<PAGE> 1
ANNUAL REPORT / OCTOBER 31 1999
AIM CHARTER FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
FULL SAIL, 1907, BY JAMES G. TYLER, 1855-1931
A CLIPPER WITH BILLOWING SAILS CUTTING THROUGH A CALM BLUE SEA,
THIS MARITIME SCENE DEPICTS OPTIMISM, CONFIDENCE AND A SENSE OF
PURPOSE, THE SAME QUALITIES EXHIBITED BY AIM CHARTER FUND.
-------------------------------------
AIM Charter Fund is for shareholders who seek growth of capital with a secondary
objective of current income. The fund invests in securities of companies with a
history of stable and improving earnings and generally increasing dividend
payouts.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Charter Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
o Had fees and expenses not been waived during the reporting period, returns
would have been lower.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of Class A shares due to differences in sales charge structure and
expenses.
o The fund's average annual total returns, including sales charges, for the
period ended 9/30/99 (the most recent calendar quarter end), are as follows:
for Class A shares, one year, 29.57%; five years, 20.67%; 10 years, 15.54%.
Class B shares, one year, 31.18%, inception (6/26/95), 20.36%. Class C
shares, one year, 35.17%; inception (8/4/97), 14.65%.
o During the fiscal year ended 10/31/99, the fund paid distributions of $0.574
per share for Class A shares and $0.537 per share for Class B and Class C
shares.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Growth & Income Fund Index represents an average of the
performance of the 30 largest growth-and-income mutual funds.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is
widely regarded by investors as representative of the stock market in
general.
o You cannot invest in any index listed. Unless otherwise indicated, index
results include reinvested dividends and do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM CHARTER FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on October 31, 1998, saw a market dominated by
THE FUND large-capitalization stocks and high-quality bonds,
APPEARS HERE] especially U.S. Treasuries. Ten months into 1998, two
well-known indexes of large-capitalization U.S. company
stocks, the S&P 500 and the Dow Jones Industrial Average,
were up by double digits, but the smaller-company stocks in
the Russell 2000 had lost 12.80%. Overseas, many markets
were languishing, especially in Asia, where many financial
difficulties originated in 1997.
In bond markets also, name-brand quality was the place
to be. The Lehman Corporate/Government Bond Index, which
follows intermediate and long-term government and investment-grade debt, was up
8.56%, while the Lehman High Yield Index, which tracks riskier "junk bonds," had
dropped 2.30%.
It would be easy for an investor to conclude that blue chips, whether equity
or fixed-income, were the only place to be. That investor, of course, would be
wrong.
MARKETS TURN
While large-capitalization stocks continue to do very well, during 1999 markets
broadened considerably, with many investment sectors performing a complete
turnaround. Year to date by October 31, 1999, the small-cap stocks in the
Russell 2000 were back in positive territory, and the many Asian markets had
staged a comeback. The same holds true for bonds. The higher-quality Lehman
index is down 1.49% year to date through October 31, 1999, while high-yield
bonds have moved into positive returns.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by signs of
economic health in Europe and Asia, not to mention the prolonged U.S. economic
expansion. However, we are aware of how easily an investor could have been
misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio and can help assure that when you do
alter your investments, there's a logical reason for doing so. AIM believes
every investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended October 31, 1999, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative. If you have any questions or comments, we invite you to
contact us, either at our Web site, aimfunds.com, or through our Client Services
department at 800-959-4246. Information about your account is also available
through our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM CHARTER FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
AIM CHARTER FUND SHOWS STELLAR PERFORMANCE
THE STOCK MARKET HAS BEEN VERY VOLATILE OVER THE REPORTING PERIOD. HOW DID AIM
CHARTER FUND PERFORM?
AIM Charter Fund produced outstanding results despite market volatility. As of
October 31, 1999, the fund's Class A shares produced a total annual return of
34.05%, while Class B and Class C shares returned 33.06%. These returns are at
net asset value, which means they do not include sales charges. The fund's
performance beat that of the S&P 500, which returned 25.66% over the time
period. The fund's net assets rose from $5.2 billion to approximately $7.4
billion over the fiscal year.
