets, and financial
highlights for the year then ended in conformity with
accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-117
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Weingarten Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Weingarten Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-118
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-86.69%
AEROSPACE & DEFENSE-4.25%
General Dynamics Corp. 904,300 $ 73,790,880
-----------------------------------------------------------------------------
Lockheed Martin Corp. 2,911,600 141,998,732
=============================================================================
215,789,612
=============================================================================
APPLICATION SOFTWARE-1.11%
Intuit Inc.(a) 1,404,300 56,480,946
=============================================================================
BANKS-2.77%
Bank of America Corp. 1,413,400 83,376,466
-----------------------------------------------------------------------------
Washington Mutual, Inc. 1,903,000 57,451,570
=============================================================================
140,828,036
=============================================================================
BIOTECHNOLOGY-0.95%
Invitrogen Corp.(a) 613,700 37,644,358
-----------------------------------------------------------------------------
Serono S.A.-Class B (Switzerland) 13,420 10,602,947
=============================================================================
48,247,305
=============================================================================
CASINOS & GAMING-0.83%
International Game Technology(a) 827,300 42,233,665
=============================================================================
COMPUTER & ELECTRONICS RETAIL-1.47%
Best Buy Co., Inc.(a) 1,095,900 60,164,910
-----------------------------------------------------------------------------
Blockbuster Inc.-Class A 577,000 14,471,160
=============================================================================
74,636,070
=============================================================================
COMPUTER HARDWARE-1.15%
International Business Machines Corp. 541,100 58,476,677
=============================================================================
CONSUMER FINANCE-1.39%
AmeriCredit Corp.(a) 1,571,800 24,362,900
-----------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 1,158,600 46,262,898
=============================================================================
70,625,798
=============================================================================
DATA PROCESSING SERVICES-2.42%
First Data Corp. 1,817,200 122,788,204
=============================================================================
DEPARTMENT STORES-0.60%
Kohl's Corp.(a) 547,900 30,468,719
=============================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.66%
H&R Block, Inc. 989,300 33,715,344
=============================================================================
DIVERSIFIED FINANCIAL SERVICES-7.27%
Citigroup Inc. 1,315,200 59,867,904
-----------------------------------------------------------------------------
Fannie Mae 1,877,700 152,018,592
-----------------------------------------------------------------------------
Freddie Mac 2,322,600 157,518,732
=============================================================================
369,405,228
=============================================================================
ELECTRIC UTILITIES-2.60%
Calpine Corp.(a) 998,500 24,712,875
-----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
ELECTRIC UTILITIES-(CONTINUED)
Mirant Corp.(a) 4,134,100 $ 107,486,600
=============================================================================
132,199,475
=============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.95%
Celestica Inc. (Canada)(a) 1,496,100 51,346,152
-----------------------------------------------------------------------------
Waters Corp.(a) 1,341,900 47,624,031
=============================================================================
98,970,183
=============================================================================
ENVIRONMENTAL SERVICES-0.94%
Waste Management, Inc. 1,940,300 47,537,350
=============================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-5.85%
AdvancePCS(a) 600,000 36,462,000
-----------------------------------------------------------------------------
AmerisourceBergen Corp. 890,000 56,568,400
-----------------------------------------------------------------------------
Cardinal Health, Inc. 723,000 48,520,530
-----------------------------------------------------------------------------
Express Scripts, Inc.(a) 902,900 36,964,726
-----------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 850,000 73,270,000
-----------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 695,100 45,445,638
=============================================================================
297,231,294
=============================================================================
HEALTH CARE EQUIPMENT-3.59%
Baxter International Inc. 2,179,800 105,436,926
-----------------------------------------------------------------------------
Biomet, Inc.(a) 640,200 19,526,100
-----------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 808,500 57,403,500
=============================================================================
182,366,526
=============================================================================
HEALTH CARE FACILITIES-5.61%
HCA Inc. 3,044,200 120,732,972
-----------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,736,500 99,883,480
-----------------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 1,601,200 64,672,468
=============================================================================
285,288,920
=============================================================================
HOME IMPROVEMENT RETAIL-3.23%
Lowe's Cos., Inc. 4,819,900 164,358,590
=============================================================================
IT CONSULTING & SERVICES-3.97%
Affiliated Computer Services, Inc.- Class
A(a) 645,300 56,818,665
-----------------------------------------------------------------------------
Electronic Data Systems Corp. 2,255,500 145,186,535
=============================================================================
202,005,200
=============================================================================
LEISURE PRODUCTS-1.22%
Mattel, Inc.(a) 3,264,000 61,787,520
=============================================================================
MANAGED HEALTH CARE-2.99%
Caremark Rx, Inc.(a) 3,742,400 50,148,160
-----------------------------------------------------------------------------
UnitedHealth Group Inc. 1,552,400 102,070,300
=============================================================================
152,218,460
=============================================================================
|
FS-119
MARKET
SHARES VALUE
MOVIES & ENTERTAINMENT-0.68%
AOL Time Warner Inc.(a) 1,105,000 $ 34,487,050
=============================================================================
MULTI-LINE INSURANCE-1.47%
American International Group, Inc. 947,600 74,481,360
=============================================================================
MULTI-UTILITIES-1.28%
Dynegy Inc.-Class A 1,808,900 64,939,510
=============================================================================
PHARMACEUTICALS-13.73%
Allergan, Inc. 729,900 52,399,521
-----------------------------------------------------------------------------
Biovail Corp. (Canada)(a) 1,670,900 78,966,734
-----------------------------------------------------------------------------
Elan Corp. PLC-ADR (Ireland)(a) 1,069,700 48,831,805
-----------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 920,000 68,429,600
-----------------------------------------------------------------------------
IVAX Corp.(a) 1,278,400 26,271,120
-----------------------------------------------------------------------------
Johnson & Johnson 3,593,700 208,111,167
-----------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 1,028,233 40,090,805
-----------------------------------------------------------------------------
Mylan Laboratories, Inc. 853,200 31,457,484
-----------------------------------------------------------------------------
Pfizer Inc. 1,609,800 67,450,620
-----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 1,230,000 76,014,000
=============================================================================
698,022,856
=============================================================================
PROPERTY & CASUALTY INSURANCE-1.80%
MGIC Investment Corp. 847,600 43,854,824
-----------------------------------------------------------------------------
Radian Group Inc. 1,399,300 47,394,291
=============================================================================
91,249,115
=============================================================================
SEMICONDUCTOR EQUIPMENT-1.40%
KLA-Tencor Corp.(a) 1,260,400 51,499,944
-----------------------------------------------------------------------------
Lam Research Corp.(a) 1,039,700 19,712,712
=============================================================================
71,212,656
=============================================================================
SEMICONDUCTORS-2.70%
Analog Devices, Inc.(a) 608,100 23,107,800
-----------------------------------------------------------------------------
Intel Corp. 2,201,400 53,758,188
-----------------------------------------------------------------------------
Microchip Technology Inc.(a) 505,200 15,772,344
-----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
SEMICONDUCTORS-(CONTINUED)
NVIDIA Corp.(a) 1,044,300 $ 44,758,698
=============================================================================
137,397,030
=============================================================================
SPECIALTY STORES-2.48%
AutoZone, Inc.(a) 218,300 12,777,099
-----------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 2,583,700 64,747,522
-----------------------------------------------------------------------------
Office Depot, Inc.(a) 3,566,800 48,508,480
=============================================================================
126,033,101
=============================================================================
SYSTEMS SOFTWARE-3.29%
Computer Associates International, Inc. 1,708,600 52,829,912
-----------------------------------------------------------------------------
Microsoft Corp.(a) 1,967,800 114,427,570
=============================================================================
167,257,482
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.04%
Sprint Corp. (PCS Group)(a) 2,376,300 52,991,490
=============================================================================
Total Common Stocks & Other Equity
Interests (Cost $4,270,183,965) 4,405,730,772
=============================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-0.49%
U.S. TREASURY BILLS-0.49%
2.56%, 12/20/01 (Cost $24,928,201)(b) $25,000,000(c) 24,928,201
=============================================================================
SHARES
MONEY MARKET FUNDS-10.45%
STIC Liquid Assets Portfolio(d) 265,630,548 265,630,548
-----------------------------------------------------------------------------
STIC Prime Portfolio(d) 265,630,548 265,630,548
=============================================================================
Total Money Market Funds (Cost
$531,261,096) 531,261,096
=============================================================================
TOTAL INVESTMENTS--97.63% (Cost
$4,826,373,262) 4,961,920,069
=============================================================================
OTHER ASSETS LESS LIABILITIES--2.37% 120,378,618
=============================================================================
NET ASSETS-100.00% $5,082,298,687
_____________________________________________________________________________
=============================================================================
|
Investment Abbreviation:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded at a discount. The interest rate shown represents the rate
of discount paid or received 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.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-120
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$4,826,373,262)* $4,961,920,069
-------------------------------------------------------------
Foreign currencies, at value (cost
$30,634,855) 30,440,406
-------------------------------------------------------------
Receivables for:
Investments sold 148,478,767
-------------------------------------------------------------
Variation margin 359,625
-------------------------------------------------------------
Fund shares sold 1,935,216
-------------------------------------------------------------
Dividends 2,639,098
-------------------------------------------------------------
Investment for deferred compensation plan 205,734
-------------------------------------------------------------
Collateral for securities loaned 170,305,500
-------------------------------------------------------------
Other assets 113,505
=============================================================
Total assets 5,316,397,920
=============================================================
LIABILITIES:
Payables for:
Investments purchased 44,217,572
-------------------------------------------------------------
Fund shares reacquired 13,607,057
-------------------------------------------------------------
Deferred compensation plan 205,734
-------------------------------------------------------------
Collateral upon return of securities loaned 170,305,500
-------------------------------------------------------------
Accrued distribution fees 3,353,712
-------------------------------------------------------------
Accrued trustees' fees 10,048
-------------------------------------------------------------
Accrued transfer agent fees 1,919,533
-------------------------------------------------------------
Accrued operating expenses 480,077
=============================================================
Total liabilities 234,099,233
=============================================================
Net assets applicable to shares outstanding $5,082,298,687
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $4,001,551,519
_____________________________________________________________
=============================================================
Class B $ 922,475,931
_____________________________________________________________
=============================================================
Class C $ 150,604,448
_____________________________________________________________
=============================================================
Institutional Class $ 7,666,789
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 316,425,965
_____________________________________________________________
=============================================================
Class B 77,809,347
_____________________________________________________________
=============================================================
Class C 12,690,480
_____________________________________________________________
=============================================================
Institutional Class 582,738
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 12.65
-------------------------------------------------------------
Offering price per share:
(Net asset value of $12.65 divided by
94.50%) $ 13.39
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 11.86
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 11.87
_____________________________________________________________
=============================================================
Institutional Class
Net asset value and offering price per
share $ 13.16
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $154,614,276 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$143,741) $ 28,836,194
-------------------------------------------------------------
Dividends from affiliated money market funds 17,855,780
-------------------------------------------------------------
Interest 340,759
-------------------------------------------------------------
Security lending income 406,289
=============================================================
Total investment income 47,439,022
=============================================================
EXPENSES:
Advisory fees 46,064,764
-------------------------------------------------------------
Administrative services fees 392,623
-------------------------------------------------------------
Custodian fees 560,018
-------------------------------------------------------------
Distribution fees -- Class A 17,315,069
-------------------------------------------------------------
Distribution fees -- Class B 12,957,576
-------------------------------------------------------------
Distribution fees -- Class C 2,097,259
-------------------------------------------------------------
Transfer agent fees -- Class A 13,632,894
-------------------------------------------------------------
Transfer agent fees -- Class B 3,157,246
-------------------------------------------------------------
Transfer agent fees -- Class C 511,018
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 1,683
-------------------------------------------------------------
Trustees' fees 42,264
-------------------------------------------------------------
Other 2,952,686
=============================================================
Total expenses 99,685,100
=============================================================
Less: Fees waived (584,500)
-------------------------------------------------------------
Expenses paid indirectly (131,276)
=============================================================
Net expenses 98,969,324
=============================================================
Net investment income (loss) (51,530,302)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (2,600,552,854)
-------------------------------------------------------------
Foreign currencies (260,383)
-------------------------------------------------------------
Futures contracts (19,026,047)
=============================================================
(2,619,839,284)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (2,497,364,549)
-------------------------------------------------------------
Foreign currencies 145,614
-------------------------------------------------------------
Futures contracts (6,153,088)
=============================================================
(2,503,372,023)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and futures contracts (5,123,211,307)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(5,174,741,609)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-121
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- ---------------
OPERATIONS:
Net investment income (loss) $ (51,530,302) $ (68,599,290)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (2,619,839,284) 1,506,816,288
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and futures
contracts (2,503,372,023) (520,884,199)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (5,174,741,609) 917,332,799
================================================================================================
Distributions to shareholders from net realized gains:
Class A (1,121,031,643) (912,274,100)
------------------------------------------------------------------------------------------------
Class B (257,775,222) (156,090,644)
------------------------------------------------------------------------------------------------
Class C (40,618,148) (13,701,366)
------------------------------------------------------------------------------------------------
Institutional Class (2,238,331) (12,672,994)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 270,194,498 927,796,775
------------------------------------------------------------------------------------------------
Class B 174,387,701 724,966,056
------------------------------------------------------------------------------------------------
Class C 38,305,460 221,312,749
------------------------------------------------------------------------------------------------
Institutional Class (703,710) (100,840,055)
================================================================================================
Net increase (decrease) in net assets (6,114,221,004) 1,595,829,220
================================================================================================
NET ASSETS:
Beginning of year 11,196,519,691 9,600,690,471
================================================================================================
End of year $ 5,082,298,687 $11,196,519,691
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 7,580,212,372 $ 7,150,137,050
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (433,499) (388,227)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (2,626,460,881) 1,414,418,150
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 128,980,695 2,632,352,718
================================================================================================
$ 5,082,298,687 $11,196,519,691
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
FS-122
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of eleven separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers four different classes of shares: Class A shares, Class B shares, Class C
shares and the Institutional Class. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a contingent
deferred sales charge. 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 to provide growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted
securities, are valued according to the following policy. A security listed
or traded on an exchange (except convertible bonds) is valued at its last
sales price as of the close of the customary trading session on the exchange
where the security is principally traded, or lacking any sales on a
particular day, the security is valued at the closing bid price on that day.
Each security reported on the NASDAQ National Market System is valued at the
last sales price as of the close of the customary trading session on the
valuation date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate and
maturity date. Securities for which market prices are not provided by any of
the above methods are valued based upon quotes furnished by independent
sources and are valued at the last bid price in the case of equity securities
and in the case of debt obligations, the mean between the last bid and asked
prices. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued at amortized cost which approximates market
value. For purposes of determining net asset value per share, futures and
option contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income was increased by
$51,485,030, undistributed net realized gains increased by $623,597 and paid
in capital decreased by $52,108,627 as a result of differing book/tax
treatment of foreign currency transactions, net operating loss
reclassifications and other reclassifications. Net assets of the Fund were
unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
FS-123
The fund has a capital loss carryforward of $2,559,101,338 as of October 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. 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 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 include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $350
million, plus 0.625% of the Fund's average daily net assets in excess of $350
million. AIM has agreed to waive advisory fees payable by the Fund to AIM at the
annual rate of 0.025% for each $5 billion increment in net assets over $5
billion, up to a maximum waiver of 0.175% on net assets in excess of $35
billion. Effective July 1, 2001, 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 fund of which the Fund has invested. For the year ended
October 31, 2001, AIM waived fees of $584,500. Under the terms of a master
sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM
Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $392,623 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 year ended October 31, 2001, AFS
was paid $8,821,006 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and the Institutional Class 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 0.30% of the Fund's average daily net assets
of Class A shares and 1.00% of the average daily net assets of Class B and C
shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class A, Class B or Class C shares to selected dealers
and financial institutions who furnish continuing personal shareholder services
to their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. For the year ended October 31, 2001, the Class A, Class B and Class C
shares paid AIM Distributors $17,315,069, $12,957,576 and $2,097,259,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,462,679 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $163,986 in contingent deferred sales charges imposed
on redemptions of Fund shares.
FS-124
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $14,465
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $131,276 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $131,276.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $154,614,276 were
on loan to brokers. The loans were secured by cash collateral of $170,305,500
received by the Fund and subsequently invested in STIC Liquid Assets Portfolio,
an affiliated money market fund. For the year ended October 31, 2001, the Fund
received fees of $406,289 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$16,742,023,593 and $17,443,346,004, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 382,656,037 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (320,621,870) ========================================================= Net unrealized appreciation of investment securities $ 62,034,167 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $4,899,885,902. |
NOTE 8-FUTURES CONTRACTS
On October 31, 2001, $18,390,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of October 31, 2001 were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-------- --------- ------------ ------------ --------------
S&P 500 959 Dec-01/Long $254,302,825 $(6,153,088)
___________________________________________________________________
===================================================================
|
FS-125
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- ---------------
Sold:
Class A 30,268,361 $ 534,842,502 38,693,394 $ 1,218,409,892
------------------------------------------------------------------------------------------------------------------------------
Class B 13,914,532 238,827,916 26,508,143 797,286,477
------------------------------------------------------------------------------------------------------------------------------
Class C 4,329,075 74,411,514 8,102,015 244,073,425
------------------------------------------------------------------------------------------------------------------------------
Institutional Class 96,341 1,778,918 1,045,908 33,206,382
==============================================================================================================================
Issued as reinvestment of dividends:
Class A 50,737,569 1,049,729,056 29,963,538 854,837,292
------------------------------------------------------------------------------------------------------------------------------
Class B 12,575,383 245,330,006 5,414,678 148,085,997
------------------------------------------------------------------------------------------------------------------------------
Class C 2,001,892 39,096,945 480,423 13,149,166
------------------------------------------------------------------------------------------------------------------------------
Institutional Class 98,123 2,101,806 428,931 12,554,823
==============================================================================================================================
Reacquired:
Class A (82,325,956) (1,314,377,060) (36,659,424) (1,145,450,409)
------------------------------------------------------------------------------------------------------------------------------
Class B (20,537,177) (309,770,221) (7,393,719) (220,406,418)
------------------------------------------------------------------------------------------------------------------------------
Class C (4,874,492) (75,202,999) (1,209,352) (35,909,842)
------------------------------------------------------------------------------------------------------------------------------
Institutional Class (254,314) (4,584,434) (4,771,038) (146,601,260)
==============================================================================================================================
6,029,337 $ 482,183,949 60,603,497 $ 1,773,235,525
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2001 2000(a) 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 28.16 $ 28.31 $ 21.72 $ 22.72 $ 20.19
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.14) (0.10) 0.02 0.01
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.87) 3.18 8.16 2.38 4.82
================================================================================================================================
Total from investment operations (11.97) 3.04 8.06 2.40 4.83
================================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.01) -- (0.06)
--------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.54) (3.19) (1.46) (3.40) (2.24)
================================================================================================================================
Total distributions (3.54) (3.19) (1.47) (3.40) (2.30)
================================================================================================================================
Net asset value, end of period $ 12.65 $ 28.16 $ 28.31 $ 21.72 $ 22.72
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) (47.38)% 10.61% 38.62% 12.34% 26.83%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,001,552 $8,948,781 $8,089,739 $6,094,178 $5,810,582
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.21%(c) 1.03% 1.03% 1.04% 1.07%
--------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.22%(c) 1.07% 1.08% 1.09% 1.11%
================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.56)%(c) (0.45)% (0.38)% 0.07% 0.07%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $5,771,689,798.
FS-126
CLASS B
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2001 2000(a) 1999(a) 1998(a) 1997(a)
-------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 26.82 $ 27.29 $ 21.12 $ 22.34 $ 19.98
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.21) (0.36) (0.30) (0.15) (0.15)
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.21) 3.08 7.93 2.33 4.75
==========================================================================================================================
Total from investment operations (11.42) 2.72 7.63 2.18 4.60
==========================================================================================================================
Less distributions from net realized gains (3.54) (3.19) (1.46) (3.40) (2.24)
==========================================================================================================================
Net asset value, end of period $ 11.86 $ 26.82 $ 27.29 $ 21.12 $ 22.34
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) (47.75)% 9.76% 37.59% 11.45% 25.78%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $922,476 $1,927,514 $1,291,456 $705,750 $486,105
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(c) 1.78% 1.82% 1.83% 1.87%
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.93%(c) 1.82% 1.87% 1.87% 1.91%
==========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.27)%(c) (1.20)% (1.17)% (0.72)% (0.73)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $1,295,757,605.
CLASS C
-------------------------------------------------------------
AUGUST 4, 1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED)
------------------------------------------- TO OCTOBER 31,
2001 2000(a) 1999(a) 1998(a) 1997(a)
-------- -------- -------- ------- --------------
Net asset value, beginning of period $ 26.85 $ 27.30 $ 21.14 $ 22.34 $22.83
---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.21) (0.36) (0.30) (0.15) (0.04)
---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.23) 3.10 7.92 2.35 (0.45)
===========================================================================================================================
Total from investment operations (11.44) 2.74 7.62 2.20 (0.49)
===========================================================================================================================
Less distributions from net realized gains (3.54) (3.19) (1.46) (3.40) --
===========================================================================================================================
Net asset value, end of period $ 11.87 $ 26.85 $ 27.30 $ 21.14 $22.34
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) (47.77)% 9.83% 37.50% 11.54% (2.15)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $150,604 $301,590 $105,420 $23,107 $2,326
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.92%(c) 1.78% 1.82% 1.83% 1.84%(d)
---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.93%(c) 1.82% 1.87% 1.87% 1.88%(d)
===========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.27)%(c) (1.20)% (1.17)% (0.72)% (0.70)%(d)
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $209,725,887.
(d) Annualized.
FS-127
AIM AGGRESSIVE GROWTH FUND
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
AIM CHARTER FUND
AIM CONSTELLATION FUND
AIM WEINGARTEN FUND
AIM--Registered Trademark-- Institutional Classes
PROSPECTUS
MARCH 1, 2002
AIM Aggressive Growth Fund seeks to
provide long-term growth of capital.
AIM Blue Chip Fund seeks to provide
long-term growth of capital and,
secondarily, current income.
AIM Capital Development Fund seeks
to provide long-term growth of
capital.
AIM Charter Fund seeks to provide
growth of capital with a secondary
objective of current income.
AIM Constellation Fund seeks to
provide growth of capital.
AIM Weingarten Fund seeks to provide
growth of capital.
This prospectus contains important
information about the Institutional
Class shares of the funds. Please
read it before investing and keep it
for future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
INVESTMENT OBJECTIVES AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - AIM Aggressive Growth Fund 1 AIM Blue Chip Fund 1 AIM Capital Development Fund 1 AIM Charter Fund 1 AIM Constellation Fund 1 AIM Weingarten Fund 1 PRINCIPAL RISKS OF INVESTING IN THE FUNDS 2 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 6 FEE TABLE AND EXPENSE EXAMPLE 7 - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 7 Expense Example 8 FUND MANAGEMENT 9 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 9 Advisor Compensation 9 Portfolio Managers 9 OTHER INFORMATION 11 - - - - - - - - - - - - - - - - - - - - - - - - - Dividends and Distributions 11 Suitability for Investors 11 Future Fund Closure 11 FINANCIAL HIGHLIGHTS 12 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - Purchasing Shares A-1 Redeeming Shares A-2 Pricing of Shares A-2 Taxes A-3 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and AIM Lifetime America are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
AIM AGGRESSIVE GROWTH FUND (AGGRESSIVE GROWTH)
The fund's investment objective is to achieve long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing primarily in common stocks of companies whose earnings the fund's portfolio managers expect to grow more than 15% per year. The fund will invest in securities of small- and medium-sized growth companies. The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM BLUE CHIP FUND (BLUE CHIP)
The fund's primary investment objective is long-term growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing at least 65% of its total assets in the common stocks of blue chip companies. Blue chip companies are those companies that the portfolio managers believe have the potential for above-average growth in earnings and that are well-established in their respective industries. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. When the portfolio managers believe securities other than common stocks offer the opportunity for long-term growth of capital and current income, the fund may invest in United States government securities, convertible securities and high-quality debt securities.
AIM CAPITAL DEVELOPMENT FUND (CAPITAL DEVELOPMENT)
The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing primarily in securities, including common stocks, convertible securities and bonds, of small- and medium-sized companies. Among factors which the portfolio managers may consider when purchasing these securities are (1) the growth prospects for a company's products; (2) the economic outlook for its industry; (3) a company's new product development; (4) its operating management capabilities; (5) the relationship between the price of the security and its estimated fundamental value; (6) relevant market, economic and political environments; and (7) financial characteristics, such as balance sheet analysis and return on assets. The portfolio managers consider whether to sell a particular security when any one of these factors materially changes or when the securities are no longer considered medium-sized company securities.
AIM CHARTER FUND (CHARTER)
The fund's primary investment objective is growth of capital with a secondary objective of current income. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objectives by investing at least 65% of its total assets in securities of established companies that have long-term above-average growth in earnings and dividends, and growth companies that the portfolio managers believe have the potential for above-average growth in earnings and dividends. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. For risk management purposes, the fund may hold a portion of its assets in cash or the following liquid assets: money market instruments, shares of affiliated money market funds, or high-quality debt instruments. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash or liquid assets. A larger position in cash or liquid assets could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
AIM CONSTELLATION FUND (CONSTELLATION)
The fund's investment objective is growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing principally in common stocks of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when it no longer meets these criteria. The fund will invest without regard to market capitalization.
AIM WEINGARTEN FUND (WEINGARTEN)
The fund's investment objective is to provide growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund will invest primarily in common stocks of seasoned and better-capitalized companies. The portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
CAPITAL DEVELOPMENT, CHARTER, AND WEINGARTEN
Each fund may engage in active and frequent trading of portfolio securities to achieve its investment objectives. If a fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
ALL FUNDS
Each of Aggressive Growth, Blue Chip and Capital Development may invest up to 25% of its total assets in foreign securities. Each of Charter, Constellation and Weingarten may invest up to 20% of its total assets in foreign securities. Any percentage limitations with respect to assets of a fund are applied at the time of purchase.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each of the funds may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, a fund may not achieve its investment objective.
ALL FUNDS
There is a risk that you could lose all or a portion of your investment in the funds. The value of your investment in a fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
To the extent the fund holds cash or liquid assets rather than equity securities for risk management purposes, the fund may not achieve its investment objective.
An investment in the funds is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
BLUE CHIP AND CHARTER
The income you may receive from your investment in Blue Chip and Charter may vary.
AGGRESSIVE GROWTH, CAPITAL DEVELOPMENT AND CONSTELLATION
The fluctuation in the value of your investment is especially true with respect to equity securities of smaller companies, whose prices may go up and down more than equity securities of larger, more-established companies. Also, since equity securities of smaller companies may not be traded as often as equity securities of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
CHARTER
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
The bar charts and tables shown below provide an indication of the risks of investing in each of the funds. A fund's past performance (before and after taxes) is not necessarily an indication of its future performance. The returns shown for Aggressive Growth, Blue Chip and Capital Development are those of each fund's Class A shares, which are not offered in this prospectus. Institutional Class shares would have higher annual returns because, although the shares are invested in the same portfolio of securities, Institutional Class shares have lower expenses. As of the date of this prospectus, the Institutional Classes of Aggressive Growth, Blue Chip and Capital Development have not yet commenced operations.
The following bar charts show changes in the performance of Aggressive Growth's, Blue Chip's and Capital Development's Class A shares and Charter's, Constellation's and Weingarten's Institutional Class shares from year to year. The bar charts do not reflect sales loads for Class A shares. If they did, the annual total returns shown for Class A shares would be lower. Institutional Class shares are not subject to front-end or back-end sales loads.
AGGRESSIVE GROWTH--CLASS A
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1992.................................................................. 21.34%
1993.................................................................. 32.03%
1994.................................................................. 17.18%
1995.................................................................. 41.51%
1996.................................................................. 14.34%
1997.................................................................. 12.24%
1998.................................................................. 4.99%
1999.................................................................. 44.98%
2000.................................................................. 3.00%
2001.................................................................. -26.00%
|
BLUE CHIP--CLASS A
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1992.................................................................. 2.64%
1993.................................................................. 4.61%
1994.................................................................. 4.66%
1995.................................................................. 32.00%
1996.................................................................. 23.75%
1997.................................................................. 31.91%
1998.................................................................. 30.42%
1999.................................................................. 25.65%
2000.................................................................. -9.29%
2001.................................................................. -22.91%
|
CAPITAL DEVELOPMENT--CLASS A
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1997.................................................................. 23.69%
1998.................................................................. 4.53%
1999.................................................................. 27.78%
2000.................................................................. 9.82%
2001.................................................................. -8.65%
|
CHARTER--INSTITUTIONAL CLASS
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1992.................................................................. 1.48%
1993.................................................................. 9.81%
1994.................................................................. -3.84%
1995.................................................................. 36.13%
1996.................................................................. 20.29%
1997.................................................................. 25.18%
1998.................................................................. 27.40%
1999.................................................................. 34.37%
2000.................................................................. -14.37%
2001.................................................................. -22.67%
|
CONSTELLATION--INSTITUTIONAL CLASS
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1993.................................................................. 17.65%
1994.................................................................. 1.80%
1995.................................................................. 36.16%
1996.................................................................. 16.83%
1997.................................................................. 13.45%
1998.................................................................. 19.41%
1999.................................................................. 45.07%
2000.................................................................. -9.98%
2001.................................................................. -23.22%
|
WEINGARTEN--INSTITUTIONAL CLASS
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1992.................................................................. -1.07%
1993.................................................................. 1.91%
1994.................................................................. 0.13%
1995.................................................................. 35.43%
1996.................................................................. 18.24%
1997.................................................................. 26.48%
1998.................................................................. 33.58%
1999.................................................................. 35.23%
2000.................................................................. -19.98%
2001.................................................................. -33.70%
|
During the periods shown in the bar charts, the highest quarterly returns and the lowest quarterly returns were as follows:
HIGHEST QUARTERLY RETURN LOWEST QUARTERLY RETURN
FUND (QUARTER ENDED) (QUARTER ENDED)
-------------------------------------------------------------------------------------------
Aggressive Growth--Class A 31.35% (12/31/99) -24.66% (09/30/01)
Blue Chip--Class A 24.45% (12/31/98) -20.05% (03/31/01)
Capital Development--Class A 30.92% (12/31/99) -20.93% (09/30/98)
Charter--Institutional Class 26.29% (12/31/98) -21.63% (09/30/01)
Constellation--Institutional Class 36.71% (12/31/99) -23.20% (09/30/01)
Weingarten--Institutional Class 28.14% (12/31/98) -27.56% (03/31/01)
-------------------------------------------------------------------------------------------
|
PERFORMANCE TABLE
The following performance table compares each fund's performance to that of a broad-based securities market index. Aggressive Growth's, Blue Chip's and Capital Development's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------------------------------------------------------------------------------------------
(for the periods ended
SINCE INCEPTION
December 31, 2001) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
---------------------------------------------------------------------------------------------------------------------
Aggressive Growth--Class A
Return Before Taxes (30.05)% 4.24% 14.10% -- 05/01/84
Return After Taxes on
Distributions (30.05) 2.73 2.86 --
Return After Taxes on
Distributions and Sale of Fund
Shares (18.30) 3.71 2.21 --
Russell 2500--Trademark-- Index(1)
(reflects no deduction for fees,
expenses, or taxes) 1.22 10.34 13.13 -- 04/30/84(2)
Blue Chip--Class A
Return Before Taxes (27.16)% 7.39% 10.12% -- 02/04/87
Return After Taxes on
Distributions (27.16) 7.24 9.03 --
Return After Taxes on
Distributions and Sale of Fund
Shares (16.54) 6.02 8.03 --
Russell 1000--Registered
Trademark-- Index(3)
(reflects no deduction for fees,
expenses, or taxes) (12.45) 10.50% 12.84 -- 01/31/87(2)
Capital Development--Class A
Return Before Taxes (13.69)% 9.38% N/A 11.40% 06/17/96
Return After Taxes on
Distributions (13.69) 8.45 N/A 10.55
Return After Taxes on
Distributions and Sale of Fund
Shares (8.34) 7.45 N/A 9.23
Russell 2500--Trademark-- Index(1)
(reflects no deduction for fees,
expenses, or taxes) 1.22 10.34 13.13 10.89(2) 06/30/96(2)
Charter--Institutional Class
Return Before Taxes (22.67)% 7.25% 9.55% -- 07/30/91
Return After Taxes on
Distributions (22.67) 5.34 7.47 --
Return After Taxes on
Distributions and Sale of Fund
Shares (13.81) 5.37 7.14 --
S&P 500(4)
(reflects no deduction for fees,
expenses, or taxes) (11.88) 10.70 12.93 -- 07/31/91(2)
Constellation--Institutional Class
Return Before Taxes (23.22)% 6.32% N/A 12.52% 04/08/92
Return After Taxes on
Distributions (23.22) 4.66 N/A 11.30
Return After Taxes on
Distributions and Sale of Fund
Shares (14.14) 5.34 N/A 10.75
S&P 500(4)
(reflects no deduction for fees,
expenses, or taxes) (11.88) 10.70 12.93 13.58(2) 03/31/92(2)
|
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------------------------------------------------------------------------------------------
(for the periods ended
SINCE INCEPTION
December 31, 2001) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
---------------------------------------------------------------------------------------------------------------------
Weingarten--Institutional Class
Return Before Taxes (33.70)% 3.93% 6.96% -- 10/08/91
Return After Taxes on
Distributions (33.70) 1.65 4.44 --
Return After Taxes on
Distributions and Sale of Fund
Shares (20.52) 3.33 5.19 --
S&P 500(4)
(reflects no deduction for fees,
expenses, or taxes) (11.88) 10.70 12.93 -- 09/30/91(2)
---------------------------------------------------------------------------------------------------------------------
|
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
(1) The Russell 2500--Trademark-- Index measures the performance of the 2,500 smallest companies in the Russell 3000--Registered Trademark-- Index, which represents approximately 17% of the total market capitalization of the Russell 3000--Registered Trademark-- Index. The Russell 3000--Registered Trademark-- Index measures the performance of the 3000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
(3) The Russell 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks that measures the performance of the 1,000 largest companies in the Russell 3000--Registered Trademark--Index.
(4) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold Institutional Class shares of the funds.
SHAREHOLDER FEES ------------------------------------------------------------------------------------------------------------------------- (fees paid directly from your investment) AGGRESSIVE GROWTH BLUE CHIP CAPITAL DEVELOPMENT CHARTER CONSTELLATION WEINGARTEN ------------------------------------------------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None None None None None None ------------------------------------------------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES(1) ------------------------------------------------------------------------------------------------------------------------- (expenses that are deducted from fund assets) AGGRESSIVE GROWTH BLUE CHIP CAPITAL DEVELOPMENT CHARTER CONSTELLATION WEINGARTEN ------------------------------------------------------------------------------------------------------------------------- Management Fees 0.63% 0.63% 0.66% 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees None None None None None None Other Expenses(2) 0.30 0.31 0.33 0.05 0.05 0.07 Total Annual Fund Operating Expenses(3) 0.93 0.94 0.99 0.68 0.68 0.70 ------------------------------------------------------------------------------------------------------------------------- |
(1) There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Effective December 12, 2001, the funds adopted a revised Multiple Class Plan requiring each class to bear proportionately all Other Expenses incurred by the fund based on the relative net assets attributable to each such class. Other Expenses have been restated to reflect the adoption of this revised plan.
(3) The investment advisor has agreed to waive a portion of the management fee on assets in excess of $5 billion. Total Annual Fund Operating Expenses net of this agreement are 0.68%, 0.65% and 0.69% for Charter, Constellation and Weingarten, respectively. Termination of this agreement requires approval by the Board of Trustees.
You should also consider the effect of any account fees charged by the financial institution managing your account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the funds with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in a fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------
Aggressive Growth $ 95 $296 $515 $1,143
Blue Chip 96 300 520 1,155
Capital Development 101 315 547 1,213
Charter 70 221 384 859
Constellation 69 218 379 847
Weingarten 72 224 390 871
----------------------------------------------------------
|
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as each fund's investment advisor. A I M Capital Management, Inc. (the subadvisor), a wholly owned subsidiary of the advisor, is each of Charter's, Constellation's and Weingarten's subadvisor and is responsible for its day-to-day management. Both the advisor and the subadvisor are located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisors supervise all aspects of the funds' operations and provide investment advisory services to the funds, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the funds.
The advisor has acted as an investment advisor since its organization in 1976, and the subadvisor has acted as an investment advisor since 1986. Today, the advisor, together with its subsidiaries, advises or manages over 150 investment portfolios, including the funds, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2001, the advisor received compensation from the funds at the following rates:
ANNUAL RATE
(AS A PERCENTAGE
OF AVERAGE DAILY
FUND NET ASSETS)
---- ----------------
Aggressive Growth 0.63%
Blue Chip 0.63%
Capital Development 0.66%
Charter 0.62%
Constellation 0.60%
Weingarten 0.62%
|
PORTFOLIO MANAGERS
The advisors use a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of each fund's portfolio are
AGGRESSIVE GROWTH
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998 he was an associate equity analyst for Prudential Securities.
BLUE CHIP
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1986.
CAPITAL DEVELOPMENT
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1996.
- Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
CHARTER
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
CONSTELLATION
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1990 and has been associated with the advisor and/or its affiliates since 1982.
- Ryan E. Crane, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst for Prudential Securities.
- Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1990.
WEINGARTEN
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1995.
- Lanny Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
DIVIDENDS AND DISTRIBUTIONS
Each of the funds expects that its distributions, if any, will consist primarily of capital gains.
DIVIDENDS
The funds generally declare and pay dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The funds generally distribute long-term and short-term capital gains, if any, annually.
SUITABILITY FOR INVESTORS
The Institutional Classes of the funds are intended for use by institutional investors. Shares of the Institutional Classes of the funds are available for banks and trust companies acting in a fiduciary or similar capacity, bank and trust company common and collective trust funds, banks and trust companies investing for their own account, entities acting for the account of a public entity (e.g. Taft-Hartley funds, states, cities or government agencies), defined benefit plans, endowments, foundations, defined contribution plans offered pursuant to Sections 401, 457, 403(a), or 403(b) or (c) (defined contribution plans offered pursuant to Section 403(b) must be sponsored by a Section 501(c)(3) organization), and platform sponsors with which A I M Distributors, Inc. has entered into a defined contribution plans agreement. For defined contribution plans for which the sponsor has combined defined contribution and defined benefit assets of at least $100 million there is no minimum initial investment requirement, otherwise the minimum initial investment requirement for defined contribution plans is $10 million. There is no minimum initial investment requirement for defined benefit plans or platform sponsors; and the minimum initial investment requirement for all other investors for which the Institutional Classes of funds are available is $1 million.
The Institutional Classes of funds are designed to be convenient and economical vehicles in which institutions can invest in a portfolio of equity securities. An investment in the funds may relieve the institution of many of the investment and administrative burdens encountered when investing in equity securities directly. These include: selection and diversification of portfolio investments; surveying the market for the best price at which to buy and sell; valuation of portfolio securities; receipt, delivery and safekeeping of securities; and portfolio recordkeeping.
FUTURE FUND CLOSURE (AGGRESSIVE GROWTH)
Due to the sometimes limited availability of common stocks of smaller companies that meet the investment criteria for the fund, the fund may periodically suspend or limit the offering of its shares.
During closed periods, the fund may impose different standards for additional investments.
As of the date of this prospectus Aggressive Growth's, Blue Chip's and Capital Development's Institutional Class had not yet commenced operations and therefore, financial information for the Institutional Class is not available.
The financial highlights tables are intended to help you understand each fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in each fund (assuming reinvestment of all dividends and distributions).
The information for the fiscal year 2001 has been audited by Ernst & Young LLP, whose report, along with each fund's financial statements, is included in the fund's annual report, which is available upon request. Information prior to fiscal year 2001 was audited by KPMG LLP.
AGGRESSIVE GROWTH -- CLASS A(a)
-----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------
2001(b) 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.41 $ 13.90 $ 10.04 $ 12.49 $ 11.23
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.13) (0.09) (0.08) (0.06)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (6.34) 11.08 4.05 (1.93) 1.90
=================================================================================================================================
Total from investment operations (6.43) 10.95 3.96 (2.01) 1.84
=================================================================================================================================
Less distributions from net realized gains (3.30) (6.44) (0.10) (0.44) (0.58)
=================================================================================================================================
Net asset value, end of period $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (40.51)% 47.53% 39.73% (16.36)% 17.35%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,516,407 $4,444,515 $2,808,451 $2,638,038 $3,864,257
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.17%(d) 1.04% 1.09% 1.06% 1.06%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.79)%(d) (0.77)% (0.69)% (0.64)% (0.65)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 89% 79% 75% 69% 73%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information and distributions prior to April 30, 2001 have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $3,304,942,591.
BLUE CHIP -- CLASS A(a)
---------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------
2001(a) 2000(b) 1999 1998(b) 1997(b)
---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 17.29 $ 15.49 $ 12.05 $ 10.32 $ 8.69
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.05) 0.01 0.04 0.06
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (6.03) 1.85 3.47 1.92 2.31
=================================================================================================================================
Total from investment operations (6.07) 1.80 3.48 1.96 2.37
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.01) (0.02) (0.02)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.03) (0.21) (0.72)
=================================================================================================================================
Total distributions -- -- (0.04) (0.23) (0.74)
=================================================================================================================================
Net asset value, end of period $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (35.11)% 11.60% 29.01% 19.36% 29.68%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,066,730 $3,163,453 $2,299,551 $1,085,648 $498,178
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.31%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.32%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.29)%(d) (0.31)% 0.03% 0.33% 0.50%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 has been restated to reflect a 3 for 1 stock split, effected in the form of a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $2,647,004,665.
CAPITAL DEVELOPMENT -- CLASS A
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
2001 2000 1999(a) 1998(a) 1997(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 21.79 $ 15.24 $ 12.89 $ 14.57 $ 11.09
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.13) (0.10) (0.06) (0.10)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.27) 6.68 2.45 (1.62) 3.58
============================================================================================================================
Total from investment operations (4.31) 6.55 2.35 (1.68) 3.48
============================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
============================================================================================================================
Net asset value, end of period $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (21.76)% 42.98% 18.23% (11.53)% 31.38%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $576,660 $759,838 $579,514 $717,263 $577,685
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.33%(c) 1.28% 1.38% 1.28% 1.33%(d)
============================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.21)%(c) (0.60)% (0.70)% (0.40)% (0.83)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $677,679,853.
(d) Excludes fee waiver. Ratio of expenses to average net assets including fee waiver was 1.38%.
CHARTER -- INSTITUTIONAL CLASS
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2001 2000 1999 1998 1997
------- ------ ------- ------- -------
Net asset value, beginning of period $ 18.33 $17.33 $ 13.42 $ 13.48 $ 11.24
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04 0.52 0.09 0.18 0.16
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.82) 1.83 4.43 1.24 2.91
==========================================================================================================================
Total from investment operations (6.78) 2.35 4.52 1.42 3.07
==========================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.07) (0.14) (0.16)
--------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.67)
==========================================================================================================================
Total distributions (0.88) (1.35) (0.61) (1.48) (0.83)
==========================================================================================================================
Net asset value, end of period $ 10.67 $18.33 $ 17.33 $ 13.42 $ 13.48
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return (38.46)% 14.02% 34.61% 11.69% 29.05%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,648 $3,234 $66,801 $43,815 $40,191
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.68%(a) 0.66% 0.65% 0.66% 0.67%
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.69%(a) 0.68% 0.67% 0.67% 0.68%
==========================================================================================================================
Ratio of net investment income (loss) to average net assets 0.25(a) 0.20% 0.51% 1.37% 1.21%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a) Ratios are based on average net assets of $2,371,432.
CONSTELLATION -- INSTITUTIONAL CLASS
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 45.55 $ 36.01 $ 27.25 $ 30.00 $ 26.01
-----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01 (0.09) (0.01) -- 0.02
-----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (17.14) 12.91 9.50 (0.65) 4.86
=============================================================================================================================
Total from investment operations (17.13) 12.82 9.49 (0.65) 4.88
=============================================================================================================================
Less distributions from net realized gains (7.42) (3.28) (0.73) (2.10) (0.89)
=============================================================================================================================
Net asset value, end of period $ 21.00 $ 45.55 $ 36.01 $ 27.25 $ 30.00
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Total return (42.80)% 37.14% 35.46% (1.85)% 19.42%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $150,609 $288,097 $244,369 $189,039 $188,109
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.65%(a) 0.65% 0.64% 0.63% 0.65%
-----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.68%(a) 0.68% 0.66% 0.65% 0.67%
=============================================================================================================================
Ratio of net investment income (loss) to average net assets 0.03%(a) (0.18)% (0.04)% (0.01)% 0.06%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate 75% 88% 62% 76% 67%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
(a) Ratios are based on average daily net assets of $200,446,415.
WEINGARTEN -- INSTITUTIONAL CLASS
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2001 2000(a) 1999 1998 1997
------- ------- -------- ------- ------- ----
Net asset value, beginning of period $ 29.00 $28.96 $ 22.18 $ 23.05 $ 20.46
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.06) 0.02 0.10 0.08
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (12.29) 3.29 8.32 2.43 4.90
==========================================================================================================================
Total from investment operations (12.30) 3.23 8.34 2.53 4.98
==========================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.10) -- (0.15)
--------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.54) (3.19) (1.46) (3.40) (2.24)
==========================================================================================================================
Total distributions (3.54) (3.19) (1.56) (3.40) (2.39)
==========================================================================================================================
Net asset value, end of period $ 13.16 $29.00 $ 28.96 $ 22.18 $ 23.05
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return (47.11)% 11.07% 39.20% 12.79% 27.37%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7,667 $18,634 $114,076 $72,884 $62,124
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.69%(b) 0.64% 0.63% 0.62% 0.64%
--------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.70%(b) 0.68% 0.68% 0.67% 0.68%
==========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.04)%(b) (0.04)% 0.02% 0.49% 0.50%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Ratios are based on average daily net assets of $11,188,888.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the Institutional Classes of the AIM Funds.
SHARES SOLD WITHOUT SALES CHARGES
You will not pay an initial or contingent deferred sales charge on purchases of any Institutional Class of shares.
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund Institutional Class accounts are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
---------------------------------------------------------------------------------------
Defined Benefit Plans or Platform Sponsors for Defined
Contribution Plans $ 0 no minimum
Banks acting in a fiduciary or similar capacity, Collective
and Common Trust Funds, Banks and Broker-Dealers
acting for their own account or Foundations and
Endowments 1 million no minimum
Defined Contribution Plans (Corporate, Non-profit or
Governmental) 10 million no minimum
---------------------------------------------------------------------------------------
|
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below. Purchase orders will not be processed unless the account application and purchase payment are received in good order.
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
The financial consultant should
mail your completed account
application to the transfer agent,
A I M Fund Services, Inc.,
P.O. Box 4497,
Houston, TX 77210-4497.
The financial consultant should
call the transfer agent at (800)
659-1005 to receive a reference
number. Then, use the following
wire instructions: Beneficiary Bank
ABA/Routing #: 113000609
Beneficiary Account Number:
00100366732 Beneficiary Account
Name: A I M Fund Services, Inc.
RFB: Fund Name, Reference # OBI:
Your Name, Account #
By Telephone Open your account as described Call the transfer agent at (800)
above. 659-1005 and wire payment for your
purchase order in accordance with
the wire instructions noted above.
By AIM Internet Connect(SM) Open your account as described [Select the AIM Internet Connect
above. option on your completed account
application or] complete an AIM
Internet Connect Authorization
Form. Mail the application [or]
form to the transfer agent. Once
your request for this option has
been processed (which may take up
to 10 days), you may place your
purchase order at www.aimfunds.com.
[You may not purchase shares in AIM
prototype retirement accounts on
the internet.]
----------------------------------------------------------------------------------------------------------
|
A- 1 ICF--3/02
SPECIAL PLANS
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in the same AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund.
[RETIREMENT PLANS
Institutional Class shares can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.]
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions.
HOW TO REDEEM SHARES
Through a Financial Consultant Contact your financial consultant.
Redemption proceeds will be sent in accordance with the wire
instructions specified in the account application provided
to the transfer agent. The transfer agent must receive your
financial intermediary's call before the close of the
customary trading session of the New York Stock Exchange
(NYSE) on days the NYSE is open for business in order to
effect the redemption at the day's closing price.
By Telephone A person who has been authorized in the account application
to effect transactions may make redemptions by telephone.
You must call the transfer agent before the close of the
customary trading session of the NYSE on days the NYSE is
open for business in order to effect the redemption at that
day's closing price.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. The
transfer agent must receive your redemption request before
the close of the customary trading session of the NYSE on
days the NYSE is open for business in order to effect the
redemption at that day's closing price.
|
TIMING AND METHOD OF PAYMENT
We normally will send out redemption proceeds within one business day, and in any event no more than seven days, after we accept your request to redeem. [If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.]
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will transmit the amount of the redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
REDEMPTIONS BY THE AIM FUNDS
If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you.
ICF--3/02 A- 2
- REJECT OR CANCEL ALL OR ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; OR
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Fund's short-term investments are valued at amortized cost when the security has 60 days or less to maturity.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good order. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
A- 3 ICF--3/02
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the funds and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about each fund's investments. Each fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about these funds, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of a fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4497
Houston, TX 77001-4497
BY TELEPHONE: (800) 451-4246
ON THE INTERNET: You can send us a request
by e-mail or download
prospectuses, annual or
semiannual reports via
our website:
http://www.aimfunds.com
|
You also can review and obtain copies of a fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com EQ-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
STATEMENT OF
ADDITIONAL INFORMATION
AIM EQUITY FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE INSTITUTIONAL CLASSES OF THE PORTFOLIOS OF AIM EQUITY FUNDS LISTED BELOW. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE FUNDS LISTED BELOW. YOU MAY OBTAIN A COPY OF THE PROSPECTUS FOR THE FUNDS LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
A I M FUND SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MARCH 1, 2002, RELATES TO THE
FOLLOWING PROSPECTUS DATED MARCH 1, 2002 FOR THE PORTFOLIOS NAMED BELOW:
AIM AGGRESSIVE GROWTH FUND
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
AIM CHARTER FUND
AIM CONSTELLATION FUND
AIM WEINGARTEN FUND
AIM EQUITY FUNDS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION ABOUT THE TRUST ........................................... 1
Fund History ......................................................... 1
Shares of Beneficial Interest ........................................ 1
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS ...................... 2
Classification ....................................................... 2
Investment Strategies and Risks ...................................... 2
Equity Investments .......................................... 7
Foreign Investments ......................................... 7
Debt Investments ............................................ 9
Other Investments ........................................... 9
Investment Techniques ....................................... 10
Derivatives ................................................. 14
Additional Securities or Investment Techniques .............. 20
Fund Policies ........................................................ 20
Temporary Defensive Positions ........................................ 22
Portfolio Turnover ................................................... 22
MANAGEMENT OF THE TRUST ....................................................... 22
Board of Trustees .................................................... 22
Management Information ............................................... 23
Ownership of Fund Shares ............................................. 24
Factors Considered in Approving the Investment Advisory Agreement .... 24
Compensation ......................................................... 24
Retirement Plan For Trustees ................................ 25
Deferred Compensation Agreements ............................ 25
Purchases of Class A Shares of the Funds at Net Asset Value .......... 25
Codes of Ethics ...................................................... 26
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ........................... 26
INVESTMENT ADVISORY AND OTHER SERVICES ........................................ 26
Investment Advisor ................................................... 26
Investment Sub-Advisor ............................................... 27
Service Agreements ................................................... 28
Other Service Providers .............................................. 28
BROKERAGE ALLOCATION AND OTHER PRACTICES ...................................... 29
Brokerage Transactions ............................................... 29
Commissions .......................................................... 30
Brokerage Selection .................................................. 30
Directed Brokerage (Research Services) ............................... 31
Regular Brokers or Dealers ........................................... 31
Allocation of Portfolio Transactions ................................. 31
Allocation of Equity Offering Transactions ........................... 31
PURCHASE, REDEMPTION AND PRICING OF SHARES .................................... 32
Purchase and Redemption of Shares .................................... 32
Redemptions by the Funds ............................................. 33
Offering Price ....................................................... 33
Redemption In Kind ................................................... 34
Backup Withholding ................................................... 34
|
PAGE
----
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS ...................................... 35
Dividends and Distributions .......................................... 35
Tax Matters .......................................................... 35
DISTRIBUTION OF SECURITIES .................................................... 42
Distributor .......................................................... 42
CALCULATION OF PERFORMANCE DATA ............................................... 43
APPENDICES:
RATINGS OF DEBT SECURITIES .................................................... A-1
TRUSTEES AND OFFICERS ......................................................... B-1
TRUSTEE COMPENSATION TABLE .................................................... C-1
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ........................... D-1
MANAGEMENT FEES ............................................................... E-1
ADMINISTRATIVE SERVICES FEES .................................................. F-1
BROKERAGE COMMISSIONS ......................................................... G-1
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES AND
REGULAR BROKERS OR DEALERS .................................................... H-1
PERFORMANCE DATA .............................................................. I-1
FINANCIAL STATEMENTS........................................................... FS
|
GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Equity Funds (the "Trust") is a Delaware business trust which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company. The Trust currently consists of thirteen separate portfolios: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Core Strategies Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Core Equity Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund, (each a "Fund" and collectively, the "Funds"). Under an Agreement and Declaration of Trust, dated December 6, 1999, as amended (the "Trust Agreement"), the Board of Trustees is authorized to create new series of shares without the necessity of a vote of shareholders of the Trust.
The Trust was originally organized on May 19, 1988 as a Maryland corporation. The Trust reorganized as a Delaware business trust on June 21, 2000. The following Funds were included in the reorganization: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund and AIM Weingarten Fund. All historical and other information contained in this Statement of Additional Information for periods prior to June 21, 2000 relating to the Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). AIM Core Strategies Fund and AIM Large Cap Core Equity Fund commenced operations as series of the Trust.
SHARES OF BENEFICIAL INTEREST
Shares of beneficial interest of the Trust are redeemable at their net asset value (subject, in certain circumstances, to a contingent deferred sales charge) at the option of the shareholder or at the option of the Trust in certain circumstances.
The Trust allocates moneys and other property it receives from the issue or sale of shares of each of its series of shares, and all income, earnings and profits from such issuance and sales, subject only to the rights of creditors, to the appropriate Fund. These assets constitute the underlying assets of each Fund, are segregated on the Trust's books of account, and are charged with the expenses of such Fund and its respective classes. The Trust allocates any general expenses of the Trust not readily identifiable as belonging to a particular Fund by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors.
Each share of each Fund represents an equal proportionate interest in that Fund with each other share and is entitled to such dividends and distributions out of the income belonging to such Fund as are declared by the Board. Each Fund offers three separate classes of shares: Class A shares, Class B shares and Class C shares. Each of AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund also offers a fourth class of shares, Institutional Class shares. This Statement of Additional Information relates solely to the Institutional Classes of these six Funds. Each class of shares represents interests in the same portfolio of investments. Differing sales charges and expenses will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for distribution after satisfaction of outstanding liabilities of the Fund allocable to such class.
Each share of a Fund has the same voting, dividend, liquidation and other rights; however, each class of shares of a Fund is subject to different sales loads, conversion features, exchange privileges and class-specific expenses. Only shareholders of a specific class may vote on matters relating to that class' distribution plan.
Except as specifically noted above, shareholders of each Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the shares of a Fund. However, on matters affecting an individual Fund or class of shares, a separate vote of shareholders of that Fund or class is required. Shareholders of a Fund or class are not entitled to vote on any matter which does not affect that Fund or class but that requires a separate vote of another Fund or class. An example of a matter that would be voted on separately by shareholders of each Fund is the approval of the advisory agreement with A I M Advisors, Inc. ("AIM"), and an example of a matter that would be voted on separately by shareholders of each class of shares is approval of the distribution plans. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are freely transferable. Other than the automatic conversion of Class B shares to Class A shares, there are no conversion rights. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees.
Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations. There is a remote possibility, however, that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which a Fund is unable to meet its obligations and the complaining party is not held to be bound by the disclaimer.
The trustees and officers of the Trust will not be liable for any act, omission or obligation of the Trust or any trustee or officer; however, a trustee or officer is not protected against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office with the Trust ("Disabling Conduct"). The Trust Agreement provides for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, provided that such persons have not engaged in Disabling Conduct. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates, although the Trust in its sole discretion may issue them. A I M Fund Services, Inc. ("AFS") will not issue certificates for shares held in prototype retirement plans sponsored by AMVESCAP National Trust Company, an affiliate of AIM.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. Each of the Funds other than AIM Emerging Growth Fund is "diversified" for purposes of the 1940 Act.
INVESTMENT STRATEGIES AND RISKS
The table on the following pages identifies various securities and investment techniques used by AIM in managing The AIM Family of Funds--Registered Trademark--. The table has been marked to indicate those securities and investment techniques that AIM may use to manage a Fund. A Fund may not use all of these techniques
at any one time. A Fund's transactions in a particular security or use of a particular technique is subject to limitations imposed by a Fund's investment objective, policies and restrictions described in that Fund's Prospectus and/or this Statement of Additional Information, as well as federal securities laws. The Funds' investment objectives, policies, strategies and practices are non-fundamental. A more detailed description of the securities and investment techniques, as well as the risks associated with those securities and investment techniques that the Funds utilize, follows the table. The descriptions of the securities and investment techniques in this section supplement the discussion of principal investment strategies contained in each Fund's Prospectus; where a particular type of security or investment technique is not discussed in a Fund's Prospectus, that security or investment technique is not a principal investment strategy.
AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------
FUND
-----------------------
SECURITY/INVESTMENT AIM AGGRESSIVE AIM BLUE AIM CAPITAL AIM CHARTER AIM CONSTELLATION AIM WEINGARTEN
TECHNIQUE GROWTH FUND CHIP FUND DEVELOPMENT FUND FUND FUND FUND
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
EQUITY INVESTMENT
--------------------------------------------------------------------------------------------------------------------
Common Stock X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Preferred Stock X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Convertible Securities X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Alternative Entity
Securities X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
FOREIGN INVESTMENTS
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Foreign Securities X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Foreign Government
Obligations
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Foreign Exchange
Transactions X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
DEBT INVESTMENTS FOR EQUITY FUNDS
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
U.S. Government
Obligations X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Liquid Assets X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Investment Grade
Corporate Debt
Obligations X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Junk Bonds
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
OTHER INVESTMENTS
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
REITs X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Other Investment
Companies X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Defaulted Securities
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Municipal Forward
Contracts
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Variable or Floating
Rate Instruments
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
|
AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------
FUND
-----------------------
SECURITY/INVESTMENT AIM AGGRESSIVE AIM BLUE AIM CAPITAL AIM CHARTER AIM CONSTELLATION AIM WEINGARTEN
TECHNIQUE GROWTH FUND CHIP FUND DEVELOPMENT FUND FUND FUND FUND
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Indexed Securities
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Zero-Coupon and
Pay-in-Kind Securities
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Synthetic Municipal
Instruments
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
INVESTMENT TECHNIQUES
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Delayed Delivery
Transactions X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
When-Issued Securities X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Short Sales X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Margin Transactions
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Swap Agreements X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Interfund Loans X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Borrowing X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Lending Portfolio
Securities X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Repurchase Agreements X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Reverse Repurchase
Agreements X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Dollar Rolls
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Illiquid Securities X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Rule 144A Securities X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Unseasoned Issuers X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Sale of Money Market
Securities
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Standby
Commitments
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
|
AIM EQUITY FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------------------------------------------
FUND
-----------------------
SECURITY/INVESTMENT AIM AGGRESSIVE AIM BLUE AIM CAPITAL AIM CHARTER AIM CONSTELLATION AIM WEINGARTEN
TECHNIQUE GROWTH FUND CHIP FUND DEVELOPMENT FUND FUND FUND FUND
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
DERIVATIVES
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Equity-Linked
Derivatives X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Put Options X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Call Options X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Straddles X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Warrants X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Futures Contracts and
Options on Futures
Contracts X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Forward Currency
Contracts X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Cover X X X X X X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
Special Situations X
----------------------- -------------- --------- ---------------- ----------- ----------------- --------------
|
Equity Investments
COMMON STOCK. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. A Fund participates in the success or failure of any company in which it holds stock. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
PREFERRED STOCK. Preferred stock, unlike common stock, often offers a stated dividend rate payable from a corporation's earnings. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, a negative feature when interest rates decline. Dividends on some preferred stock may be "cumulative," requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer's common stock. Preferred stock also generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation, and may be "participating," which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means that the interest to be paid is set by auction and will often be reset at stated intervals. The rights of preferred stocks on the distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.
CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures, notes, preferred stocks and other securities that may be converted into a prescribed amount of common stock or other equity securities at a specified price and time. The holder of convertible securities is entitled to receive interest paid or accrued on debt, or dividends paid or accrued on preferred stock, until the security matures or is converted.
The value of a convertible security depends on interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuer's capital structure. Convertible securities may be illiquid, and may be required to convert at a time and at a price that is unfavorable to the Fund. AIM Blue Chip Fund does not intend to invest more than 10% of its total assets in convertible securities.
ALTERNATIVE ENTITY SECURITIES. Companies that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate entities may issue equity securities that are similar to common or preferred stock of corporations.
Foreign Investments
FOREIGN SECURITIES. Foreign securities are equity or debt securities issued by issuers outside the United States, and include securities in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers.
Each Fund may invest up to 25% of its total assets in foreign securities, except that each of AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund may invest up to 20% of its total assets in foreign securities.
Investments by a Fund in foreign securities, whether denominated in U.S. dollars or foreign currencies, may entail all of the risks set forth below. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of the risks described below.
Currency Risk. The value of the Funds' foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in which the Funds may invest may not be as developed as the United States' economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Funds' investments.
Regulatory Risk. Foreign companies are not registered with the Securities and Exchange Commission ("SEC") and are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, corporate governance practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the Funds invest will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (such as the need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States.
On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. It is anticipated that each participating country (currently, Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain) will replace its local currency with the euro by July 1, 2002. The anticipated replacement of existing currencies with the euro on or before July 1, 2002 could cause market disruptions and could adversely affect the value of securities held by a Fund.
FOREIGN EXCHANGE TRANSACTIONS. Foreign exchange transactions include direct purchases of futures contracts with respect to foreign currency, and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange traded futures contracts.
Each Fund has authority to deal in foreign exchange between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rates between those currencies. A Fund may commit the same percentage of its total assets to foreign exchange hedges as it can invest in foreign securities.
The Funds may utilize either specific transactions ("transaction hedging") or portfolio positions ("position hedging") to hedge foreign currency exposure through foreign exchange transactions. Transaction hedging is the purchase or sale of foreign currency with respect to specific receivables or payables of a Fund accruing in connection with the purchase or sale of its portfolio securities, the sale and redemption of shares of the Fund, or the payment of dividends and distributions by the Fund. Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions (or underlying portfolio security positions, such as in an ADR) denominated or quoted in a foreign currency. Additionally, foreign exchange transactions may involve some of the risks of investments in foreign securities.
Debt Investments
U.S. GOVERNMENT OBLIGATIONS. Obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities include bills, notes and bonds issued by the U.S. Treasury, as well as "stripped" or "zero coupon" U.S. Treasury obligations representing future interest or principal payments on U.S. Treasury notes or bonds. Stripped securities are sold at a discount to their "face value," and may exhibit greater price volatility than interest-bearing securities since investors receive no payment until maturity. Obligations of certain agencies and instrumentalities of the U.S. Government, such as the Government National Mortgage Association ("GNMA"), are supported by the full faith and credit of the U.S. Treasury; others, such as those of the Federal National Mortgage Association ("FNMA"), are supported by the right of the issuer to borrow from the Treasury; others, such as those of the Student Loan Marketing Association ("SLMA"), are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations; still others, though issued by an instrumentality chartered by the U.S. Government, like the Federal Farm Credit Bureau ("FFCB"), are supported only by the credit of the instrumentality. The U.S. Government may choose not to provide financial support to U.S. Government-sponsored agencies or instrumentalities if it is not legally obligated to do so.
LIQUID ASSETS. In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the Funds may temporarily hold all or a portion of its assets in cash or the following liquid assets: money market instruments (such as certificates of deposit, time deposits, bankers' acceptances from U.S. or foreign banks, and repurchase agreements), shares of affiliated money market funds or high-quality debt obligations (such as U.S. Government obligations, commercial paper, master notes and other short-term corporate instruments, participation interests in corporate loans, and municipal obligations). For cash management purposes, the Funds may also hold a portion of its assets in cash or such liquid assets.
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. Each Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations or U.S. commercial banks, U.S. dollar-denominated obligations of foreign issuers and debt obligations of foreign issuers denominated in foreign currencies. Such debt obligations include, among others, bonds, notes, debentures and variable rate demand notes. In choosing corporate debt securities on behalf of a Fund, its investment adviser may consider (i) general economic and financial conditions; (ii) the specific issuer's (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions, (e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic or social conditions applicable to such issuer's country; and, (iii) other considerations deemed appropriate. AIM Blue Chip Fund will not invest in non-convertible corporate debt securities rated below investment grade by Standard and Poor's Ratings Services ("S&P") and Moody's Investors Service ("Moody's") or in unrated non-convertible corporate debt securities believed by the Funds' investment advisor to be below investment grade quality.
Descriptions of debt securities ratings are found in Appendix A.
Other Investments
REAL ESTATE INVESTMENT TRUSTS ("REITS"). REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States, or both.
To the extent consistent with their respective investment objectives and policies, each Fund may invest up to 15% of its total assets in equity and/or debt securities issued by REITs.
To the extent that a Fund has the ability to invest in REITs, the Fund could conceivably own real estate directly as a result of a default on the securities it owns. A Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions,
adverse changes in the climate for real estate, environmental liability risks, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain an exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs.
OTHER INVESTMENT COMPANIES. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds (defined below), the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Funds have obtained an exemptive order from the SEC allowing them to invest in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds: (i) a Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Fund may not invest more than 10% of its total assets in securities issued by other investment companies.
Investment Techniques
DELAYED DELIVERY TRANSACTIONS. Delayed delivery transactions or forward commitments, involve commitments by a Fund to dealers or issuers to acquire or sell securities at a specified future date beyond the customary settlement for such securities. These commitments may fix the payment price and interest basis rate to be received or paid on the investment. A Fund may purchase securities on a delayed delivery basis to the extent it can anticipate having available cash on settlement date.
Investment in securities on a delayed delivery basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a delayed delivery commitment. Until the settlement date, a Fund will segregate liquid assets of a dollar value sufficient at all times to make payment for the delayed delivery transactions. Such segregated liquid assets will be marked-to-market daily, and the amount segregated will be increased if necessary to maintain adequate coverage of the delayed delivery commitments. No additional delayed delivery agreements or when-issued commitments (as described below) will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of a Fund until settlement. Absent extraordinary circumstances, a Fund will not sell or otherwise transfer the delayed delivery basis securities prior to settlement.
WHEN-ISSUED SECURITIES. Purchasing securities on a "when-issued" basis means that the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued. The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. A Fund will only make
commitments to purchase such securities with the intention of actually acquiring such securities, but the Fund may sell these securities before the settlement date if it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in a Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if a Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Fund's assets will fluctuate to a greater degree. Furthermore, when the time comes for the Fund to meet its obligations under when-issued commitments, the Fund will do so by using then available cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the Fund's payment obligation).
Investment in securities on a when-issued basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must sell another security in order to honor a when-issued commitment. If a Fund purchases a when-issued security, the Fund's custodian bank will segregate liquid assets in an amount equal to the when-issued commitment. If the market value of such segregated assets declines, additional liquid assets will be segregated on a daily basis so that the market value of the segregated assets will equal the amount of the Fund's when-issued commitments. No additional delayed delivery agreements (as described above) or when-issued commitments will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
SHORT SALES. In a short sale, a Fund does not immediately deliver the securities sold and does not receive the proceeds from the sale. A Fund is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. A Fund will make a short sale, as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Fund or a security convertible into or exchangeable for such security, or when the Fund does not want to sell the security it owns, because it wishes to defer recognition of gain or loss for federal income tax purposes. In such case, any future losses in a Fund's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount a Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the conversion premium. In determining the number of shares to be sold short against a Fund's position in a convertible security, the anticipated fluctuation in the conversion premium is considered. A Fund may also make short sales to generate additional income from the investment of the cash proceeds of short sales.
A Fund will only make short sales "against the box," meaning that at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. To secure its obligation to deliver the securities sold short, a Fund will segregate with its custodian an equal amount of the securities sold short or securities convertible into or exchangeable for such securities. A Fund may pledge no more than 10% of its total assets as collateral for short sales at any time.
MARGIN TRANSACTIONS. None of the Funds will purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin.
SWAP AGREEMENTS. Each Fund may enter into interest rate, index and currency exchange rate swap agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if it had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few
weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly used swap agreements include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or "floor"; and (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictitious basis on which to calculate the obligations that the parties to a swap agreement have agreed to exchange. Most swap agreements entered into by a Fund would calculate the obligations on a "net basis." Consequently, a Fund's obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). Obligations under a swap agreement will be accrued daily (offset against amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating liquid assets to avoid any potential leveraging of the Fund. A Fund will not enter into a swap agreement with any single party if the net amount owed to or to be received under existing contracts with that party would exceed 5% of the Fund's total assets. For a discussion of the tax considerations relating to swap agreements, see "Dividends, Distributions and Tax Matters - Swap Agreements."
INTERFUND LOANS. Each Fund may lend uninvested cash up to 15% of its net assets to other AIM Funds and each Fund may borrow from other AIM Funds to the extent permitted under such Fund's investment restrictions. During temporary or emergency periods, the percentage of a Fund's net assets that may be loaned to other AIM Funds may be increased as permitted by the SEC. If any interfund loans are outstanding, a Fund cannot make any additional investments. If a Fund has borrowed from other AIM Funds and has aggregate borrowings from all sources that exceed 10% of such Fund's total assets, such Fund will secure all of its loans from other AIM Funds. The ability of a Fund to lend its securities to other AIM Funds is subject to certain other terms and conditions.
BORROWING. Each Fund may borrow money to a limited extent for temporary or emergency purposes. If there are unusually heavy redemptions because of changes in interest rates or for any other reason, a Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling fund securities under these circumstances may result in a lower net asset value per share or decreased dividend income, or both. The Trust believes that, in the event of abnormally heavy redemption requests, the Fund's borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio securities less likely.
LENDING PORTFOLIO SECURITIES. The Funds may each lend their portfolio securities (principally to broker-dealers) where such loans are callable at any time and are continuously secured by segregated collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Each Fund may lend portfolio securities to the extent of one-third of its total assets.
The Funds would continue to receive the income on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. Any cash collateral pursuant to these loans would be invested in short-term money market instruments or Affiliated Money Market Funds. Lending securities entails a risk of loss to the Funds if and to the extent that the market value of the securities loaned increases and the collateral is not increased accordingly.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a Fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a
mutually agreed upon time and price (which is higher than the purchase price), thereby determining the yield during the Fund's holding period. A Fund may, however, enter into a "continuing contract" or "open" repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying obligation from the Fund on demand and the effective interest rate is negotiated on a daily basis. Each of the Funds may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest.
If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, a Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying security and loss of income. The securities underlying a repurchase agreement will be marked to market every business day so that the value of such securities is at least equal to the investment value of the repurchase agreement, including any accrued interest thereon.
The Funds have obtained an exemptive order from the SEC allowing them to invest their cash balances in joint accounts for the purpose of investing in repurchase agreements with maturities not to exceed 60 days, and in certain other money market instruments with remaining maturities not to exceed 90 days. Repurchase agreements are considered loans by a Fund under the 1940 Act.
AIM Charter Fund may enter into repurchase agreements (at any time up to 50% of its total net assets), using only U.S. Government securities, for the sole purpose of increasing its yield on idle cash.
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements are
agreements that involve the sale of securities held by a Fund to financial
institutions such as banks and broker-dealers, with an agreement that the Fund
will repurchase the securities at an agreed upon price and date. A Fund may
employ reverse repurchase agreements (i) for temporary emergency purposes, such
as to meet unanticipated net redemptions so as to avoid liquidating other
portfolio securities during unfavorable market conditions; (ii) to cover
short-term cash requirements resulting from the timing of trade settlements; or
(iii) to take advantage of market situations where the interest income to be
earned from the investment of the proceeds of the transaction is greater than
the interest expense of the transaction. At the time it enters into a reverse
repurchase agreement, a Fund will segregate liquid assets having a dollar value
equal to the repurchase price, and will subsequently continually monitor the
account to ensure that such equivalent value is maintained at all times. Reverse
repurchase agreements involve the risk that the market value of securities to be
purchased by the Fund may decline below the price at which it is obligated to
repurchase the securities, or that the other party may default on its
obligation, so that the Fund is delayed or prevented from completing the
transaction. Reverse repurchase agreements are considered borrowings by a Fund
under the 1940 Act.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot be disposed of within seven days in the normal course of business at the price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act"). Restricted securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities.
Each Fund may invest up to 15% of its net assets in securities that are illiquid. Limitations on the resale of restricted securities may have an adverse effect on their marketability, which may prevent a Fund from disposing of them promptly at reasonable prices. A Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations.
RULE 144A SECURITIES. Rule 144A securities are securities which, while privately placed, are eligible for purchase and resale pursuant to Rule 144A under the 1933 Act. This Rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. AIM, under the supervision of the Board of Trustees, will consider whether securities purchased under Rule 144A are illiquid and thus subject to the Funds' restriction on investment in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination AIM will consider the trading markets for the
specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes; (ii) number of dealers and potential purchasers; (iii) dealer undertakings to make a market; and (iv) nature of the security and of market place trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). AIM will also monitor the liquidity of Rule 144A securities and, if as a result of changed conditions, AIM determines that a Rule 144A security is no longer liquid, AIM will review a Fund's holdings of illiquid securities to determine what, if any, action is required to assure that such Fund complies with its restriction on investment in illiquid securities. Investing in Rule 144A securities could increase the amount of each Fund's investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities.
UNSEASONED ISSUERS. Investments in the equity securities of companies having less than three years' continuous operations (including operations of any predecessor) involve more risk than investments in the securities of more established companies because unseasoned issuers have only a brief operating history and may have more limited markets and financial resources. As a result, securities of unseasoned issuers tend to be more volatile than securities of more established companies.
Derivatives
The Funds may each invest in forward contracts, futures contracts, options on securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with each Fund's investments. The Funds may also invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. These instruments are often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least in part, from the performance of another asset (such as a security, currency or an index of securities).
EQUITY-LINKED DERIVATIVES. Equity-Linked Derivatives are interests in a securities portfolio designed to replicate the composition and performance of a particular index. Equity-Linked Derivatives are exchange traded. The performance results of Equity-Linked Derivatives will not replicate exactly the performance of the pertinent index due to transaction and other expenses, including fees to service providers, borne by the Equity-Linked Derivatives. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios As Listed Securities ("OPALS"). Investments in Equity-Linked Derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the Equity-Linked Derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in Equity-Linked Derivatives may constitute investments in other investment companies and, therefore, a Fund may be subject to the same investment restrictions with Equity-Linked Derivatives as with other investment companies. See "Other Investment Companies."
PUT AND CALL OPTIONS. A call option gives the purchaser the right to buy the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the call option, the writer of a call option is obligated to sell the underlying security, contract or foreign currency. A put option gives the purchaser the right to sell the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration date of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the put option, the writer of a put option is obligated to buy the underlying security, contract or foreign currency. The premium paid to the writer is consideration for undertaking the obligations under the option contract. Until an option expires or is offset, the option is said to be "open." When an option expires or is offset, the option is said to be "closed."
A Fund will not write (sell) options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at any time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
Pursuant to federal securities rules and regulations, if a Fund writes options, it may be required to set aside assets to reduce the risks associated with using those options. This process is described in more detail below in the section "Cover."
Writing Options. A Fund may write put and call options in an attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying security, contract, or foreign currency alone. In return for the premium received for writing a call option, the Fund foregoes the opportunity for profit from a price increase in the underlying security, contract, or foreign currency above the exercise price so long as the option remains open, but retains the risk of loss should the price of the security, contract, or foreign currency decline. In return for the premium received for writing a put option, the Fund assumes the risk that the price of the underlying security, contract, or foreign currency will decline below the exercise price, in which case the put would be exercised and the Fund would suffer a loss.
If a call option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received. A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the price it is willing to pay for the underlying security, contract or currency. The obligation imposed upon the writer of an option is terminated upon the expiration of the option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option (put or call as the case may be) identical to that previously sold.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
Purchasing Options. A Fund may purchase a call option for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected increase in the market price of the underlying security, contract or currency. If the market price does not exceed the exercise price, the Fund could purchase the security on the open market and could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Each of the Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise strike and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads."
A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon the exercise of the put option. Conversely, if the
underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost. A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
Over-The-Counter Options. Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Because OTC options in certain cases may be difficult to dispose of in a timely manner, the Fund may be required to treat some or all of these options as illiquid securities. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option position at any time prior to its expiration.
Index Options. Index options (or options on securities indices) are similar in many respects to options on securities, except that an index option gives the holder the right to receive, upon exercise, cash instead of securities, if the closing level of the securities index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset some of the risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index.
Pursuant to federal securities rules and regulations, if a Fund writes index options, it may be required to set aside assets to reduce the risks associated with writing those options. This process is described in more detail below in the section "Cover."
STRADDLES. The Fund, for hedging purposes, may write straddles (combinations of put and call options on the same underlying security) to adjust the risk and return characteristics of the Fund's overall position. A possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.
WARRANTS. Warrants are, in effect, longer-term call options. They give the holder the right to purchase a given number of shares of a particular company at specified prices within certain periods of time. The purchaser of a warrant expects that the market price of the security will exceed the purchase price of the warrant plus the exercise price of the warrant, thus giving him a profit. Since the market price may never exceed the exercise price before the expiration date of the warrant, the purchaser of the warrant risks the loss of the entire purchase price of the warrant. Warrants generally trade in the open market and may be sold rather than exercised. Warrants are sometimes sold in unit form with other securities of an issuer. Units of warrants and common stock may be employed in financing young, unseasoned companies. The purchase price of a warrant varies with the exercise price of the warrant, the current market value of the underlying security, the life of the warrant and various other investment factors.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place (collectively, "Futures Contracts"). A stock index Futures Contract provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made. Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times when a Futures Contract is outstanding.
A Fund will enter into Futures Contracts for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures Contracts will be purchased to protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to purchase. A Fund's hedging may include sales of Futures Contracts as an offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and purchases of Futures Contracts as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
The Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls. For a further discussion of the risks associated with investments in foreign securities, see "Foreign Investments" in this Statement of Additional Information.
Closing out an open Futures Contract is effected by entering into an offsetting Futures Contract for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If a Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Futures Contract.
"Margin" with respect to Futures Contracts is the amount of funds that must be deposited by a Fund in order to initiate Futures Contracts trading and maintain its open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered ("initial margin") is intended to ensure the Fund's performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures commission merchant through which a Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency or index fluctuates making the Futures Contract more or less valuable, a process known as marking-to-market.
If a Fund were unable to liquidate a Futures Contract or an option on a Futures Contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Futures Contract or option or to maintain cash or securities in a segregated account.
Options on Futures Contracts. Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the Futures Contract position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures Contract margin account.
Limitations on Futures Contracts and Options on Futures Contracts and on Certain Options on Currencies. To the extent that a Fund enters into Futures Contracts, options on Futures Contracts and options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are "in-the-money") will not exceed 5% of the total assets of the Fund, after taking into account unrealized profits and unrealized losses on any contracts it has entered into. This guideline may be modified by the Board, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
Pursuant to federal securities rules and regulations, a Fund's use of Futures Contracts and options on Futures Contracts may require that Fund to set aside assets to reduce the risks associated with using Futures Contracts and options on Futures Contracts. This process is described in more detail below in the section "Cover."
FORWARD CURRENCY CONTRACTS. A forward contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon by the parties. A Fund either may accept or make delivery of the currency at the maturity of the forward contract. A Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions.
Each of the Funds may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward contracts does not eliminate fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward contract
sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase.
Pursuant to federal securities rules and regulations, a Fund's use of forward contracts may require that Fund to set aside assets to reduce the risks associated with using forward contracts. This process is described in more detail below in the section "Cover."
COVER. Transactions using forward contracts, futures contracts and options (other than options purchased by a Fund) expose a Fund to an obligation to another party. A Fund will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward contracts or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities.
Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, a Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations.
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES. The use by the Funds of options, futures contracts and forward currency contracts involves special considerations and risks, as described below. Risks pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract or option thereon or forward contract at any particular time.
(5) As described above, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving
obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction.
Additional Securities or Investment Techniques
SPECIAL SITUATIONS. AIM Constellation Fund may invest in "special situations." A special situation arises when, in the opinion of the Fund's management, the securities of a particular company will, within a reasonably estimated period of time, be accorded market recognition at an appreciated value solely by reason of a development applicable to that company, and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among others: liquidations, reorganizations, recapitalizations, mergers, material litigation, technical breakthroughs, and new management or management policies. Although large and well-known companies may be involved, special situations more often involve comparatively small or unseasoned companies. Investments in unseasoned companies and special situations often involve much greater risk than in ordinary investment securities.
FUND POLICIES
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following investment restrictions, which may be changed only by a vote of a majority of such Fund's outstanding shares. Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares. Any investment restriction that involves a maximum or minimum percentage of securities or assets (other than with respect to borrowing) shall not be considered to be violated unless an excess over or a deficiency under the percentage occurs immediately after, and is caused by, an acquisition or disposition of securities or utilization of assets by the Fund.
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the 1933 Act.
(4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's
investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, or (ii) tax-exempt obligations issued by governments or political subdivisions of governments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security.
(5) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein.
(6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities.
(7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests.
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide each of the Funds with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though each of the Funds has this flexibility, the Board of Trustees has adopted non-fundamental restrictions for each of the Funds relating to certain of these restrictions which the advisor must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental investment restrictions apply to each of the Funds. They may be changed for any Fund without approval of that Fund's voting securities.
(1) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% of its total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may (i) purchase securities of other investment companies as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities of other money market funds and lend money to other investment companies or their series portfolios that have AIM or an affiliate of AIM as an investment advisor (an "AIM Advised Fund"), subject to the terms and conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Advised Fund. Other than AIM Constellation Fund, the Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. AIM Constellation Fund may not purchase additional securities when any borrowings from an AIM Advised Fund are outstanding. Each other Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM Advised Fund are outstanding.
(3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to an AIM Advised Fund, on such terms and conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
The following non-fundamental policy applies only to AIM Constellation Fund:
The amount AIM Constellation Fund may borrow will also be limited by the applicable margin limitations imposed by the Federal Reserve Board. If at any time the value of AIM Constellation Fund's assets should fail to meet the 300% asset coverage requirement, the Fund will, within three days, reduce its borrowings to the extent necessary. AIM Constellation Fund may be required to eliminate partially or totally its outstanding borrowings at times when it may not be desirable for it to do so. Any investment gains made by AIM Constellation Fund with the borrowed monies in excess of interest paid by the Fund will cause the net asset value of AIM Constellation Fund's shares to rise faster than would otherwise be the case. On the other hand, if the investment performance of the additional securities purchased with the proceeds of such borrowings fails to cover the interest paid on the money borrowed by AIM Constellation Fund, the net asset value of AIM Constellation Fund will decrease faster than would otherwise be the case. This speculative factor is known as "leveraging."