WHAT WERE MARKET CONDITIONS LIKE OVER THE REPORTING PERIOD?
Investor concern over interest rates repeatedly roiled the markets. In June and
August, the Federal Reserve Board (the Fed) raised rates in two quarter-point
moves. At its October meeting, the Fed chose to leave rates unchanged but
adopted a "tightening bias," indicating that it may be inclined to raise rates
in the near future. Shortly after the close of the fiscal year, the Fed lifted
interest rates by another quarter point.
Meanwhile, the market reversed its long-term trend toward large stocks as
investors turned to small- and mid-sized stocks. These smaller stocks had been
undervalued for some time, and they became attractive as many large stocks
suffered earnings disappointments. The third quarter of 1999 was somewhat
difficult as a result, but markets rebounded in October.
HOW DID YOU MANAGE THE FUND DURING THESE CONDITIONS?
With earnings growth slowing for many large companies, fewer stocks met our
investment criteria. Over the fiscal year, we cut the number of holdings in the
fund's portfolio from 145 to 75. Paring down the portfolio allowed us to
concentrate on stocks that exhibited the strongest earnings performance.
WHAT WERE THE TOP SECTORS FOR THE FUND?
The fund continued to focus on leading technology, financial and health-care
stocks. Over the fiscal year, the fund's technology concentration increased from
21% to 30%, while its investments in financial and health-care stocks held
steady or decreased slightly.
WHY IS TECHNOLOGY SO IMPORTANT TO THE FUND?
Technology was one of the strongest market sectors over the fiscal year. For
example, in the third quarter, the S&P 500 declined by 6.24%, but its technology
segment posted a positive return of 4.43%. Our heavy weighting in technology is
one of the main reasons the fund beat the S&P 500 over the fiscal year.
The fund held stocks of companies involved in Internet infrastructure, such
as software, wireless communications and cable-TV firms. A new stock among our
top 10 holdings is Novell, which makes software that connects PCs to corporate
networks. The company has seen tremendous growth this year based on the success
of its Internet-related products.
THE FUND'S LARGEST HOLDING IS MICROSOFT. HOW WILL THE RULING IN THE DEPARTMENT
OF JUSTICE CASE AFFECT YOUR INVESTMENT?
After the close of the reporting period, a federal judge ruled that Microsoft is
a monopoly. As of this writing, neither a settlement nor an appeal has been
announced, and it's unlikely that a final
NET ASSETS CONTINUE TO GROW
================================================================================
10/31/98 $5.2 billion
10/31/99 $7.4 billion
===============================================================================
FUND BEATS S&P 500
AIM CHARTER FUND VS. BENCHMARK INDEX
Total returns, excluding sales charges, for
the year ended 10/31/99
===============================================================================
AIM CHARTER FUND CLASS C SHARES 34.05%
AIM CHARTER FUND CLASS B SHARES 33.06%
AIM CHARTER FUND CLASS A SHARES 33.06%
S&P 500 Index 25.66%
===============================================================================
-------------------------------------
WE BELIEVE THE ENVIRONMENT REMAINS
FAVORABLE FOR EQUITIES DESPITE
SHORT-TERM MARKET VOLATILITY.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM CHARTER FUND
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
decision will be made until 2001. While we cannot comment on our specific plans
to buy or sell stocks, we can say that as of this time, Microsoft remains a
large holding in the fund. We believe that the company's growth prospects remain
strong, especially with the upcoming introduction of two new software products:
Office 2000 and Windows 2000. Over the short term, the stock may be volatile,
but this is a core growth company that should continue to be a part of our
portfolio.
AFTER THE CLOSE OF THE REPORTING PERIOD, ONE OF THE FUND'S TOP HOLDINGS, TYCO
INTERNATIONAL, FELL VICTIM TO CONCERNS ABOUT ITS ACCOUNTING METHODS. WHAT HAS
BEEN YOUR RESPONSE?