TEMPORARY DEFENSIVE POSITIONS
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the fund may temporarily hold all or a portion of its assets in cash or the following liquid assets: money market instruments, shares of affiliated money market funds or high-quality debt obligations.
PORTFOLIO TURNOVER
The portfolio turnover rate for AIM Weingarten Fund increased significantly from the fiscal year ended October 31, 2000 to the fiscal year ended October 31, 2001 because of the economic downturn, and the efforts to reposition the Fund into areas of the market that would respond favorably to a recovering economy. AIM Charter Fund anticipates an increase in its portfolio turnover rate for the fiscal year ending October 31, 2002. The management team of AIM Charter Fund changed effective January 24, 2002, and the new portfolio managers engaged in extensive trading in order to reposition the Fund's holdings. To the extent possible, the Fund exchanged securities with other AIM Funds without paying brokerage commissions, in accordance with Rule 17a-7 under the 1940 Act.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Funds and the Trust is vested in the Board of Trustees. The Board of Trustees approves all significant agreements between the Trust, on behalf of one or more of the Funds, and persons or companies furnishing services to the Funds. The day-to-day operations of each Fund are delegated to the officers of the Trust and to AIM, subject always to the objective(s), restrictions and policies of the applicable Fund and to the general supervision of the Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and
A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
MANAGEMENT INFORMATION
The trustees and officers of the Trust, their principal occupations during the last five years and certain other information concerning them is set forth in Appendix B.
The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee, the Valuation Committee and the Committee on Directors/Trustees.
The members of the Audit Committee are Frank S. Bayley, Bruce L. Crockett, Albert R. Dowden (Vice Chair), Edward K. Dunn, Jr. (Chair), Jack M. Fields, Carl Frischling (on leave of absence), Lewis F. Pennock and Louis S. Sklar, Dr. Prema Mathai-Davis and Miss Ruth H. Quigley. The Audit Committee is responsible for: (i) considering management's recommendations of independent accountants for each Fund and evaluating such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Funds' independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Funds' independent accountants and management. During the fiscal year ended October 31, 2001, the Audit Committee held nine meetings.
The members of the Investments Committee are Messrs. Bayley, Crockett,
Dowden, Dunn, Fields, Frischling, Pennock and Sklar (Chair), Dr. Mathai-Davis
(Vice Chair) and Miss Quigley. The Investments Committee is responsible for: (i)
overseeing AIM's investment-related compliance systems and procedures to ensure
their continued adequacy; and (ii) considering and acting, on an interim basis
between meetings of the full Board, on investment-related matters requiring
Board consideration, including dividends and distributions, brokerage policies
and pricing matters. During the fiscal year ended October 31, 2001, the
Investment Committee held six meetings.
The members of the Valuation Committee are Messrs. Dunn and Pennock
(Chair), and Miss Quigley (Vice Chair). The Valuation Committee is responsible
for: (i) periodically reviewing AIM's Procedures for Valuing Securities
("Procedures"), and making any recommendations to AIM with respect thereto; (ii)
reviewing proposed changes to the Procedures recommended by AIM from time to
time; (iii) periodically reviewing information provided by AIM regarding
industry developments in connection with valuation; (iv) periodically reviewing
information from AIM regarding fair value and liquidity determinations made
pursuant to the Procedures, and making recommendations to the full Board in
connection therewith (whether such information is provided only to the Committee
or to the Committee and the full Board simultaneously); and (v) if requested by
AIM, assisting AIM's internal valuation committee and/or the full Board in
resolving particular valuation anomalies. During the fiscal year ended October
31, 2001, the Valuation Committee held no meetings.
The members of the Committee on Directors/Trustees are Messrs. Bayley, Crockett (Chair), Dowden, Dunn, Fields (Vice Chair), Pennock and Sklar, Dr. Mathai-Davis and Miss Quigley. The Committee on Directors/Trustees is responsible for: (i) considering and nominating individuals to stand for election as dis-interested trustees as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the dis-interested trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the dis-interested trustees. During the fiscal year ended October 31, 2001, the Committee on Directors/Trustees held seven meetings.
The Committee on Directors/Trustees will consider nominees recommended
by a shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Committee on Directors/Trustees or the Board, as applicable, shall
make the final determination of persons to be nominated.
OWNERSHIP OF FUND SHARES
The dollar range of equity securities beneficially owned by each trustee (i) in the Funds and (ii) on an aggregate basis, in all registered investment companies overseen by the trustee within the AIM Funds complex is set forth in Appendix B.
FACTORS CONSIDERED IN APPROVING THE INVESTMENT ADVISORY AGREEMENT
The advisory agreement with AIM was re-approved by the Funds' Board at a meeting held on May 8-9, 2001. In evaluating the fairness and reasonableness of the advisory agreement, the Board of Trustees considered a variety of factors for each Fund, including: the requirements of each Fund for investment supervisory and administrative services; the quality of AIM's services, including a review of each Fund's investment performance and AIM's investment personnel; the size of the fees in relationship to the extent and quality of the investment advisory services rendered; fees charged to AIM's other clients; fees charged by competitive investment advisors; the size of the fees in light of services provided other than investment advisory services; the expenses borne by each Fund as a percentage of its assets and relationship to contractual limitations; any fee waivers (or payments of Fund expenses) by AIM; AIM's profitability; the benefits received by AIM from its relationship to each Fund, including soft dollar arrangements, and the extent to which each Fund shares in those benefits; the organizational capabilities and financial condition of AIM and conditions and trends prevailing in the economy, the securities markets and the mutual fund industry; and the historical relationship between each Fund and AIM.
In considering the above factors, the Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of each Fund may be invested in money market funds advised by AIM pursuant to the terms of an exemptive order. The Board found that each Fund may realize certain benefits upon investing cash balances in AIM advised money market funds, including a higher net return, increased liquidity, increased diversification or decreased transaction costs. The Board also found that each Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board further determined that the proposed securities lending program and related procedures with respect to each of the lending Funds is in the best interests of each lending Fund and their respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of each lending Fund and its respective shareholders.
After consideration of these factors, the Board found that: (i) the services provided to each Fund and its shareholders were adequate; (ii) the agreements were fair and reasonable under the circumstances; and (iii) the fees payable under the agreements would have been obtained through arm's length negotiations. The Board therefore concluded that each Fund's advisory agreement was in the best interests of the Fund and its shareholders and continued the agreement for an additional year.
COMPENSATION
Each trustee who is not affiliated with AIM is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of other AIM Funds. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component.
Information regarding compensation paid or accrued for each trustee of the Trust who is not affiliated with AIM during the year ended December 31, 2000 is found in Appendix C.
Retirement Plan For Trustees
The trustees have adopted a retirement plan for the trustees of the Trust who are not affiliated with AIM. The retirement plan includes a retirement policy as well as retirement benefits for the non-AIM-affiliated trustees.
The retirement policy permits each non-AIM-affiliated trustee to serve until December 31 of the year in which the trustee turns 72. A majority of the trustees may extend from time to time the retirement date of a trustee.
Annual retirement benefits are available to each non-AIM-affiliated
trustee of the Trust and/or the other AIM Funds (each, a "Covered Fund") who has
at least five years of credited service as a trustee (including service to a
predecessor fund) for a Covered Fund. The retirement benefits will equal 75% of
the trustee's annual retainer paid or accrued by any Covered Fund to such
trustee during the twelve-month period prior to retirement, including the amount
of any retainer deferred under a separate deferred compensation agreement
between the Covered Fund and the trustee. The annual retirement benefits are
payable in quarterly installments for a number of years equal to the lesser of
(i) ten or (ii) the number of such trustee's credited years of service. A death
benefit is also available under the plan that provides a surviving spouse with a
quarterly installment of 50% of a deceased trustee's retirement benefits for the
same length of time that the trustee would have received based on his or her
service. A trustee must have attained the age of 65 (55 in the event of death or
disability) to receive any retirement benefit.
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (for purposes of this paragraph only, the "Deferring Trustees") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees have the option to elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the Deferring Trustees have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning on the date selected under the Compensation Agreement. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's retirement benefits commence under the Plan. The Board, in its sole discretion, also may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
PURCHASES OF CLASS A SHARES OF THE FUNDS AT NET ASSET VALUE
The trustees and other affiliated persons of the Trust may purchase
Class A shares of the Funds without paying an initial sales charge. AIM
Distributors permits such purchases because there is a reduced sales effort
involved in sales to such purchasers, thereby resulting in relatively low
expenses of distribution. For a complete description of the persons who will not
pay an initial sales charge on purchases of Class A shares of the Funds, see
"Purchase, Redemption and Pricing of Shares - Purchase and Redemption of Shares
- Purchases of Class A Shares and AIM Cash Reserve Shares of AIM Money Market
Fund - Purchases of Class A Shares at Net Asset Value."
CODES OF ETHICS
AIM, the Trust and A I M Distributors, Inc. ("AIM Distributors") have each adopted a Code of Ethics governing, as applicable, personal trading activities of all Directors/Trustees, officers of the Trust, persons who, in connection with their regular functions, play a role in the recommendation of any purchase or sale of a security by any of the Funds or obtain information pertaining to such purchase or sale, and certain other employees. The Codes of Ethics are intended to prohibit conflicts of interest with the Trust that may arise from personal trading. Personal trading, including personal trading involving securities that may be purchased or held by a Fund, is permitted by persons covered under the relevant Codes subject to certain restrictions; however those persons are generally required to pre-clear all security transactions with the Compliance Officer or his designee and to report all transactions on a regular basis.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Information about the ownership of each class of each Fund's shares by beneficial or record owners of such Fund and by trustees and officers as a group is found in Appendix D. A shareholder who owns beneficially 25% or more of the outstanding shares of a Fund is presumed to "control" that Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
AIM, the Funds' investment advisor, was organized in 1976, and along with its subsidiaries, manages or advises over 150 investment portfolios encompassing a broad range of investment objectives. AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect, wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent global investment management group. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management Information" herein.
As investment advisor, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds.
AIM is also responsible for furnishing to the Funds, at AIM's expense, the services of persons believes to be competent to perform all supervisory and administrative services required by the Funds, in the judgment of the trustees, to conduct their respective businesses effectively, as well as the offices, equipment and other facilities necessary for their operations. Such functions include the maintenance of each Fund's accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Master Advisory Agreement provides that the Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, including, without limitation: brokerage commissions, taxes, legal, auditing or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption, and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to trustees and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of each Fund in connection with membership in investment company organizations, and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders.
AIM, at its own expense, furnishes to the Trust office space and facilities. AIM furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to its advisory agreement with the Trust, AIM receives a monthly fee from each Fund calculated at the following annual rates, based on the average daily net assets of each Fund during the year:
FUND NAME NET ASSETS ANNUAL RATE
--------- ---------- -----------
AIM Aggressive Growth Fund First $150 million 0.80%
Amount over $150 million 0.625%
---------------------------- -------------------------- ----------
AIM Blue Chip Fund* First $350 million 0.75%
Amount over $350 million 0.625%
---------------------------- -------------------------- ----------
AIM Capital Development Fund First $350 million 0.75%
Amount over $350 million 0.625%
---------------------------- -------------------------- ----------
AIM Charter Fund* First $30 million 1.00%
AIM Constellation Fund* Next $120 million 0.75%
Amount over $150 million 0.625%
---------------------------- -------------------------- ----------
AIM Weingarten Fund* First $30 million 1.00%
Next $320 million 0.75%
Amount over $350 million 0.625%
---------------------------- -------------------------- ----------
|
* See currently effective fee disclosure below.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
AIM has voluntarily agreed, effective July 1, 2000, to waive advisory fees payable by AIM Blue Chip Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund in an amount equal to 0.025% for each $5 billion increment in net assets over $5 billion, up to a maximum waiver of 0.175% on net assets in excess of $35 billion.
AIM has voluntarily agreed, effective July 1, 2001, to waive a portion of advisory fees payable by each Fund. The amount of the waiver will equal 25% of the advisory fee AIM receives from the Affiliated Money Market Funds as a result of each Fund's Investment of uninvested cash in an Affiliated Money Market Fund. See "Investment Strategies and Risks - Other Investments - Other Investment Companies."
INVESTMENT SUB-ADVISOR
AIM has entered into Master Sub-Advisory contracts with A I M Capital Management, Inc. ("AIM Capital") to provide investment sub-advisory services to AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund. AIM Capital is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). AIM Capital is a wholly owned subsidiary of AIM.
For the services to be rendered by AIM Capital, Inc. under its Master Sub-Advisory Contracts, the Advisor will pay to AIM Capital a fee which will be computed daily and paid as of the last day of each month on the basis of each Fund's daily net asset value, using for each daily calculation the most recently determined net asset value of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.50% of the Advisor's compensation of the sub-advised assets per year, for each of the AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund.
The management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund for the last three fiscal years ended October 31 are found in Appendix E.
SECURITIES LENDING ARRANGEMENTS. If a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The advisory agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fee, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee.
SERVICE AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. AIM and the Trust have entered into a Master Administrative Services Agreement ("Administrative Services Agreement") pursuant to which AIM may perform or arrange for the provision of certain accounting and other administrative services to each Fund which are not required to be performed by AIM under the advisory agreement. The Administrative Services Agreement provides that it will remain in effect and continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Administrative Services Agreement, AIM is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is reimbursed for the services of the Trust's principal financial officer and her staff, and any expenses related to fund accounting services.
Administrative services fees paid to AIM by each Fund for the last three fiscal years ended October 31 are found in Appendix F.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. A I M Fund Services, Inc. ("AFS"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046, a registered transfer agent and wholly owned subsidiary of AIM, acts as transfer and dividend disbursing agent for the Funds.
The Transfer Agency and Service Agreement between the Trust and AFS provides that AFS will perform certain shareholder services for the Funds. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares; prepare and transmit payments for dividends and distributions declared by the Funds; maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts. AFS may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year.
It is anticipated that most investors will perform their own subaccounting.
CUSTODIAN. State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds. Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, serves as sub-custodian for retail purchases. The Bank of New York, 100 Church Street, New York, New York 10286, also serves as sub-custodian to facilitate cash management.
The Custodian is authorized to establish separate accounts in foreign countries and to cause foreign securities owned by the Funds to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and securities depositories. AIM is responsible for selecting eligible foreign securities depositories; the Custodian is responsible for monitoring eligible foreign securities depositories.
Under its contract with the Trust, the Custodian maintains the portfolio securities of the Funds, administers the purchases and sales of portfolio securities, collects interest and dividends and other distributions made on the securities held in the portfolios of the Funds and performs other ministerial duties. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets.
AUDITORS. The Funds' independent public accountants are responsible for auditing the financial statements of the Funds. The Board of Trustees has selected Ernst & Young LLP, 1221 McKinney, Suite 2400, Houston, Texas 77010, as the independent public accountants to audit the financial statements of the Funds.
COUNSEL TO THE TRUST. Legal matters for the Trust have been passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Sub-Advisor has adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, the Sub-Advisor's procedures do not materially differ from AIM's procedures as set forth below.
BROKERAGE TRANSACTIONS
AIM makes decisions to buy and sell securities for each Fund, selects broker-dealers, effects the Funds' investment portfolio transactions, allocates brokerage fees in such transactions and, where applicable, negotiates commissions and spreads on transactions. AIM's primary consideration in effecting a security transaction is to obtain the most favorable execution of the order, which includes the best price on the security and a low commission rate. While AIM seeks reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Brokerage Selection" below.
Some of the securities in which the Funds invest are traded in over-the-counter markets. Portfolio transactions placed in such markets may be effected at either net prices without commissions, but which include compensation to the broker-dealer in the form of a mark up or mark down, or on an agency basis, which involves the payment of negotiated brokerage commissions.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
Brokerage commissions paid by each of the Funds during the last three fiscal years ended October 31 are found in Appendix G.
COMMISSIONS
During the last three fiscal years ended October 31, 2001, none of the Funds paid brokerage commissions to brokers affiliated with the Funds, AIM, AIM Distributors, or any affiliates of such entities.
The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account (and may invest in Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
BROKERAGE SELECTION
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e)(1), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which [it] exercises investment discretion." The services provided by the broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in recognition of research services provided to it, a Fund may pay a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Trust's trustees with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of electronic communications of trade information, the providing of custody services, as well as the providing of equipment used to communicate research information and the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fee paid by the Funds is not reduced because AIM receives such services. However, to the extent that AIM would have
purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly.
AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker; and (3) the broker's interest in mutual funds in general and in the Funds and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds") in particular, including sales of the Funds and of the other AIM Funds. In connection with (3) above, the Funds' trades may be executed directly by dealers that sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements, consistent with obtaining best execution. AIM will not use a specific formula in connection with any of these considerations to determine the target levels.
DIRECTED BROKERAGE (RESEARCH SERVICES)
Directed brokerage (research services) paid by each of the Funds during the last fiscal year ended October 31, 2001 are found in Appendix H.
REGULAR BROKERS OR DEALERS
Information concerning the Funds' acquisition of securities of their regular brokers or dealers during the last fiscal year ended October 31, 2001 is found in Appendix H.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among the Fund(s) and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect a Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM results in transactions which could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, AIM considers the investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the judgments of the persons responsible for recommending the investment. This procedure would apply to transactions in both equity and fixed income securities.
ALLOCATION OF EQUITY OFFERING TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed by AIM may become interested in participating in equity security distributions that are available in an equity "offering", which AIM defines as an IPO, a secondary (follow-on offering), a private placement, a direct placement or a PIPE (private investment in public equity) and occasions may arise when purchases of such securities by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. In such cases, it shall be AIM's practice to specifically combine or otherwise bunch indications of interest for offerings for all AIM Funds and accounts participating in purchase transactions for that offering, and to allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks to participate in a particular offering by reviewing a number of factors, including suitability of the investment with the AIM Fund's or account's investment objective, policies and strategies, the liquidity of the AIM Fund or account if such investment is purchased, and whether the portfolio manager intends to hold the security as a long-term investment. The allocation of limited supply securities issued in offerings will be made to eligible AIM Funds and accounts in a manner designed to be fair and equitable for the eligible AIM Funds and accounts, and so that there is equal allocation of offerings over the longer term. Where multiple funds or accounts are eligible, rotational participation may occur, based on the extent to which an AIM Fund or account has participated in previous offerings as well as the size of the AIM Fund or account. Each eligible AIM Fund and account with an asset level of less than $500 million will be placed in one of three tiers, depending upon each AIM Fund's or account's asset level. The AIM Funds and accounts in the tier containing funds and accounts with the smallest asset levels will participate first, each receiving a 40 basis point allocation (rounded to the nearest share round lot that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or account's net assets. This process continues until all of the AIM Funds and accounts in the three tiers receive their Allocations, or until the shares are all allocated. Should securities remain after this process, eligible AIM Funds and accounts will receive their Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts not receiving a full Allocation, the Allocation may be made only to certain AIM Funds or accounts so that each may receive close to or exactly 40 basis points. Selection of those AIM Funds or accounts shall be rotational in a manner designed to allocate equally over the longer term. In addition, Incubator Funds, as described in AIM's Incubator and New Fund Investment Policy, will each be limited to a 40 basis point allocation only.
When any AIM Funds and/or accounts with substantially identical investment objectives and policies participate in offerings, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest participating AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund is participating, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such offering transactions will be the same for each AIM Fund and account.
PURCHASE, REDEMPTION AND PRICING OF SHARES
PURCHASE AND REDEMPTION OF SHARES
Before the initial purchase of shares, an investor must submit a completed account application to his financial intermediary, who should forward the application to A I M Fund Services, Inc. at P.O. Box 4497, Houston, Texas 77210-4497. An investor may change information in his account application by submitting written changes or a new account application to his intermediary or to AFS.
Purchase and redemption orders must be received in good order. To be in good order, the financial intermediary must give AFS all required information and documentation with respect to the investor. If the intermediary fails to deliver the investor's payment on the required settlement date, the intermediary must reimburse the Fund for any overdraft charges incurred.
A financial intermediary may submit a written request to AFS for correction of transactions involving Fund shares. If AFS agrees to correct a transaction, and the correction requires a dividend adjustment, the intermediary must agree in writing to reimburse the Fund for any resulting loss.
An investor may terminate his relationship with an intermediary and become the shareholder of record on his account. However, until the investor establishes a relationship with an intermediary, the investor will not be able to purchase additional shares of the Fund, except through the reinvestment of distributions.
Payment for redeemed shares is normally made by Federal Reserve wire to the bank account designated in the investor's account application, but may be sent by check at the investor's request. By providing written notice to his financial intermediary or to AFS, an investor may change the bank account designated to receive redemption proceeds. AFS may request additional documentation.
AFS may request that an intermediary maintain separate master accounts in the Fund for shares held by the intermediary (a) for its own account, for the account of other institutions and for accounts for which the intermediary acts as a fiduciary; and (b) for accounts for which the intermediary acts in some other capacity. An intermediary may aggregate its master accounts and subaccounts to satisfy the minimum investment requirement.
REDEMPTIONS BY THE FUNDS
If the Funds determine that you have provided incorrect information in opening an account or in the course of conducting subsequent transactions, the Funds may, at their discretion, redeem the account and distribute the proceeds to you.
Additional information regarding purchases and redemptions is located in the Funds' prospectus, under the headings "Purchasing Shares" and "Redeeming Shares."
OFFERING PRICE
Shares of the institutional class of a Fund are sold at net asset value.
Calculation of Net Asset Value
Each Fund determines its net asset value per share once daily as of the close of the customary trading session of the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, each Fund determines its net asset value per share as of the close of the NYSE on such day. For purposes of determining net asset value per share, the Fund will generally use futures and options contract closing prices which are available fifteen (15) minutes after the close of the customary trading session of the NYSE. The Funds determine net asset value per share by dividing the value of a Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of a Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each security (excluding convertible bonds) held by a Fund is valued at its last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price on that day; option contracts are valued at the mean between the closing bid and asked prices on the exchange where the contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt securities (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, coupon rate, maturity, type of issue, 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 ask 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 investments are valued at amortized cost when the security has 60 days or less to maturity.
Foreign securities are converted into U.S. Dollars using exchange rates as of the close of the NYSE. Generally, trading in foreign securities, corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the customary trading session of the NYSE. The values of such securities used in computing the net asset value of each Fund's shares are determined as of the close of the respective markets. Occasionally, events affecting the values of such securities may occur between the times at which such values are determined and the close of the customary trading session of the NYSE which will not be reflected in the computation of a Fund's net asset value. If a development/event has actually caused that closing price to no longer reflect actual value, the closing price, as of the close of the applicable market, may be adjusted to reflect the fair value of the affected securities as of the close of the NYSE as determined in good faith by or under the supervision of the Board of Trustees.
Fund securities primarily traded in foreign markets may be traded in such markets on days which are not business days of the Fund. Because the net asset value per share of each Fund is determined only on business days of the Fund, the net asset value per share of a Fund may be significantly affected on days when an investor cannot exchange or redeem shares of the Fund.
REDEMPTION IN KIND
AIM intends to redeem all shares of the Funds in cash. It is possible that future conditions may make it undesirable for a Fund to pay for redeemed shares in cash. In such cases, the Fund may make payment in securities or other property if the Fund has made an election under Rule 18f-1 under the 1940 Act. Rule 18f-1 obligates a Fund to redeem for cash all shares presented to such Fund for redemption by any one shareholder in an amount up to the lesser of $250,000 or 1% of that Fund's net assets in any 90-day period. Securities delivered in payment of redemptions are valued at the same value assigned to them in computing the applicable Fund's net asset value per share. Shareholders receiving such securities are likely to incur brokerage costs on their subsequent sales of such securities.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, generally must withhold as of January 1, 2002, 30% of redemption payments and reportable dividends (whether paid or accrued) in the case of any shareholder who fails to provide the Fund with a taxpayer identification number ("TIN") and a certification that he is not subject to backup withholding; however, the backup withholding rate decreases in phases to 28% for distributions made in the year 2006 and thereafter.
An investor is subject to backup withholding if:
1. the investor fails to furnish a correct TIN to the Fund, or
2. the IRS notifies the Fund that the investor furnished an incorrect TIN, or
3. the investor or the Fund is notified by the IRS that the investor is subject to backup withholding because the investor failed to report all of the interest and dividends on such investor's tax return (for reportable interest and dividends only), or
4. the investor fails to certify to the Fund that the investor is not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or
5. the investor does not certify his TIN. This applies only to non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five situations discussed above. Redemption proceeds and long-term gain distributions are subject to backup withholding only if (1), (2) or (5) above applies.
Certain payees and payments are exempt from backup withholding and information reporting. AIM or AFS will not provide Form 1099 to those payees.
Investors should contact the IRS if they have any questions concerning withholding.
IRS PENALTIES - Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS - Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 generally remains in effect for a period starting on the date the Form is signed and ending on the last day of the third succeeding calendar year. Such shareholders may, however, be subject to federal income tax withholding at a 30% rate on ordinary income dividends and other distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
It is the present policy of the Fund to declare and pay annually net investment income dividends and capital gain distributions.
It is the Fund's intention to distribute substantially all of its net investment income and realized net capital gains by the end of each taxable year. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital loss, if any, carried forward from previous fiscal periods. All dividends and distributions will be automatically reinvested in additional shares of the same class of each Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth in the Prospectus under the caption "Special Plans - Automatic Dividend Investment." Such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. If a shareholder's account does not have any shares in it on a dividend or capital gain distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested.
A dividend or distribution paid by a fund which does not declare dividends daily has the effect of reducing the net asset value per share on the ex-dividend date by the amount of the dividend or distribution. Therefore, a dividend or distribution declared shortly after a purchase of shares by an investor would represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Prospectus. No attempt is made to present a
detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY. Each Fund has elected to be taxed as a regulated investment company under Subchapter M of the Code. As a regulated investment company, each Fund is not subject to federal income tax on the portion of its net investment income (i.e., taxable interest, dividends and other taxable ordinary income, net of expenses) and capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes (i) at least 90% of its investment company taxable income (i.e., net investment income, net foreign currency ordinary gain or loss and the excess of net short-term capital gain over net long-term capital loss) and (ii) at least 90% of the excess of its tax-exempt interest income under Code Section 103(a) over its deductions disallowed under Code Sections 265 and 171(a)(2) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by a Fund made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gain of the taxable year and can therefore satisfy the Distribution Requirement.
Each Fund may use "equalization accounting" in determining the portion of its net investment income and capital gain net income that has been distributed. A Fund that elects to use equalization accounting will allocate a portion of its realized investment income and capital gain to redemptions of Fund shares and will reduce the amount of such income and gain that it distributes in cash. However, each Fund intends to make cash distributions for each taxable year in an aggregate amount that is sufficient to satisfy the Distribution Requirement without taking into account its use of equalization accounting. The Internal Revenue Service has not published any guidance concerning the methods to be used in allocating investment income and capital gain to redemptions of shares. In the event that the Internal Revenue Service determines that a Fund is using an improper method of allocation and has underdistributed its net investment income and capital gain net income for any taxable year, such Fund may be liable for additional federal income tax.
In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gain from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including, but not limited to, gain from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement").
In addition to satisfying the requirements described above, each Fund must satisfy an asset diversification test in order to qualify as a regulated investment company (the "Asset Diversification Test"). Under this test, at the close of each quarter of each Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers, as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer, and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses.
For purposes of the Asset Diversification Test, the IRS has ruled that the issuer of a purchased listed call option on stock is the issuer of the stock underlying the option. The IRS has also informally ruled that, in general, the issuers of purchased or written call and put options on securities, of long and short positions on futures contracts on securities and of options on such future contracts are the issuers of the securities underlying such financial instruments where the instruments are traded on an exchange.
Where the writer of a listed call option owns the underlying securities, the IRS has ruled that the Asset Diversification Test will be applied solely to such securities and not to the value of the option itself.
With respect to options on securities indexes, futures contracts on securities indexes and options on such futures contracts, the IRS has informally ruled that the issuers of such options and futures contracts are the separate entities whose securities are listed on the index, in proportion to the weighing of securities in the computation of the index. It is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related options. It has been suggested that the issuer in each case may be the foreign central bank or the foreign government backing the particular currency. Due to this uncertainty and because the Funds may not rely on informal rulings of the IRS, the Funds may find it necessary to seek a ruling from the IRS as to the application of the Asset Diversification Test to certain of the foregoing types of financial instruments or to limit its holdings of some or all such instruments in order to stay within the limits of such test.
If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of such Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY. In general, gain or loss recognized by a Fund on the disposition of an asset will be a capital gain or loss. However, gain recognized on the disposition of a debt obligation purchased by a Fund at a market discount (generally, at a price less than its principal amount) will be treated as ordinary income to the extent of the portion of the market discount which accrued during the period of time the Fund held the debt obligation unless the Fund made an election to accrue market discount into income. If a Fund purchases a debt obligation that was originally issued at a discount, the Fund is generally required to include in gross income each year the portion of the original issue discount which accrues during such year. In addition, under the rules of Code Section 988, gain or loss recognized on the disposition of a debt obligation denominated in a foreign currency or an option with respect thereto (but only to the extent attributable to changes in foreign currency exchange rates), and gain or loss recognized on the disposition of a foreign currency forward contract or of foreign currency itself, will generally be treated as ordinary income or loss.
Certain hedging transactions that may be engaged in by certain of the Funds (such as short sales "against the box") may be subject to special tax treatment as "constructive sales" under Section 1259 of the Code if a Fund holds certain "appreciated financial positions" (defined generally as any interest (including a futures or forward contract, short sale or option) with respect to stock, certain debt instruments, or partnership interests if there would be a gain were such interest sold, assigned, or otherwise terminated at its fair market value). Upon entering into a constructive sales transaction with respect to an appreciated financial position, a Fund will generally be deemed to have constructively sold such appreciated financial position and will recognize gain as if such position were sold, assigned, or otherwise terminated at its fair market value on the date of such constructive sale (and will take into account any gain for the taxable year which includes such date).
Some of the forward foreign currency exchange contracts, options and
futures contracts that certain of the Funds may enter into will be subject to
special tax treatment as "Section 1256 contracts." Section 1256 contracts that a
Fund holds are treated as if they are sold for their fair market value on the
last business day of the taxable year, regardless of whether a taxpayer's
obligations (or rights) under such contracts have terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date. Any
gain or loss recognized as a consequence of the year-end deemed disposition of
Section 1256 contracts is combined with any other gain or loss that was
previously recognized upon the termination of Section 1256 contracts during that
taxable year. The net amount of such gain or loss for the entire taxable year
(including gain or loss arising as a consequence of the year-end deemed sale of
such contracts) is deemed to be 60% long-term and 40% short-term gain or loss.
However, in the case of Section 1256 contracts that are forward foreign currency
exchange contracts, the net gain or loss is separately determined and (as
discussed above) generally treated as ordinary income or loss. If such a future
or option is held as an offsetting position and can be considered a straddle
under Section 1092 of
the Code, such a straddle will constitute a mixed straddle. A mixed straddle will be subject to both Section 1256 and Section 1092 unless certain elections are made by the Fund.
Other hedging transactions in which the Funds may engage may result in "straddles" or "conversion transactions" for U.S. federal income tax purposes. The straddle and conversion transaction rules may affect the character of gains (or in the case of the straddle rules, losses) realized by the Funds. In addition, losses realized by the Funds on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. Because only a few regulations implementing the straddle rules and the conversion transaction rules have been promulgated, the tax consequences to the Funds of hedging transactions are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the Funds (and, if they are conversion transactions, the amount of ordinary income) which is taxed as ordinary income when distributed to shareholders.
Because application of any of the foregoing rules governing Section 1256 contracts, constructive sales, straddle and conversion transactions may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected investment or straddle positions, the taxable income of a Fund may exceed its book income. Accordingly, the amount which must be distributed to shareholders and which will be taxed to shareholders as ordinary income or long-term capital gain may also differ from the book income of the Fund and may be increased or decreased as compared to a fund that did not engage in such transactions.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES. A 4% non-deductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income (excess of capital gains over capital losses) for the one-year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
Section 988 foreign currency gains and losses incurred after October 31 (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund generally intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, in the event that the Internal Revenue Service determines that a Fund is using an improper method of allocation for purposes of equalization accounting (as discussed above), such Fund may be liable for excise tax. Moreover, investors should note that a Fund may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability. In addition, under certain circumstances, a Fund may elect to pay a minimal amount of excise tax.
PFIC INVESTMENTS. Those Funds that are permitted to invest in foreign equity securities may invest in stocks of foreign companies that are classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income.
The application of the PFIC rules may affect, among other things, the character of gain, the amount of gain or loss and the timing of the recognition of income with respect to PFIC stock, as well as subject the Funds themselves to tax on certain income from PFIC stock. For these reasons the amount
that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to a fund that did not invest in PFIC stock.
SWAP AGREEMENTS. Each Fund may enter into swap agreements. The rules governing the tax aspects of swap agreements are in a developing stage and are not entirely clear in certain respects. Accordingly, while a Fund intends to account for such transactions in a manner deemed to be appropriate, the IRS might not accept such treatment. If it did not, the status of a Fund as a regulated investment company might be affected. Each Fund intends to monitor developments in this area. Certain requirements that must be met under the Code in order for a Fund to qualify as a regulated investment company may limit the extent to which the Fund will be able to engage in swap agreements.
FUND DISTRIBUTIONS. Each Fund anticipates distributing substantially all of its investment company taxable income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will qualify for the 70% dividends received deduction for corporations only to the extent discussed below.
A Fund may either retain or distribute to shareholders its net capital gain (net long-term capital gain over net short-term capital loss) for each taxable year. Each Fund currently intends to distribute any such amounts. If net capital gain is distributed and designated as a capital gain dividend, it will be taxable to shareholders as long-term capital gain (currently taxable at a maximum rate of 20% for noncorporate shareholders) regardless of the length of time the shareholder has held his shares or whether such gain was recognized by the Fund prior to the date on which the shareholder acquired his shares. Conversely, if a Fund elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available capital loss carry forwards) at the 35% corporate tax rate. If a Fund elects to retain its net capital gain, it is expected that the Fund also will elect to have shareholders treated as if each received a distribution of its pro rata share of such gain, with the result that each shareholder will be required to report its pro rata share of such gain on its tax return as long-term capital gain, will receive a refundable tax credit for its pro rata share of tax paid by the Fund on the gain, and will increase the tax basis for its shares by an amount equal to the deemed distribution less the tax credit.
Legislation enacted in 1997 lowers the maximum capital gain tax rate from 20% to 18% with respect to capital assets which are held for five years and for which the holding period begins after December 31, 2000. In connection with this new legislation, a Fund may make elections to treat any readily tradable stock it holds on January 1, 2001 as having been sold and reacquired on January 2, 2001 at its closing market price on that date and to treat any other security in its portfolio as having been sold and reacquired on January 1 for an amount equal to its fair market value on that date. If a Fund makes any such election (when it files its tax return), it will recognize gain, but not loss, on the deemed sale, which may cause a Fund to increase the amount of distributions that the Fund will make in comparison to a fund that did not make such an election. The Funds have not yet determined whether they will make this election with respect to any stock or securities in their respective portfolios.
Ordinary income dividends paid by a Fund with respect to a taxable year will qualify for the 70% dividends received deduction generally available to corporations (other than corporations, such as "S" corporations, which are not eligible for the deduction because of their special characteristics and other than for purposes of special taxes such as the accumulated earnings tax and the personal holding company tax) to the extent of the amount of qualifying dividends received by the Fund from domestic corporations for the taxable year. However, the alternative minimum tax applicable to corporations may reduce the value of the dividends received deduction.
Alternative minimum tax ("AMT") is imposed in addition to, but only to the extent it exceeds, the regular tax and is computed at a maximum rate of 28% for non-corporate taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's alternative minimum taxable income ("AMTI") over an exemption amount. The corporate dividends received deduction is not itself an item of tax preference that must be added back to taxable income or is otherwise disallowed in determining a corporation's AMTI. However, corporate shareholders will generally be required to take the full amount of any dividend
received from the Fund into account (without a dividend received deduction) in determining their adjusted current earnings, which are used in computing an additional corporate preference item (i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings over its AMTI (determined without regard to this item and the AMTI net operating loss deduction)) that is includable in AMTI. However, certain small corporations are wholly exempt from the AMT.
Distributions by a Fund that do not constitute earnings and profits will be treated as a return of capital to the extent of (and in reduction of) the shareholder's tax basis in his shares; any excess will be treated as gain from the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Fund (or of another Fund). Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date.
Ordinarily, shareholders are required to take distributions by a Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year in accordance with the guidance that has been provided by the IRS.
If the net asset value of shares is reduced below a shareholder's cost as a result of a distribution by a Fund, such distribution generally will be taxable even though it represents a return of invested capital. Investors should be careful to consider the tax implications of buying shares of a Fund just prior to a distribution. The price of shares purchased at this time may reflect the amount of the forthcoming distribution. Those purchasing just prior to a distribution will receive a distribution which generally will be taxable to them.
SALE OR REDEMPTION OF SHARES. A shareholder will recognize gain or loss
on the sale or redemption of shares of a Fund in an amount equal to the
difference between the proceeds of the sale or redemption and the shareholder's
adjusted tax basis in the shares. All or a portion of any loss so recognized may
be deferred if the shareholder purchases other shares of the Fund within thirty
(30) days before or after the sale or redemption. In general, any gain or loss
arising from (or treated as arising from) the sale or redemption of shares of a
Fund will be considered capital gain or loss and will be long-term capital gain
or loss if the shares were held for longer than one year. Currently, any
long-term capital gain recognized by a non-corporate shareholder will be subject
to tax at a maximum rate of 20%. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. Capital losses in any year are deductible only to the
extent of capital gains plus, in the case of a non-corporate taxpayer, $3,000 of
ordinary income.
If a shareholder (a) incurs a sales load in acquiring shares of a Fund,
(b) disposes of such shares less than 91 days after they are acquired, and (c)
subsequently acquires shares of the Fund or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of, but shall be treated as incurred on the
acquisition of the shares subsequently acquired. The wash sale rules may also
limit the amount of loss that may be taken into account.
BACKUP WITHHOLDING. The Funds may be required to withhold as of January 1, 2002, 30% of distributions and/or redemption payments; however, this rate is reduced in phases to 28% for distributions
made in the year 2006 and thereafter. For more information refer to "Purchase, Redemption and Pricing of Shares - Backup Withholding".
FOREIGN SHAREHOLDERS. Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from a Fund is "effectively connected" with a U.S. trade or business carried on by such shareholder. If the income from a Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, distributions (other than distributions of long-term capital gain) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the distribution. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gain realized on the redemption of shares of a Fund, capital gain dividends and amounts retained by a Fund that are designated as undistributed net capital gain.
If the income from a Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends and any gains realized upon the sale or redemption of shares of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, a Fund may be required to withhold U.S. federal income tax at a rate of 30% on distributions made on or after January 1, 2002 that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless such shareholders furnish the Fund with proper notification of their foreign status; however, this rate is reduced in phases to 28% for distributions made in the year 2006 and thereafter.
Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the income resulting from a Fund's election to treat any foreign income tax paid by it as paid by its shareholders, but may not be able to claim a credit or deduction with respect to the withholding tax for the foreign tax treated as having been paid by them.
Foreign persons who file a United States tax return to obtain a U.S. tax refund and who are not eligible to obtain a social security number must apply to the IRS for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or the IRS.
Transfers by gift of shares of a Fund by a foreign shareholder who is a nonresident alien individual will not be subject to U.S. federal gift tax. An individual who, at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exception applies. In the absence of a treaty, there is a $13,000 statutory estate tax credit.
The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Fund, including the applicability of foreign tax.
FOREIGN INCOME TAX. Investment income received by each Fund from sources within foreign countries may be subject to foreign income tax withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Funds to a reduced rate of, or exemption from, tax on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, the Fund may elect to "pass through" to the Fund's shareholders the amount of foreign income tax paid by the Fund (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income tax paid by the Fund that are
attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign tax in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against Federal income tax (but not both). No deduction for foreign tax may be claimed by a non-corporate shareholder who does not itemize deductions or who is subject to alternative minimum tax.
Unless certain requirements are met, a credit for foreign tax is subject to the limitation that it may not exceed the shareholder's U.S. tax (determined without regard to the availability of the credit) attributable to the shareholder's foreign source taxable income. In determining the source and character of distributions received from a Fund for this purpose, shareholders will be required to allocate Fund distributions according to the source of the income realized by the Fund. Each Fund's gain from the sale of stock and securities and certain currency fluctuation gain and loss will generally be treated as derived from U.S. sources. In addition, the limitation on the foreign tax credit is applied separately to foreign source "passive" income, such as dividend income. Individuals who have no more than $300 ($600 for married persons filing jointly) of creditable foreign tax included on Form 1099 and whose foreign source income is all "qualified passive income" may elect each year to be exempt from the foreign tax credit limitation and will be able to claim a foreign tax credit without filing Form 1116 with its corresponding requirement to report income and tax by country. Moreover, no foreign tax credit will be allowable to any shareholder who has not held his shares of the Fund for at least 16 days during the 30-day period beginning 15 days before the day such shares become ex-dividend with respect to any Fund distribution to which foreign income taxes are attributed (taking into account certain holding period reduction requirements of the Code). Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income tax paid by a Fund.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS. The foregoing general discussion of U.S. federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on the date of this Statement of Additional Information. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation for ordinary income dividends and capital gain dividends from regulated investment companies often differ from the rules for U.S. federal income taxation described above. Distributions may also be subject to additional state, local and foreign taxes depending on each shareholder's particular situation. Non-U.S. shareholders may be subject to U.S. tax rules that differ significantly from those summarized above. Shareholders are urged to consult their tax advisers as to the consequences of these and other state and local tax rules affecting investment in the Funds.
DISTRIBUTION OF SECURITIES
DISTRIBUTOR
The Trust has entered into master distribution agreements, as amended, relating to the Funds (the "Distribution Agreements") with AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, pursuant to which AIM Distributors acts as the distributor of shares of the Funds. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the Trust are affiliated with AIM Distributors. See "Management of the Trust."
The Distribution Agreements provide AIM Distributors with the exclusive right to distribute shares of the Funds on a continuous basis directly and through institutions with whom AIM Distributors has entered into selected dealer agreements. AIM Distributors has not undertaken to sell any specified number of shares of any classes of the Funds.
The Trust (on behalf of the Institutional Classes) or AIM Distributors may terminate the Distribution Agreement on sixty (60) days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its assignment.
AIM Distributors may, from time to time at its expense, pay a bonus or other consideration or incentive to dealers or banks. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold or of average daily net assets of the Funds attributable to that particular dealer. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable Fund's shares or the amount that any particular Fund will receive as proceeds from such sales. Dealers may not use sales of the Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state.
CALCULATION OF PERFORMANCE DATA
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund.
Average Annual Total Return Quotation
The standard formula for calculating average annual total return is as follows:
n P(1+T) = ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable
maximum sales load is deducted at the beginning of the 1, 5,
or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the 1, 5, or 10 year periods (or fractional portion
of such period).
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The average annual total return for each Fund, with respect to its Institutional Class shares, for the one year period ended October 31 is found in Appendix I.
Total returns quoted in advertising reflect all aspects of a Fund's return, including the effect of reinvesting dividends and capital gain distributions, and any change in the Fund's net asset value per share over the period. Cumulative total return reflects the performance of a Fund over a stated period of time. Average annual total returns are calculated by determining the growth or decline in value of a hypothetical investment in a Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. Each Fund's total return is calculated in accordance with a standardized formula for computation of annualized total return.
A Fund's total return shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. A cumulative total return reflects the Fund's performance over a stated period of time. An average annual total return reflects the hypothetical compounded annual rate of return that would have produced the same cumulative total return if the Fund's performance had been constant over the entire period. Because average annual returns tend to even out variations in the Fund's return, investors should recognize that such returns are not the same as actual year-by-year results. To illustrate the components of overall performance, a Fund may separate its cumulative and average annual returns into income results and capital gains or losses.
Alternative Total Return Quotations
Standard total return quotes may be accompanied by total return figures calculated by alternative methods. For example, average annual total return may be calculated without assuming payment of the full sales load according to the following formula:
n P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only a stated
portion of, or none of, the applicable maximum sales load at
the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the stated period.
|
Cumulative total return across a stated period may be calculated as follows:
P(1+V)=ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated
portion of, or none of, the applicable maximum sales load at
the beginning of the stated period.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the stated period.
|
The cumulative total return for each Fund, with respect to its Institutional Class shares, for the period from inception through October 31 is found in Appendix I.
Yield Quotation
Yield is a function of the type and quality of a Fund's investments, the maturity of the securities held in a Fund's portfolio and the operating expense ratio of the Fund. Yield is computed in accordance with standardized formulas described below and can be expected to fluctuate from time to time and is not necessarily indicative of future results. Accordingly, yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time.
Income calculated for purposes of calculating a Fund's yield differs from income as determined for other accounting purposes. Because of the different accounting methods used, and because of the compounding assumed in yield calculations, the yield quoted for a Fund may differ from the rate of distributions from the Fund paid over the same period or the rate of income reported in the Fund's financial statements.
The standard formula for calculating yield for each Fund is as follows:
Where a = dividends and interest earned during a stated 30-day period.
For purposes of this calculation, dividends are accrued rather
than recorded on the ex-dividend date. Interest earned under
this formula must generally be calculated based on the yield
to maturity of each obligation (or, if more appropriate, based
on yield to call date).
b = expenses accrued during period (net of reimbursements).
c = the average daily number of shares outstanding during the
period.
d = the maximum offering price per share on the last day of the
period.
|
Performance Information
All advertisements for the Funds' Class A, B and C shares will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of a Fund's shares. If any advertised performance data for such classes does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. Further information regarding each Fund's performance is contained in that Fund's annual report to shareholders, which is available upon request and without charge.
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing that Fund's yield and total return.
Certain Funds may participate in the initial public offering (IPO) market in some market cycles. Because of these Funds' small asset bases, any investment the Funds may make in IPOs may significantly increase these Funds' total returns. As the Funds' assets grow, the impact of IPO investments will decline, which may decrease the Funds' total returns.
The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results.
Total return and yield figures for the Funds are neither fixed nor guaranteed. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. The following is a list of such publications or media entities:
Advertising Age Forbes Nation's Business Barron's Fortune New York Times Best's Review Hartford Courant Pension World Broker World Inc. Pensions & Investments Business Week Institutional Investor Personal Investor Changing Times Insurance Forum Philadelphia Inquirer Christian Science Monitor Insurance Week USA Today Consumer Reports Investor's Business Daily U.S. News & World Report Economist Journal of the American Wall Street Journal FACS of the Week Society of CLU & ChFC Washington Post Financial Planning Kiplinger Letter CNN Financial Product News Money CNBC Financial Services Week Mutual Fund Forecaster PBS Financial World |
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services:
Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper, Inc. |
Each Fund's performance may also be compared in advertising to the performance of comparative benchmarks such as the following:
Lipper Mid-Cap Growth Fund Index Russell 3000(R) Index Lipper Large Cap Value Fund Index Russell Mid Cap Index Russell 1000 Index Standard & Poor's 500 Stock Index Russell 2500(R) Index Standard & Poor's Mid Cap 400 Index Russell 2500(R) Growth Index NASDAQ Index |
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10 year Treasury Notes
90 day Treasury Bills
Advertising for the Funds may from time to time include discussions of general economic conditions and interest rates. Advertising for such Funds may also include references to the use of those Funds as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for any of the Funds may disclose: (i) the largest holdings in the Fund's portfolio; (ii) certain selling group members; (iii) certain institutional shareholders; (iv) measurements of risk, including standard deviation, Beta and Sharpe ratios; and/or (v) capitalization and sector analyses of holdings in the Funds' portfolios.
From time to time, the Funds' sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, discussions regarding investment styles, such as the growth, value or GARP (growth at a reasonable price) styles of investing, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation.
From time to time, AIM Dent Demographic Trends Fund's sales literature and/or advertisements may quote (i) Harry S. Dent, Jr.'s theories on why the coming decade may offer unprecedented opportunities for investors, including his opinions on the stock market outlook and where growth may be strongest; (ii) Harry S. Dent, Jr.'s opinions and theories from his books and publications, including, but not limited to, Job Shock, The Great Boom Ahead and The Roaring 2000s, including his beliefs that (a) people's spending patterns may help predict the stock market, (b) the stock market has tended to perform best when a generation has reached its peak spending years from ages 45-50, and (c) as more and more baby boomers reach their peak spending age, they could propel stock prices up for the next decade; and (iii) Harry S. Dent, Jr.'s S-curve analysis, a forecasting tool used to analyze products that show remarkable growth.
APPENDIX A
RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's, S&P and Fitch:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. These are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa in its corporate bond rating system. The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Bonds in the Aa group which Moody's believes possess the strongest investment attributes are designated by the symbol Aa1.
Note: Also, Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to B. The modifier indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic category.
MOODY'S DUAL RATINGS
In the case of securities with a demand feature, two ratings are assigned: one representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the other representing an evaluation of the degree of risk associated with the demand feature.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade or (MIG). Such ratings recognize the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term ratings, while other factors of major importance in bond risk, long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand feature variable rate demand obligation (VRDO). Such ratings will be designated as VMIG or, if the demand feature is not rated, as NR. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. Additionally, investors should be alert to the fact that the source of payment may be limited to the external liquidity with no or limited legal recourse to the issuer in the event the demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such programs are characterized as having variable short-term maturities but having neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with each symbol representing a group in which the quality characteristics are broadly the same.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months.
PRIME-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
Funds employed; conservative capitalization structures with moderate reliance on
debt and
ample asset protection; broad margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or related supported institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.
Note: A Moody's commercial paper rating may also be assigned as an evaluation of the demand feature of a short-term or long-term security with a put option.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or large exposure to adverse conditions.
S&P MUNICIPAL BOND RATINGS
An S&P municipal bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees.
The ratings are based, in varying degrees, on the following considerations: likelihood of default - capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation; nature of and provisions of the obligation; and protection
afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
Note: Ratings within the AA and A major rating categories may be modified by the addition of a plus (+) sign or minus (-) sign to show relative standing.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, AAA/A-1+). With short-term demand debt, the note rating symbols are used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access risks unique to notes. Notes maturing in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment: amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue will be treated as a note); and source of payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note).
Note rating symbols and definitions are as follows:
SP-1: Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3: Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
Rating categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
B: Issues with this rating are regarded as having only speculative capacity for timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D: Debt with this rating is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless it is believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a specific debt issue in a timely manner.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Bonds carrying the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature of taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of such information. Ratings may be changed, suspended, or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds and, therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a project or the occurrence of a specific event.
SUSPENDED: A rating is suspended when Fitch deems the amount of information available from the issuer to be inadequate for rating purposes.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper and timely information.
FITCHALERT: Ratings are placed on FitchAlert to notify investors of an occurrence that is likely to result in a rating change and the likely direction of such change. These are designated as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may be raised or lowered. FitchAlert is relatively short-term, and should be resolved within 12 months.
RATINGS OUTLOOK
An outlook is used to describe the most likely direction of any rating change over the intermediate term. It is described as "Positive" or "Negative." The absence of a designation indicates a stable outlook.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings ("BB" to "C") represent Fitch's assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an assessment of the ultimate recovery value through reorganization of liquidation.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer or possible recovery value in bankruptcy, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical credit quality since rating categories cannot fully reflect the differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified, which could assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. "DDD" represents the highest potential for recovery on these bonds, and "D" represents the lowest potential for recovery.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "DDD," "DD," or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could cause these securities to be rated below investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank.
APPENDIX B
TRUSTEES AND OFFICERS
TRUSTEE
NAME, YEAR OF BIRTH AND/OR OTHER
AND POSITION(S) HELD OFFICER DIRECTORSHIP(S)
WITH THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
-------------------------------- ------- ------------------------------------------------ ----------------
INTERESTED PERSON
Robert H. Graham* -- 1946 1988 Chairman, President and Chief Executive Officer, None
Trustee, Chairman and A I M Management Group Inc. (financial services
President holding company); Chairman and President, A I M
Advisors, Inc. (registered investment advisor);
Chairman, A I M Capital Management, Inc.
(registered investment advisor), A I M
Distributors, Inc. (registered broker dealer),
A I M Fund Services, Inc., (registered transfer
agent); and Fund Management Company (registered
broker dealer); and Director and Vice Chairman,
AMVESCAP PLC (parent of AIM and a global
investment management firm)
----------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
----------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds,
Inc.
Trustee (registered
investment
company)
----------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 1993 Chairman, Crockett Technology Associates ACE Limited
Trustee (technology consulting company) (insurance
company); and
Captaris, Inc.
(unified
messaging
provider)
----------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2000 Chairman, Cortland Trust, Inc. (registered None
Trustee investment company) and DHJ Media, Inc.;
Director, Magellan Insurance Company; Member of
Advisory Board of Rotary Power International
(designer, manufacturer, and seller of rotary
power engines); formerly, Director, President
and CEO, Volvo Group North America, Inc.; and
director of various affiliated Volvo companies
----------------------------------------------------------------------------------------------------------------
|
TRUSTEE
NAME, YEAR OF BIRTH AND/OR OTHER
AND POSITION(S) HELD OFFICER DIRECTORSHIP(S)
WITH THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
-------------------------------- ------- ------------------------------------------------ ----------------
INDEPENDENT TRUSTEES
----------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. -- 1935 1998 Formerly, Chairman, Mercantile Mortgage Corp.; None
Trustee Vice Chairman, President and Chief Operating
Officer, Mercantile-Safe Deposit & Trust Co.;
and President, Mercantile Bankshares Corp.
----------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Administaff
Trustee Group, Inc. (government affairs company)
----------------------------------------------------------------------------------------------------------------
Carl Frischling** -- 1937 1988 Partner, law firm of Kramer Levin Naftalis and Cortland Trust,
Trustee Frankel LLP Inc. (registered
investment
company)
----------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 1998 Formerly, Chief Executive Officer, YWCA of the None
Trustee USA
----------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 1988 Partner, law firm of Pennock & Cooper None
Trustee
----------------------------------------------------------------------------------------------------------------
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
----------------------------------------------------------------------------------------------------------------
Louis S. Sklar -- 1939 1989 Executive Vice President, Development and None
Trustee Operations, Hines Interests Limited Partnership
(real estate development company)
----------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
----------------------------------------------------------------------------------------------------------------
Gary T. Crum -- 1947 1988 Director, Chief Executive Officer - Director of N/A
Senior Vice President Investments, A I M Capital Management, Inc.;
Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC
(parent of AIM and a global investment
management firm)
----------------------------------------------------------------------------------------------------------------
|
TRUSTEE
NAME, YEAR OF BIRTH AND/OR OTHER
AND POSITION(S) HELD OFFICER DIRECTORSHIP(S)
WITH THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
-------------------------------- ------- ------------------------------------------------ ----------------
OTHER OFFICERS
----------------------------------------------------------------------------------------------------------------
Carol F. Relihan -- 1954 1988 Director, Senior Vice President, General Counsel N/A
Senior Vice President and and Secretary, A I M Advisors, Inc. and A I M
Secretary Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company;
and Vice President, A I M Fund Services, Inc.,
A I M Capital Management, Inc. and A I M
Distributors, Inc.
----------------------------------------------------------------------------------------------------------------
Melville B. Cox -- 1943 1992 Vice President and Chief Compliance Officer, N/A
Vice President A I M Advisors, Inc. and A I M Capital
Management, Inc.; and Vice President, A I M Fund
Services, Inc.
----------------------------------------------------------------------------------------------------------------
Edgar M. Larsen -- 1940 1999 Vice President, A I M Advisors, Inc.; and N/A
Vice President President and Chief Investment Officer, A I M
Capital Management, Inc.
----------------------------------------------------------------------------------------------------------------
Dana R. Sutton -- 1959 1988 Vice President and Fund Treasurer, A I M N/A
Vice President and Treasurer Advisors, Inc.
----------------------------------------------------------------------------------------------------------------
|
TRUSTEE OWNERSHIP OF FUND SHARES
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN
BY TRUSTEE IN
DOLLAR RANGE OF EQUITY SECURITIES THE AIM FAMILY OF
NAME OF TRUSTEE PER FUND FUNDS--Registered Trademark--
--------------------- -------------------------------------------- -----------------------------
Robert H. Graham Aggressive Growth Over $100,000 Over $100,000(1)
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation Over $100,000
Emerging Growth $50,001 - $100,000
Weingarten Over $100,000
--------------------- -------------------------------------------- --------------------------
Frank S. Bayley - 0 - $10,001 - $50,000
--------------------- -------------------------------------------- --------------------------
Bruce L. Crockett Aggressive Growth $1 - $10,000 $1 - $10,000
Charter $1 - $10,000
Constellation $1 - $10,000
Weingarten $1 - $10,000
--------------------- -------------------------------------------- --------------------------
Owen Daly II Aggressive Growth $1 - $10,000 Over $100,000(1)
Blue Chip $10,001 - $50,000
Charter $50,001 - $100,000
Constellation $1 - $10,000
Large Cap Basic Value Over $100,000
--------------------- -------------------------------------------- --------------------------
Albert R. Dowden Blue Chip $10,001 - $50,000 Over $100,000(1)
--------------------- -------------------------------------------- --------------------------
Edward K. Dunn, Jr. Capital Development Over $100,000 Over $100,000(1)
--------------------- -------------------------------------------- --------------------------
|
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN
DOLLAR RANGE OF EQUITY SECURITIES BY TRUSTEE IN
NAME OF TRUSTEE PER FUND THE AIM FAMILY OF FUNDS
--------------------- -------------------------------------------- --------------------------
Jack M. Fields Blue Chip $10,001 - $50,000 Over $100,000(1)
Charter $50,001 - $100,000
Constellation $50,001 - $100,000
Weingarten $50,001 - $100,000
--------------------- -------------------------------------------- --------------------------
Carl Frischling Aggressive Growth $50,001 - $100,000 Over $100,000(1)
Blue Chip Over $100,000
Capital Development Over $100,000
Charter Over $100,000
Constellation Over $100,000
Weingarten $50,001 - $100,000
--------------------- -------------------------------------------- --------------------------
Prema Mathai-Davis Aggressive Growth $50,001 - $100,000 Over $100,000(1)
Blue Chip $10,001 - $50,000
Large Cap Basic Value $10,001 - $50,000
--------------------- -------------------------------------------- --------------------------
Lewis F. Pennock Charter $10,001 - $50,000 $10,001 - $50,000
--------------------- -------------------------------------------- --------------------------
Ruth H. Quigley -0- $1 - $10,000
--------------------- -------------------------------------------- --------------------------
Louis S. Sklar Aggressive Growth $50,001 - $100,000 Over $100,000(1)
Charter Over $100,000
Constellation Over $100,000
Weingarten Over $100,000
-----------------------------------------------------------------------------------------------
|
APPENDIX C
TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with AIM during the year ended December 31, 2001:
RETIREMENT
AGGREGATE BENEFITS ESTIMATED TOTAL
COMPENSATION ACCRUED ANNUAL COMPENSATION
FROM THE BY ALL BENEFITS UPON FROM ALL AIM
TRUSTEE TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4)(5)
------- ------------ ------------ ------------- ------------
Frank S. Bayley(6) $ 2,213 -0- $75,000 $112,000
Bruce L. Crockett 28,969 $ 36,312 75,000 126,500
Owen Daly II(7) 28,969 33,318 75,000 126,500
Albert R. Dowden 25,600 3,193 75,000 126,500
Edward K. Dunn, Jr 28,969 8,174 75,000 126,500
Jack M. Fields 28,616 19,015 75,000 126,000
Carl Frischling(8) 28,873 54,394 75,000 126,000
Prema Mathai-Davis 28,969 21,056 75,000 126,500
Lewis F. Pennock 28,969 37,044 75,000 126,500
Ruth H. Quigley(6) 2,309 -0- 75,000 112,500
Louis S. Sklar 28,108 53,911 75,000 123,000
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended October 31, 2001, including earnings, was $257,401.
(2) During the fiscal year ended October 31, 2001, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $116,956.
(3) Amounts shown assume each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as directors or trustees of sixteen registered investment companies advised by AIM.
(5) During the fiscal year ended October 31, 2001, the Trust received reimbursement for compensation paid to the trustees of $8,101. During the year ended December 31, 2001, all AIM Funds received reimbursement of total compensation paid to trustees of $31, 500.
(6) Mr. Bayley and Miss Quigley were elected to serve as trustees on September 28, 2001.
(7) Mr. Daly retired as trustee on December 31, 2001.
(8) During the fiscal year ended October 31, 2001, the Trust paid $98,704 in legal fees to Kramer Levin Naftalis & Frankel LLP for services rendered by such firm as counsel to the independent trustees of the Trust. Mr. Frischling is a partner of such firm.
APPENDIX D
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding shares of each class of the Trust's equity securities and the percentage of the outstanding shares held by such holders are set forth below. Unless otherwise indicated below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
A shareholder who owns beneficially 25% or more of the outstanding securities of a Fund is presumed to "control" that Fund as defined in the 1940 Act. Such control may affect the voting rights of other shareholders.
All information listed below is as of February 4, 2002.
AIM AGGRESSIVE GROWTH FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Merrill Lynch Pierce Fenner & Smith 10.12% -- 15.31% N/A
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
--------------------------------------------------------------------------------------------------
The Manufacturers Life Insurance 8.47% -- -- N/A
Company
C/O Manulife Financial USA
Attn: Rosie Chuck SRS Acctg
250 Bloor St East, 7th Floor
Toronto, Ontario, Canada M4WIE5
|
AIM BLUE CHIP FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 8.60% 9.37% 17.70% N/A
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Banc One Securities Corp FBO
The One Investment Solution -- -- 7.05% N/A
Attn: Wrap Processing OH1-1244
1111 Polaris Pkwy, Suite J-2
Columbus, OH 43240-1244
|
AIM CAPITAL DEVELOPMENT FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 10.25% 12.27% 15.46% N/A
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
--------------------------------------------------------------------------------------------------
Coastgear & Company
State Street Bank & Trust -- -- 7.45% N/A
Attn: Kevin Smith
105 Rosemont Avenue
Westwood, MA 02090
|
AIM CHARTER FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 11.18% 7.63% 14.85% --
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
--------------------------------------------------------------------------------------------------
Great-West Life and Annuity Insurance
Company 6.74% -- -- --
401(k) Unit Valuations
Attn Mutual Fund Trading 2T2
8515 E. Orchard
Englewood, CO 80111
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Ruth and Ted Bauer
Family Foundation -- -- -- 11.60%
11 Greenway Plaza, Suite 2600
Houston, TX 77046-1173
--------------------------------------------------------------------------------------------------
City National Bank
Attn: Trust Operations/Mutual Funds -- -- -- 8.91%
P.O. Box 60520
Los Angeles, CA 90060-0520
--------------------------------------------------------------------------------------------------
City of Springfield, Trustee, FBO
City of Springfield, 457 DCP -- -- -- 6.13%
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------------------------------------------------------------------------
Town of Watertown, Trustee
FBO: Town of Watertown -- -- -- 6.02%
457 Deferred Compensation Plan
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------------------------------------------------------------------------
Steamship Authority, Trustee
FBO: Woods Hole, Martha's Vineyard's -- -- -- 5.19%
Nantucket 456 DCP
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
|
AIM CONSTELLATION FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 13.16% 6.39% 20.21% --
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
--------------------------------------------------------------------------------------------------
Banc One Securities Corp FBO
The One Investment Solution -- -- 5.99% --
Attn: Wrap Processing OH1-1244
1111 Polaris Pkwy, Suite J-2
Columbus, OH 43240-1244
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Ohio Public
Employees Deferred Compensation -- -- -- 65.53%
172 E. State Street
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
Wells Fargo Bank West NA Cust.
City of Houston -- -- -- 12.48%
457 Deferred Compensation Plan
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------------------------------------------------------------------------
Nationwide Insurance Company-DCVA
C/O IPO Portfolio Accounting -- -- -- 8.83%
P.O. Box 182029
Columbus, OH 43218
--------------------------------------------------------------------------------------------------
State of Vermont Deferred Comp
C/O Copeland Companies -- -- -- 7.59%
Attn: Planned Valuation Services
2 Tower Center
East Brunswick, NJ 08816-0000
|
AIM CORE STRATEGIES FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ---------- --------- ----------
A I M Advisors, Inc.**
Attn: David Hessel 100.00%* 100.00%* 100.00%*
11 Greenway Plaza, Suite 100
Houston, TX 77046
|
* Owned of record and beneficially. ** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM DENT DEMOGRAPHIC TRENDS FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ---------- --------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 7.22% 13.76% 19.79%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM EMERGING GROWTH FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ---------- --------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 9.08% 8.30% 24.26%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM LARGE CAP BASIC VALUE FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ---------- --------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 32.12% 16.38% 20.56%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM LARGE CAP CORE EQUITY FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ---------- --------- ----------
A I M Advisors, Inc.**
Attn: David Hessel 54.03%* 65.47%* 98.35%*
11 Greenway Plaza, Suite 100
Houston, TX 77046
--------------------------------------------------------------------------------
Gary Saginor TTEE
The Nina Firestone Trust DTD -- 10.86% --
11/07/2001
2500 N Military Trail, Suite 285
Boca Raton, FL 33431-0000
--------------------------------------------------------------------------------
Alberta M. Flynt -- 6.15% --
1427 Oak Street
Flowood, MS 39208-0000
--------------------------------------------------------------------------------
Willie Thomas Havard
Credit Shelter Tr -- 5.49% --
U/W DTD 02/12/1998
137 Villa Way
Clinton, MS 39056-0000
|
* Owned of record and beneficially. ** Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM LARGE CAP GROWTH FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ---------- --------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 10.22% 9.76% 16.28%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM MID CAP GROWTH FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
---------- ---------- ----------
PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD
--------------------------------------- ---------- --------- ----------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 7.04% 13.74% 18.00%
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
|
AIM WEINGARTEN FUND
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers 13.49% 7.72% 17.91% --
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
--------------------------------------------------------------------------------------------------
Great-West Life and Annuity Insurance Co.
401(k) Unit Valuations 5.36% -- -- --
Attn: Mutual Fund Trading 2T2
8515 E. Orchard Rd
Englewood, CO 80111-0000
--------------------------------------------------------------------------------------------------
Fleet National Bank
Attn: Various C/R -- -- -- 28.51%
P.O. Box 92800
Rochester, NY 14692
|
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
---------- ---------- ---------- -------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF OWNED OF OWNED OF OWNED OF OWNED OF
PRINCIPAL HOLDER RECORD RECORD RECORD RECORD
--------------------------------------- ---------- --------- ---------- -------------
AIM Foundation
Attn: Patricia Lewis -- -- -- 20.38%
11 Greenway Plaza, Suite 2600
Houston, TX 77046
--------------------------------------------------------------------------------------------------
David, Leary, Trustee
FBO: Town of Weymouth -- -- -- 7.43%
457 Deferred Compensation Plan
C/O. Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------------------------------------------------------------------------
Town of Watertown, Trustee
FBO: Town of Watertown -- -- -- 6.33%
457 Deferred Compensation Plan
C/O Great West, Recordkeeper
8515 E. Orchard Rd 2T2
Englewood, CO 80111-0000
--------------------------------------------------------------------------------------------------
Obie & Co. FBO
Joshua Michael Grayson Trust -- -- -- 6.24%
Mutual Fund Unit 16 HCB 40
P.O. Box 200547
Houston, TX 77216
|
MANAGEMENT OWNERSHIP
As of February 4, 2002, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of AIM Aggressive Growth Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Core Strategies Fund, AIM Dent Demographic Trends Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Core Equity Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund, and AIM Weingarten Fund. In addition, as of February 4, 2002, the trustees and officers as a group owned 1.03% of Class A shares of AIM Emerging Growth Fund and 1.51% of Class A shares of AIM Blue Chip Fund.
APPENDIX E
MANAGEMENT FEES
For the last three fiscal years ended October 31, the management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund were as follows:
2001 2000
------------------------------------------- -------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT MANAGEMENT MANAGEMENT NET MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
-------------- ------------ ------------ -------------- ------------ ------------ --------------
AIM Aggressive
Growth Fund $ 23,755,259 $ 7,508 $ 23,747,751 $ 26,977,097 -0- $ 26,977,097
-------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM Blue Chip
Fund $ 35,318,225 $ 153,216 $ 35,165,009 $ 36,923,601 $ 70,387 $ 36,853,214
-------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM Capital
Development
Fund $ 8,548,376 $ 3,281 $ 8,545,095 $ 9,200,414 -0- $ 9,200,414
-------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM Charter
Fund $ 43,928,613 $ 504,457 $ 43,424,156 $ 56,142,463 $ 1,484,073 $ 54,658,390
-------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM
Constellation
Fund $ 93,618,688 $ 3,749,927 $ 89,868,761 $128,677,520 $ 6,187,566 $122,489,954
-------------- ------------ ------------ ------------ ------------ ------------ ------------
AIM Weingarten
Fund $ 46,064,764 $ 584,500 $ 45,480,264 $ 75,218,931 $ 5,181,384 $ 70,073,547
-------------- ------------ ------------ ------------ ------------ ------------ ------------
1999
-------------------------------------------
MANAGEMENT MANAGEMENT NET MANAGEMENT
FUND NAME FEE PAYABLE FEE WAIVERS FEE PAID
-------------- ------------ ------------ --------------
AIM Aggressive
Growth Fund $ 17,085,022 -0- $ 17,085,022
-------------- ------------ ------------ ------------
AIM Blue Chip
Fund $ 21,592,076 -0- $ 21,592,076
-------------- ------------ ------------ ------------
AIM Capital
Development
Fund $ 8,102,504 -0- $ 8,102,504
-------------- ------------ ------------ ------------
AIM Charter
Fund $ 41,014,707 $ 1,130,089 $ 39,884,618
-------------- ------------ ------------ ------------
AIM
Constellation
Fund $ 90,458,750 $ 3,107,849 $ 87,350,901
-------------- ------------ ------------ ------------
AIM Weingarten
Fund $ 54,999,214 $ 4,288,405 $ 50,710,809
-------------- ------------ ------------ ------------
|
APPENDIX F
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last three fiscal years ended October 31:
FUND NAME 2001 2000 1999
---------------------------- -------- -------- --------
AIM Aggressive Growth Fund $276,738 $233,230 $126,956
---------------------------- -------- -------- --------
AIM Blue Chip Fund $331,400 $280,996 $153,309
---------------------------- -------- -------- --------
AIM Capital Development Fund $160,775 $147,339 $111,632
---------------------------- -------- -------- --------
AIM Charter Fund $383,570 $383,224 $235,274
---------------------------- -------- -------- --------
AIM Constellation Fund $622,082 $731,392 $431,120
---------------------------- -------- -------- --------
AIM Weingarten Fund $392,623 $473,764 $281,500
---------------------------- -------- -------- --------
|
APPENDIX G
BROKERAGE COMMISSIONS
Brokerage commissions paid by each of the Funds listed below during the last three fiscal years ended October 31, were as follows:
FUND 2001 2000 1999
---- ----------- ----------- -----------
AIM Aggressive Growth Fund $ 6,473,868 $ 4,003,829 $ 3,536,558
AIM Blue Chip Fund 3,838,893 3,087,012 2,695,856
AIM Capital Development Fund 4,153,032 2,924,761 3,324,179
AIM Charter Fund 12,104,855 10,479,914 11,856,871
AIM Constellation Fund 23,003,818 25,382,535 20,108,956
AIM Weingarten Fund 30,640,967 21,922,844 20,226,511
|
The variation in the brokerage commissions paid by each of AIM Aggressive Growth Fund and AIM Weingarten Fund for the fiscal year ended October 31, 2001, as compared to the two prior fiscal years, was due to fluctuations in asset levels, increased portfolio turnover and record market volatility.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended October 31, 2001, each Fund allocated the following amount of transactions to broker-dealers that provided AIM with certain research, statistics and other information:
Related
Fund Transactions Brokerage Commissions
---- -------------- ---------------------
AIM Aggressive Growth Fund $ 761,312,304 $1,218,904
AIM Blue Chip Fund 360,119,191 425,758
AIM Capital Development Fund 229,225,331 368,662
AIM Charter Fund 992,753,189 1,258,184
AIM Constellation Fund 1,356,784,301 1,734,767
AIM Weingarten Fund 3,297,364,386 3,239,006
|
During the last fiscal year ended October 31, 2001, the Funds held securities issued by the following companies, which are "regular" brokers or dealers of one or more of the Funds identified below:
Fund Security Market Value
---- ------------ ------------
AIM Aggressive Growth Fund
Legg Mason Common Stock $ 16,844,000
AIM Blue Chip Fund
Merrill Lynch & Co., Inc. Common Stock 63,379,500
Morgan Stanley Dean Witter & Co. Common Stock 70,934,000
AIM Capital Development Fund
Legg Mason Common Stock 6,110,161
AIM Charter Fund
Goldman Sachs Group, Inc. Common Stock 50,804,000
Merrill Lynch & Co., Inc. Common Stock 76,492,500
Morgan Stanley Dean Witter & Co. Common Stock 146,760,000
AIM Constellation Fund
Goldman Sachs Group, Inc. Common Stock 265,744,000
Merrill Lynch & Co., Inc. Common Stock 180,085,200
Morgan Stanley Dean Witter & Co. Common Stock 195,680,000
|
APPENDIX I
PERFORMANCE DATA
The average annual total return for each Fund, with respect to its Institutional Class shares, for the one year period ended October 31, 2001, is as follows:
PERIOD ENDED
OCTOBER 31, 2001
---------------------------
ONE YEAR INCEPTION DATE
-------- --------------
AIM Aggressive Growth Fund N/A 03/01/02
AIM Blue Chip Fund N/A 03/01/02
AIM Capital Development Fund N/A 03/01/02
AIM Charter Fund -38.46% 07/30/91
AIM Constellation Fund -42.81% 04/08/92
AIM Weingarten Fund -47.11% 10/08/91
|
The cumulative total return for each Fund, with respect to its Institutional Class shares, for the period from inception through October 31, 2001 is as follows:
PERIOD ENDED
OCTOBER 31, 2001
--------------------------------
SINCE INCEPTION INCEPTION DATE
--------------- --------------
AIM Aggressive Growth Fund N/A 03/01/02
AIM Blue Chip Fund N/A 03/01/02
AIM Capital Development Fund N/A 03/01/02
AIM Charter Fund 157.06% 07/30/91
AIM Constellation Fund 180.93% 04/08/92
AIM Weingarten Fund 115.40% 10/08/91
|
FINANCIAL STATEMENTS
FS
AGGRESSIVE GROWTH FUND
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Aggressive Growth Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Aggressive Growth Fund (a portfolio
AIM Equity Funds), including the schedule of investments,
as of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the periods presented through October 31,
2000 were audited by other auditors whose report dated
December 6, 2000, expressed an unqualified opinion on
those statements and financial highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Aggressive Growth Fund at October 31, 2001, and the
results of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-1
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Aggressive Growth Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Aggressive Growth Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-2
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY
INTERESTS-97.33%
ADVERTISING-0.29%
Catalina Marketing Corp.(a) 300,000 $ 8,295,000
==========================================================================
AIR FREIGHT & COURIERS-0.23%
Expeditors International of Washington, Inc. 150,000 6,780,000
==========================================================================
APPAREL & ACCESSORIES-0.25%
Quicksilver, Inc.(a) 556,100 7,323,837
==========================================================================
APPAREL RETAIL-2.21%
American Eagle Outfitters, Inc.(a) 1,041,800 28,545,320
--------------------------------------------------------------------------
Genesco, Inc.(a) 500,000 9,125,000
--------------------------------------------------------------------------
Too Inc.(a) 1,000,000 26,610,000
==========================================================================
64,280,320
==========================================================================
APPLICATION SOFTWARE-6.81%
Activision, Inc.(a) 425,000 15,363,750
--------------------------------------------------------------------------
Aspen Technology, Inc.(a) 500,000 6,625,000
--------------------------------------------------------------------------
Cerner Corp.(a) 500,000 26,875,000
--------------------------------------------------------------------------
Citrix Systems, Inc.(a) 667,200 15,612,480
--------------------------------------------------------------------------
Compuware Corp.(a) 1,000,000 10,280,000
--------------------------------------------------------------------------
Electronic Arts Inc.(a) 325,000 16,724,500
--------------------------------------------------------------------------
Henry (Jack) & Associates, Inc. 2,000,000 49,320,000
--------------------------------------------------------------------------
Kronos, Inc.(a) 400,000 22,956,000
--------------------------------------------------------------------------
National Instruments Corp.(a) 500,000 14,405,000
--------------------------------------------------------------------------
NetIQ Corp.(a) 180,400 5,078,260
--------------------------------------------------------------------------
Secure Computing Corp.(a) 900,000 14,715,000
==========================================================================
197,954,990
==========================================================================
AUTO PARTS & EQUIPMENT-0.74%
Gentex Corp.(a) 900,000 21,420,000
==========================================================================
BANKS-2.68%
Investors Financial Services Corp. 750,000 39,675,000
--------------------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 816,400 23,422,516
--------------------------------------------------------------------------
TCF Financial Corp. 350,000 14,700,000
==========================================================================
77,797,516
==========================================================================
BIOTECHNOLOGY-0.70%
Invitrogen Corp.(a) 200,000 12,268,000
--------------------------------------------------------------------------
Techne Corp.(a) 269,000 8,107,660
==========================================================================
20,375,660
==========================================================================
BROADCASTING & CABLE TV-0.56%
Hispanic Broadcasting Corp.(a) 500,000 8,380,000
--------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 313,600 7,840,000
==========================================================================
16,220,000
==========================================================================
|
MARKET
SHARES VALUE
BUILDING PRODUCTS-0.31%
Simpson Manufacturing Co., Inc.(a) 178,000 $ 9,149,200
==========================================================================
CASINOS & GAMING-0.61%
International Game Technology(a) 350,000 17,867,500
==========================================================================
COMPUTER & ELECTRONICS RETAIL-1.11%
CDW Computer Centers, Inc.(a) 700,000 32,235,000
==========================================================================
CONSTRUCTION & ENGINEERING-3.22%
Insituform Technologies, Inc.-Class A(a) 875,000 16,765,000
--------------------------------------------------------------------------
Jacobs Engineering Group Inc.(a) 650,000 42,601,000
--------------------------------------------------------------------------
Shaw Group Inc. (The)(a) 1,250,000 34,375,000
==========================================================================
93,741,000
==========================================================================
CONSUMER FINANCE-1.09%
AmeriCredit Corp.(a) 700,000 10,850,000
--------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 300,000 11,979,000
--------------------------------------------------------------------------
Doral Financial Corp. 250,000 8,717,500
==========================================================================
31,546,500
==========================================================================
DATA PROCESSING SERVICES-2.89%
Concord EFS, Inc.(a) 1,000,000 27,370,000
--------------------------------------------------------------------------
Fiserv, Inc.(a) 750,000 27,892,500
--------------------------------------------------------------------------
Paychex, Inc. 900,000 28,854,000
==========================================================================
84,116,500
==========================================================================
DEPARTMENT STORES-0.57%
Kohl's Corp.(a) 300,000 16,683,000
==========================================================================
DIVERSIFIED COMMERCIAL SERVICES-4.77%
Apollo Group, Inc.-Class A(a) 1,000,000 40,650,000
--------------------------------------------------------------------------
Cintas Corp. 175,000 7,073,500
--------------------------------------------------------------------------
DeVry, Inc.(a) 1,000,000 26,950,000
--------------------------------------------------------------------------
DiamondCluster International, Inc.-Class A(a) 1,000,000 10,300,000
--------------------------------------------------------------------------
IMS Health Inc. 1,000,000 21,370,000
--------------------------------------------------------------------------
Iron Mountain Inc.(a) 825,000 32,216,250
==========================================================================
138,559,750
==========================================================================
DIVERSIFIED FINANCIAL SERVICES-4.22%
Affiliated Managers Group, Inc.(a) 500,000 30,850,000
--------------------------------------------------------------------------
Eaton Vance Corp. 750,000 21,075,000
--------------------------------------------------------------------------
Federated Investors, Inc.-Class B 500,000 13,050,000
--------------------------------------------------------------------------
Legg Mason, Inc. 400,000 16,844,000
--------------------------------------------------------------------------
SEI Investments Co. 500,000 15,375,000
--------------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 1,000,000 25,490,000
==========================================================================
122,684,000
==========================================================================
|
FS-3
MARKET
SHARES VALUE
ELECTRONIC EQUIPMENT &
INSTRUMENTS-2.93%
Jabil Circuit, Inc.(a) 600,000 $ 12,720,000
--------------------------------------------------------------------------
PerkinElmer, Inc. 525,000 14,127,750
--------------------------------------------------------------------------
Plexus Corp.(a) 500,000 12,500,000
--------------------------------------------------------------------------
Tektronix, Inc.(a) 750,000 14,775,000
--------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 412,700 7,787,649
--------------------------------------------------------------------------
Waters Corp.(a) 659,900 23,419,851
==========================================================================
85,330,250
==========================================================================
EMPLOYMENT SERVICES-2.26%
Administaff, Inc.(a) 287,800 6,472,622
--------------------------------------------------------------------------
Hall, Kinion & Associates, Inc.(a)(b) 1,000,000 5,090,000
--------------------------------------------------------------------------
On Assignment, Inc.(a) 167,400 2,713,554
--------------------------------------------------------------------------
Robert Half International Inc.(a) 2,500,000 51,575,000
==========================================================================
65,851,176
==========================================================================
ENVIRONMENTAL SERVICES-2.14%
Tetra Tech, Inc.(a)(b) 2,400,000 62,112,000
==========================================================================
FOOTWEAR-0.62%
Vans, Inc.(a)(b) 1,250,000 17,950,000
==========================================================================
GAS UTILITIES-1.11%
Kinder Morgan, Inc. 650,000 32,259,500
==========================================================================
GENERAL MERCHANDISE STORES-1.12%
BJ's Wholesale Club, Inc.(a) 500,000 25,385,000
--------------------------------------------------------------------------
99 Cents Only Stores(a) 200,400 7,124,220
==========================================================================
32,509,220
==========================================================================
HEALTH CARE DISTRIBUTORS &
SERVICES-8.68%
AdvancePCS(a) 300,000 18,231,000
--------------------------------------------------------------------------
AmerisourceBergen Corp. 300,000 19,068,000
--------------------------------------------------------------------------
Apria Healthcare Group Inc.(a) 1,400,000 32,200,000
--------------------------------------------------------------------------
Express Scripts, Inc.(a) 1,000,000 40,940,000
--------------------------------------------------------------------------
Henry Schein, Inc.(a) 400,000 13,500,000
--------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 300,000 25,860,000
--------------------------------------------------------------------------
Lincare Holdings Inc.(a) 1,200,000 30,840,000
--------------------------------------------------------------------------
McKesson Corp. 706,000 26,114,940
--------------------------------------------------------------------------
Patterson Dental Co.(a) 450,000 17,100,000
--------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 438,100 28,642,978
==========================================================================
252,496,918
==========================================================================
HEALTH CARE EQUIPMENT-1.37%
Cytyc Corp.(a) 750,000 19,665,000
--------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 300,000 20,130,000
==========================================================================
39,795,000
==========================================================================
HEALTH CARE FACILITIES-3.49%
Community Health Systems, Inc.(a) 128,100 3,132,045
--------------------------------------------------------------------------
Health Management Associates, Inc.-Class A(a) 1,450,000 28,260,500
--------------------------------------------------------------------------
|
MARKET
SHARES VALUE
HEALTH CARE FACILITIES-(CONTINUED)
LifePoint Hospitals, Inc.(a) 631,700 $ 19,696,406
--------------------------------------------------------------------------
Province Healthcare Co.(a) 640,700 17,651,285
--------------------------------------------------------------------------
RehabCare Group, Inc.(a) 645,400 16,393,160
--------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 601,900 16,191,110
==========================================================================
101,324,506
==========================================================================
INDUSTRIAL MACHINERY-0.25%
Danaher Corp. 130,000 7,246,200
==========================================================================
INSURANCE BROKERS-0.83%
Brown & Brown 164,900 9,465,260
--------------------------------------------------------------------------
Gallagher (Arthur J.) & Co. 400,000 14,616,000
==========================================================================
24,081,260
==========================================================================
INTERNET SOFTWARE & SERVICES-0.93%
SmartForce Public Ltd. Co.-ADR(a) 350,000 5,761,000
--------------------------------------------------------------------------
SonicWALL, Inc.(a) 1,500,000 21,300,000
==========================================================================
27,061,000
==========================================================================
IT CONSULTING & SERVICES-3.65%
Investment Technology Group, Inc.(a) 750,000 48,307,500
--------------------------------------------------------------------------
Keane, Inc.(a) 525,000 7,434,000
--------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 2,000,000 50,400,000
==========================================================================
106,141,500
==========================================================================
LIFE & HEALTH INSURANCE-0.23%
Nationwide Financial Services, Inc.-Class A 200,000 6,804,000
==========================================================================
MANAGED HEALTH CARE-1.86%
First Health Group Corp.(a) 2,000,000 54,000,000
==========================================================================
MOVIES & ENTERTAINMENT-0.34%
Macrovision Corp.(a) 400,000 9,844,000
==========================================================================
MULTI-LINE INSURANCE-1.18%
HCC Insurance Holdings, Inc. 1,250,000 34,362,500
==========================================================================
NETWORKING EQUIPMENT-0.30%
Brocade Communications Systems, Inc.(a) 350,000 8,592,500
==========================================================================
OIL & GAS DRILLING-2.60%
Cooper Cameron Corp.(a) 500,000 19,500,000
--------------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 1,500,000 27,030,000
--------------------------------------------------------------------------
Pride International, Inc.(a) 2,250,000 28,935,000
==========================================================================
75,465,000
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-3.61%
Cal Dive International, Inc.(a) 1,000,000 20,890,000
--------------------------------------------------------------------------
Core Laboratories N.V. (Netherlands)(a) 900,000 14,670,000
--------------------------------------------------------------------------
Hanover Compressor Co.(a) 1,300,000 35,854,000
--------------------------------------------------------------------------
National-Oilwell, Inc.(a) 1,000,000 18,520,000
--------------------------------------------------------------------------
Varco International, Inc.(a) 1,000,000 15,000,000
==========================================================================
104,934,000
==========================================================================
|
FS-4
MARKET
SHARES VALUE
OIL & GAS EXPLORATION &
PRODUCTION-0.60%
Newfield Exploration Co.(a) 500,000 $ 17,405,000
==========================================================================
PHARMACEUTICALS-1.30%
CIMA Labs Inc.(a) 300,000 16,215,000
--------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 375,000 21,633,750
==========================================================================
37,848,750
==========================================================================
PROPERTY & CASUALTY INSURANCE-0.52%
ACE Ltd. (Bermuda) 425,000 14,981,250
==========================================================================
RESTAURANTS-3.44%
CBRL Group, Inc. 1,000,000 25,110,000
--------------------------------------------------------------------------
CEC Entertainment Inc.(a) 380,000 14,721,200
--------------------------------------------------------------------------
Sonic Corp.(a) 1,000,000 33,510,000
--------------------------------------------------------------------------
Starbucks Corp.(a) 1,564,500 26,784,240
==========================================================================
100,125,440
==========================================================================
SEMICONDUCTOR EQUIPMENT-1.36%
Axcelis Technologies, Inc.(a) 750,000 9,832,500
--------------------------------------------------------------------------
EMCORE Corp.(a) 221,600 2,473,056
--------------------------------------------------------------------------
Lam Research Corp.(a) 400,000 7,584,000
--------------------------------------------------------------------------
LTX Corp.(a) 650,000 10,699,000
--------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 300,000 9,012,000
==========================================================================
39,600,556
==========================================================================
SEMICONDUCTORS-6.56%
Alpha Industries, Inc.(a) 1,100,000 25,608,000
--------------------------------------------------------------------------
Applied Micro Circuits Corp.(a) 1,600,000 17,648,000
--------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 675,000 23,226,750
--------------------------------------------------------------------------
Cree, Inc.(a) 400,000 7,180,000
--------------------------------------------------------------------------
Intersil Corp.-Class A(a) 500,000 16,375,000
--------------------------------------------------------------------------
Micrel, Inc.(a) 500,000 12,575,000
--------------------------------------------------------------------------
Microchip Technology Inc.(a) 1,000,000 31,220,000
--------------------------------------------------------------------------
QLogic Corp.(a) 500,000 19,675,000
--------------------------------------------------------------------------
RF Micro Devices, Inc.(a) 625,000 12,775,000
--------------------------------------------------------------------------
Semtech Corp.(a) 650,000 24,537,500
==========================================================================
190,820,250
==========================================================================
SPECIALTY CHEMICALS-1.25%
OM Group, Inc. 600,000 36,330,000
==========================================================================
|
MARKET
SHARES VALUE
SPECIALTY STORES-3.85%
AutoZone, Inc.(a) 200,000 $ 11,706,000
--------------------------------------------------------------------------
Barnes & Noble, Inc.(a) 750,000 27,562,500
--------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 850,000 21,301,000
--------------------------------------------------------------------------
Venator Group, Inc.(a) 3,000,000 43,500,000
--------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 300,000 7,770,000
==========================================================================
111,839,500
==========================================================================
TELECOMMUNICATIONS EQUIPMENT-3.91%
Anaren Microwave, Inc.(a) 899,900 13,759,471
--------------------------------------------------------------------------
CommScope, Inc.(a) 750,000 14,662,500
--------------------------------------------------------------------------
Comverse Technology, Inc.(a) 500,000 9,405,000
--------------------------------------------------------------------------
Polycom, Inc.(a) 1,000,000 29,980,000
--------------------------------------------------------------------------
Scientific-Atlanta, Inc. 850,000 17,739,500
--------------------------------------------------------------------------
UTStarcom, Inc.(a) 1,200,000 28,176,000
==========================================================================
113,722,471
==========================================================================
TRADING COMPANIES & DISTRIBUTORS-0.61%
Fastenal Co. 300,000 17,715,000
==========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.17%
AirGate PCS, Inc.(a) 500,000 25,730,000
--------------------------------------------------------------------------
American Tower Corp.-Class A(a) 750,000 8,265,000
==========================================================================
33,995,000
==========================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,753,858,690) 2,829,573,520
==========================================================================
MONEY MARKET FUNDS-2.85%
STIC Liquid Assets Portfolio(c) 41,476,328 41,476,328
--------------------------------------------------------------------------
STIC Prime Portfolio(c) 41,476,328 41,476,328
==========================================================================
Total Money Market Funds (Cost
$82,952,656) 82,952,656
==========================================================================
TOTAL INVESTMENTS-100.18% (Cost
$2,836,811,346) 2,912,526,176
==========================================================================
OTHER ASSETS LESS LIABILITIES-(0.18%) (5,176,212)
==========================================================================
NET ASSETS-100.00% $2,907,349,964
__________________________________________________________________________
==========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuer in which the Fund's holdings of the issuer represent 5%
or more of the outstanding voting securities of the issuer. The Fund has
not owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer.