In recent months, concerns have arisen over have arisen over Tyco's accounting
methods. While no wrongdoing has been proven, Tyco and its stock price remain
under scrutiny. Most recently, the Securities and Exchange Commission launched
an informal investigation of the company, which Tyco voluntarily made public.
While we have no reason to believe that accounting irregularities exist, we do
recognize that this issue may take time to be resolved. As a result, we elected
to reduce our exposure by selling some of our position in the stock after the
close of the reporting period. While the outcome of this situation is difficult
to predict, we remain confident in the company and its management team. They
have proven to be significant creators of value for shareholders over the years,
and we expect they will continue this record of success despite current issues.
WHAT WERE CONDITIONS LIKE FOR FINANCIAL STOCKS?
Interest-rate concerns have plagued financial stocks, causing them to experience
substantial volatility. But the long-term prospects for banks and insurance
companies seem favorable based on the continued strength of their earnings.
Another issue gives us reason to believe that financial stocks may soon
recover. After the close of the fiscal year, Congress reformed the
Glass-Steagall Act (created to separate commercial and investment banking). Many
analysts believe this may set off a blizzard of merger-and-acquisition activity
among banks, insurance companies, investment managers and brokers.
BESIDES TECHNOLOGY, WHAT OTHER AREAS PERFORMED WELL FOR THE FUND?
The fund increased its holdings in consumer cyclicals, including retail stocks.
For much of the period, consumer-cyclical companies benefited from a booming
economy, nearly full employment and robust sales. Dayton Hudson, which owns
Marshall Fields, Target and Mervyn's stores, became a top 10 holding for the
fund near the end of the reporting period. The company reported strong earnings
in its most recent quarter based on sales growth in its 1,212 stores.
WHAT'S YOUR OUTLOOK FOR THE NEAR TERM?
Our outlook for the market is positive. The United States is experiencing one of
the longest expansion periods in its history. The U.S. economy is strong,
inflation is low and the country is enjoying a budget surplus. We believe the
environment remains favorable for equities despite short-term market volatility.
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets NUMBER OF HOLDINGS 75
<TABLE>
<CAPTION>
=================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Microsoft Corp. 4.78% 1. Computers (Software & Services) 11.21%
2. Tyco International Ltd. 4.69 2. Financial (Diversified) 7.81
3. American Express Co. 3.14 3. Health Care (Diversified) 7.55
4. International Business Machines Corp. 3.01 4. Computers (Hardware) 6.57
5. Novell, Inc. 3.00 5. Broadcasting (Television, Radio & Cable) 5.43
6. Chase Manhattan Corp. (The) 2.97 6. Retail (General Merchandise) 5.38
7. American International Group, Inc. 2.80 7. Manufacturing (Diversified) 5.19
8. General Electric Co. 2.76 8. Communications Equipment 4.90
9. Dayton Hudson Corp. 2.63 9. Health Care (Drugs-Major Pharmaceuticals) 4.05
10. Cisco Systems, Inc. 2.51 10. Investment Banking/Brokerage 3.74
Please keep in mind that the fund's portfolio is subject to change, and there is
no assurance that the fund will continue to hold any particular security.
=================================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM CHARTER FUND
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMACE
RESULTS OF A
$10,000 INVESTMENT
11/26/68-10/31/99
This chart compares your fund's Class A shares to benchmark indexes. It is
intended to give you an idea of how your fund performed compared to the stock
market over the period 11/26/68-10/31/99. (Please note that performance results
for the S&P 500 are for the period 11/30/68-10/31/99.)