The aggregate market value of affiliated issuers as of 10/31/01 was
$85,152,000 which represented 2.93% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-5
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$2,836,811,346)* $2,912,526,176
-------------------------------------------------------------
Receivables for:
Investments sold 23,258,480
-------------------------------------------------------------
Fund shares sold 2,402,147
-------------------------------------------------------------
Dividends 632,352
-------------------------------------------------------------
Investment for deferred compensation plan 95,160
-------------------------------------------------------------
Collateral for securities loaned 311,796,716
-------------------------------------------------------------
Other assets 35,695
=============================================================
Total assets 3,250,746,726
=============================================================
LIABILITIES:
Payables for:
Investments purchased 22,981,404
-------------------------------------------------------------
Fund shares reacquired 6,493,242
-------------------------------------------------------------
Deferred compensation plan 95,160
-------------------------------------------------------------
Collateral upon return of securities loaned 311,796,716
-------------------------------------------------------------
Accrued distribution fees 1,282,229
-------------------------------------------------------------
Accrued trustees' fees 2,881
-------------------------------------------------------------
Accrued transfer agent fees 583,308
-------------------------------------------------------------
Accrued operating expenses 161,822
=============================================================
Total liabilities 343,396,762
=============================================================
Net assets applicable to shares outstanding $2,907,349,964
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,516,406,835
_____________________________________________________________
=============================================================
Class B $ 294,303,205
_____________________________________________________________
=============================================================
Class C $ 96,639,924
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 289,826,192
_____________________________________________________________
=============================================================
Class B 34,843,023
_____________________________________________________________
=============================================================
Class C 11,442,349
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 8.68
-------------------------------------------------------------
Offering price per share:
(Net asset value of $8.68 divided by
94.50%) $ 9.19
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 8.45
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 8.45
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $309,207,982 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends from affiliated money market funds $ 6,721,845
-------------------------------------------------------------
Dividends 3,570,756
-------------------------------------------------------------
Interest 11,967
-------------------------------------------------------------
Security lending income 4,106,821
=============================================================
Total investment income 14,411,389
=============================================================
EXPENSES:
Advisory fees 23,755,259
-------------------------------------------------------------
Administrative services fees 276,738
-------------------------------------------------------------
Custodian fees 260,290
-------------------------------------------------------------
Distribution fees -- Class A 8,262,356
-------------------------------------------------------------
Distribution fees -- Class B 3,431,496
-------------------------------------------------------------
Distribution fees -- Class C 1,107,492
-------------------------------------------------------------
Transfer agent fees -- Class A 7,926,292
-------------------------------------------------------------
Transfer agent fees -- Class B 857,333
-------------------------------------------------------------
Transfer agent fees -- Class C 276,699
-------------------------------------------------------------
Trustees' fees 23,404
-------------------------------------------------------------
Total other expenses 1,393,669
=============================================================
Total expenses 47,571,028
=============================================================
Less: Fees waived (7,508)
-------------------------------------------------------------
Expenses paid indirectly (98,463)
=============================================================
Net expenses 47,465,057
=============================================================
Net investment income (loss) (33,053,668)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (655,234,334)
=============================================================
Change in net unrealized appreciation
(depreciation) of investment securities (1,352,849,651)
=============================================================
Net gain (loss) from investment securities (2,008,083,985)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(2,041,137,653)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-6
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- --------------
OPERATIONS:
Net investment income (loss) $ (33,053,668) $ (34,890,410)
-----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (655,234,334) 978,195,173
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,352,849,651) 362,410,770
===============================================================================================
Net increase (decrease) in net assets resulting from
operations (2,041,137,653) 1,305,715,533
===============================================================================================
Distributions to shareholders from net realized gains:
Class A (805,640,320) (320,367,821)
-----------------------------------------------------------------------------------------------
Class B (74,578,792) (4,413,088)
-----------------------------------------------------------------------------------------------
Class C (23,638,642) (1,287,521)
-----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 676,696,702 663,429,973
-----------------------------------------------------------------------------------------------
Class B 177,773,085 343,326,602
-----------------------------------------------------------------------------------------------
Class C 58,760,112 112,539,912
===============================================================================================
Net increase (decrease) in net assets (2,031,765,508) 2,098,943,590
===============================================================================================
NET ASSETS:
Beginning of year 4,939,115,472 2,840,171,882
===============================================================================================
End of year $ 2,907,349,964 $4,939,115,472
_______________________________________________________________________________________________
===============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 3,487,258,638 $2,607,070,149
-----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (202,093) (174,108)
-----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (655,421,411) 903,654,950
-----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 75,714,830 1,428,564,481
===============================================================================================
$ 2,907,349,964 $4,939,115,472
_______________________________________________________________________________________________
===============================================================================================
|
See Notes to Financial Statements.
FS-7
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. 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 to achieve long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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 Directors.
B. Securities Transactions and Investment Income -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. On October 31, 2001, undistributed net investment income was increased by $33,025,683, undistributed net realized gains increased by $15,727 and paid in capital decreased by $33,041,410 as a result of net operation loss reclassifications and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
FS-8
The fund has a capital loss carryforward of $636,872,876 as of October 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. AIM has agreed to
waive advisory fees payable by the Fund to AIM at the annual rate of 0.025% for
each $5 billion increment in net assets over $5 billion, up to a maximum waiver
of 0.175% on net assets in excess of $35 billion. Effective July 1, 2001, 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 fund of which
the Fund has invested. For the year ended October 31, 2001, AIM waived fees of
$7,508.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $276,738 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 year ended October 31, 2001, AFS
was paid $4,434,848 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
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $8,262,356,
$3,431,496 and $1,107,492, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,095,640 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $127,954 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $8,787 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $65,345 and reductions in custodian fees of $33,118 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $98,463.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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
FS-9
of the collateral may be temporarily less than the value of the securities on
loan.
At October 31, 2001, securities with an aggregate value of $309,207,982 were
on loan to brokers. The loans were secured by cash collateral of $311,796,716
received by the Fund and invested in affiliated money market funds as follows:
$155,898,358 in STIC Liquid Assets Portfolio and $155,898,358 in STIC Prime
Portfolio. For the year ended October 31, 2001, the Fund received fees of
$4,106,821 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 2001 was $3,260,841,615 and $3,253,198,052, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 414,174,670 ----------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (357,008,375) ============================================================================= Net unrealized appreciation of investment securities $ 57,166,295 _____________________________________________________________________________ ============================================================================= Cost of investments for tax purposes is $2,855,359,881. |
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000*
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
Sold:
Class A 66,113,301 $ 764,231,772 204,998,037 $1,165,506,524
---------------------------------------------------------------------------------------------------------------------------
Class B 16,139,430 187,252,162 21,294,813 379,822,496
---------------------------------------------------------------------------------------------------------------------------
Class C 6,138,899 70,314,475 6,866,314 122,159,297
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 59,903,743 755,374,108 5,280,778 297,990,645
---------------------------------------------------------------------------------------------------------------------------
Class B 5,828,105 71,964,367 72,296 4,045,318
---------------------------------------------------------------------------------------------------------------------------
Class C 1,838,406 22,685,441 19,260 1,076,149
===========================================================================================================================
Reacquired:
Class A (77,634,743) (842,909,178) (19,341,399) (800,067,196)
---------------------------------------------------------------------------------------------------------------------------
Class B (7,763,426) (81,443,444) (1,179,153) (40,541,212)
---------------------------------------------------------------------------------------------------------------------------
Class C (3,192,257) (34,239,804) (351,490) (10,695,534)
===========================================================================================================================
67,371,458 $ 913,229,899 217,659,456 $1,119,296,487
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
* Shares have been restated to reflect a 4 for 1 stock split, effected in the form of a 300% stock dividend, on July 14, 2000.
FS-10
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(a)
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2001(b) 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 18.41 $ 13.90 $ 10.04 $ 12.49 $ 11.23
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09) (0.13) (0.09) (0.08) (0.06)
--------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.34) 11.08 4.05 (1.93) 1.90
================================================================================================================================
Total from investment operations (6.43) 10.95 3.96 (2.01) 1.84
================================================================================================================================
Less distributions from net realized gains (3.30) (6.44) (0.10) (0.44) (0.58)
================================================================================================================================
Net asset value, end of period $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(c) (40.51)% 47.53% 39.73% (16.36)% 17.35%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,516,407 $4,444,515 $2,808,451 $2,638,038 $3,864,257
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets 1.17%(d) 1.04% 1.09% 1.06% 1.06%
================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.79)%(d) (0.77)% (0.69)% (0.64)% (0.65)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 89% 79% 75% 69% 73%
________________________________________________________________________________________________________________________________
================================================================================================================================
|
(a) Per share information and distributions prior to April 30, 2001 have been
restated to reflect a 4 for 1 stock split, effected in the form of a 300%
stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $3,304,942,591.
CLASS B(a)
-------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------- TO OCTOBER 31,
2001(b) 2000 1999
--------- --------- ----------------------
Net asset value, beginning of period $ 18.12 $ 13.81 $ 10.85
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.29) (0.07)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.20) 11.04 3.03
================================================================================================================
Total from investment operations (6.37) 10.75 2.96
================================================================================================================
Less distributions from net realized gains (3.30) (6.44) --
================================================================================================================
Net asset value, end of period $ 8.45 $ 18.12 $ 13.81
________________________________________________________________________________________________________________
================================================================================================================
Total return(c) (40.90)% 46.29% 27.27%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $294,303 $374,010 $24,914
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 1.94%(d) 1.86% 2.08%(e)
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.55)%(d) (1.59)% (1.68)%(e)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 89% 79% 75%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Per share information and distributions prior to April 30, 2001 have been
restated to reflect a 4 for 1 stock split, effected in the form of a 300%
stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $343,149,601.
(e) Annualized.
FS-11
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C(a)
-------------------------------------------------
MARCH 1, 1999
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------- TO OCTOBER 31,
2001(b) 2000 1999
--------- --------- ----------------------
Net asset value, beginning of period $ 18.11 $ 13.81 $10.85
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.29) (0.07)
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.19) 11.03 3.03
================================================================================================================
Total from investment operations (6.36) 10.74 2.96
================================================================================================================
Less distributions from net realized gains (3.30) (6.44) --
================================================================================================================
Net asset value, end of period $ 8.45 $ 18.11 $13.81
________________________________________________________________________________________________________________
================================================================================================================
Total return(c) (40.86)% 46.21% 27.27%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 96,640 $120,591 $6,807
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets 1.94%(d) 1.86% 2.08%(e)
================================================================================================================
Ratio of net investment income (loss) to average net assets (1.55)%(d) (1.59)% (1.68)%(e)
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 89% 79% 75%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Per share information and distributions prior to April 30, 2001 have been
restated to reflect a 4 for 1 stock split, effected in the form of a 300%
stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $110,749,185.
(e) Annualized.
FS-12
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Blue Chip Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and liabilities of AIM Blue Chip Fund (a portfolio AIM Equity Funds), including the schedule of investments, as of October 31, 2001, and the related statement of operations, statement of changes in net assets, and financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statements of changes in net assets for the year ended October 31, 2000, and the financial highlights for each of the four years in the period then ended were audited by other auditors whose report dated December 6, 2000, expressed an unqualified opinion on those statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2001, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Blue Chip Fund at October 31, 2001, and the results of its operations, changes in its net assets, and financial highlights for the year then ended in conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-13
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Blue Chip Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Blue Chip Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-14
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-97.06%
ADVERTISING-0.52%
Interpublic Group of Cos., Inc. (The) 1,000,000 $ 22,450,000
==========================================================================
AEROSPACE & DEFENSE-1.37%
General Dynamics Corp. 300,000 24,480,000
--------------------------------------------------------------------------
United Technologies Corp. 650,000 35,028,500
==========================================================================
59,508,500
==========================================================================
ALUMINUM-0.65%
Alcoa Inc. 875,000 28,236,250
==========================================================================
BANKS-2.24%
Fifth Third Bancorp 1,000,000 56,420,000
--------------------------------------------------------------------------
Wells Fargo & Co. 1,050,000 41,475,000
==========================================================================
97,895,000
==========================================================================
BIOTECHNOLOGY-1.66%
Amgen Inc.(a) 1,275,000 72,445,500
==========================================================================
COMPUTER HARDWARE-2.00%
Dell Computer Corp.(a) 450,000 10,791,000
--------------------------------------------------------------------------
International Business Machines Corp. 460,000 49,712,200
--------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,650,000 26,897,500
==========================================================================
87,400,700
==========================================================================
COMPUTER STORAGE & PERIPHERALS-0.28%
EMC Corp.(a) 1,000,000 12,320,000
==========================================================================
DATA PROCESSING SERVICES-2.40%
First Data Corp. 1,000,000 67,570,000
--------------------------------------------------------------------------
Fiserv, Inc.(a) 1,000,000 37,190,000
==========================================================================
104,760,000
==========================================================================
DEPARTMENT STORES-0.51%
Kohl's Corp.(a) 400,000 22,244,000
==========================================================================
DIVERSIFIED FINANCIAL SERVICES-12.51%
Citigroup Inc. 3,625,000 165,010,000
--------------------------------------------------------------------------
Fannie Mae 1,150,000 93,104,000
--------------------------------------------------------------------------
Freddie Mac 1,150,000 77,993,000
--------------------------------------------------------------------------
J.P. Morgan Chase & Co. 2,125,000 75,140,000
--------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,450,000 63,379,500
--------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 1,450,000 70,934,000
==========================================================================
545,560,500
==========================================================================
DRUG RETAIL-0.48%
Walgreen Co. 650,000 21,047,000
==========================================================================
ELECTRIC UTILITIES-1.31%
Calpine Corp.(a) 600,000 14,850,000
--------------------------------------------------------------------------
|
MARKET
SHARES VALUE
ELECTRIC UTILITIES-(CONTINUED)
Duke Energy Corp. 1,100,000 $ 42,251,000
==========================================================================
57,101,000
==========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.76%
Sanmina Corp.(a) 2,200,000 33,308,000
==========================================================================
FOOD DISTRIBUTORS-1.08%
SYSCO Corp. 1,950,000 47,014,500
==========================================================================
FOOD RETAIL-1.19%
Safeway Inc.(a) 1,250,000 52,062,500
==========================================================================
GAS UTILITIES-0.84%
El Paso Corp. 750,000 36,795,000
==========================================================================
GENERAL MERCHANDISE STORES-4.09%
Costco Wholesale Corp.(a) 500,000 18,915,000
--------------------------------------------------------------------------
Target Corp. 1,575,000 49,061,250
--------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,150,000 110,510,000
==========================================================================
178,486,250
==========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.31%
Cardinal Health, Inc. 850,000 57,043,500
==========================================================================
HEALTH CARE EQUIPMENT-2.51%
Baxter International Inc. 900,000 43,533,000
--------------------------------------------------------------------------
Medtronic, Inc. 1,450,000 58,435,000
--------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 250,000 7,727,500
==========================================================================
109,695,500
==========================================================================
HEALTH CARE FACILITIES-1.27%
HCA Inc. 1,400,000 55,524,000
==========================================================================
HOME IMPROVEMENT RETAIL-2.24%
Home Depot, Inc. (The) 2,550,000 97,486,500
==========================================================================
HOUSEHOLD PRODUCTS-1.15%
Colgate-Palmolive Co. 875,000 50,330,000
==========================================================================
INDUSTRIAL CONGLOMERATES-8.04%
General Electric Co. 5,850,000 212,998,500
--------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 2,800,000 137,592,000
==========================================================================
350,590,500
==========================================================================
INDUSTRIAL GASES-0.64%
Air Products & Chemicals, Inc. 700,000 28,028,000
==========================================================================
INTEGRATED OIL & GAS-3.71%
Exxon Mobil Corp. 3,625,000 143,006,250
--------------------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR (Netherlands) 375,000 18,941,250
==========================================================================
161,947,500
==========================================================================
|
FS-15
MARKET
SHARES VALUE
INTEGRATED TELECOMMUNICATION SERVICES-2.06%
BellSouth Corp. 625,000 $ 23,125,000
--------------------------------------------------------------------------
SBC Communications Inc. 1,750,000 66,692,500
==========================================================================
89,817,500
==========================================================================
MANAGED HEALTH CARE-0.95%
UnitedHealth Group Inc. 630,000 41,422,500
==========================================================================
MOVIES & ENTERTAINMENT-3.23%
AOL Time Warner Inc.(a) 3,000,000 93,630,000
--------------------------------------------------------------------------
Viacom Inc.-Class B(a) 1,300,000 47,463,000
==========================================================================
141,093,000
==========================================================================
MULTI-LINE INSURANCE-3.02%
American International Group, Inc. 1,675,000 131,655,000
==========================================================================
MULTI-UTILITIES-0.78%
Dynegy Inc.-Class A 750,000 26,925,000
--------------------------------------------------------------------------
Enron Corp. 500,000 6,950,000
==========================================================================
33,875,000
==========================================================================
NETWORKING EQUIPMENT-2.37%
Cisco Systems, Inc.(a) 6,100,000 103,212,000
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-1.11%
Halliburton Co. 925,000 22,838,250
--------------------------------------------------------------------------
Schlumberger Ltd. 525,000 25,420,500
==========================================================================
48,258,750
==========================================================================
PHARMACEUTICALS-12.90%
Abbott Laboratories 550,000 29,139,000
--------------------------------------------------------------------------
Allergan, Inc. 1,050,000 75,379,500
--------------------------------------------------------------------------
American Home Products Corp. 650,000 36,289,500
--------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,275,000 68,148,750
--------------------------------------------------------------------------
Johnson & Johnson 1,775,000 102,790,250
--------------------------------------------------------------------------
Pfizer Inc. 4,000,000 167,600,000
--------------------------------------------------------------------------
Pharmacia Corp. 725,000 29,377,000
--------------------------------------------------------------------------
Schering-Plough Corp. 1,450,000 53,911,000
==========================================================================
562,635,000
==========================================================================
PROPERTY & CASUALTY INSURANCE-0.45%
ACE Ltd. (Bermuda) 290,000 10,222,500
--------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 110,000 9,554,600
==========================================================================
19,777,100
==========================================================================
RAILROADS-0.45%
Canadian National Railroad Co. (Canada) 500,000 19,800,000
==========================================================================
|
MARKET
SHARES VALUE
SEMICONDUCTOR EQUIPMENT-2.29%
Applied Materials, Inc.(a) 1,550,000 $ 52,870,500
--------------------------------------------------------------------------
KLA-Tencor Corp.(a) 1,150,000 46,989,000
==========================================================================
99,859,500
==========================================================================
SEMICONDUCTORS-4.00%
Altera Corp.(a) 1,000,000 20,200,000
--------------------------------------------------------------------------
Analog Devices, Inc.(a) 800,000 30,400,000
--------------------------------------------------------------------------
Intel Corp. 1,500,000 36,630,000
--------------------------------------------------------------------------
Linear Technology Corp. 300,000 11,640,000
--------------------------------------------------------------------------
Texas Instruments Inc. 1,550,000 43,384,500
--------------------------------------------------------------------------
Xilinx, Inc.(a) 1,050,000 31,941,000
==========================================================================
174,195,500
==========================================================================
SOFT DRINKS-1.31%
PepsiCo, Inc. 1,175,000 57,234,250
==========================================================================
SPECIALTY STORES-0.46%
Bed Bath & Beyond Inc.(a) 800,000 20,048,000
==========================================================================
SYSTEMS SOFTWARE-5.10%
Microsoft Corp.(a) 2,300,000 133,745,000
--------------------------------------------------------------------------
Oracle Corp.(a) 3,600,000 48,816,000
--------------------------------------------------------------------------
VERITAS Software Corp.(a) 1,400,000 39,732,000
==========================================================================
222,293,000
==========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.85%
Nokia Oyj-ADR (Finland) 1,800,000 36,918,000
==========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.97%
Vodafone Group PLC-ADR (United Kingdom) 1,825,000 42,194,000
==========================================================================
Total Common Stocks & Other Equity
Interests (Cost $4,063,887,651) 4,233,568,300
==========================================================================
MONEY MARKET FUNDS-3.09%
STIC Liquid Assets Portfolio(b) 67,493,023 67,493,023
--------------------------------------------------------------------------
STIC Prime Portfolio(b) 67,493,023 67,493,023
==========================================================================
Total Money Market Funds (Cost
$134,986,046) 134,986,046
==========================================================================
TOTAL INVESTMENTS-100.15% (Cost
$4,198,873,697) 4,368,554,346
==========================================================================
OTHER ASSETS LESS LIABILITIES-(0.15)% (6,650,271)
==========================================================================
NET ASSETS-100.00% $4,361,904,075
__________________________________________________________________________
==========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-16
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$4,198,873,697)* $4,368,554,346
-------------------------------------------------------------
Foreign currencies, at value (cost $2,940) 2,828
-------------------------------------------------------------
Receivables for:
Investments sold 5,701,080
-------------------------------------------------------------
Fund shares sold 3,693,825
-------------------------------------------------------------
Dividends and interest 2,884,682
-------------------------------------------------------------
Investment for deferred compensation plan 65,489
-------------------------------------------------------------
Collateral for securities loaned 140,006,800
-------------------------------------------------------------
Other assets 50,271
=============================================================
Total assets 4,520,959,321
=============================================================
LIABILITIES:
Payables for:
Investments purchased 1,438,635
-------------------------------------------------------------
Fund shares reacquired 11,623,593
-------------------------------------------------------------
Deferred compensation plan 65,489
-------------------------------------------------------------
Collateral upon return of securities loaned 140,006,800
-------------------------------------------------------------
Accrued distribution fees 3,960,564
-------------------------------------------------------------
Accrued trustees' fees 2,915
-------------------------------------------------------------
Accrued transfer agent fees 1,596,362
-------------------------------------------------------------
Accrued operating expenses 360,888
=============================================================
Total liabilities 159,055,246
=============================================================
Net assets applicable to shares outstanding $4,361,904,075
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,067,602,167
_____________________________________________________________
=============================================================
Class B $1,806,464,028
_____________________________________________________________
=============================================================
Class C $ 487,837,880
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 184,210,827
_____________________________________________________________
=============================================================
Class B 166,113,892
_____________________________________________________________
=============================================================
Class C 44,862,086
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 11.22
-------------------------------------------------------------
Offering price per share:
(Net asset value of $11.22 divided by
94.50%) $ 11.87
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 10.87
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 10.87
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $133,915,521 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$287,888) $ 42,874,285
-------------------------------------------------------------
Dividends from affiliated money market funds 12,134,556
-------------------------------------------------------------
Interest 166,170
-------------------------------------------------------------
Security lending income 245,142
=============================================================
Total investment income 55,420,153
=============================================================
EXPENSES:
Advisory fees 35,318,225
-------------------------------------------------------------
Administrative services fees 331,400
-------------------------------------------------------------
Custodian fees 318,803
-------------------------------------------------------------
Distribution fees -- Class A 9,264,516
-------------------------------------------------------------
Distribution fees -- Class B 23,065,985
-------------------------------------------------------------
Distribution fees -- Class C 6,273,129
-------------------------------------------------------------
Transfer agent fees -- Class A 6,703,381
-------------------------------------------------------------
Transfer agent fees -- Class B 6,041,346
-------------------------------------------------------------
Transfer agent fees -- Class C 1,643,032
-------------------------------------------------------------
Trustees' fees 29,498
-------------------------------------------------------------
Other 1,943,980
=============================================================
Total expenses 90,933,295
=============================================================
Less: Fees waived (153,216)
-------------------------------------------------------------
Expenses paid indirectly (97,797)
=============================================================
Net expenses 90,682,282
=============================================================
Net investment income (loss) (35,262,129)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (875,677,465)
-------------------------------------------------------------
Foreign currencies (168)
-------------------------------------------------------------
Futures contracts (102,691)
=============================================================
(875,780,324)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (1,586,303,937)
-------------------------------------------------------------
Foreign currencies 6,224
=============================================================
(1,586,297,713)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and futures contracts (2,462,078,037)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(2,497,340,166)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
FS-17
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- --------------
OPERATIONS:
Net investment income (loss) $ (35,262,129) $ (38,897,346)
-----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and options
contracts (875,780,324) (192,471,545)
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, futures
contracts and options contracts (1,586,297,713) 713,644,598
===============================================================================================
Net increase (decrease) in net assets resulting from
operations (2,497,340,166) 482,275,707
===============================================================================================
Share transactions-net:
Class A 81,644,114 608,764,340
-----------------------------------------------------------------------------------------------
Class B 98,738,160 660,832,200
-----------------------------------------------------------------------------------------------
Class C 49,072,979 337,243,562
===============================================================================================
Net increase (decrease) in net assets (2,267,884,913) 2,089,115,809
===============================================================================================
NET ASSETS:
Beginning of year 6,629,788,988 4,540,673,179
===============================================================================================
End of year $ 4,361,904,075 $6,629,788,988
_______________________________________________________________________________________________
===============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 5,301,981,761 $5,107,761,635
-----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (133,954) (106,761)
-----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
options contracts (1,109,616,802) (233,836,669)
-----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 169,673,070 1,755,970,783
===============================================================================================
$ 4,361,904,075 $6,629,788,988
_______________________________________________________________________________________________
===============================================================================================
|
See Notes to Financial Statements.
FS-18
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of eleven separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
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 with a secondary objective of current income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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. On October 31, 2001, undistributed net investment income (loss) was increased by $35,234,936, undistributed net realized gains increased by $191 and paid in capital decreased by $35,235,127 as a result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the
requirements of the Internal Revenue Code necessary to qualify as a regulated
investment company and, as such, will not be subject to federal income taxes
on otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund's capital loss carryforward of $1,058,100,548 is broken down by
expiration date as follows:
CAPITAL
LOSS CARRYFORWARD EXPIRATION
----------------- ----------------
$ 38,614,683 October 31, 2007
===================================
185,511,022 October 31, 2008
===================================
833,974,843 October 31, 2009
===================================
$1,058,100,548
___________________________________
===================================
|
FS-19
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for the portion of the results of operations resulting
from changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. 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.
H. 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 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
include the possibility of an illiquid market and that a change in value of
the contracts may not correlate with changes in the value of the securities
being hedged.
I. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes, based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. AIM has agreed to
waive advisory fees payable by the Fund to AIM at the annual rate of 0.025% for
each $5 billion increment in net assets over $5 billion, up to a maximum waiver
of 0.175% on net assets in excess of $35 billion. Effective July 1, 2001 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 fund of which the
Fund has invested. For the year ended October 31, 2001, AIM waived fees of
$153,216.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $331,400 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 year ended October 31, 2001, AFS
was paid $7,316,456 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the
FS-20
Class A, Class B and Class C shares paid AIM Distributors $9,264,516,
$23,065,985 and $6,273,129, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,579,184 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $251,600 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $11,278
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $97,051 and reductions in custodian fees of $746 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $97,797.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $133,915,521 were
on loan to brokers. The loans were secured by cash collateral of $140,006,800
received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated
money market fund. For the year ended October 31, 2001, the Fund received fees
of $245,142 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$2,188,599,269 and $1,644,779,358, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 493,198,321 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (375,033,928) ========================================================= Net unrealized appreciation of investment securities $ 118,164,393 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $4,250,389,953. |
FS-21
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
Sold:
Class A 59,896,009 $ 859,547,781 148,715,420 $1,263,107,272
---------------------------------------------------------------------------------------------------------------------------
Class B 38,414,696 544,596,082 129,401,524 992,150,930
---------------------------------------------------------------------------------------------------------------------------
Class C 15,458,538 219,941,831 37,286,271 429,625,653
===========================================================================================================================
Reacquired:
Class A (58,620,165) (777,903,667) (15,253,996) (654,342,932)
---------------------------------------------------------------------------------------------------------------------------
Class B (35,112,835) (445,857,922) (8,016,409) (331,318,730)
---------------------------------------------------------------------------------------------------------------------------
Class C (13,300,112) (170,868,852) (2,250,850) (92,382,091)
===========================================================================================================================
6,736,131 $ 229,455,253 289,881,960 $1,606,840,102
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A(a)
----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2001 2000(b) 1999 1998(b) 1997(b)
---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 17.29 $ 15.49 $ 12.05 $ 10.32 $ 8.69
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.05) 0.01 0.04 0.06
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.03) 1.85 3.47 1.92 2.31
==============================================================================================================================
Total from investment operations (6.07) 1.80 3.48 1.96 2.37
==============================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.01) (0.02) (0.02)
------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.03) (0.21) (0.72)
==============================================================================================================================
Total distributions -- -- (0.04) (0.23) (0.74)
==============================================================================================================================
Net asset value, end of period $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(c) (35.11)% 11.60% 29.01% 19.36% 29.68%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,067,602 $3,163,453 $2,299,551 $1,085,648 $498,178
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.31%
------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.28%(d) 1.19% 1.19% 1.22% 1.32%
==============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.29)%(d) (0.31)% 0.03% 0.33% 0.50%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 has been
restated to reflect a 3 for 1 stock split, effected in the form of a 200%
stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $2,647,004,665.
FS-22
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B(a)
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2001 2000(b) 1999(b) 1998 1997(b)
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 16.87 $ 15.22 $ 11.91 $ 10.25 $ 8.69
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) (0.04) (0.01)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.87) 1.82 3.44 1.91 2.30
============================================================================================================================
Total from investment operations (6.00) 1.65 3.34 1.87 2.29
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.01)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.03) (0.21) (0.72)
============================================================================================================================
Net asset value, end of period $ 10.87 $ 16.87 $ 15.22 $ 11.91 $ 10.25
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) (35.57)% 10.87% 28.08% 18.52% 28.81%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,806,464 $2,746,149 $1,891,171 $745,862 $264,337
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.94%(d) 1.88% 1.91% 1.94% 2.10%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.94%(d) 1.88% 1.91% 1.94% 2.12%
============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(d) (1.00)% (0.68)% (0.38)% (0.28)%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 has been
restated to reflect a 3 for 1 stock split, effected in the form of a 200%
stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $2,306,598,522.
CLASS C(a)
--------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
------------------------------------------ TO OCTOBER 31,
2001 2000 (b) 1999(b) 1998(b) 1997(b)
------- -------- -------- ------- ----------------------
Net asset value, beginning of period $ 16.86 $ 15.21 $ 11.91 $ 10.25 $10.57
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.13) (0.17) (0.10) (0.04) --
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.86) 1.82 3.43 1.91 (0.32)
=================================================================================================================================
Total from investment operations (5.99) 1.65 3.33 1.87 (0.32)
=================================================================================================================================
Less distributions from net realized gains -- -- (0.03) (0.21) --
=================================================================================================================================
Net asset value, end of period $ 10.87 $ 16.86 $ 15.21 $ 11.91 $10.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (35.53)% 10.82% 28.09% 18.52% (3.06)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $487,838 $720,186 $349,951 $87,554 $3,947
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.94%(d) 1.88% 1.90% 1.94% 2.10%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.94%(d) 1.88% 1.90% 1.94% 2.12%(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.94)%(d) (1.00)% (0.68)% (0.38)% (0.28)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 31% 22% 22% 27% 43%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Per share information for all periods prior to October 31, 2000 has been
restated to reflect a 3 for 1 stock split, effected in the form of a 200%
stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(d) Ratios are based on average daily net assets of $627,312,890.
(e) Annualized.