It is important to understand the differences between your fund and an
index. An index measures the performance of a hypothetical portfolio. A market
index such as the S&P 500 is not managed, incurring no sales charges, expenses
or fees. If you could buy all the securities that make up a market index, you
would incur expenses that would affect your investment's return.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
================================================================================
CLASS A SHARES
Inception (11/26/68) 14.44%
10 years 16.37
5 years 21.83
1 year 26.63*
* 34.05% excluding sales charges
CLASS B SHARES
Inception (6/26/95) 21.52%
1 year 28.06*
* 33.06% excluding sales charges
CLASS C SHARES
Inception (8/4/97) 16.99%
1 year 32.06*
* 33.06% excluding sales charges
================================================================================
Your fund's total return includes sales charges, expenses, and management fees.
The performance of the fund's Class B and Class C shares will differ from Class
A shares due to differing fees and expenses. For fund data performance
calculations and descriptions of indexes cited on this page, please refer to the
inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. THE
RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AIM CHARTER FUND
<PAGE> 7
ANNUAL REPORT / PERFORMANCE HISTORY
in thousands
================================================================================
AIM Charter Fund, Lipper Growth & S&P 500 Index
Class A Shares Income Fund Index
- --------------------------------------------------------------------------------
11/26/68 9500
10/31/69 9562 9020.93 9237.5
10/31/70 7024 7799.08 8213.91
10/31/71 9170 9109.63 9598.09
10/31/72 12768 10509.3 11702.3
10/31/73 14160 10360.4 11703.3
10/31/74 9720 7891.16 8334.92
10/31/75 11892 9912.43 10499.8
10/31/76 14361 11936 12616.2
10/31/77 16072 11723.2 11854.5
10/31/78 21504 12661.7 12607.3
10/31/79 27400 15052 14554.5
10/31/80 42236 19848.5 19227.6
10/31/81 45396 20370.6 19337.5
10/31/82 49230 24321.8 22486.6
10/31/83 63803 30952.4 28770.8
10/31/84 58888 32352.4 30602.9
10/31/85 67374 38411.3 36518.6
10/31/86 88655 50075.9 48637.9
10/31/87 94617 51254.6 51750
10/31/88 100199 60569.4 59387
10/31/89 133941 73178.9 75038.4
10/31/90 139104 64719.1 69425.8
10/31/91 191473 86509.6 92625.1
10/31/92 199461 94213.9 101840
10/31/93 233203 112580 117023
10/31/94 227257 116140 121537
10/31/95 288684 139691 153633
10/31/96 336899 169574 190630
10/31/97 433165 217110 251820
10/31/98 481675 237632 307251
10/31/99 647552 275721 386099
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
AIM CHARTER FUND
<PAGE> 8
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-92.27%
BANKS (MONEY CENTER)-2.97%
Chase Manhattan Corp. (The) 2,500,000 $ 218,437,500
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-4.67%
AT&T Corp.-Liberty Media
Group-Class A(a) 1,000,000 39,687,500
- ---------------------------------------------------------------
Comcast Corp.-Class A 3,000,000 126,375,000
- ---------------------------------------------------------------
MediaOne Group, Inc.(a) 2,500,000 177,656,250
- ---------------------------------------------------------------
343,718,750
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-4.90%
Corning, Inc. 500,000 39,312,500
- ---------------------------------------------------------------
Lucent Technologies Inc. 1,755,000 112,758,750
- ---------------------------------------------------------------
Motorola, Inc. 850,000 82,821,875
- ---------------------------------------------------------------
Nokia Oyj-ADR (Finland) 800,000 92,450,000
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 150,000 33,412,500
- ---------------------------------------------------------------
360,755,625
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-6.27%
Dell Computer Corp.(a) 1,500,000 60,187,500
- ---------------------------------------------------------------
International Business Machines
Corp.(b) 2,250,000 221,343,750
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 1,700,000 179,881,250
- ---------------------------------------------------------------
461,412,500
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-2.51%
Cisco Systems, Inc.(a) 2,500,000 185,000,000
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-2.33%
EMC Corp.(a) 1,250,000 91,250,000
- ---------------------------------------------------------------
Lexmark International Group,
Inc.-Class A(a) 1,024,500 79,975,031
- ---------------------------------------------------------------
171,225,031
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-10.27%
America Online, Inc.(a) 600,000 77,812,500
- ---------------------------------------------------------------
Microsoft Corp.(a) 3,800,000 351,737,500
- ---------------------------------------------------------------
Novell, Inc.(a) 11,000,000 220,687,500
- ---------------------------------------------------------------
VERITAS Software Corp.(a) 650,000 70,118,750
- ---------------------------------------------------------------
Yahoo! Inc.(a) 200,000 35,812,500
- ---------------------------------------------------------------
756,168,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-0.74%
Providian Financial Corp. 500,000 $ 54,500,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.76%
General Electric Co. 1,500,000 203,343,750
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-1.55%
Linear Technology Corp. 600,000 41,962,500
- ---------------------------------------------------------------
Texas Instruments, Inc. 800,000 71,800,000
- ---------------------------------------------------------------
113,762,500
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.82%
Applied Materials, Inc.(a) 500,000 44,906,250
- ---------------------------------------------------------------
Teradyne, Inc.(a) 400,000 15,400,000
- ---------------------------------------------------------------
60,306,250
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-7.81%
American Express Co. 1,500,000 231,000,000
- ---------------------------------------------------------------
Citigroup, Inc. 2,300,000 124,487,500
- ---------------------------------------------------------------
Fannie Mae 1,000,000 70,750,000
- ---------------------------------------------------------------
Freddie Mac 2,750,000 148,671,875
- ---------------------------------------------------------------
574,909,375
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-7.55%
American Home Products Corp. 1,400,000 73,150,000
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 2,000,000 153,625,000
- ---------------------------------------------------------------
Johnson & Johnson 1,500,001 157,125,084
- ---------------------------------------------------------------
Warner-Lambert Co. 2,150,000 171,596,875
- ---------------------------------------------------------------
555,496,959
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-4.05%
Pfizer, Inc. 3,750,000 148,125,000
- ---------------------------------------------------------------
Pharmacia & Upjohn, Inc. 950,000 51,240,625
- ---------------------------------------------------------------
Schering-Plough Corp. 2,000,000 99,000,000
- ---------------------------------------------------------------
298,365,625
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.64%
Guidant Corp. 1,750,000 86,406,250
- ---------------------------------------------------------------
Medtronic, Inc. 1,000,000 34,625,000
- ---------------------------------------------------------------
121,031,250
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE)-2.80%
American International Group,
Inc. 2,000,000 $ 205,875,000
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-3.74%
Goldman Sachs Group, Inc. (The) 150,000 10,650,000
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc. 500,000 39,250,000
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 1,250,000 137,890,625
- ---------------------------------------------------------------
Schwab (Charles) Corp. (The) 2,250,000 87,609,375
- ---------------------------------------------------------------
275,400,000
- ---------------------------------------------------------------
LODGING-HOTELS-0.76%
Carnival Corp. 1,250,000 55,625,000
- ---------------------------------------------------------------
MANUFACTURING
(DIVERSIFIED)-5.19%
Tyco International Ltd.(b) 8,650,000 345,459,375
- ---------------------------------------------------------------
United Technologies Corp. 600,000 36,300,000
- ---------------------------------------------------------------
381,759,375
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-1.50%
Baker Hughes, Inc. 1,250,000 34,921,875
- ---------------------------------------------------------------
Halliburton Co. 800,000 30,150,000
- ---------------------------------------------------------------
Schlumberger Ltd. 750,000 45,421,875
- ---------------------------------------------------------------
110,493,750