FS-23
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Capital Development Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Capital Development Fund (a portfolio
AIM Equity Funds), including the schedule of investments,
as of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the four years in the period then ended were
audited by other auditors whose report dated December 6,
2000, expressed an unqualified opinion on those
statements and financial highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Capital Development Fund at October 31, 2001, and the
results of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
FS-24
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Capital Development Fund (a series portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Capital Development Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-25
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-93.17%
ADVERTISING-0.91%
Lamar Advertising Co.(a) 318,500 $ 10,000,900
======================================================================
AEROSPACE & DEFENSE-0.47%
Aeroflex Inc.(a) 350,100 5,135,967
======================================================================
AGRICULTURAL PRODUCTS-0.63%
Bunge Ltd. 391,400 6,896,468
======================================================================
APPAREL RETAIL-1.64%
Abercrombie & Fitch Co.-Class A(a) 324,900 6,114,618
----------------------------------------------------------------------
Ross Stores, Inc. 378,200 11,837,660
======================================================================
17,952,278
======================================================================
APPLICATION SOFTWARE-3.22%
Intuit Inc.(a) 333,200 13,401,304
----------------------------------------------------------------------
Peregrine Systems, Inc.(a) 181,000 2,613,640
----------------------------------------------------------------------
Secure Computing Corp.(a) 410,400 6,710,040
----------------------------------------------------------------------
Synopsys, Inc.(a) 268,900 12,638,300
======================================================================
35,363,284
======================================================================
AUTO PARTS & EQUIPMENT-1.09%
Gentex Corp.(a) 286,300 6,813,940
----------------------------------------------------------------------
Lear Corp.(a) 167,800 5,151,460
======================================================================
11,965,400
======================================================================
BANKS-2.16%
Compass Bancshares, Inc. 485,400 12,149,562
----------------------------------------------------------------------
Zions Bancorp 241,500 11,572,680
======================================================================
23,722,242
======================================================================
BROADCASTING & CABLE TV-3.79%
Cablevision Systems Corp.-Class A(a) 300,000 10,275,000
----------------------------------------------------------------------
Charter Communications, Inc.-Class A(a) 347,300 4,910,822
----------------------------------------------------------------------
Cox Radio, Inc.-Class A(a) 300,000 6,510,000
----------------------------------------------------------------------
Entercom Communications Corp.(a) 100,000 3,370,000
----------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 390,300 6,541,428
----------------------------------------------------------------------
Mediacom Communications Corp.(a) 739,700 9,926,774
======================================================================
41,534,024
======================================================================
BUILDING PRODUCTS-1.12%
American Standard Cos. Inc.(a) 212,600 12,309,540
======================================================================
CASINOS & GAMING-1.08%
Harrah's Entertainment, Inc.(a) 406,200 11,832,606
======================================================================
CATALOG RETAIL-0.32%
Insight Enterprises, Inc.(a) 218,550 3,551,438
======================================================================
|
MARKET
SHARES VALUE
COMPUTER & ELECTRONICS RETAIL-2.18%
Best Buy Co., Inc.(a) 197,400 $ 10,837,260
----------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 285,000 13,124,250
======================================================================
23,961,510
======================================================================
COMPUTER HARDWARE-0.57%
Apple Computer, Inc.(a) 354,500 6,225,020
======================================================================
CONSUMER FINANCE-2.06%
AmeriCredit Corp.(a) 262,900 4,074,950
----------------------------------------------------------------------
Countrywide Credit Industries, Inc. 242,900 9,698,997
----------------------------------------------------------------------
Metris Companies Inc. 351,300 5,694,573
----------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $3,120,900)(a)(b) 309,000 3,128,625
======================================================================
22,597,145
======================================================================
DATA PROCESSING SERVICES-3.35%
BISYS Group, Inc. (The)(a) 137,300 7,142,346
----------------------------------------------------------------------
Ceridian Corp.(a) 664,700 10,960,903
----------------------------------------------------------------------
Certegy Inc.(a) 385,250 10,979,625
----------------------------------------------------------------------
Concord EFS, Inc.(a) 279,400 7,647,178
======================================================================
36,730,052
======================================================================
DIVERSIFIED COMMERCIAL SERVICES-3.41%
Edison Schools Inc.(a) 669,100 12,612,535
----------------------------------------------------------------------
Equifax Inc. 502,300 11,231,428
----------------------------------------------------------------------
Iron Mountain Inc.(a) 250,000 9,762,500
----------------------------------------------------------------------
Pre-Paid Legal Services, Inc.(a) 249,700 3,807,925
======================================================================
37,414,388
======================================================================
DIVERSIFIED FINANCIAL SERVICES-8.13%
Affiliated Managers Group, Inc.(a) 197,500 12,185,750
----------------------------------------------------------------------
Alliance Data Systems Corp.(a) 826,100 13,217,600
----------------------------------------------------------------------
Allied Capital Corp. 285,800 6,436,216
----------------------------------------------------------------------
Ambac Financial Group, Inc. 240,600 11,548,800
----------------------------------------------------------------------
American Capital Strategies, Ltd. 413,600 10,244,872
----------------------------------------------------------------------
Legg Mason, Inc. 145,100 6,110,161
----------------------------------------------------------------------
Phoenix Cos., Inc. (The)(a) 658,100 8,456,585
----------------------------------------------------------------------
SEI Investments Co. 261,600 8,044,200
----------------------------------------------------------------------
USA Education Inc. 159,100 12,976,196
======================================================================
89,220,380
======================================================================
DRUG RETAIL-0.87%
Duane Reade, Inc.(a) 317,400 9,496,608
======================================================================
ELECTRIC UTILITIES-2.20%
Constellation Energy Group, Inc. 432,400 9,672,788
----------------------------------------------------------------------
Orion Power Holdings, Inc.(a) 560,600 14,469,086
======================================================================
24,141,874
======================================================================
|
FS-26
MARKET
SHARES VALUE
ELECTRICAL COMPONENTS & EQUIPMENT-0.99%
Cooper Industries, Inc. 279,100 $ 10,801,170
======================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-4.54%
Celestica Inc. (Canada)(a) 300,000 10,296,000
----------------------------------------------------------------------
Garmin Ltd.(a) 495,000 8,320,950
----------------------------------------------------------------------
Mettler-Toledo International Inc.(a) 289,200 13,277,172
----------------------------------------------------------------------
Tektronix, Inc.(a) 460,000 9,062,000
----------------------------------------------------------------------
Varian Inc.(a) 350,000 8,869,000
======================================================================
49,825,122
======================================================================
ENVIRONMENTAL SERVICES-0.95%
Republic Services, Inc.(a) 636,100 10,419,318
======================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.96%
Monsanto Co. 335,600 10,504,280
======================================================================
FOREST PRODUCTS-1.09%
Plum Creek Timber Company, Inc. 434,400 12,002,472
======================================================================
GAS UTILITIES-0.56%
Kinder Morgan, Inc.(c) 123,700 6,139,231
======================================================================
GENERAL MERCHANDISE STORES-1.27%
BJ's Wholesale Club, Inc.(a)(c) 160,500 8,148,585
----------------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 256,700 5,768,049
======================================================================
13,916,634
======================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-3.28%
Apria Healthcare Group Inc.(a) 450,700 10,366,100
----------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 170,200 14,671,240
----------------------------------------------------------------------
Lincare Holdings Inc.(a) 426,300 10,955,910
======================================================================
35,993,250
======================================================================
HEALTH CARE FACILITIES-1.43%
LifePoint Hospitals, Inc.(a) 149,100 4,648,938
----------------------------------------------------------------------
Triad Hospitals, Inc.(a) 408,700 10,994,030
======================================================================
15,642,968
======================================================================
INSURANCE BROKERS-1.04%
Aon Corp. 301,000 11,450,040
======================================================================
IT CONSULTING & SERVICES-2.48%
Affiliated Computer Services, Inc.-Class A(a) 149,000 13,119,450
----------------------------------------------------------------------
SunGard Data Systems Inc.(a) 169,800 4,278,960
----------------------------------------------------------------------
Titan Corp. (The)(a) 373,400 9,756,942
======================================================================
27,155,352
======================================================================
LEISURE PRODUCTS-1.20%
Mattel, Inc.(a) 694,700 13,150,671
======================================================================
LIFE & HEALTH INSURANCE-0.79%
Nationwide Financial Services, Inc.-Class A 203,900 6,936,678
----------------------------------------------------------------------
Principal Financial Group, Inc. (The)(a) 76,800 1,728,000
======================================================================
8,664,678
======================================================================
|
MARKET
SHARES VALUE
MANAGED HEALTH CARE-3.42%
Anthem, Inc.(a) 267,800 $ 11,215,464
----------------------------------------------------------------------
First Health Group Corp.(a) 517,800 13,980,600
----------------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 392,400 9,900,252
----------------------------------------------------------------------
Trigon Healthcare, Inc.(a) 39,000 2,394,210
======================================================================
37,490,526
======================================================================
MULTI-UTILITIES-1.41%
Aquila, Inc.(a) 277,800 5,097,630
----------------------------------------------------------------------
UtiliCorp United Inc. 348,300 10,320,129
======================================================================
15,417,759
======================================================================
NETWORKING EQUIPMENT-0.32%
Lantronix, Inc.(a) 550,000 3,536,500
======================================================================
OIL & GAS DRILLING-0.54%
Santa Fe International Corp. 243,200 5,919,488
======================================================================
OIL & GAS EQUIPMENT & SERVICES-1.21%
BJ Services Co.(a) 334,000 8,547,060
----------------------------------------------------------------------
Key Energy Services, Inc.(a) 539,500 4,693,650
======================================================================
13,240,710
======================================================================
OIL & GAS EXPLORATION & PRODUCTION-1.63%
Kerr-McGee Corp. 204,300 11,767,680
----------------------------------------------------------------------
Murphy Oil Corporation 76,400 6,073,800
======================================================================
17,841,480
======================================================================
PACKAGED FOODS-0.51%
Hershey Foods Corporation 88,100 5,614,613
======================================================================
PAPER PRODUCTS-1.03%
Bowater Inc. 253,000 11,314,160
======================================================================
PHARMACEUTICALS-5.02%
Altana A.G. (Germany) 246,500 11,538,123
----------------------------------------------------------------------
Biovail Corp. (Canada)(a) 342,200 16,172,372
----------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 410,600 9,940,626
----------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 262,400 11,729,280
----------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 118,800 5,664,384
======================================================================
55,044,785
======================================================================
PROPERTY & CASUALTY INSURANCE-2.38%
ACE Ltd. (Bermuda) 319,917 11,277,074
----------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda)(c) 170,900 14,844,374
======================================================================
26,121,448
======================================================================
REAL ESTATE INVESTMENT TRUSTS-1.98%
Apartment Investment & Management Co.-Class A 251,090 10,538,247
----------------------------------------------------------------------
Mack-Cali Realty Corp. 358,800 11,122,800
======================================================================
21,661,047
======================================================================
|
FS-27
MARKET
SHARES VALUE
REINSURANCE-1.44%
Annuity and Life Reassurance Holdings, Ltd.
(Bermuda) 170,700 $ 3,967,068
-------------------------------------------------------------------------
Everest Re Group, Ltd. (Bermuda) 177,700 11,879,245
=========================================================================
15,846,313
=========================================================================
RESTAURANTS-2.93%
Brinker International, Inc.(a) 456,400 11,592,560
-------------------------------------------------------------------------
CEC Entertainment Inc.(a) 134,100 5,195,034
-------------------------------------------------------------------------
Jack in the Box Inc.(a) 159,700 3,928,620
-------------------------------------------------------------------------
Starbucks Corp.(a) 668,000 11,436,160
=========================================================================
32,152,374
=========================================================================
SEMICONDUCTOR EQUIPMENT-0.94%
Novellus Systems, Inc.(a) 153,300 5,063,499
-------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(a) 175,000 5,257,000
=========================================================================
10,320,499
=========================================================================
SEMICONDUCTORS-4.54%
Alpha Industries, Inc.(a) 284,700 6,627,816
-------------------------------------------------------------------------
International Rectifier Corp.(a) 376,500 13,218,915
-------------------------------------------------------------------------
Micrel, Incorporated(a)(c) 152,000 3,822,800
-------------------------------------------------------------------------
Microchip Technology Inc.(a) 447,975 13,985,780
-------------------------------------------------------------------------
Semtech Corp.(a) 321,000 12,117,750
=========================================================================
49,773,061
=========================================================================
SPECIALTY STORES-1.29%
Copart, Inc.(a) 133,700 3,924,095
-------------------------------------------------------------------------
Venator Group, Inc.(a) 705,400 10,228,300
=========================================================================
14,152,395
=========================================================================
SYSTEMS SOFTWARE-1.61%
Adobe Systems Inc. 433,000 11,431,200
-------------------------------------------------------------------------
Symantec Corp.(a) 112,500 6,186,375
=========================================================================
17,617,575
=========================================================================
|
MARKET
SHARES VALUE
TELECOMMUNICATIONS EQUIPMENT-0.60%
Comverse Technology, Inc.(a) 352,100 $ 6,623,001
=========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.59%
Telephone and Data Systems, Inc. 73,900 6,495,810
=========================================================================
Total Common Stocks & Other Equity
Interests (Cost $862,235,426) 1,021,899,854
_________________________________________________________________________
=========================================================================
|
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
PUT OPTIONS PURCHASED-0.04%
GAS UTILITIES-0.01%
Kinder Morgan, Inc. 1,237 45 Nov-01 46,387
=========================================================================
GENERAL MERCHANDISE STORES-0.01%
BJ's Wholesale Club, Inc. 800 50 Nov-01 114,000
=========================================================================
SEMICONDUCTORS-0.02%
Micrel, Incorporated 1,520 25 Nov-01 239,400
=========================================================================
Total Put Options Purchased
(Cost $831,576) 399,787
_________________________________________________________________________
=========================================================================
|
SHARES
MONEY MARKET FUNDS-7.01%
STIC Liquid Assets Portfolio(d) 38,451,632 38,451,632
-------------------------------------------------------------------------
STIC Prime Portfolio(d) 38,451,632 38,451,632
=========================================================================
Total Money Market Funds (Cost
$76,903,264) 76,903,264
=========================================================================
TOTAL INVESTMENTS-100.22% (Cost $939,970,266) 1,099,202,905
=========================================================================
OTHER ASSETS LESS LIABILITIES-(0.22%) (2,398,433)
=========================================================================
NET ASSETS-100.00% $1,096,804,472
_________________________________________________________________________
=========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 10/31/01 represented
0.29% of the Fund's net assets.
(c) A portion of this security is subject to call options written. See Note 8.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-28
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$939,970,266)* $1,099,202,905
----------------------------------------------------------------------
Receivables for:
Investments sold 14,301,949
----------------------------------------------------------------------
Fund shares sold 709,238
----------------------------------------------------------------------
Dividends 676,916
----------------------------------------------------------------------
Investment for deferred compensation plan 40,005
----------------------------------------------------------------------
Collateral for securities loaned 108,019,789
----------------------------------------------------------------------
Other assets 16,990
======================================================================
Total assets 1,222,967,792
======================================================================
LIABILITIES:
Payables for:
Investments purchased 12,977,906
----------------------------------------------------------------------
Fund shares reacquired 2,710,734
----------------------------------------------------------------------
Options written (premiums received
$1,099,367) 810,408
----------------------------------------------------------------------
Deferred compensation plan 40,005
----------------------------------------------------------------------
Collateral upon return of securities loaned 108,019,789
----------------------------------------------------------------------
Accrued distribution fees 1,012,825
----------------------------------------------------------------------
Accrued trustees' fees 1,376
----------------------------------------------------------------------
Accrued transfer agent fees 443,051
----------------------------------------------------------------------
Accrued operating expenses 147,226
======================================================================
Total liabilities 126,163,320
======================================================================
Net assets applicable to shares outstanding $1,096,804,472
______________________________________________________________________
======================================================================
NET ASSETS:
Class A $ 576,659,604
______________________________________________________________________
======================================================================
Class B $ 454,017,599
______________________________________________________________________
======================================================================
Class C $ 66,127,269
______________________________________________________________________
======================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 39,244,317
______________________________________________________________________
======================================================================
Class B 32,190,014
______________________________________________________________________
======================================================================
Class C 4,691,502
______________________________________________________________________
======================================================================
Class A:
Net asset value per share $ 14.69
----------------------------------------------------------------------
Offering price per share: for the division
symbol]
(Net asset value of $14.69 divided by 94.50%) $ 15.54
______________________________________________________________________
======================================================================
Class B:
Net asset value and offering price per
share $ 14.10
______________________________________________________________________
======================================================================
Class C:
Net asset value and offering price per
share $ 14.10
______________________________________________________________________
======================================================================
|
* At October 31, 2001, securities with an aggregate market value of $105,883,145 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$4,980) $ 8,028,457
------------------------------------------------------------
Dividends from affiliated money market funds 4,072,797
------------------------------------------------------------
Interest 201,533
------------------------------------------------------------
Security lending income 2,216,701
============================================================
Total investment income 14,519,488
============================================================
EXPENSES:
Advisory fees 8,548,376
------------------------------------------------------------
Administrative services fees 160,775
------------------------------------------------------------
Custodian fees 107,468
------------------------------------------------------------
Distribution fees -- Class A 2,371,880
------------------------------------------------------------
Distribution fees -- Class B 5,430,170
------------------------------------------------------------
Distribution fees -- Class C 770,433
------------------------------------------------------------
Transfer agent fees -- Class A 1,804,999
------------------------------------------------------------
Transfer agent fees -- Class B 1,478,333
------------------------------------------------------------
Transfer agent fees -- Class C 209,746
------------------------------------------------------------
Trustees' fees 12,820
------------------------------------------------------------
Other 471,840
============================================================
Total expenses 21,366,840
============================================================
Less: Fees waived (3,281)
------------------------------------------------------------
Expenses paid indirectly (25,515)
============================================================
Net expenses 21,338,044
============================================================
Net investment income (loss) (6,818,556)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (7,222,320)
------------------------------------------------------------
Foreign currencies (52,237)
------------------------------------------------------------
Option contracts written 2,472,279
============================================================
(4,802,278)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (304,959,228)
------------------------------------------------------------
Foreign currencies (9,726)
------------------------------------------------------------
Option contracts written (1,233,187)
============================================================
(306,202,141)
============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (311,004,419)
============================================================
Net increase (decrease) in net assets
resulting from operations $(317,822,975)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-29
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
-------------- --------------
OPERATIONS:
Net investment income (loss) $ (6,818,556) $ (13,081,906)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (4,802,278) 213,082,772
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (306,202,141) 244,363,492
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (317,822,975) 444,364,358
==============================================================================================
Distributions to shareholders from net realized gains:
Class A (96,954,437) --
----------------------------------------------------------------------------------------------
Class B (81,364,674) --
----------------------------------------------------------------------------------------------
Class C (11,018,702) --
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 77,378,574 (58,539,325)
----------------------------------------------------------------------------------------------
Class B 52,952,759 (17,710,466)
----------------------------------------------------------------------------------------------
Class C 13,238,100 7,427,062
==============================================================================================
Net increase (decrease) in net assets (363,591,355) 375,541,629
==============================================================================================
NET ASSETS:
Beginning of year 1,460,395,827 1,084,854,198
==============================================================================================
End of year $1,096,804,472 $1,460,395,827
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 950,485,964 $ 813,799,595
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (62,566) (49,180)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (13,130,799) 180,931,398
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 159,511,873 465,714,014
==============================================================================================
$1,096,804,472 $1,460,395,827
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
FS-30
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Capital Development Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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.
On October 31, 2001, undistributed net investment income (loss) was
increased by $6,805,170, undistributed net realized gains increased by
$77,894 and paid in capital decreased by $6,883,064 as a result of foreign
currency transactions, net operating loss reclassifications, and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The fund has a capital loss carryforward of $11,152,255 as of October 31,
2001 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2009.
FS-31
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. 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.
H. Put Options -- The Fund may purchase put options. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option's underlying instrument may be a security or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund's resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the securities hedged.
I. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. Effective July 1,
2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $3,281.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $160,775 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 year ended October 31, 2001, AFS
was paid $1,981,565 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
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2001,
the Class A, Class B and Class C shares paid AIM Distributors $2,371,880,
$5,430,170 and $770,433, respectively, as compensation under the Plans.
AIM Distributors received commissions of $233,900 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $19,079 in contingent deferred sales charges imposed
on redemptions of Fund shares.
FS-32
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $5,081 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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $22,028 and reductions in custodian fees of $3,487 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $25,515.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $105,883,145 were
on loan to brokers. The loans were secured by cash collateral of $108,019,789
received by the Fund and invested in affiliated money market funds as follows:
$54,009,894 in STIC Liquid Assets Portfolio and $54,009,895 in STIC Prime
Portfolio. For the year ended October 31, 2001, the Fund received fees of
$2,216,701 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$1,581,209,021 and $1,609,231,992, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $196,016,893 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (38,762,798) ========================================================= Net unrealized appreciation of investment securities $157,254,095 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $941,948,810. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
Beginning of year 7,963 $6,226,953
---------------------------------------------------------
Written 8,299 3,114,723
---------------------------------------------------------
Closed (9,758) (6,236,434)
---------------------------------------------------------
Expired (2,437) (2,005,875)
=========================================================
End of year 4,067 $1,099,367
_________________________________________________________
=========================================================
|
FS-33
NOTE 8-CALL OPTION CONTRACTS (CONTINUED)
Open call option contracts written at October 31, 2001 were as follows:
OCTOBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 2001 MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- ---------- ------------ --------------
BJ's Wholesale Club, Inc. Dec-01 $60 810 $ 159,565 $ 30,375 $129,190
---------------------------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc. Nov-01 55 1,237 76,691 27,833 48,858
---------------------------------------------------------------------------------------------------------------------------
Micrel Inc. Feb-02 30 1,520 314,629 357,200 (42,571)
---------------------------------------------------------------------------------------------------------------------------
XL Capital Ltd -- Class A Nov-01 80 500 548,482 395,000 153,482
===========================================================================================================================
4,067 $1,099,367 $810,408 $288,959
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
------------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ------------- ---------- -------------
Sold:
Class A 10,419,720 $ 176,330,665 5,210,489 $ 111,276,526
---------------------------------------------------------------------------------------------------------------------------
Class B 3,656,256 60,895,695 3,984,927 81,378,727
---------------------------------------------------------------------------------------------------------------------------
Class C 1,125,563 18,758,747 1,124,727 23,107,989
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 5,235,028 90,980,110 -- --
---------------------------------------------------------------------------------------------------------------------------
Class B 4,475,584 75,098,584 -- --
---------------------------------------------------------------------------------------------------------------------------
Class C 616,947 10,344,899 -- --
===========================================================================================================================
Reacquired:
Class A (11,277,708) (189,932,201) (8,381,526) (169,815,851)
---------------------------------------------------------------------------------------------------------------------------
Class B (5,128,289) (83,041,520) (5,105,919) (99,089,193)
---------------------------------------------------------------------------------------------------------------------------
Class C (974,815) (15,865,546) (816,459) (15,680,927)
===========================================================================================================================
8,148,286 $ 143,569,433 (3,983,761) $ (68,822,729)
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Class A
-----------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
2001 2000 1999(a) 1998(a) 1997(a)
-------- -------- --------- --------- ---------
Net asset value, beginning of period $ 21.79 $ 15.24 $ 12.89 $ 14.57 $ 11.09
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.04) (0.13) (0.10) (0.06) (0.10)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.27) 6.68 2.45 (1.62) 3.58
=========================================================================================================================
Total from investment operations (4.31) 6.55 2.35 (1.68) 3.48
=========================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
=========================================================================================================================
Net asset value, end of period $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) (21.76)% 42.98% 18.23% (11.53)% 31.38%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $576,660 $759,838 $ 579,514 $ 717,263 $ 577,685
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 1.33%(c) 1.28% 1.38% 1.28% 1.33%(d)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.21)%(c) (0.60)% (0.70)% (0.40)% (0.83)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $677,679,853.
(d) Includes fee waiver. Ratio of expenses to average net assets excluding fee
waiver was 1.38%.
FS-34
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2001 2000 1999(a) 1998(a) 1997(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 21.16 $ 14.90 $ 12.70 $ 14.46 $ 11.08
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) (0.26) (0.20) (0.16) (0.20)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.12) 6.52 2.40 (1.60) 3.58
======================================================================================================================
Total from investment operations (4.27) 6.26 2.20 (1.76) 3.38
======================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
======================================================================================================================
Net asset value, end of period $ 14.10 $ 21.16 $ 14.90 $ 12.70 $ 14.46
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) (22.29)% 42.01% 17.32% (12.17)% 30.51%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $454,018 $617,576 $451,508 $493,993 $297,623
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 1.99% 2.12% 2.02% 2.09%(d)
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.87)%(c) (1.30)% (1.44)% (1.14)% (1.59)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $543,017,006.
(d) Includes fee waiver. Ratio of expenses to average net assets excluding fee
waiver was 2.14%.
CLASS C
------------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED OCTOBER 31, (DATE SALES COMMENCED)
----------------------------------------- TO OCTOBER 31,
2001 2000 1999(a) 1998 1997(a)
------- ------- ------- ------- ----------------------
Net asset value, beginning of period $ 21.15 $ 14.89 $ 12.69 $ 14.45 $ 13.48
----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.14) (0.25) (0.20) (0.16) (0.06)
----------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (4.12) 6.51 2.40 (1.60) 1.03
==================================================================================================================================
Total from investment operations (4.26) 6.26 2.20 (1.76) 0.97
==================================================================================================================================
Less distributions from net realized gains (2.79) -- -- -- --
==================================================================================================================================
Net asset value, end of period $ 14.10 $ 21.15 $ 14.89 $ 12.69 $ 14.45
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Total return(b) (22.24)% 42.04% 17.34% (12.18)% 7.20%
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $66,127 $82,982 $53,832 $48,293 $12,195
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Ratio of expenses to average net assets 1.99%(c) 1.99% 2.12% 2.02% 2.14%(d)(e)
==================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.87)%(c) (1.30)% (1.44)% (1.14)% (1.69)%(d)
__________________________________________________________________________________________________________________________________
==================================================================================================================================
Portfolio turnover rate 130% 101% 117% 78% 41%
__________________________________________________________________________________________________________________________________
==================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are based on average daily net assets of $77,043,292.
(d) Annualized.
(e) Includes fee waiver. Ratio of expenses to average net assets excluding fee
waiver was 2.19%.
FS-35
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Charter Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Charter Fund (a portfolio AIM Equity
Funds), including the schedule of investments, as of
October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the four years in the period then ended were
audited by other auditors whose report dated December 6,
2000, expressed an unqualified opinion on those
statements and financial highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Charter Fund at October 31, 2001, and the results of its
operations, changes in its net assets, and financial
highlights for the year then ended in conformity with
accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
AIM CHARTER FUND
FS-36
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Charter Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Charter Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-37
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
STOCKS & OTHER EQUITY
INTERESTS-97.69%
ADVERTISING-0.75%
Interpublic Group of Cos., Inc. (The) 350,000 $ 7,857,500
---------------------------------------------------------------------------
Omnicom Group Inc. 400,000 30,712,000
===========================================================================
38,569,500
===========================================================================
AEROSPACE & DEFENSE-1.43%
Boeing Co. (The) 550,000 17,930,000
---------------------------------------------------------------------------
General Dynamics Corp. 350,000 28,560,000
---------------------------------------------------------------------------
United Technologies Corp. 500,000 26,945,000
===========================================================================
73,435,000
===========================================================================
AIRLINES-0.31%
Southwest Airlines Co. 1,000,000 15,900,000
===========================================================================
APPAREL RETAIL-0.51%
Gap, Inc. (The) 2,000,000 26,140,000
===========================================================================
AUTO PARTS & EQUIPMENT-0.28%
Johnson Controls, Inc. 200,000 14,464,000
===========================================================================
BANKS-3.00%
Bank of America Corp. 500,000 29,495,000
---------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 1,500,000 51,015,000
---------------------------------------------------------------------------
Fifth Third Bancorp 400,000 22,568,000
---------------------------------------------------------------------------
Washington Mutual, Inc. 700,000 21,133,000
---------------------------------------------------------------------------
Wells Fargo & Co. 750,000 29,625,000
===========================================================================
153,836,000
===========================================================================
BIOTECHNOLOGY-0.55%
Amgen Inc.(a) 500,000 28,410,000
===========================================================================
BREWERS-0.41%
Anheuser-Busch Cos., Inc. 500,000 20,830,000
===========================================================================
BROADCASTING & CABLE TV-0.93%
Clear Channel Communications, Inc.(a) 500,000 19,060,000
---------------------------------------------------------------------------
Comcast Corp.-Class A(a) 800,000 28,672,000
===========================================================================
47,732,000
===========================================================================
BUILDING PRODUCTS-0.33%
Masco Corp. 850,000 16,855,500
===========================================================================
COMPUTER & ELECTRONICS RETAIL-0.21%
Best Buy Co., Inc.(a) 200,000 10,980,000
===========================================================================
COMPUTER HARDWARE-2.77%
Dell Computer Corp.(a) 1,500,000 35,970,000
---------------------------------------------------------------------------
International Business Machines Corp. 725,000 78,350,750
---------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,750,000 27,912,500
===========================================================================
142,233,250
===========================================================================
|
MARKET
SHARES VALUE
COMPUTER STORAGE & PERIPHERALS-0.30%
EMC Corp.(a) 1,250,000 $ 15,400,000
===========================================================================
CONSUMER FINANCE-0.94%
Capital One Financial Corp. 600,000 24,786,000
---------------------------------------------------------------------------
MBNA Corp. 500,000 13,805,000
---------------------------------------------------------------------------
Providian Financial Corp. 2,500,000 9,725,000
===========================================================================
48,316,000
===========================================================================
DATA PROCESSING SERVICES-0.23%
Paychex, Inc. 362,800 11,631,368
===========================================================================
DEPARTMENT STORES-1.08%
Kohl's Corp.(a) 1,000,000 55,610,000
===========================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.95%
Cendant Corp.(a) 3,750,000 48,600,000
===========================================================================
DIVERSIFIED FINANCIAL SERVICES-16.23%
American Express Co. 500,000 14,715,000
---------------------------------------------------------------------------
Citigroup Inc. 4,500,000 204,840,000
---------------------------------------------------------------------------
Fannie Mae 650,000 52,624,000
---------------------------------------------------------------------------
Freddie Mac 1,500,000 101,730,000
---------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 650,000 50,804,000
---------------------------------------------------------------------------
J.P. Morgan Chase & Co. 3,000,000 106,080,000
---------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,750,000 76,492,500
---------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 3,000,000 146,760,000
---------------------------------------------------------------------------
State Street Corp. 400,000 18,216,000
---------------------------------------------------------------------------
Stilwell Financial, Inc. 3,000,000 60,330,000
===========================================================================
832,591,500
===========================================================================
DRUG RETAIL-1.16%
CVS Corp. 450,000 10,755,000
---------------------------------------------------------------------------
Walgreen Co. 1,500,000 48,570,000
===========================================================================
59,325,000
===========================================================================
ELECTRIC UTILITIES-0.86%
Calpine Corp.(a) 650,000 16,087,500
---------------------------------------------------------------------------
Edison International(a) 350,000 4,973,500
---------------------------------------------------------------------------
Mirant Corp.(a) 600,000 15,600,000
---------------------------------------------------------------------------
PG&E Corp.(a) 400,000 7,224,000
===========================================================================
43,885,000
===========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.65%
Celestica Inc. (Canada)(a) 2,000,000 68,640,000
---------------------------------------------------------------------------
Jabil Circuit, Inc.(a) 400,000 8,480,000
---------------------------------------------------------------------------
Sanmina Corp.(a) 500,000 7,570,000
===========================================================================
84,690,000
===========================================================================
|
AIM CHARTER FUND
FS-38
MARKET
SHARES VALUE
EMPLOYMENT SERVICES-0.14%
Robert Half International Inc.(a) 350,000 $ 7,220,500
===========================================================================
ENVIRONMENTAL SERVICES-0.36%
Waste Management, Inc. 750,000 18,375,000
===========================================================================
FOOD DISTRIBUTORS-0.30%
Sysco Corp. 650,000 15,671,500
===========================================================================
FOOD RETAIL-0.61%
Kroger Co. (The)(a) 600,000 14,676,000
---------------------------------------------------------------------------
Safeway Inc.(a) 400,000 16,660,000
===========================================================================
31,336,000
===========================================================================
GENERAL MERCHANDISE STORES-4.44%
Family Dollar Stores, Inc. 350,000 10,101,000
---------------------------------------------------------------------------
Target Corp. 5,000,000 155,750,000
---------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1,200,000 61,680,000
===========================================================================
227,531,000
===========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.52%
Cardinal Health, Inc. 400,000 26,844,000
===========================================================================
HEALTH CARE EQUIPMENT-1.94%
Baxter International Inc. 1,000,000 48,370,000
---------------------------------------------------------------------------
Medtronic, Inc. 1,000,000 40,300,000
---------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 350,000 10,818,500
===========================================================================
99,488,500
===========================================================================
HOME IMPROVEMENT RETAIL-1.88%
Home Depot, Inc. (The) 1,500,000 57,345,000
---------------------------------------------------------------------------
Lowe's Cos., Inc. 1,150,000 39,215,000
===========================================================================
96,560,000
===========================================================================
HOTELS-0.90%
Carnival Corp. 800,000 17,424,000
---------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 2,000,000 22,000,000
---------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 300,000 6,612,000
===========================================================================
46,036,000
===========================================================================
HOUSEHOLD PRODUCTS-0.34%
Colgate-Palmolive Co. 300,000 17,256,000
===========================================================================
INDUSTRIAL CONGLOMERATES-6.92%
General Electric Co. 5,500,000 200,255,000
---------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 3,150,000 154,791,000
===========================================================================
355,046,000
===========================================================================
INDUSTRIAL MACHINERY-0.33%
Danaher Corp. 300,000 16,722,000
===========================================================================
INSURANCE BROKERS-0.47%
Marsh & McLennan Cos., Inc. 250,000 24,187,500
===========================================================================
INTEGRATED OIL & GAS-1.29%
ChevronTexaco Corp. 300,000 26,565,000
---------------------------------------------------------------------------
|
MARKET
SHARES VALUE
INTEGRATED OIL & GAS-(CONTINUED)
Exxon Mobil Corp. 1,000,000 $ 39,450,000
===========================================================================
66,015,000
===========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.74%
SBC Communications Inc. 1,000,000 38,110,000
===========================================================================
LEISURE PRODUCTS-0.22%
Mattel, Inc.(a) 600,000 11,358,000
===========================================================================
LIFE & HEALTH INSURANCE-0.35%
AFLAC, Inc. 300,000 7,338,000
---------------------------------------------------------------------------
Conseco, Inc.(a) 3,500,000 10,465,000
===========================================================================
17,803,000
===========================================================================
MANAGED HEALTH CARE-0.51%
UnitedHealth Group Inc. 400,000 26,300,000
===========================================================================
MOTORCYCLE MANUFACTURERS-0.53%
Harley-Davidson, Inc. 600,000 27,156,000
===========================================================================
MOVIES & ENTERTAINMENT-2.99%
AOL Time Warner Inc.(a) 3,500,000 109,235,000
---------------------------------------------------------------------------
Viacom Inc.-Class B(a) 1,000,000 36,510,000
---------------------------------------------------------------------------
Walt Disney Co. (The) 400,000 7,436,000
===========================================================================
153,181,000
===========================================================================
MULTI-LINE INSURANCE-3.06%
American International Group, Inc. 2,000,000 157,200,000
===========================================================================
MULTI-UTILITIES-1.27%
Dynegy Inc.-Class A 650,000 23,335,000
---------------------------------------------------------------------------
Enron Corp. 3,000,000 41,700,000
===========================================================================
65,035,000
===========================================================================
NETWORKING EQUIPMENT-1.57%
Cisco Systems, Inc.(a) 4,750,000 80,370,000
===========================================================================
OIL & GAS DRILLING-0.44%
Transocean Sedco Forex Inc. 750,000 22,612,500
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.52%
Baker Hughes Inc. 400,000 14,332,000
---------------------------------------------------------------------------
Halliburton Co. 500,000 12,345,000
===========================================================================
26,677,000
===========================================================================
PERSONAL PRODUCTS-0.39%
Gillette Co. 650,000 20,208,500
===========================================================================
PHARMACEUTICALS-11.75%
Abbott Laboratories 500,000 26,490,000
---------------------------------------------------------------------------
Allergan, Inc. 600,000 43,074,000
---------------------------------------------------------------------------
American Home Products Corp. 700,000 39,081,000
---------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,500,000 80,175,000
---------------------------------------------------------------------------
Johnson & Johnson 1,850,000 107,133,500
---------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 500,000 19,495,000
---------------------------------------------------------------------------
|
AIM CHARTER FUND
FS-39
MARKET
SHARES VALUE
PHARMACEUTICALS-(CONTINUED)
Pfizer Inc. 3,750,000 $ 157,125,000
---------------------------------------------------------------------------
Pharmacia Corp. 400,000 16,208,000
---------------------------------------------------------------------------
Pharmacia Corp.-$2.60 Conv. Pfd. ACES 1,000,000 39,500,000
---------------------------------------------------------------------------
Schering-Plough Corp. 2,000,000 74,360,000
===========================================================================
602,641,500
===========================================================================
PROPERTY & CASUALTY INSURANCE-0.98%
ACE Ltd. (Bermuda) 375,000 13,218,750
---------------------------------------------------------------------------
MGIC Investment Corp. 200,000 10,348,000
---------------------------------------------------------------------------
St. Paul Co., Inc. (The) 250,000 11,475,000
---------------------------------------------------------------------------
XL Captial Ltd.-Class A (Bermuda) 175,000 15,200,500
===========================================================================
50,242,250
===========================================================================
SEMICONDUCTOR EQUIPMENT-2.41%
Applied Materials, Inc.(a) 2,000,000 68,220,000
---------------------------------------------------------------------------
KLA-Tencor Corp.(a) 1,350,000 55,161,000
===========================================================================
123,381,000
===========================================================================
SEMICONDUCTORS-5.51%
Altera Corp.(a) 1,250,000 25,250,000
---------------------------------------------------------------------------
Analog Devices, Inc.(a) 1,350,000 51,300,000
---------------------------------------------------------------------------
Intel Corp. 3,300,000 80,586,000
---------------------------------------------------------------------------
Linear Technology Corp. 800,000 31,040,000
---------------------------------------------------------------------------
Texas Instruments Inc. 2,500,000 69,975,000
---------------------------------------------------------------------------
Xilinx, Inc.(a) 800,000 24,336,000
===========================================================================
282,487,000
===========================================================================
SOFT DRINKS-1.89%
Coca-Cola Co. (The) 400,000 19,152,000
---------------------------------------------------------------------------
PepsiCo, Inc. 1,600,000 77,936,000
===========================================================================
97,088,000
===========================================================================
SPECIALTY STORES-0.49%
Bed Bath & Beyond Inc.(a) 625,000 15,662,500
---------------------------------------------------------------------------
Tiffany & Co. 400,000 9,356,000
===========================================================================
25,018,500
===========================================================================
SYSTEMS SOFTWARE-4.50%
Computer Associates International, Inc. 500,000 15,460,000
---------------------------------------------------------------------------
Microsoft Corp.(a) 3,000,000 174,450,000
---------------------------------------------------------------------------
Oracle Corp.(a) 3,000,000 40,680,000
===========================================================================
230,590,000
===========================================================================
|
MARKET
SHARES VALUE
TELECOMMUNICATIONS EQUIPMENT-1.53%
Motorola, Inc. 3,000,000 $ 49,110,000
---------------------------------------------------------------------------
QUALCOMM Inc.(a) 600,000 29,472,000
===========================================================================
78,582,000
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.72%
Sprint Corp. (PCS Group)(a) 1,650,000 36,795,000
===========================================================================
Total Stocks & Other Equity Interests
(Cost $4,700,032,339) 5,010,559,368
===========================================================================
PRINCIPAL
AMOUNT
CONVERTIBLE NOTES-1.13%
COMPUTER HARDWARE-0.21%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Putable, Sub. Deb.,
8.00%, 05/01/03 (Acquired 03/07/00-04/19/01;
Cost $10,476,000)(b)(c)(d) $17,900,000 3,222,000
---------------------------------------------------------------------------
8.00%, 05/01/03 (Acquired 04/17/98-
04/19/01; Cost $37,053,750)(b)(c)(d) 42,800,000 7,704,000
===========================================================================
10,926,000
===========================================================================
SYSTEMS SOFTWARE-0.58%
VERITAS Software Corp., Conv. Unsec. Notes,
5.25%, 11/01/04 10,000,000 29,700,000
===========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.34%
Lucent Technologies Inc., Conv. Pfd. Notes,
8.00%, 08/15/31 (Acquired 08/01/01; Cost
$15,000,000)(b) 15,000 17,381,250
===========================================================================
Total Convertible Notes
(Cost $76,114,568) 58,007,250
===========================================================================
SHARES
MONEY MARKET FUNDS-2.00%
STIC Liquid Assets Portfolio(e) 51,095,980 51,095,980
---------------------------------------------------------------------------
STIC Prime Portfolio(e) 51,095,980 51,095,980
===========================================================================
Total Money Market Funds
(Cost $102,191,960) 102,191,960
===========================================================================
TOTAL INVESTMENTS-100.82%
(Cost $4,878,338,867) 5,170,758,578
===========================================================================
OTHER ASSETS LESS LIABILITIES-(0.82)% (41,803,588)
===========================================================================
NET ASSETS-100.00% $5,128,954,990
___________________________________________________________________________
===========================================================================
|
Investment Abbreviations:
ACES - Automatically Convertible Equity Security Conv. - Convertible Deb. - Debentures Gtd. - Guaranteed Pfd. - Preferred Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
10/31/01 was $28,307,250, which represented 0.55% of the Fund's net assets.
(c) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM CHARTER FUND
FS-40
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$4,878,338,867)* $5,170,758,578
-------------------------------------------------------------
Receivables for:
Investments sold 1,054,271
-------------------------------------------------------------
Fund shares sold 2,481,747
-------------------------------------------------------------
Dividends and interest 3,369,978
-------------------------------------------------------------
Investment for deferred compensation plan 141,930
-------------------------------------------------------------
Collateral for securities loaned 157,871,000
-------------------------------------------------------------
Other assets 63,412
=============================================================
Total assets 5,335,740,916
=============================================================
LIABILITIES:
Payables for:
Investments purchased 29,422,955
-------------------------------------------------------------
Fund shares reacquired 13,505,626
-------------------------------------------------------------
Deferred compensation plan 141,930
-------------------------------------------------------------
Collateral upon return of securities loaned 157,871,000
-------------------------------------------------------------
Accrued distribution fees 3,766,293
-------------------------------------------------------------
Accrued trustees' fees 2,588
-------------------------------------------------------------
Accrued transfer agent fees 1,757,658
-------------------------------------------------------------
Accrued operating expenses 317,876
=============================================================
Total liabilities 206,785,926
=============================================================
Net assets applicable to shares outstanding $5,128,954,990
=============================================================
NET ASSETS:
Class A $3,159,303,778
_____________________________________________________________
=============================================================
Class B $1,719,470,450
_____________________________________________________________
=============================================================
Class C $ 248,533,219
_____________________________________________________________
=============================================================
Institutional Class $ 1,647,543
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 301,921,398
_____________________________________________________________
=============================================================
Class B 168,970,042
_____________________________________________________________
=============================================================
Class C 24,353,446
_____________________________________________________________
=============================================================
Institutional Class 154,347
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 10.46
-------------------------------------------------------------
Offering price per share:
(Net asset value of $10.46 divided by
94.50%) $ 11.07
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 10.18
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 10.21
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value and offering price per
share $ 10.67
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $147,803,828 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$167,987) $ 51,939,068
-------------------------------------------------------------
Dividends from affiliated money market funds 9,708,350
-------------------------------------------------------------
Interest 2,430,943
-------------------------------------------------------------
Security lending income 493,642
=============================================================
Total investment income 64,572,003
=============================================================
EXPENSES:
Advisory fees 43,928,613
-------------------------------------------------------------
Administrative services fees 383,570
-------------------------------------------------------------
Custodian fees 381,521
-------------------------------------------------------------
Distribution fees -- Class A 12,930,396
-------------------------------------------------------------
Distribution fees -- Class B 23,400,806
-------------------------------------------------------------
Distribution fees -- Class C 3,339,941
-------------------------------------------------------------
Transfer agent fees -- Class A 8,527,137
-------------------------------------------------------------
Transfer agent fees -- Class B 4,737,943
-------------------------------------------------------------
Transfer agent fees -- Class C 676,235
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 335
-------------------------------------------------------------
Trustees' fees 33,996
-------------------------------------------------------------
Other 2,084,211
=============================================================
Total expenses 100,424,704
=============================================================
Less: Fees waived (504,457)
-------------------------------------------------------------
Expenses paid indirectly (130,329)
=============================================================
Net expenses 99,789,918
=============================================================
Net investment income (loss) (35,217,915)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,053,979,957)
-------------------------------------------------------------
Option contracts written 2,143,751
=============================================================
(1,051,836,206)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (2,495,927,588)
-------------------------------------------------------------
Foreign currencies 32,252
=============================================================
(2,495,895,336)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (3,547,731,542)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(3,582,949,457)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM CHARTER FUND
FS-41
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- --------------
OPERATIONS:
Net investment income (loss) $ (35,217,915) $ (40,843,340)
--------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities and option contracts (1,051,836,206) 471,954,499
--------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities
and foreign currencies (2,495,895,336) 506,889,736
================================================================================
Net increase (decrease) in net assets
resulting from operations (3,582,949,457) 938,000,895
================================================================================
Distributions to shareholders from net
realized gains:
Class A (282,256,150) (388,576,691)
--------------------------------------------------------------------------------
Class B (155,149,624) (178,887,093)
--------------------------------------------------------------------------------
Class C (21,295,588) (12,095,934)
--------------------------------------------------------------------------------
Institutional Class (157,658) (5,231,737)
--------------------------------------------------------------------------------
Share transactions-net:
Class A (161,661,243) 584,181,510
--------------------------------------------------------------------------------
Class B (2,882,485) 797,259,785
--------------------------------------------------------------------------------
Class C 28,949,621 277,016,670
--------------------------------------------------------------------------------
Institutional Class (227,735) (65,767,394)
================================================================================
Net increase (decrease) in net assets (4,177,630,319) 1,945,900,011
================================================================================
NET ASSETS:
Beginning of year 9,306,585,309 7,360,685,298
================================================================================
End of year $ 5,128,954,990 $9,306,585,309
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 5,916,415,607 $6,086,848,912
--------------------------------------------------------------------------------
Undistributed net investment income (loss) (892,327) (265,564)
--------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (1,078,954,767) 431,720,148
--------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 292,386,477 2,788,281,813
================================================================================
$ 5,128,954,990 $9,306,585,309
________________________________________________________________________________
================================================================================
|
See Notes to Financial Statements.