- ---------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.33%
Conoco, Inc.-Class B 900,000 24,412,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-1.18%
Mobil Corp. 900,000 86,850,000
- ---------------------------------------------------------------
RAILROADS-0.48%
Kansas City Southern Industries,
Inc. 750,000 35,578,125
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.89%
Home Depot, Inc. (The) 749,993 56,624,472
- ---------------------------------------------------------------
Lowe's Companies, Inc. 1,500,000 82,500,000
- ---------------------------------------------------------------
139,124,472
- ---------------------------------------------------------------
RETAIL (COMPUTERS &
ELECTRONICS)-2.13%
Best Buy Co., Inc.(a) 1,400,000 77,787,500
- ---------------------------------------------------------------
Tandy Corp. 1,250,000 78,671,875
- ---------------------------------------------------------------
156,459,375
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.54%
Kroger Co. (The)(a) 1,916,900 39,895,481
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL
MERCHANDISE)-5.38%
Costco Wholesale Corp.(a) 400,000 $ 32,125,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 3,000,000 193,875,000
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 3,000,000 170,062,500
- ---------------------------------------------------------------
396,062,500
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.48%
Amazon.com, Inc.(a) 500,000 35,312,500
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.33%
Concord EFS, Inc.(a) 1,500,000 40,593,750
- ---------------------------------------------------------------
First Data Corp. 1,250,000 57,109,375
- ---------------------------------------------------------------
97,703,125
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-2.33%
MCI WorldCom, Inc.(a) 2,000,000 171,625,000
- ---------------------------------------------------------------
TELEPHONE-1.37%
GTE Corp. 500,000 37,500,000
- ---------------------------------------------------------------
SBC Communications, Inc. 1,250,000 63,671,875
- ---------------------------------------------------------------
101,171,875
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$4,615,196,054) 6,791,781,943
- ---------------------------------------------------------------
CONVERTIBLE PREFERRED
STOCKS-2.32%
BROADCASTING (TELEVISION, RADIO
& CABLE)-0.76%
Mediaone Group, Inc.-$2.25
Series D Conv. Pfd. 400,000 56,200,000
- ---------------------------------------------------------------
ELECTRIC COMPANIES-1.56%
Houston Industries, Inc.-$3.29
Conv. Pfd. 1,000,000 114,750,000
- ---------------------------------------------------------------
Total Convertible Preferred
Stocks (Cost $123,420,376) 170,950,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE BONDS & NOTES-2.09%
COMPUTERS (HARDWARE)-0.30%
Candescent Technology Corp.,
Conv. Sr. Sub. Deb., 7.00%,
05/01/03 (Acquired
04/17/98-11/30/98; Cost
$27,943,750)(c) $ 28,300,000 22,074,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.94%
VERITAS Software Corp., Conv.
Notes, 5.25%, 11/01/04 13,500,000 69,001,875
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-0.51%
Amazon.com, Inc., Conv. Sub.
Deb., 4.75%, 02/01/09 $ 35,000,000 $ 37,275,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.34%
Global Telesystems Group, Inc.,
Conv. Sr. Unsec. Sub. Notes,
8.75%, 06/30/00 (Acquired
02/05/98; Cost $13,002,080)(c) 10,000,000 25,025,000
- ---------------------------------------------------------------
Total Convertible Bonds &
Notes
(Cost $95,916,763) 153,375,875
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-4.93%
STIC Liquid Assets Portfolio(d) 181,461,397 $ 181,461,397
- ---------------------------------------------------------------
STIC Prime Portfolio(d) 181,461,397 181,461,397
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $362,922,794) 362,922,794
- ---------------------------------------------------------------
TOTAL INVESTMENTS-101.61% 7,479,030,612
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(1.61%) (118,345,314)
- ---------------------------------------------------------------
NET ASSETS-100.00% $7,360,685,298
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) 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 valuation of these securities has been determined in
accordance with the procedures established by the Board of Directors. The
aggregate market value of these securities at 10/31/99 was $47,099,000 which
represented 0.64% of the Fund's net assets.