AIM CHARTER FUND
FS-42
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of eleven separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers four different classes of shares: Class A shares, Class B shares, Class C
shares and the Institutional Class. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a contingent
deferred sales charge. 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 growth of capital with a secondary objective
of current income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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. On October 31, 2001, undistributed net investment income was increased by $34,591,152, undistributed net realized gains increased by $20,311 and paid in capital decreased by $34,611,463 as a result of net operating loss reclassifications and other reclassifications. Net assets of the Fund were unaffected by the reclassifications noted above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The fund has a capital loss carryforward of $1,010,857,488 as of October 31, 2001 which may be carried forward to offset
AIM CHARTER FUND
FS-43
future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. 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.
H. Bond Premiums -- It has been the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. In November 2000, a revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was issued and is effective for fiscal years beginning after December 15, 2000. The revised Guide will require the Fund to amortize premium and discount on all fixed-income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding. Adopting this accounting principle will not effect the Fund's net asset value, but will change the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. The Fund expects that the impact of the adoption of this principle will not be material to the financial statements.
I. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
agreed to waive advisory fees payable by the Fund to AIM at the annual rate of
0.025% for each $5 billion increment in net assets over $5 billion, up to a
maximum waiver of 0.175% on net assets in excess of $35 billion. Effective July
1, 2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $504,457. Under the terms of a master sub-advisory agreement
between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM
Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $383,570 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 year ended October 31, 2001, AFS
was paid $6,916,602 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and the Institutional Class 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 0.30% 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
AIM CHARTER FUND
FS-44
the Plans would constitute an asset-based sales charge. The Plans also impose a
cap on the total sales charges, including asset-based sales charges that may be
paid by the respective classes. For the year ended October 31, 2001, the Class
A, Class B and Class C shares paid AIM Distributors $12,930,396, $23,400,806 and
$3,339,941, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,328,439 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $191,689 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $13,632
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $122,815 and reductions in custodian fees of $7,514 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $130,329.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $147,803,828 were
on loan to brokers. The loans were secured by cash collateral of $157,871,000
received by the Fund and invested in STIC Liquid Assets Portfolio, an affiliated
money market fund. For the year ended October 31, 2001, the Fund received fees
of $493,642 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$5,289,825,997 and $5,527,271,604, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $756,700,389 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (532,958,136) ========================================================= Net unrealized appreciation of investment securities $223,742,253 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $4,947,016,325. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of year -- $ --
----------------------------------------------------------
Written 15,000 3,870,757
----------------------------------------------------------
Closed (15,000) (3,870,757)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
AIM CHARTER FUND
FS-45
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
---------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
Sold:
Class A 37,578,186 $ 517,083,181 57,178,653 $1,066,455,209
---------------------------------------------------------------------------------------------------------------------------
Class B 24,357,854 333,276,040 53,229,017 974,381,372
---------------------------------------------------------------------------------------------------------------------------
Class C 7,575,697 105,353,193 16,418,781 302,161,441
---------------------------------------------------------------------------------------------------------------------------
Institutional Class 21,223 287,988 579,610 10,786,891
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 17,611,530 266,615,003 21,344,032 366,468,078
---------------------------------------------------------------------------------------------------------------------------
Class B 9,886,847 146,422,053 9,983,505 169,088,645
---------------------------------------------------------------------------------------------------------------------------
Class C 1,369,533 20,351,280 672,773 11,427,814
---------------------------------------------------------------------------------------------------------------------------
Institutional Class 8,709 133,843 294,477 5,109,184
===========================================================================================================================
Reacquired:
Class A (74,345,004) (945,359,427) (45,774,876) (848,741,777)
---------------------------------------------------------------------------------------------------------------------------
Class B (39,590,160) (482,580,578) (18,927,570) (346,210,232)
---------------------------------------------------------------------------------------------------------------------------
Class C (7,831,344) (96,754,852) (1,991,214) (36,572,585)
---------------------------------------------------------------------------------------------------------------------------
Institutional Class (52,054) (649,566) (4,553,078) (81,663,469)
===========================================================================================================================
(23,408,983) $(135,821,842) 88,454,110 $1,592,690,571
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
INSTITUTIONAL CLASS
--------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------
2001 2000 1999 1998 1997
------- ------ ------- ------- -------
Net asset value, beginning of period $ 18.33 $17.33 $ 13.42 $ 13.48 $ 11.24
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04 0.52 0.09 0.18 0.16
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (6.82) 1.83 4.43 1.24 2.91
================================================================================================================
Total from investment operations (6.78) 2.35 4.52 1.42 3.07
================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.07) (0.14) (0.16)
----------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.88) (1.35) (0.54) (1.34) (0.67)
================================================================================================================
Total distributions (0.88) (1.35) (0.61) (1.48) (0.83)
================================================================================================================
Net asset value, end of period $ 10.67 $18.33 $ 17.33 $ 13.42 $ 13.48
________________________________________________________________________________________________________________
================================================================================================================
Total return (38.46)% 14.02% 34.61% 11.69% 29.05%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,648 $3,234 $66,801 $43,815 $40,191
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.68%(a) 0.66% 0.65% 0.66% 0.67%
----------------------------------------------------------------------------------------------------------------
Without fee waivers 0.69%(a) 0.68% 0.67% 0.67% 0.68%
================================================================================================================
Ratio of net investment income (loss) to average net assets 0.25%(a) 0.20% 0.51% 1.37% 1.21%
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 78% 80% 107% 154% 170%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Ratios are based on average daily net assets of $2,371,432.
AIM CHARTER FUND
FS-46
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Constellation Fund
And Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Constellation Fund (a portfolio of AIM
Equity Funds), including the schedule of investments, as
of October 31, 2001, and the related statement of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statements of changes in net assets for
the year ended October 31, 2000, and the financial
highlights for each of the four years in the period then
ended were audited by other auditors whose report dated
December 6, 2000, expressed an unqualified opinion on
those statements and financial highlights.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Constellation Fund at October 31, 2001, and the results
of its operations, changes in its net assets, and
financial highlights for the year then ended in
conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
AIM CONSTELLATION FUND
FS-47
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Constellation Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Constellation Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-48
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-97.93%
ADVERTISING-3.05%
Lamar Advertising Co.(a)(b) 4,500,000 $ 141,300,000
----------------------------------------------------------------------------
Omnicom Group Inc. 2,500,000 191,950,000
============================================================================
333,250,000
============================================================================
AEROSPACE & DEFENSE-2.90%
General Dynamics Corp. 1,124,400 91,751,040
----------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 910,000 79,051,700
----------------------------------------------------------------------------
Lockheed Martin Corp. 3,000,000 146,310,000
============================================================================
317,112,740
============================================================================
APPAREL RETAIL-1.71%
Ross Stores, Inc. 1,500,000 46,950,000
----------------------------------------------------------------------------
Talbots, Inc. (The) 1,333,500 38,004,750
----------------------------------------------------------------------------
TJX Cos., Inc. (The) 3,029,800 102,407,240
============================================================================
187,361,990
============================================================================
APPLICATION SOFTWARE-3.26%
Cadence Design Systems, Inc.(a) 1,500,000 31,710,000
----------------------------------------------------------------------------
Citrix Systems, Inc.(a) 2,000,000 46,800,000
----------------------------------------------------------------------------
Electronic Arts Inc.(a) 1,500,000 77,190,000
----------------------------------------------------------------------------
Intuit Inc.(a) 5,000,000 201,100,000
============================================================================
356,800,000
============================================================================
BROADCASTING & CABLE TV-2.37%
Comcast Corp.-Class A(a) 4,000,000 143,360,000
----------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 2,186,500 36,645,740
----------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 3,180,900 79,522,500
============================================================================
259,528,240
============================================================================
COMPUTER & ELECTRONICS RETAIL-0.81%
CDW Computer Centers, Inc.(a) 1,929,000 88,830,450
============================================================================
COMPUTER HARDWARE-2.36%
Dell Computer Corp.(a) 4,000,000 95,920,000
----------------------------------------------------------------------------
International Business Machines Corp. 1,500,000 162,105,000
============================================================================
258,025,000
============================================================================
CONSUMER FINANCE-2.62%
Capital One Financial Corp. 3,389,200 140,007,852
----------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 1,000,000 39,930,000
----------------------------------------------------------------------------
MBNA Corp. 3,836,900 105,936,809
============================================================================
285,874,661
============================================================================
DATA PROCESSING SERVICES-3.82%
Concord EFS, Inc.(a) 960,400 26,286,148
----------------------------------------------------------------------------
Fiserv, Inc.(a) 9,000,000 334,710,000
----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
DATA PROCESSING SERVICES-(CONTINUED)
Paychex, Inc. 1,767,000 $ 56,650,020
============================================================================
417,646,168
============================================================================
DEPARTMENT STORES-1.75%
Kohl's Corp.(a) 3,449,400 191,821,134
============================================================================
DIVERSIFIED FINANCIAL SERVICES-12.88%
American Express Co. 3,000,000 88,290,000
----------------------------------------------------------------------------
Citigroup Inc. 4,550,000 207,116,000
----------------------------------------------------------------------------
Fannie Mae 750,000 60,720,000
----------------------------------------------------------------------------
Freddie Mac 2,106,200 142,842,484
----------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 3,400,000 265,744,000
----------------------------------------------------------------------------
J.P. Morgan Chase & Co. 5,000,000 176,800,000
----------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 4,120,000 180,085,200
----------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 4,000,000 195,680,000
----------------------------------------------------------------------------
State Street Corp. 2,000,000 91,080,000
============================================================================
1,408,357,684
============================================================================
DRUG RETAIL-0.59%
Walgreen Co. 2,000,000 64,760,000
============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.77%
Celestica Inc. (Canada)(a) 4,767,100 163,606,872
----------------------------------------------------------------------------
Sanmina Corp.(a) 2,000,000 30,280,000
============================================================================
193,886,872
============================================================================
ENVIRONMENTAL SERVICES-0.34%
Waste Management, Inc. 1,500,000 36,750,000
============================================================================
FOOD RETAIL-0.95%
Safeway Inc.(a) 2,500,000 104,125,000
============================================================================
FOOTWEAR-1.13%
NIKE, Inc.-Class B 2,500,000 123,400,000
============================================================================
GENERAL MERCHANDISE STORES-1.46%
Family Dollar Stores, Inc. 1,953,800 56,386,668
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,000,000 102,800,000
============================================================================
159,186,668
============================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.44%
Cardinal Health, Inc. 712,500 47,815,875
============================================================================
HEALTH CARE EQUIPMENT-2.04%
Biomet, Inc.(a) 4,000,075 122,002,288
----------------------------------------------------------------------------
Medtronic, Inc. 2,500,000 100,750,000
============================================================================
222,752,288
============================================================================
|
AIM CONSTELLATION FUND
FS-49
MARKET
SHARES VALUE
HEALTH CARE FACILITIES-2.68%
HCA Inc. 3,000,000 $ 118,980,000
----------------------------------------------------------------------------
Health Management Associates, Inc.- Class
A(a) 6,000,000 116,940,000
----------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,000,000 57,520,000
============================================================================
293,440,000
============================================================================
HOME IMPROVEMENT RETAIL-2.92%
Home Depot, Inc. (The) 3,000,000 114,690,000
----------------------------------------------------------------------------
Lowe's Cos., Inc. 6,000,000 204,600,000
============================================================================
319,290,000
============================================================================
HOUSEHOLD APPLIANCES-0.31%
Whirlpool Corp. 566,100 33,411,222
============================================================================
INDUSTRIAL CONGLOMERATES-1.17%
General Electric Co. 3,500,000 127,435,000
============================================================================
INDUSTRIAL MACHINERY-0.77%
Danaher Corp. 1,500,000 83,610,000
============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.80%
WorldCom, Inc.-WorldCom Group(a) 6,500,000 87,425,000
============================================================================
INTERNET SOFTWARE & SERVICES-0.53%
VeriSign, Inc.(a) 1,500,000 58,065,000
============================================================================
INVESTMENTS-0.93%
Nasdaq-100 Index Tracking Stock(a) 3,000,000 101,700,000
============================================================================
IT CONSULTING & SERVICES-2.92%
Electronic Data Systems Corp. 3,000,000 193,110,000
----------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 5,000,000 126,000,000
============================================================================
319,110,000
============================================================================
LIFE & HEALTH INSURANCE-1.05%
AFLAC, Inc. 3,978,900 97,323,894
----------------------------------------------------------------------------
Principal Financial Group, Inc. (The)(a) 774,300 17,421,750
============================================================================
114,745,644
============================================================================
MANAGED HEALTH CARE-2.99%
Caremark Rx, Inc.(a) 5,000,000 67,000,000
----------------------------------------------------------------------------
First Health Group Corp.(a) 1,000,000 27,000,000
----------------------------------------------------------------------------
UnitedHealth Group Inc. 1,000,000 65,750,000
----------------------------------------------------------------------------
Wellpoint Health Networks Inc.(a) 1,500,000 167,385,000
============================================================================
327,135,000
============================================================================
MOTORCYCLE MANUFACTURERS-1.45%
Harley-Davidson, Inc. 3,500,000 158,410,000
============================================================================
MOVIES & ENTERTAINMENT-2.63%
AOL Time Warner Inc.(a) 6,000,000 187,260,000
----------------------------------------------------------------------------
Viacom Inc.-Class B(a) 2,750,000 100,402,500
============================================================================
287,662,500
============================================================================
|
MARKET
SHARES VALUE
MULTI-LINE INSURANCE-2.73%
American International Group, Inc. 3,800,000 $ 298,680,000
============================================================================
MULTI-UTILITIES-0.33%
Dynegy Inc.-Class A 1,000,000 35,900,000
============================================================================
NETWORKING EQUIPMENT-1.76%
Cisco Systems, Inc.(a) 10,000,000 169,200,000
----------------------------------------------------------------------------
McDATA Corp.-Class A(a) 1,564,420 23,012,618
============================================================================
192,212,618
============================================================================
OIL & GAS DRILLING-0.81%
Noble Drilling Corp.(a) 2,900,000 88,595,000
============================================================================
PHARMACEUTICALS-6.79%
Elan Corp. PLC-ADR (Ireland)(a) 3,000,000 136,950,000
----------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 1,500,000 111,570,000
----------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 2,000,000 115,380,000
----------------------------------------------------------------------------
Pfizer Inc. 6,000,000 251,400,000
----------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 773,600 34,579,920
----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 1,500,000 92,700,000
============================================================================
742,579,920
============================================================================
PROPERTY & CASUALTY INSURANCE-1.41%
ACE Ltd. (Bermuda) 2,509,800 88,470,450
----------------------------------------------------------------------------
XL Capital Ltd.-Class A (Bermuda) 750,000 65,145,000
============================================================================
153,615,450
============================================================================
RESTAURANTS-1.53%
Brinker International, Inc.(a) 3,000,000 76,200,000
----------------------------------------------------------------------------
Darden Restaurants, Inc. 1,250,000 40,025,000
----------------------------------------------------------------------------
Outback Steakhouse, Inc.(a) 544,300 15,703,055
----------------------------------------------------------------------------
Tricon Global Restaurants, Inc.(a) 688,800 34,846,392
============================================================================
166,774,447
============================================================================
SEMICONDUCTOR EQUIPMENT-1.65%
Applied Materials, Inc.(a) 2,000,000 68,220,000
----------------------------------------------------------------------------
Novellus Systems, Inc.(a) 2,000,000 66,060,000
----------------------------------------------------------------------------
Teradyne, Inc.(a) 2,000,000 46,100,000
============================================================================
180,380,000
============================================================================
SEMICONDUCTORS-5.10%
Altera Corp.(a) 3,000,000 60,600,000
----------------------------------------------------------------------------
Analog Devices, Inc.(a) 4,658,000 177,004,000
----------------------------------------------------------------------------
Intel Corp. 1,000,000 24,420,000
----------------------------------------------------------------------------
Linear Technology Corp. 2,490,900 96,646,920
----------------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 1,437,700 65,774,775
----------------------------------------------------------------------------
Microchip Technology Inc.(a) 4,246,968 132,590,341
============================================================================
557,036,036
============================================================================
|
AIM CONSTELLATION FUND
FS-50
MARKET
SHARES VALUE
SPECIALTY STORES-3.23%
AutoZone, Inc.(a) 605,900 $ 35,463,327
----------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 8,000,000 200,480,000
----------------------------------------------------------------------------
Borders Group, Inc.(a) 4,000,000 62,360,000
----------------------------------------------------------------------------
Office Depot, Inc.(a) 4,000,000 54,400,000
============================================================================
352,703,327
============================================================================
SYSTEMS SOFTWARE-3.99%
Microsoft Corp.(a) 7,500,000 436,125,000
============================================================================
TELECOMMUNICATIONS EQUIPMENT-0.28%
Nokia Oyj-ADR (Finland) 1,500,000 30,765,000
============================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.92%
Sprint Corp. (PCS Group)(a) 4,500,000 100,350,000
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $10,765,157,040) 10,704,440,934
============================================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS-3.05%
STIC Liquid Assets Portfolio(c) 167,018,637 $ 167,018,637
----------------------------------------------------------------------------
STIC Prime Portfolio(c) 167,018,637 167,018,637
============================================================================
Total Money Market Funds
(Cost $334,037,274) 334,037,274
============================================================================
TOTAL INVESTMENTS-100.98%
(Cost $11,099,194,314) 11,038,478,208
============================================================================
OTHER ASSETS LESS LIABILITIES-(0.98%) (107,463,292)
============================================================================
NET ASSETS-100.00% $10,931,014,916
____________________________________________________________________________
============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuer in which the Fund's holdings of the issuer represent 5%
or more of the outstanding voting securities of the issuer. The Fund has
not owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer.
The market value as of 10/31/01 represented 1.29% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM CONSTELLATION FUND
FS-51
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$11,099,194,314)* $11,038,478,208
-------------------------------------------------------------
Receivables for:
Investments sold 55,794,179
-------------------------------------------------------------
Fund shares sold 5,542,976
-------------------------------------------------------------
Dividends 3,203,885
-------------------------------------------------------------
Investment for deferred compensation plan 299,778
-------------------------------------------------------------
Collateral for securities loaned 82,388,055
-------------------------------------------------------------
Other assets 91,742
=============================================================
Total assets 11,185,798,823
=============================================================
LIABILITIES:
Payables for:
Investments purchased 123,237,702
-------------------------------------------------------------
Fund shares reacquired 36,973,947
-------------------------------------------------------------
Deferred compensation plan 299,778
-------------------------------------------------------------
Collateral upon return of securities
loaned 82,388,055
-------------------------------------------------------------
Accrued distribution fees 6,352,435
-------------------------------------------------------------
Accrued trustees' fees 4,710
-------------------------------------------------------------
Accrued transfer agent fees 4,349,945
-------------------------------------------------------------
Accrued operating expenses 1,177,335
=============================================================
Total liabilities 254,783,907
=============================================================
Net assets applicable to shares outstanding $10,931,014,916
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 9,703,277,317
_____________________________________________________________
=============================================================
Class B $ 818,342,827
_____________________________________________________________
=============================================================
Class C $ 258,786,001
_____________________________________________________________
=============================================================
Institutional Class $ 150,608,771
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 492,027,970
_____________________________________________________________
=============================================================
Class B 43,330,146
_____________________________________________________________
=============================================================
Class C 13,706,725
_____________________________________________________________
=============================================================
Institutional Class 7,172,708
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 19.72
-------------------------------------------------------------
Offering price per share:
(Net asset value of $19.72 divided by
94.50%) $ 20.87
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 18.89
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 18.88
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value offering and redemption
price per share $ 21.00
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $81,311,797 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$19,950) $ 52,609,362
-------------------------------------------------------------
Dividends from affiliated money market funds 48,646,039
-------------------------------------------------------------
Interest 811,984
-------------------------------------------------------------
Security lending income 700,894
=============================================================
Total investment income 102,768,279
=============================================================
EXPENSES:
Advisory fees 93,618,688
-------------------------------------------------------------
Administrative services fees 622,082
-------------------------------------------------------------
Custodian fees 659,500
-------------------------------------------------------------
Distribution fees -- Class A 40,107,085
-------------------------------------------------------------
Distribution fees -- Class B 10,331,953
-------------------------------------------------------------
Distribution fees -- Class C 3,343,201
-------------------------------------------------------------
Transfer agent fees -- Class A 27,877,105
-------------------------------------------------------------
Transfer agent fees -- Class B 2,296,337
-------------------------------------------------------------
Transfer agent fees -- Class C 743,046
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 30,126
-------------------------------------------------------------
Trustees' fees 62,240
-------------------------------------------------------------
Other 3,984,782
=============================================================
Total expenses 183,676,145
=============================================================
Less: Fees waived (3,749,927)
-------------------------------------------------------------
Expenses paid indirectly (264,049)
=============================================================
Net expenses 179,662,169
=============================================================
Net investment income (loss) (76,893,890)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,231,927,356)
-------------------------------------------------------------
Foreign currencies (1,459)
-------------------------------------------------------------
Option contracts written 6,689,775
=============================================================
(1,225,239,040)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (7,717,580,233)
-------------------------------------------------------------
Foreign currencies 1,921
=============================================================
(7,717,578,312)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (8,942,817,352)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(9,019,711,242)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM CONSTELLATION FUND
FS-52
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
---------------- ---------------
OPERATIONS:
Net investment income (loss) $ (76,893,890) $ (134,563,472)
-------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (1,225,239,040) 3,997,300,240
-------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, and foreign currencies (7,717,578,312) 1,649,711,807
=================================================================================================
Net increase (decrease) in net assets resulting from
operations (9,019,711,242) 5,512,448,575
=================================================================================================
Distributions to shareholders from net realized gains:
Class A (3,284,079,983) (1,341,534,330)
-------------------------------------------------------------------------------------------------
Class B (239,710,222) (59,304,397)
-------------------------------------------------------------------------------------------------
Class C (79,328,549) (16,589,886)
-------------------------------------------------------------------------------------------------
Institutional Class (47,688,484) (23,400,833)
-------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,798,697,583 1,156,513,412
-------------------------------------------------------------------------------------------------
Class B 360,350,428 575,351,569
-------------------------------------------------------------------------------------------------
Class C 104,195,656 231,744,660
-------------------------------------------------------------------------------------------------
Institutional Class 31,147,864 (16,568,699)
=================================================================================================
Net increase (decrease) in net assets (10,376,126,949) 6,018,660,071
=================================================================================================
NET ASSETS:
Beginning of year 21,307,141,865 15,288,481,794
=================================================================================================
End of year $ 10,931,014,916 $21,307,141,865
_________________________________________________________________________________________________
=================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 12,227,372,518 $10,009,800,678
-------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (744,944) (652,603)
-------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (1,234,896,552) 3,641,131,584
-------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (60,716,106) 7,656,862,206
=================================================================================================
$ 10,931,014,916 $21,307,141,865
_________________________________________________________________________________________________
=================================================================================================
|
See Notes to Financial Statements.
AIM CONSTELLATION FUND
FS-53
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers four different classes of shares: Class A shares, Class B
shares, Class C shares and the Institutional Class. Class A shares are sold with
a front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. 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 growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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. On October 31, 2001, undistributed net investment income (loss) was increased by $76,801,549, undistributed net realized gains were increased by $18,142 and paid in capital was decreased by $76,819,691 as a result of book/tax differences due to foreign currency gain/loss and net operating loss reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The fund has a capital loss carryforward of $1,224,074,030 as of October 31, 2001 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
AIM CONSTELLATION FUND
FS-54
E. 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.
F. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
agreed to waive advisory fees payable by the Fund to AIM at the annual rate of
0.025% for each $5 billion increment in net assets over $5 billion, up to a
maximum waiver of 0.175% on net assets in excess of $35 billion. Effective July
1, 2001, 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
fund of which the Fund has invested. For the year ended October 31, 2001, AIM
waived fees of $3,749,927. Under the terms of a master sub-advisory agreement
between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM
Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $622,082 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 year ended October 31, 2001, AFS
was paid $14,673,763 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and the Institutional Class 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 0.30% of the Fund's average daily net assets
of Class A shares and 1.00% of the average daily net assets of Class B and C
shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class A, Class B or Class C shares to selected dealers
and financial institutions who furnish continuing personal shareholder services
to their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. For the year ended October 31, 2001, the Class A, Class B and Class C
shares paid AIM Distributors $40,107,085, $10,331,953 and $3,343,201,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,879,056 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $317,491 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $25,883
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $264,049 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $264,049.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed
AIM CONSTELLATION FUND
FS-55
line. The commitment fee is allocated among the funds based on their respective average net assets for the period.
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 October 31, 2001, securities with an aggregate value of $81,311,797 were on
loan to brokers. The loans were secured by cash collateral of $82,388,055
received by the Fund and invested in affiliated money market funds as follows:
$57,449,572 in STIC Liquid Assets Portfolio and $24,938,483 in STIC Prime
Portfolio. For the year ended October 31, 2001, the Fund received fees of
$700,894 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$10,627,583,666 and $10,541,501,562, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,650,840,736 ---------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,722,379,365) ========================================================== Net unrealized appreciation (depreciation) of investment securities $ (71,538,629) __________________________________________________________ ========================================================== Cost of investments for tax purposes is $11,110,016,837. |
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2001 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of year -- $ --
----------------------------------------------------------
Written 15,000 6,689,775
----------------------------------------------------------
Expired (15,000) (6,689,775)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- ---------------
Sold:
Class A 69,882,787 $ 1,870,548,957 86,430,817 $ 3,725,450,424
-----------------------------------------------------------------------------------------------------------------------------
Class B 12,298,051 324,078,409 16,075,085 679,865,751
-----------------------------------------------------------------------------------------------------------------------------
Class C 4,478,320 117,760,474 6,309,791 266,777,259
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,273,391 37,026,988 3,694,065 165,186,338
=============================================================================================================================
Issued as reinvestment of dividends:
Class A 107,528,397 3,125,797,826 34,136,740 1,274,304,836
-----------------------------------------------------------------------------------------------------------------------------
Class B 8,229,796 230,503,608 1,560,370 57,000,776
-----------------------------------------------------------------------------------------------------------------------------
Class C 2,703,433 75,693,277 430,722 15,725,642
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,529,945 47,137,606 593,714 23,119,167
=============================================================================================================================
Reacquired:
Class A (128,320,077) (3,197,649,200) (90,168,284) (3,843,241,848)
-----------------------------------------------------------------------------------------------------------------------------
Class B (8,314,571) (194,231,589) (3,863,116) (161,514,958)
-----------------------------------------------------------------------------------------------------------------------------
Class C (3,756,367) (89,258,095) (1,210,375) (50,758,241)
-----------------------------------------------------------------------------------------------------------------------------
Institutional Class (1,955,216) (53,016,730) (4,750,277) (204,874,204)
=============================================================================================================================
65,577,889 $ 2,294,391,531 49,239,252 $ 1,947,040,942
_____________________________________________________________________________________________________________________________
=============================================================================================================================
|
AIM CONSTELLATION FUND
FS-56
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
INSTITUTIONAL CLASS
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 45.55 $ 36.01 $ 27.25 $ 30.00 $ 26.01
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01 (0.09) (0.01) -- 0.02
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (17.14) 12.91 9.50 (0.65) 4.86
======================================================================================================================
Total from investment operations (17.13) 12.82 9.49 (0.65) 4.88
======================================================================================================================
Less distributions from net realized gains (7.42) (3.28) (0.73) (2.10) (0.89)
======================================================================================================================
Net asset value, end of period $ 21.00 $ 45.55 $ 36.01 $ 27.25 $ 30.00
______________________________________________________________________________________________________________________
======================================================================================================================
Total return (42.80)% 37.14% 35.46% (1.85)% 19.42%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $150,609 $288,097 $244,369 $189,039 $188,109
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.65%(a) 0.65% 0.64% 0.63% 0.65%
----------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.68%(a) 0.68% 0.66% 0.65% 0.67%
======================================================================================================================
Ratio of net investment income (loss) to average net assets 0.03%(a) (0.18)% (0.04)% (0.01)% 0.06%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 75% 88% 62% 76% 67%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Ratios are based on average daily net assets of $200,446,415.
AIM CONSTELLATION FUND
FS-57
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of AIM Weingarten Fund
and Board of Trustees of AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Weingarten Fund (a portfolio AIM
Equity Funds), including the schedule of investments, as
of October 31, 2001, and the related statements of
operations, statement of changes in net assets, and
financial highlights for the year then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit. The statement of changes in net assets for the
year ended October 31, 2000, and the financial highlights
for each of the four years in the period then ended were
audited by other auditors whose report dated December 6,
2000, expressed an unqualified opinion on those
statements and financial highlights
We conducted our audit in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our
procedures included confirmation of securities owned as
of October 31, 2001, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Weingarten Fund at October 31, 2001, and the results of
its operations, changes in its net assets, and financial
highlights for the year then ended in conformity with
accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP Houston, Texas December 10, 2001 |
AIM WEINGARTEN FUND
FS-58
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees AIM Equity Funds:
We have audited the accompanying statement of changes in net assets of AIM Weingarten Fund (a portfolio of AIM Equity Funds) for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended. This financial statement and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement and financial highlights referred to above present fairly, in all material respects, the changes in net assets of AIM Weingarten Fund for the year ended October 31, 2000 and the financial highlights for each of the periods in the four-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP December 6, 2000 Houston, Texas |
FS-59
SCHEDULE OF INVESTMENTS
October 31, 2001
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS-86.69%
AEROSPACE & DEFENSE-4.25%
General Dynamics Corp. 904,300 $ 73,790,880
-----------------------------------------------------------------------------
Lockheed Martin Corp. 2,911,600 141,998,732
=============================================================================
215,789,612
=============================================================================
APPLICATION SOFTWARE-1.11%
Intuit Inc.(a) 1,404,300 56,480,946
=============================================================================
BANKS-2.77%
Bank of America Corp. 1,413,400 83,376,466
-----------------------------------------------------------------------------
Washington Mutual, Inc. 1,903,000 57,451,570
=============================================================================
140,828,036
=============================================================================
BIOTECHNOLOGY-0.95%
Invitrogen Corp.(a) 613,700 37,644,358
-----------------------------------------------------------------------------
Serono S.A.-Class B (Switzerland) 13,420 10,602,947
=============================================================================
48,247,305
=============================================================================
CASINOS & GAMING-0.83%
International Game Technology(a) 827,300 42,233,665
=============================================================================
COMPUTER & ELECTRONICS RETAIL-1.47%
Best Buy Co., Inc.(a) 1,095,900 60,164,910
-----------------------------------------------------------------------------
Blockbuster Inc.-Class A 577,000 14,471,160
=============================================================================
74,636,070
=============================================================================
COMPUTER HARDWARE-1.15%
International Business Machines Corp. 541,100 58,476,677
=============================================================================
CONSUMER FINANCE-1.39%
AmeriCredit Corp.(a) 1,571,800 24,362,900
-----------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 1,158,600 46,262,898
=============================================================================
70,625,798
=============================================================================
DATA PROCESSING SERVICES-2.42%
First Data Corp. 1,817,200 122,788,204
=============================================================================
DEPARTMENT STORES-0.60%
Kohl's Corp.(a) 547,900 30,468,719
=============================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.66%
H&R Block, Inc. 989,300 33,715,344
=============================================================================
DIVERSIFIED FINANCIAL SERVICES-7.27%
Citigroup Inc. 1,315,200 59,867,904
-----------------------------------------------------------------------------
Fannie Mae 1,877,700 152,018,592
-----------------------------------------------------------------------------
Freddie Mac 2,322,600 157,518,732
=============================================================================
369,405,228
=============================================================================
|
MARKET
SHARES VALUE
ELECTRIC UTILITIES-2.60%
Calpine Corp.(a) 998,500 $ 24,712,875
-----------------------------------------------------------------------------
Mirant Corp.(a) 4,134,100 107,486,600
=============================================================================
132,199,475
=============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.95%
Celestica Inc. (Canada)(a) 1,496,100 51,346,152
-----------------------------------------------------------------------------
Waters Corp.(a) 1,341,900 47,624,031
=============================================================================
98,970,183
=============================================================================
ENVIRONMENTAL SERVICES-0.94%
Waste Management, Inc. 1,940,300 47,537,350
=============================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-5.85%
AdvancePCS(a) 600,000 36,462,000
-----------------------------------------------------------------------------
AmerisourceBergen Corp. 890,000 56,568,400
-----------------------------------------------------------------------------
Cardinal Health, Inc. 723,000 48,520,530
-----------------------------------------------------------------------------
Express Scripts, Inc.(a) 902,900 36,964,726
-----------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 850,000 73,270,000
-----------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 695,100 45,445,638
=============================================================================
297,231,294
=============================================================================
HEALTH CARE EQUIPMENT-3.59%
Baxter International Inc. 2,179,800 105,436,926
-----------------------------------------------------------------------------
Biomet, Inc.(a) 640,200 19,526,100
-----------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 808,500 57,403,500
=============================================================================
182,366,526
=============================================================================
HEALTH CARE FACILITIES-5.61%
HCA Inc. 3,044,200 120,732,972
-----------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,736,500 99,883,480
-----------------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 1,601,200 64,672,468
=============================================================================
285,288,920
=============================================================================
HOME IMPROVEMENT RETAIL-3.23%
Lowe's Cos., Inc. 4,819,900 164,358,590
=============================================================================
IT CONSULTING & SERVICES-3.97%
Affiliated Computer Services, Inc.- Class
A(a) 645,300 56,818,665
-----------------------------------------------------------------------------
Electronic Data Systems Corp. 2,255,500 145,186,535
=============================================================================
202,005,200
=============================================================================
LEISURE PRODUCTS-1.22%
Mattel, Inc.(a) 3,264,000 61,787,520
=============================================================================
MANAGED HEALTH CARE-2.99%
Caremark Rx, Inc.(a) 3,742,400 50,148,160
-----------------------------------------------------------------------------
UnitedHealth Group Inc. 1,552,400 102,070,300
=============================================================================
152,218,460
=============================================================================
|
AIM WEINGARTEN FUND
FS-60
MARKET
SHARES VALUE
MOVIES & ENTERTAINMENT-0.68%
AOL Time Warner Inc.(a) 1,105,000 $ 34,487,050
=============================================================================
MULTI-LINE INSURANCE-1.47%
American International Group, Inc. 947,600 74,481,360
=============================================================================
MULTI-UTILITIES-1.28%
Dynegy Inc.-Class A 1,808,900 64,939,510
=============================================================================
PHARMACEUTICALS-13.73%
Allergan, Inc. 729,900 52,399,521
-----------------------------------------------------------------------------
Biovail Corp. (Canada)(a) 1,670,900 78,966,734
-----------------------------------------------------------------------------
Elan Corp. PLC-ADR (Ireland)(a) 1,069,700 48,831,805
-----------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 920,000 68,429,600
-----------------------------------------------------------------------------
IVAX Corp.(a) 1,278,400 26,271,120
-----------------------------------------------------------------------------
Johnson & Johnson 3,593,700 208,111,167
-----------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 1,028,233 40,090,805
-----------------------------------------------------------------------------
Mylan Laboratories, Inc. 853,200 31,457,484
-----------------------------------------------------------------------------
Pfizer Inc. 1,609,800 67,450,620
-----------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 1,230,000 76,014,000
=============================================================================
698,022,856
=============================================================================
PROPERTY & CASUALTY INSURANCE-1.80%
MGIC Investment Corp. 847,600 43,854,824
-----------------------------------------------------------------------------
Radian Group Inc. 1,399,300 47,394,291
=============================================================================
91,249,115
=============================================================================
SEMICONDUCTOR EQUIPMENT-1.40%
KLA-Tencor Corp.(a) 1,260,400 51,499,944
-----------------------------------------------------------------------------
Lam Research Corp.(a) 1,039,700 19,712,712
=============================================================================
71,212,656
=============================================================================
SEMICONDUCTORS-2.70%
Analog Devices, Inc.(a) 608,100 23,107,800
-----------------------------------------------------------------------------
Intel Corp. 2,201,400 53,758,188
-----------------------------------------------------------------------------
Microchip Technology Inc.(a) 505,200 15,772,344
-----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
SEMICONDUCTORS-(CONTINUED)
NVIDIA Corp.(a) 1,044,300 $ 44,758,698
=============================================================================
137,397,030
=============================================================================
SPECIALTY STORES-2.48%
AutoZone, Inc.(a) 218,300 12,777,099
-----------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 2,583,700 64,747,522
-----------------------------------------------------------------------------
Office Depot, Inc.(a) 3,566,800 48,508,480
=============================================================================
126,033,101
=============================================================================
SYSTEMS SOFTWARE-3.29%
Computer Associates International, Inc. 1,708,600 52,829,912
-----------------------------------------------------------------------------
Microsoft Corp.(a) 1,967,800 114,427,570
=============================================================================
167,257,482
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.04%
Sprint Corp. (PCS Group)(a) 2,376,300 52,991,490
=============================================================================
Total Common Stocks & Other Equity
Interests (Cost $4,270,183,965) 4,405,730,772
=============================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-0.49%
U.S. TREASURY BILLS-0.49%
2.56%, 12/20/01 (Cost $24,928,201)(b) $25,000,000(c) 24,928,201
=============================================================================
SHARES
MONEY MARKET FUNDS-10.45%
STIC Liquid Assets Portfolio(d) 265,630,548 265,630,548
-----------------------------------------------------------------------------
STIC Prime Portfolio(d) 265,630,548 265,630,548
=============================================================================
Total Money Market Funds
(Cost $531,261,096) 531,261,096
=============================================================================
TOTAL INVESTMENTS--97.63%
(Cost $4,826,373,262) 4,961,920,069
=============================================================================
OTHER ASSETS LESS LIABILITIES--2.37% 120,378,618
=============================================================================
NET ASSETS-100.00% $5,082,298,687
_____________________________________________________________________________
=============================================================================
|
Investment Abbreviation:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded at a discount. The interest rate shown represents the rate
of discount paid or received 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.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM WEINGARTEN FUND
FS-61
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2001
ASSETS:
Investments, at market value (cost
$4,826,373,262)* $4,961,920,069
-------------------------------------------------------------
Foreign currencies, at value (cost
$30,634,855) 30,440,406
-------------------------------------------------------------
Receivables for:
Investments sold 148,478,767
-------------------------------------------------------------
Variation margin 359,625
-------------------------------------------------------------
Fund shares sold 1,935,216
-------------------------------------------------------------
Dividends 2,639,098
-------------------------------------------------------------
Investment for deferred compensation plan 205,734
-------------------------------------------------------------
Collateral for securities loaned 170,305,500
-------------------------------------------------------------
Other assets 113,505
=============================================================
Total assets 5,316,397,920
=============================================================
LIABILITIES:
Payables for:
Investments purchased 44,217,572
-------------------------------------------------------------
Fund shares reacquired 13,607,057
-------------------------------------------------------------
Deferred compensation plan 205,734
-------------------------------------------------------------
Collateral upon return of securities loaned 170,305,500
-------------------------------------------------------------
Accrued distribution fees 3,353,712
-------------------------------------------------------------
Accrued trustees' fees 10,048
-------------------------------------------------------------
Accrued transfer agent fees 1,919,533
-------------------------------------------------------------
Accrued operating expenses 480,077
=============================================================
Total liabilities 234,099,233
=============================================================
Net assets applicable to shares outstanding $5,082,298,687
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $4,001,551,519
_____________________________________________________________
=============================================================
Class B $ 922,475,931
_____________________________________________________________
=============================================================
Class C $ 150,604,448
_____________________________________________________________
=============================================================
Institutional Class $ 7,666,789
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 316,425,965
_____________________________________________________________
=============================================================
Class B 77,809,347
_____________________________________________________________
=============================================================
Class C 12,690,480
_____________________________________________________________
=============================================================
Institutional Class 582,738
_____________________________________________________________
=============================================================
Class A:
Net asset value per share $ 12.65
-------------------------------------------------------------
Offering price per share:
(Net asset value of $12.65 divided by
94.50%) $ 13.39
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 11.86
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 11.87
_____________________________________________________________
=============================================================
Institutional Class
Net asset value and offering price per
share $ 13.16
_____________________________________________________________
=============================================================
|
* At October 31, 2001, securities with an aggregate market value of $154,614,276 were on loan to brokers.