(d) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$5,197,455,987) $7,479,030,612
- ------------------------------------------------------------
Receivables for:
Investments sold 11,818,345
- ------------------------------------------------------------
Capital stock sold 10,408,480
- ------------------------------------------------------------
Dividends and interest 7,301,796
- ------------------------------------------------------------
Investment for deferred compensation plan 83,490
- ------------------------------------------------------------
Other assets 140,597
- ------------------------------------------------------------
Total assets 7,508,783,320
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 105,957,126
- ------------------------------------------------------------
Capital stock reacquired 8,011,254
- ------------------------------------------------------------
Deferred compensation 83,490
- ------------------------------------------------------------
Options written (Premiums received
$25,481,560) 25,656,250
- ------------------------------------------------------------
Accrued advisory fees 3,634,922
- ------------------------------------------------------------
Accrued administrative services fees 27,618
- ------------------------------------------------------------
Accrued directors' fees 3,913
- ------------------------------------------------------------
Accrued distribution fees 3,681,163
- ------------------------------------------------------------
Accrued transfer agent fees 637,952
- ------------------------------------------------------------
Accrued operating expenses 404,334
- ------------------------------------------------------------
Total liabilities 148,098,022
- ------------------------------------------------------------
Net assets applicable to shares outstanding $7,360,685,298
============================================================
NET ASSETS:
Class A $4,948,665,737
============================================================
Class B $2,206,751,605
============================================================
Class C $ 138,467,127
============================================================
Institutional Class $ 66,800,829
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 288,328,877
============================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 130,030,549
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 8,139,220
============================================================
Institutional Class:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 3,855,460
============================================================
Class A:
Net asset value and redemption price per
share $ 17.16
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $17.16 / 94.50%) $ 18.16
============================================================
Class B:
Net asset value and offering price per
share $ 16.97
============================================================
Class C:
Net asset value and offering price per
share $ 17.01
============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 17.33
============================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $157,812 foreign
withholding tax) $ 49,869,261
- ------------------------------------------------------------
Interest 25,693,052
- ------------------------------------------------------------
Total investment income 75,562,313
- ------------------------------------------------------------
EXPENSES:
Advisory fees 41,014,707
- ------------------------------------------------------------
Administrative services fees 235,274
- ------------------------------------------------------------
Custodian fees 364,030
- ------------------------------------------------------------
Directors' fees 50,623
- ------------------------------------------------------------
Distribution fees-Class A 13,556,239
- ------------------------------------------------------------
Distribution fees-Class B 18,631,086
- ------------------------------------------------------------
Distribution fees-Class C 809,325
- ------------------------------------------------------------
Transfer agent fees-Class A 4,930,725
- ------------------------------------------------------------
Transfer agent fees-Class B 3,087,342
- ------------------------------------------------------------
Transfer agent fees-Class C 149,576
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 6,136
- ------------------------------------------------------------
Other 1,214,166
- ------------------------------------------------------------
Total expenses 84,049,229
- ------------------------------------------------------------
Less: Fees waived by advisor (1,130,089)
- ------------------------------------------------------------
Expenses paid indirectly (149,110)
- ------------------------------------------------------------
Net expenses 82,770,030
- ------------------------------------------------------------
Net investment income (loss) (7,207,717)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 668,004,945
- ------------------------------------------------------------
Foreign currencies (1,105,968)
- ------------------------------------------------------------
Option contracts written (9,533,983)
- ------------------------------------------------------------
657,364,994
- ------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 1,116,385,588
- ------------------------------------------------------------
Foreign currencies (47,768)
- ------------------------------------------------------------
Option contracts written 214,221
- ------------------------------------------------------------
1,116,552,041
- ------------------------------------------------------------
Net gain from investment securities,
foreign currencies and option contracts 1,773,917,035
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $1,766,709,318
============================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (7,207,717) $ 37,825,223
- -----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 657,364,994 206,268,933
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, futures and option
contracts 1,116,552,041 254,914,824
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,766,709,318 499,008,980
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (9,134,542) (28,039,987)
- -----------------------------------------------------------------------------------------------
Class B -- (3,013,337)
- -----------------------------------------------------------------------------------------------
Class C -- (47,378)
- -----------------------------------------------------------------------------------------------
Institutional Class (216,682) (445,449)
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A (149,620,112) (346,531,949)