STATEMENT OF OPERATIONS
For the year ended October 31, 2001
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$143,741) $ 28,836,194
-------------------------------------------------------------
Dividends from affiliated money market funds 17,855,780
-------------------------------------------------------------
Interest 340,759
-------------------------------------------------------------
Security lending income 406,289
=============================================================
Total investment income 47,439,022
=============================================================
EXPENSES:
Advisory fees 46,064,764
-------------------------------------------------------------
Administrative services fees 392,623
-------------------------------------------------------------
Custodian fees 560,018
-------------------------------------------------------------
Distribution fees -- Class A 17,315,069
-------------------------------------------------------------
Distribution fees -- Class B 12,957,576
-------------------------------------------------------------
Distribution fees -- Class C 2,097,259
-------------------------------------------------------------
Transfer agent fees -- Class A 13,632,894
-------------------------------------------------------------
Transfer agent fees -- Class B 3,157,246
-------------------------------------------------------------
Transfer agent fees -- Class C 511,018
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 1,683
-------------------------------------------------------------
Trustees' fees 42,264
-------------------------------------------------------------
Other 2,952,686
=============================================================
Total expenses 99,685,100
=============================================================
Less: Fees waived (584,500)
-------------------------------------------------------------
Expenses paid indirectly (131,276)
=============================================================
Net expenses 98,969,324
=============================================================
Net investment income (loss) (51,530,302)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (2,600,552,854)
-------------------------------------------------------------
Foreign currencies (260,383)
-------------------------------------------------------------
Futures contracts (19,026,047)
=============================================================
(2,619,839,284)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (2,497,364,549)
-------------------------------------------------------------
Foreign currencies 145,614
-------------------------------------------------------------
Futures contracts (6,153,088)
=============================================================
(2,503,372,023)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and futures contracts (5,123,211,307)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(5,174,741,609)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM WEINGARTEN FUND
FS-62
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2001 and 2000
2001 2000
--------------- ---------------
OPERATIONS:
Net investment income (loss) $ (51,530,302) $ (68,599,290)
------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (2,619,839,284) 1,506,816,288
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and futures
contracts (2,503,372,023) (520,884,199)
================================================================================================
Net increase (decrease) in net assets resulting from
operations (5,174,741,609) 917,332,799
================================================================================================
Distributions to shareholders from net realized gains:
Class A (1,121,031,643) (912,274,100)
------------------------------------------------------------------------------------------------
Class B (257,775,222) (156,090,644)
------------------------------------------------------------------------------------------------
Class C (40,618,148) (13,701,366)
------------------------------------------------------------------------------------------------
Institutional Class (2,238,331) (12,672,994)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 270,194,498 927,796,775
------------------------------------------------------------------------------------------------
Class B 174,387,701 724,966,056
------------------------------------------------------------------------------------------------
Class C 38,305,460 221,312,749
------------------------------------------------------------------------------------------------
Institutional Class (703,710) (100,840,055)
================================================================================================
Net increase (decrease) in net assets (6,114,221,004) 1,595,829,220
================================================================================================
NET ASSETS:
Beginning of year 11,196,519,691 9,600,690,471
================================================================================================
End of year $ 5,082,298,687 $11,196,519,691
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 7,580,212,372 $ 7,150,137,050
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (433,499) (388,227)
------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (2,626,460,881) 1,414,418,150
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 128,980,695 2,632,352,718
================================================================================================
$ 5,082,298,687 $11,196,519,691
________________________________________________________________________________________________
================================================================================================
|
See Notes to Financial Statements.
AIM WEINGARTEN FUND
FS-63
NOTES TO FINANCIAL STATEMENTS
October 31, 2001
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of eleven separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers four different classes of shares: Class A shares, Class B shares, Class C
shares and the Institutional Class. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a contingent
deferred sales charge. 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 to provide growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the security
is principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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. Occasionally, 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. On October 31, 2001, undistributed net investment income was increased by $51,485,030, undistributed net realized gains increased by $623,597 and paid in capital decreased by $52,108,627 as a result of differing book/tax treatment of foreign currency transactions, net operating loss reclassifications and other reclassifications. Net assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The fund has a capital loss carryforward of $2,559,101,338 as of October 31, 2001 which may be carried forward to offset
AIM WEINGARTEN FUND
FS-64
future taxable gains, if any, which expires, if not previously utilized, in the year 2009.
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.
G. 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 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 include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes based on relative net assets.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $350
million, plus 0.625% of the Fund's average daily net assets in excess of $350
million. AIM has agreed to waive advisory fees payable by the Fund to AIM at the
annual rate of 0.025% for each $5 billion increment in net assets over $5
billion, up to a maximum waiver of 0.175% on net assets in excess of $35
billion. Effective July 1, 2001, 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 fund of which the Fund has invested. For the year ended
October 31, 2001, AIM waived fees of $584,500. Under the terms of a master
sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM
Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2001, AIM was
paid $392,623 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 year ended October 31, 2001, AFS
was paid $8,821,006 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and the Institutional Class 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 0.30% of the Fund's average daily net assets
of Class A shares and 1.00% of the average daily net assets of Class B and C
shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class A, Class B or Class C shares to selected dealers
and financial institutions who furnish continuing personal shareholder services
to their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. For the year ended October 31, 2001, the Class A, Class B and Class C
shares paid AIM Distributors $17,315,069, $12,957,576 and $2,097,259,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,462,679 from sales of the Class A
shares of the Fund during the year ended October 31, 2001. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 2001,
AIM Distributors received $163,986 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2001, the Fund paid legal fees of $14,465
for services rendered by Kramer, Levin, Naftalis &
AIM WEINGARTEN FUND
FS-65
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 year ended October 31, 2001, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $131,276 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $131,276.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2001, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 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 October 31, 2001, securities with an aggregate value of $154,614,276 were
on loan to brokers. The loans were secured by cash collateral of $170,305,500
received by the Fund and subsequently invested in STIC Liquid Assets Portfolio,
an affiliated money market fund. For the year ended October 31, 2001, the Fund
received fees of $406,289 for securities lending.
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2001 was
$16,742,023,593 and $17,443,346,004, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2001 is as follows:
Aggregate unrealized appreciation of investment securities $ 382,656,037 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (320,621,870) ========================================================= Net unrealized appreciation of investment securities $ 62,034,167 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $4,899,885,902. |
NOTE 8-FUTURES CONTRACTS
On October 31, 2001, $18,390,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of October 31, 2001 were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-------- --------- ------------ ------------ --------------
S&P 500 959 Dec-01/Long $254,302,825 $(6,153,088)
___________________________________________________________________
===================================================================
|
AIM WEINGARTEN FUND
FS-66
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2001 and 2000 were as follows:
2001 2000
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- ---------------
Sold:
Class A 30,268,361 $ 534,842,502 38,693,394 $ 1,218,409,892
------------------------------------------------------------------------------------------------------------------------------
Class B 13,914,532 238,827,916 26,508,143 797,286,477
------------------------------------------------------------------------------------------------------------------------------
Class C 4,329,075 74,411,514 8,102,015 244,073,425
------------------------------------------------------------------------------------------------------------------------------
Institutional Class 96,341 1,778,918 1,045,908 33,206,382
==============================================================================================================================
Issued as reinvestment of dividends:
Class A 50,737,569 1,049,729,056 29,963,538 854,837,292
------------------------------------------------------------------------------------------------------------------------------
Class B 12,575,383 245,330,006 5,414,678 148,085,997
------------------------------------------------------------------------------------------------------------------------------
Class C 2,001,892 39,096,945 480,423 13,149,166
------------------------------------------------------------------------------------------------------------------------------
Institutional Class 98,123 2,101,806 428,931 12,554,823
==============================================================================================================================
Reacquired:
Class A (82,325,956) (1,314,377,060) (36,659,424) (1,145,450,409)
------------------------------------------------------------------------------------------------------------------------------
Class B (20,537,177) (309,770,221) (7,393,719) (220,406,418)
------------------------------------------------------------------------------------------------------------------------------
Class C (4,874,492) (75,202,999) (1,209,352) (35,909,842)
------------------------------------------------------------------------------------------------------------------------------
Institutional Class (254,314) (4,584,434) (4,771,038) (146,601,260)
==============================================================================================================================
6,029,337 $ 482,183,949 60,603,497 $ 1,773,235,525
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
INSTITUTIONAL CLASS
----------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------
2001 2000(a) 1999 1998 1997
------- ------- -------- ------- -------
Net asset value, beginning of period $ 29.00 $ 28.96 $ 22.18 $ 23.05 $ 20.46
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.06) 0.02 0.10 0.08
------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (12.29) 3.29 8.32 2.43 4.90
==================================================================================================================
Total from investment operations (12.30) 3.23 8.34 2.53 4.98
==================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.10) -- (0.15)
------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.54) (3.19) (1.46) (3.40) (2.24)
==================================================================================================================
Total distributions (3.54) (3.19) (1.56) (3.40) (2.39)
==================================================================================================================
Net asset value, end of period $ 13.16 $ 29.00 $ 28.96 $ 22.18 $ 23.05
__________________________________________________________________________________________________________________
==================================================================================================================
Total return (47.11)% 11.07% 39.20% 12.79% 27.37%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 7,667 $18,634 $114,076 $72,884 $62,124
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.69%(b) 0.64% 0.63% 0.62% 0.64%
------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.70%(b) 0.68% 0.68% 0.67% 0.68%
==================================================================================================================
Ratio of net investment income (loss) to average net assets (0.04)%(b) (0.04)% 0.02% 0.49% 0.50%
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate 240% 145% 124% 125% 128%
__________________________________________________________________________________________________________________
==================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $11,188,888.
AIM WEINGARTEN FUND
FS-67
PART C: OTHER INFORMATION
Item 23 Exhibits
a(1) - (a) Agreement and Declaration of Trust of Registrant, dated December 6, 1999.(11)
- (b) Amendment No. 1, dated May 10, 2000, to Agreement and Declaration of Trust of Registrant, dated
December 6, 1999.(12)
- (c) Amendment No. 2, dated December 13, 2000, to Agreement and Declaration of Trust of Registrant,
dated December 6, 1999.(13)
- (d) Amendment No. 3, dated March 14, 2001, to Agreement and Declaration of Trust of Registrant,
dated December 6, 1999.(14)
- (e) Amendment No. 4, dated September 28, 2001, to Agreement and Declaration of Trust of
Registrant, dated December 6, 1999.(14)
- (f) Amendment No. 5, dated December 11, 2001, to Agreement and Declaration of Trust of
Registrant, dated December 6, 1999.(15)
b(1) - (a) By-Laws of Registrant, dated effective December 6, 1999. (11)
- (b) Amendment No. 1, dated June 14, 2000, to Bylaws of Registrant, dated effective December 6,
1999.(13)
c - Articles II, VI, VII and VIII of the Agreement and Declaration of Trust, as amended, and Articles IV
and VI of the By-Laws, as amended, as previously filed, define rights of holders of shares.
d(1) - (a) Master Investment Advisory Agreement, dated June 21, 2000, between Registrant and
A I M Advisors, Inc.(13)
- (b) Amendment No. 1, dated December 28, 2001, to Master Investment Advisory Agreement of
Registrant, dated June 21, 2000.(17)
(2) - Master Sub-Advisory Agreement, dated June 21, 2000, between A I M Advisors, Inc. and
A I M Capital Management, Inc.(13)
(3) - Sub-Advisory Agreement, dated June 21, 2000, between A I M Advisors, Inc. and H.S. Dent
Advisors, Inc.(13)
e(1) - (a) First Amended and Restated Master Distribution Agreement, dated July 1, 2000 between
Registrant (on behalf of its Class A and Class C shares) and A I M Distributors, Inc.(13)
- (b) Amendment No. 1, dated November 28, 2000, to the First Amended and Restated Master
Distribution Agreement, dated July 1, 2000, between Registrant (on behalf of its Class A and
Class C shares) and A I M Distributors, Inc.(13)
- (c) Amendment No. 2, dated December 28, 2001, to the First Amended and Restated Master
Distribution Agreement, dated July 1, 2000, between Registrant (on behalf of its Class A and
Class C shares) and A I M Distributors, Inc.(17)
|
(d) Form of Amendment No. 3, dated ___ 2002, to the First Amended and Restated Master
Distribution Agreement, dated July 1, 2000, between Registrant (on behalf of its Class A,
Class C and Institutional Class shares) and A I M Distributors, Inc.(16)
(2) - (a) First Amended and Restated Master Distribution Agreement, dated December 31, 2000, between
Registrant (on behalf of its Class B shares) and A I M Distributors, Inc.(13)
- (b) Amendment No. 1, dated December 28, 2001, to the First Amended and Restated Master
Distribution Agreement, dated December 31, 2000, between Registrant (on behalf of its Class B
shares) and A I M Distributors, Inc.(17)
(3) - Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers.(14)
(4) - Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks.(6)
f(1) - AIM Funds Retirement Plan for Eligible Directors/Trustees, effective as of March 8, 1994, as
restated September 18, 1995, as restated March 7, 2000, and as restated October 1, 2001.(16)
(2) - Form of Director Deferred Compensation Agreement for Registrant's Non-Affiliated Directors, as
amended March 7, 2000 and September 28, 2001.(16)
g(1) - (a) Master Custodian Contract, dated May 1, 2000, between Registrant and State Street
Bank and Trust Company.(13)
(b) Amendment, dated May 1, 2000 to the Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company.(13)
(c) Amendment, dated June 29, 2001, to the Master Custodian Contract, dated May 1, 2000,
between Registrant and State Street Bank and Trust Company.(16)
(2) - (a) Subcustodian Agreement, dated September 9, 1994, between Registrant, Texas Commerce Bank
National Association, State Street Bank and Trust Company and A I M Fund Services, Inc.(2)
- (b) Amendment No. 1, dated October 2, 1998, to Subcustodian Agreement between Registrant, Chase
Bank of Texas, N.A. (formerly Texas Commerce Bank), State Street and Trust Company and A I M
Fund Services, Inc.(10)
(3) - Foreign Assets Delegation Agreement, dated June 29, 2001, between A I M Advisors, Inc. and
Registrant.(16)
h(1) - (a) Transfer Agency and Service Agreement, dated June 21, 2000, between Registrant and
A I M Fund Services, Inc.(13)
(b) Amendment No. 1, dated July 1, 2000, to the Transfer Agency and Service Agreement dated
June 21, 2000, between Registrant and A I M Fund Services, Inc.(13)
(c) Amendment No. 2, dated January 1, 2002, to the Transfer Agency and Services Agreement dated
June 21, 2000, between Registrant and A I M Fund Services, Inc.(17)
(2) - Shareholder Sub-Accounting Services Agreement between Registrant, First Data Investor Services
Group (formerly The Shareholder Services Group, Inc.), Financial Data Services Inc. and Merrill
Lynch, Pierce, Fenner & Smith Inc., dated October 1, 1993.(1)
|
(3) - (a) Remote Access and Related Services Agreement, dated December 23, 1994, between Registrant
and First Data Investor Services Group, Inc. (formerly The Shareholder Services Group, Inc.).(2)
- (b) Amendment No. 1, dated October 4, 1995, to the Remote Access and Related Services Agreement
dated December 23, 1994, between Registrant and First Data Investor Services Group, Inc.(3)
- (c) Addendum No. 2, dated October 12, 1995, to the Remote Access and Related Services
Agreement, dated December 23, 1994, between Registrant and First Data Investor Services Group,
Inc.(3)
- (d) Amendment No. 3, dated February 1, 1997, to the Remote Access and Related Services
Agreement, dated December 23, 1994, between Registrant and First Data Investor Services Group,
Inc.(4)
- (e) Amendment No. 4, dated June 30, 1998, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between Registrant and First Data Investor Services Group, Inc.(6)
- (f) Amendment No. 5, dated July 1, 1998, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between Registrant and First Data Investor Services Group, Inc.(6)
- (g) Exhibit 1, effective as of August 4, 1997, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc.(5)
- (h) Amendment No. 6, dated August 30, 1999, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between Registrant and First Data Investor Services Group, Inc.(10)
- (i) Amendment No. 7, dated February 29, 2000, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between Registrant and First Data Services Group, Inc.(13)
- (j) Amendment No. 8, dated June 26, 2000, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between Registrant and First Data Investor Services Group, Inc.(14)
- (k) Amendment No. 9, dated June 26, 2000, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between Registrant and First Data Investor Services Group, Inc.(14)
- (l) Amendment No. 10, dated July 28, 2000, to the Remote Access and Related Services Agreement,
dated December 23, 1994, between Registrant and First Data Investor Services Group, Inc.(14)
- (m) Letter amendment, dated August 22, 2000, to Amendment No. 9, dated June 26, 2000, to the
Remote Access and Related Services Agreement, dated December 23, 1994, between Registrant and
First Data Investor Services Group. Inc.(14)
(4) - Preferred Registered Technology Escrow Agreement, dated September 10, 1997, between Registrant
and First Data Investor Services Group, Inc.(5)
|
(5) - (a) Master Administrative Services Agreement, dated June 21, 2000, between Registrant and A I M
Advisors, Inc.(13)
- (b) Amendment No. 1, dated May 9, 2001, to the Master Administrative Services Agreement, dated
June 21, 2000, between Registrant and A I M Advisors, Inc.(14)
- (c) Amendment No. 2, dated December 28, 2001, to the Master Administrative Services Agreement,
dated June 21, 2000, between Registrant and A I M Advisors, Inc.(17)
(6) - (a) Memorandum of Agreement, regarding securities lending, dated June 21, 2000, between
Registrant, on behalf of all Funds, and A I M Advisors, Inc.(13)
- (b) Memorandum of Agreement, dated July 1, 2001, between Registrant, on behalf of AIM Large Cap
Basic Value Fund, and A I M Advisors, Inc.(15)
(7) - Interfund Loan Agreement, dated September 18, 2001, between all Registrant and A I M Advisors,
Inc.(14)
i - Legal Opinion - None
j (1) - Consent of Ballard Spahr Andrews & Ingersoll, LLP.(17)
(2) - Consent of Ernst & Young LLP.(17)
(3) - Consent of KPMG LLP.(17)
k (1) - Omitted Financial Statements - None.
l (1) - Agreement Concerning Initial Capitalization of Registrant's AIM Large Cap Growth Fund, dated
February 26, 1999.(7)
(2) - Agreement Concerning Initial Capitalization of Registrant's AIM Dent Demographic Trends Fund,
dated June 4, 1999.(9)
(3) - Agreement Concerning Initial Capitalization of Registrant's AIM Large Cap Basic Value Fund,
dated June 29, 1999.(9)
(4) - Agreement Concerning Initial Capitalization of Registrant's AIM Mid Cap Growth Fund, dated
November 1, 1999.(10)
(5) - Agreement Concerning Initial Capitalization of Registrant's AIM Emerging Growth Fund.(13)
(6) - Agreement concerning Initial Capitalization of Registrant's AIM Core Strategies Fund and AIM
Large Cap Core Equity Fund, dated December 28, 2001.(17)
m(1) - (a) First Amended and Restated Master Distribution Plan, dated as of July 1, 2000, for the
Class A and Class C shares.(13)
- (b) Amendment No. 1, dated December 28, 2001, to Registrant's First Amended and Restated Master
Distribution Plan, dated July 1, 2000, on behalf of its Class A and Class C shares.(17)
(2) - (a) First Amended and Restated Master Distribution Plan, dated December 31, 2000, for the Class
B shares.(13)
|
- (b) Amendment No. 1, dated December 28, 2001, to Registrant's First Amended and Restated Master
Distribution Plan, dated December 31, 2000, on behalf of its Class B shares.(17)
(3) - Form of Shareholder Service Agreement to be used in connection with Registrant's Master
Distribution Plan.(14)
(4) - Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master
Distribution Plan.(14)
(5) - Form of Variable Group Annuity Contract Holder Service Agreement to be used in connection with
Registrant's Master Distribution Plan.(14)
(6) - Form of Agency Pricing Agreement to be used in connection with Registrant's Master Distribution
Plan.(14)
(7) - Forms of Service Agreements for Bank Trust Departments and for Brokers for Bank Trust
Departments.(14)
(8) - Form of Shareholder Service Agreement for shares of the AIM Mutual Funds.(14)
n(1) - Multiple Class Plan of The AIM Family of Funds--Registered Trademark--,
effective December 12, 2001.(16)
o - Reserved
p(1) - The A I M Management Group Code of Ethics, adopted May 1, 1981, as last amended February 24,
2000, relating to A I M Management Group Inc. and A I M Advisors, Inc.(12)
(2) - AIM Funds Code of Ethics of the Registrant, effective September 23, 2000.(14)
(1) Incorporated herein by reference to PEA No. 40, filed on February 26, 1992.
(2) Incorporated herein by reference to PEA No. 44, filed on February 24, 1995.
(3) Incorporated herein by reference to PEA No. 47, filed on December 29, 1995.
(4) Incorporated herein by reference to PEA No. 53, filed on October 9, 1997.
(5) Incorporated herein by reference to PEA No. 54, filed on February 27, 1998.
(6) Incorporated herein by reference to PEA No. 55, filed on December 11, 1998.
(7) Incorporated herein by reference to PEA No. 56, filed on February 23, 1999.
(8) Incorporated herein by reference to PEA No. 57, filed on March 24, 1999.
(9) Incorporated herein by reference to PEA No. 60, filed on July 15, 1999.
(10) Incorporated herein by reference to PEA No. 62, filed on January 6, 2000.
(11) Incorporated herein by reference to PEA No. 64, filed on March 27, 2000.
(12) Incorporated herein by reference to PEA No. 65, filed on May 25, 2000.
(13) Incorporated herein by reference to PEA No. 67, filed on February 23, 2001.
(14) Incorporated herein by reference to PEA No. 68, filed on October 12, 2001.
(15) Incorporated herein by reference to PEA No. 69, filed on December 14, 2001.
(16) Incorporated herein by reference to PEA No. 70, filed on December 28, 2001.
(17) Filed herewith electronically.
|
Item 24. Persons Controlled by or Under Common Control With the Fund
None.
Item 25. Indemnification
The Registrant's Agreement and Declaration of Trust, dated December 6, 1999, provides, among other things (i) that trustees and officers of the Registrant, when acting as such, shall not be personally liable for any act, omission or obligation of the Registrant or any trustee or officer (except for liabilities to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard to duty); (ii) for the indemnification by the Registrant of the trustees, officers, employees and agents of the Registrant to the fullest extent permitted by the Delaware Business Trust Act and Bylaws
and other applicable law; (iii) that shareholders of the Registrant shall not be personally liable for the debts, liabilities, obligations or expenses of the Registrant or any portfolio or class; and (iv) for the indemnification by the Registrant, out of the assets belonging to the applicable portfolio, of shareholders and former shareholders of the Registrant in case they are held personally liable solely by reason of being or having been shareholders of the Registrant or any portfolio or class and not because of their acts or omissions or for some other reason.
A I M Advisors, Inc., the Registrant and other investment companies managed by A I M Advisors, Inc., their respective officers, trustees, directors and employees (the "Insured Parties") are insured under a joint Mutual Fund & Investment Advisory Professional and Directors & Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1940 Act and is, therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustees, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1940 Act and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of the Advisor's directors and officers is with the Advisor and its affiliated companies. Reference is also made to the caption "Fund Management-The Advisor" of the Prospectus which comprises Part A of the Registration Statement, and to the caption "Management of the Trust" of the Statement of Additional Information which comprises Part B of the Registration Statement, and to Item 27(b) of this Part C.
Item 27. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal underwriter, also acts as a principal underwriter to the following investment companies:
AIM Advisor Funds
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
AIM Tax-Exempt Funds
AIM Variable Insurance Funds
(b)
Name and Principal Position and Offices with Positions and Offices
Business Address* Underwriter with Registrant
----------------- ----------- ---------------
Robert H. Graham Chairman & Director Chairman, President &
Trustee
Michael J. Cemo President, Chief Executive Officer None
& Director
Gary T. Crum Director Senior Vice President
James L. Salners Executive Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Mark D. Santero Senior Vice President None
Leslie A. Schmidt Senior Vice President None
James E. Stueve Senior Vice President None
Michael C. Vessels Senior Vice President None
James R. Anderson Vice President & Chief None
Compliance Officer
Mary A. Corcoran Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
Kim T. McAuliffe Vice President None
Carol F. Relihan Vice President Senior Vice President &
Secretary
Linda L. Warriner Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
|
(c) None.
Item 28. Location of Accounts and Records
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, will maintain physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Registrant's Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, and the Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund Services, Inc., P. O. Box 4739, Houston, Texas 77210-4739.
Item 29. Management Services
None.
Item 30. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 25th day of February, 2002.
REGISTRANT: AIM EQUITY FUNDS
By: /s/ ROBERT H. GRAHAM
-----------------------------------
Robert H. Graham, President
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ ROBERT H. GRAHAM Chairman, Trustee & President February 25, 2002
------------------------------------------------ (Principal Executive Officer)
(Robert H. Graham)
/s/ FRANK S. BAYLEY Trustee February 25, 2002
------------------------------------------------
(Frank S. Bayley)
/s/ BRUCE L. CROCKETT Trustee February 25, 2002
------------------------------------------------
(Bruce L. Crockett)
/s/ ALBERT R. DOWDEN Trustee February 25, 2002
------------------------------------------------
(Albert R. Dowden)
/s/ EDWARD K. DUNN, JR. Trustee February 25, 2002
------------------------------------------------
(Edward K. Dunn, Jr.)
/s/ JACK M. FIELDS Trustee February 25, 2002
------------------------------------------------
(Jack M. Fields)
/s/ CARL FRISCHLING Trustee February 25, 2002
------------------------------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee February 25, 2002
------------------------------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee February 25, 2002
------------------------------------------------
(Lewis F. Pennock)
/s/ RUTH H. QUIGLEY Trustee February 25, 2002
------------------------------------------------
(Ruth H. Quigley)
/s/ LOUIS S. SKLAR Trustee February 25, 2002
------------------------------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & Treasurer February 25, 2002
------------------------------------------------ (Principal Financial and
(Dana R. Sutton) Accounting Officer)
|
INDEX
Exhibits
d(1)(b) Amendment No. 1, dated December 28, 2001, to the Master
Investment Advisory Agreement of Registrant, dated
June 21, 2000
e(1)(c) Amendment No. 2, dated December 28, 2001, to the First Amended
and Restated Master Distribution Agreement, dated July 1,
2000, between Registrant (on behalf of its Class A and Class C
shares) and A I M Distributors, Inc.
e(2)(b) Amendment No. 1, dated December 28, 2001, to the First Amended
and Restated Master Distribution Agreement, dated December 31,
2000, between Registrant (on behalf of its Class B shares) and
AIM Distributors, Inc.
h(1)(c) Amendment No. 2, dated January 1, 2002, to the Transfer
Agency and Service Agreement dated June 21, 2000 between
Registrant and A I M Fund Services, Inc.
h(5)(c) Amendment No. 2, dated December 28, 2001, to the Master
Administrative Services Agreement, dated June 21, 2000,
between Registrant and A I M Advisors, Inc.
j(1) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) Consent of Ernst & Young LLP
j(3) Consent of KPMG LLP
l(6) Agreement concerning Initial Capitalization of Registrant's AIM Core Strategies Fund and AIM
Large Cap Core Equity Fund, dated December 28, 2001
m(1)(b) Amendment No. 1, dated December 28, 2001, to Registrant's First Amended and Restated Master
Distribution Plan, dated July 1, 2000, on behalf of its Class A and Class C shares
m(2)(b) Amendment No. 1, dated December 28, 2001, to Registrant's First Amended and Restated Master
Distribution Plan, dated December 31, 2000, on behalf of its Class B shares
|
EXHIBIT d(1)(b)
AMENDMENT NO. 1
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of December 28, 2001, amends the Master Investment Advisory Agreement (the "Agreement"), dated June 21, 2000, between AIM Equity Funds, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to add two new portfolios, the AIM Core Strategies Fund and the AIM Large Cap Equity Fund;
NOW, THEREFORE, the parties agree as follows;
1. Appendix A and Appendix B to the Agreement are hereby deleted in their entirety and replaced with the following:
"APPENDIX A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT ------------ ------------------------------------ AIM Aggressive Growth Fund June 1, 2000 AIM Blue Chip Fund June 1, 2000 AIM Capital Development Fund June 1, 2000 AIM Charter Fund June 1, 2000 AIM Constellation Fund June 1, 2000 AIM Core Strategies Fund December 28, 2001 AIM Dent Demographic Trends Fund June 1, 2000 AIM Emerging Growth Fund June 1, 2000 AIM Large Cap Basic Value Fund June 1, 2000 AIM Large Cap Core Equity Fund December 28, 2001 AIM Large Cap Growth Fund June 1, 2000 AIM Mid Cap Growth Fund June 1, 2000 AIM Weingarten Fund June 1, 2000 |
APPENDIX B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full compensation for all services rendered, an advisory fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
AIM AGGRESSIVE GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $150 million................................................... 0.80% Over $150 million.................................................... 0.625% |
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $350 million................................................... 0.75% Over $350 million.................................................... 0.625% |
AIM CHARTER FUND
AIM CONSTELLATION FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $30 million.................................................... 1.00% Over $30 million to and including $150 million....................... 0.75% Over $150 million.................................................... 0.625% |
AIM DENT DEMOGRAPHIC TRENDS FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $2 billion..................................................... 0.85% Over $2 billion...................................................... 0.80% |
AIM EMERGING GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion..................................................... 0.85% Over $1 billion...................................................... 0.80% |
AIM LARGE CAP BASIC VALUE FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion..................................................... 0.60% Over $1 billion to and including $2 billion.......................... 0.575% Over $2 billion...................................................... 0.55% |
AIM CORE STRATEGIES FUND
AIM LARGE CAP CORE EQUITY FUND
AIM LARGE CAP GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion..................................................... 0.75% Over $1 billion to and including $2 billion.......................... 0.70% Over $2 billion...................................................... 0.625% |
AIM MID CAP GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion..................................................... 0.80% Over $1 billion...................................................... 0.75% |
AIM WEINGARTEN FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $30 million.................................................... 1.00% Over $30 million to and including $350 million....................... 0.75% Over $350 million.................................................... 0.625%" |
2. In all other respects, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers on the date first written above.
AIM EQUITY FUNDS
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
----------------------------- -----------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
A I M ADVISORS INC.
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
----------------------------- -----------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
EXHIBIT e(1)(c)
AMENDMENT NO. 2
TO THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM EQUITY FUNDS
(APPLICABLE TO CLASS A AND CLASS C SHARES)
AND
A I M DISTRIBUTORS, INC.
The First Amended and Restated Master Distribution Agreement (the "Agreement"), dated July 1, 2000, by and between AIM Equity Funds, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Appendix A to the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM EQUITY FUNDS
CLASS A SHARES
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Core Strategies Fund
AIM Dent Demographic Trends Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Core Equity Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM Weingarten Fund
CLASS C SHARES
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Core Strategies Fund
AIM Dent Demographic Trends Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Core Equity Fund
AIM Large Cap Growth Fund
CLASS C SHARES (continued)
AIM Mid Cap Growth Fund
AIM Weingarten Fund
INSTITUTIONAL CLASS SHARES
AIM Charter Fund
AIM Constellation Fund
AIM Weingarten Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: December 28, 2001
AIM EQUITY FUNDS
Attest: /s/ LISA A. MOSS By /s/ ROBERT H. GRAHAM
------------------------------- -------------------------------
Assistant Secretary President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
------------------------------- -------------------------------
Assistant Secretary President
|
EXHIBIT e(2)(b)
AMENDMENT NO. 1
TO THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM EQUITY FUNDS
(CLASS B SHARES)
AND
A I M DISTRIBUTORS, INC.
The Master Distribution Agreement (the Agreement"), dated December 31, 2000, by and between AIM Equity Funds, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Schedule A to the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM EQUITY FUNDS
CLASS B SHARES
AIM Aggressive Growth Fund
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund
AIM Constellation Fund
AIM Core Strategies Fund
AIM Dent Demographic Trends Fund
AIM Emerging Growth Fund
AIM Large Cap Basic Value Fund
AIM Large Cap Core Equity Fund
AIM Large Cap Growth Fund
AIM Mid Cap Growth Fund
AIM Weingarten Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: December 28, 2001
AIM EQUITY FUNDS
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
------------------------------ ------------------------------
Assistant Secretary President
|
EXHIBIT h(1)(c)
AMENDMENT NUMBER 2 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of January 1, 2002 is made to the Transfer Agency and Service Agreement dated June 21, 2000 (the "Agreement") between AIM Equity Funds (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article 11 of the Agreement.
Section 2.01 is hereby deleted in its entirety and replaced with the following:
"2.01 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 fees as set out in the initial fee schedule attached hereto. Such fees and out-of-pocket expenses and advances identified under Section 2.02 below may be changed from time to time subject to mutual written agreement between the Fund and the Transfer Agent."
Paragraph 1 of the Fee Schedule 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, B, C and Institutional
Non-Daily Accrual Funds $15.20
Class A, B, C and Institutional
Monthly Dividend and Daily Accrual Funds $16.20"
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All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM EQUITY FUNDS
By: /s/ ROBERT H. GRAHAM
-------------------------
President
ATTEST:
/s/ LISA A. MOSS
-------------------
Assistant Secretary
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A I M FUND SERVICES, INC.
By: /s/ TONY D. GREEN
-------------------------
President
ATTEST:
/s/ LISA A. MOSS
-------------------
Assistant Secretary
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EXHIBIT h(5)(c)
AMENDMENT NO. 2
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated June 21, 2000, by and between A I M Advisors, Inc., a Delaware corporation, and AIM Equity Funds, a Delaware business trust, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM EQUITY FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM Aggressive Growth Fund June 1, 2001 AIM Blue Chip Fund June 1, 2001 AIM Capital Development Fund June 1, 2001 AIM Charter Fund June 1, 2001 AIM Constellation Fund June 1, 2001 AIM Core Strategies Fund December __, 2001 AIM Dent Demographic Trends Fund June 1, 2001 AIM Emerging Growth Fund June 1, 2001 AIM Large Cap Basic Value Fund June 1, 2001 AIM Large Cap Core Equity Fund December __, 2001 AIM Large Cap Growth Fund June 1, 2001 AIM Mid Cap Growth Fund June 1, 2001 AIM Weingarten Fund June 1, 2001" |
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: December 28, 2001
A I M ADVISORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
AIM EQUITY FUNDS
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary Robert H. Graham
President
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(SEAL)
EXHIBIT j(1)
CONSENT OF COUNSEL
AIM EQUITY FUNDS
We hereby consent to the use of our name and to the reference to our firm under the caption "Investment Advisory and Other Services - Other Service Providers" in the Statements of Additional Information for (i) the retail classes of the thirteen series portfolios of AIM Equity Funds (the "Company") and (ii) the institutional classes of AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund, each a series portfolio of the Company, which are included in Post-Effective Amendment No. 71 to the Registration Statement under the Securities Act of 1933, as amended (No. 2-25469), and Amendment No. 71 to the Registration Statement under the Investment Company Act of 1940, as amended (No. 811-1424), on Form N-1A of the Company.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
-----------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
February 13, 2002
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EXHIBIT j(2)
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the caption "Financial Highlights" in the Prospectus and "Auditors" in the Statement of Additional Information and to the incorporation by reference of those references and use of our reports dated December 10, 2001, on the financial statements and financial highlights of the AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographics Fund, AIM Emerging Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Growth Fund, and AIM Weingarten Fund as of and for the year ended October 31, 2001 in the Post-Effective Amendment Number 71 to the Registration Statement (Form N-1A).
/s/ ERNST & YOUNG LLP
--------------------------
ERNST & YOUNG LLP
Houston, Texas
February 20, 2002
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EXHIBIT j(3)
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees and Shareholders
AIM Equity Funds:
We consent to the use of our reports for the series portfolios of AIM Equity Funds dated December 6, 2000 included herein and the references to our firm under the headings "Financial Highlights" in the Prospectuses and "Auditors" in the Statements of Additional Information.
/s/ KPMG LLP Houston, Texas February 22, 2002 |
EXHIBIT l (6)
December 28, 2001
Board of Trustees
AIM Equity Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Re: Initial Capital Investment in New Portfolio of AIM Equity Funds (The "Fund")
Ladies and Gentlemen:
We are purchasing shares of the Fund for the purpose of providing initial investment for two new investment portfolios of the Fund. The purpose of this letter is to set out our understanding of the conditions of and our promises and representations concerning this investment.
We hereby agree to purchase shares equal to the following dollar amount for the portfolio:
FUND AMOUNT DATE
---- ------ ----
AIM Core Strategies Fund - Class A Shares $ 10.00 December 28, 2001
AIM Core Strategies Fund - Class B Shares $ 10.00 December 28, 2001
AIM Core Strategies Fund - Class C Shares $ 10.00 December 28, 2001
AIM Core Strategies Fund - Class A Shares $400,000 December 31, 2001
AIM Core Strategies Fund - Class B Shares $300,000 December 31, 2001
AIM Core Strategies Fund - Class C Shares $300,000 December 31, 2001
AIM Large Cap Core Equity Fund - Class A Shares $ 10.00 December 28, 2001
AIM Large Cap Core Equity Fund - Class B Shares $ 10.00 December 28, 2001
AIM Large Cap Core Equity Fund - Class C Shares $ 10.00 December 28, 2001
AIM Large Cap Core Equity Fund - Class A Shares $400,000 December 31, 2001
AIM Large Cap Core Equity Fund - Class B Shares $300,000 December 31, 2001
AIM Large Cap Core Equity Fund - Class C Shares $300,000 December 31, 2001
|
We understand that the initial net asset value per share for the portfolios named above will be $10.
We hereby represent that we are purchasing these shares solely for our own account and solely for investment purposes without any intent of distributing or reselling said shares. We further represent that disposition of said shares will only be by direct redemption to or repurchase by the Fund.
We further agree to provide the Fund with at least three days' advance written notice of any intended redemption and agree that we will work with the Fund with respect to the amount of such redemption so as not to place a burden on the Fund and to facilitate normal portfolio management of the Fund.
Sincerely yours,
A I M ADVISORS, INC.
/s/ ROBERT H. GRAHAM ------------------------------- Robert H. Graham President |
cc: Sara Ehlert-Gerke
Mark Gregson
EXHIBIT m(1)(b)
AMENDMENT NO. 1
FIRST AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
The First Amended and Restated Master Distribution Plan (the "Plan"), dated as of July 1, 2000, pursuant to Rule 12b-1 of AIM Equity Funds, a Delaware business trust, is hereby amended as follows:
Schedule A of the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
FIRST AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS
(CLASS A SHARES AND CLASS C SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Portfolio (or Class thereof) designated below, a Distribution Fee* determined by applying the annual rate set forth below as to each Portfolio (or Class thereof) to the average daily net assets of the Portfolio (or Class thereof) for the plan year, computed in a manner used for the determination of the offering price of shares of the Portfolio.
MINIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS A SHARES SALES CHARGE FEE FEE
-------------- ------------ ------- ---------
AIM Aggressive Growth Fund 0.00% 0.25% 0.25%
AIM Blue Chip Fund 0.10% 0.25% 0.35%
AIM Capital Development Fund 0.10% 0.25% 0.35%
AIM Charter Fund 0.05% 0.25% 0.30%
AIM Constellation Fund 0.05% 0.25% 0.30%
AIM Core Strategies Fund 0.10% 0.25% 0.35%
AIM Dent Demographic Trends Fund 0.10% 0.25% 0.35%
AIM Emerging Growth Fund 0.10% 0.25% 0.35%
AIM Large Cap Basic Value Fund 0.10% 0.25% 0.35%
AIM Large Cap Core Equity Fund 0.10% 0.25% 0.35%
AIM Large Cap Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Growth Fund 0.10% 0.25% 0.35%
AIM Weingarten Fund 0.05% 0.25% 0.30%
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MINIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS A SHARES SALES CHARGE FEE FEE
-------------- ------------ ------- ---------
AIM Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Blue Chip Fund 0.75% 0.25% 1.00%
AIM Capital Development Fund 0.75% 0.25% 1.00%
AIM Charter Fund 0.75% 0.25% 1.00%
AIM Constellation Fund 0.75% 0.25% 1.00%
AIM Core Strategies Fund 0.75% 0.25% 1.00%
AIM Dent Demographic Trends Fund 0.75% 0.25% 1.00%
AIM Emerging Growth Fund 0.75% 0.25% 1.00%
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MINIMUM MAXIMUM MAXIMUM
PORTFOLIO ASSET BASED SERVICE AGGREGATE
CLASS A SHARES SALES CHARGE FEE FEE
-------------- ------------ ------- ---------
AIM Large Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Large Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Large Cap Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Growth Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%"
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* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Class and the applicable Portfolio.
The Distributor will waive part or all of its Distribution Fee as to a Portfolio (or Class thereof) to the extent that the ordinary business expenses of the Portfolio exceed the expense limitation as to the Portfolio (if any) as contained in the Master Investment Advisory Agreement between the Company and A I M Advisors, Inc.
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: December 28, 2001
AIM EQUITY FUNDS
(on behalf of its Class A and Class C
Shares)
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ---------------------------------
Assistant Secretary President
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EXHIBIT m(2)(b)
AMENDMENT NO. 1
TO THE FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS
(CLASS B SHARES)
(SECURITIZATION FEATURE)
The First Amended and Restated Master Distribution Plan (the "Plan"), dated as of December 31, 2000, pursuant to Rule 12b-1 of AIM Equity Funds, a Delaware business trust, is hereby amended as follows:
Schedule A to the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS
(CLASS B SHARES)
(DISTRIBUTION FEE)
MAXIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE FEE
---- ------------ ------- ---------
AIM Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Blue Chip Fund 0.75% 0.25% 1.00%
AIM Capital Development Fund 0.75% 0.25% 1.00%
AIM Charter Fund 0.75% 0.25% 1.00%
AIM Constellation Fund 0.75% 0.25% 1.00%
AIM Core Strategies Fund 0.75% 0.25% 1.00%
AIM Dent Demographic Trends Fund 0.75% 0.25% 1.00%
AIM Emerging Growth Fund 0.75% 0.25% 1.00%
AIM Large Cap Basic Value Fund 0.75% 0.25% 1.00%
AIM Large Cap Core Equity Fund 0.75% 0.25% 1.00%
AIM Large Cap Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Growth Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%"
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All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: December 28, 2001
AIM EQUITY FUNDS
(on behalf of its Class B Shares)
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
----------------------------- -----------------------------
Assistant Secretary President
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