- -----------------------------------------------------------------------------------------------
Class B (57,712,333) (108,856,197)
- -----------------------------------------------------------------------------------------------
Class C (1,614,093) (819,962)
- -----------------------------------------------------------------------------------------------
Institutional Class (1,761,967) (3,989,466)
- -----------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A 151,495,357 235,195,827
- -----------------------------------------------------------------------------------------------
Class B 370,892,559 350,425,592
- -----------------------------------------------------------------------------------------------
Class C 84,930,162 32,069,085
- -----------------------------------------------------------------------------------------------
Institutional Class 9,431,197 3,464,509
- -----------------------------------------------------------------------------------------------
Net increase in net assets 2,163,398,864 628,420,268
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,197,286,434 4,568,866,166
- -----------------------------------------------------------------------------------------------
End of period $ 7,360,685,298 $5,197,286,434
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 4,466,453,244 $3,821,903,969
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (217,108) 9,291,857
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 613,057,085 201,250,572
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 2,281,392,077 1,164,840,036
- -----------------------------------------------------------------------------------------------
$ 7,360,685,298 $5,197,286,434
===============================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds, Inc.
(the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of ten separate portfolios. 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 generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price 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 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 Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
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 options contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions, Investment Income and Distributions -- 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 as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was increased by
$7,049,976, undistributed net realized gains decreased by $34,849,976 and
paid-in capital increased by $27,800,000 in order to comply with the
requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. 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.
D. 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
11
<PAGE> 14
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.
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 that 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, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying security
at the time the option is written. When the Fund writes a covered call
option, an amount equal to the premium received by the Fund is recorded as an
asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the sale
of the underlying security and the proceeds of the sale are increased by the
premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. 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. Bond Premiums -- It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
J. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company 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 1.0% 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
contractually agreed to waive a portion of its advisory fees paid by the Fund to
AIM to the extent necessary to reduce the fees paid by the Fund at net asset
levels higher than those currently incorporated in the present advisory fee
schedule. Under the contractual waiver, AIM will receive a fee calculated at the
annual rate of 1.0% 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 to and including $2 billion, plus 0.60% of
the Fund's average daily net assets in excess of $2 billion. The waiver is
contractual and may not be terminated without approval
12
<PAGE> 15
of the Board of Directors. During the year ended October 31, 1999, AIM waived
fees of $1,130,089. 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. During the year ended October 31, 1999, AIM was
paid $235,274 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, 1999, AFS
was paid $4,807,681 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 and a master distribution agreement with
Fund Management Company ("FMC) to serve as the distributor for the Institutional
Class shares of the Fund. The Company has adopted a plan 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. During the year ended October 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $13,556,239,
$18,631,086 and $809,325, respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,030,454 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. 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, 1999,
AIM Distributors received $96,080 in contingent deferred sales charges imposed
on redemptions of Fund shares. Certain officers and directors of the Company are
officers and directors of AIM, AFS, FMC and AIM Distributors.
During the year ended October 31, 1999, the Fund paid legal fees of $15,483
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
During the year ended October 31, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$76,809 and $72,301, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $149,110 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, 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 The Chase Manhattan Bank. 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, 1999, 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. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1999 was
$7,032,932,257 and $6,722,183,283, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $2,293,837,834
- ----------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (24,022,713)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $2,269,815,121
==========================================================
Cost of investments for tax purposes is $5,209,215,491.
</TABLE>
13
<PAGE> 16
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of year 31,202 $ 8,091,351
- --------------------------------------------------------------------------------------
Written 62,592 40,059,097
- --------------------------------------------------------------------------------------
Closed (54,607) (18,452,621)
- --------------------------------------------------------------------------------------
Exercised (14,921) (4,076,636)
- --------------------------------------------------------------------------------------
Expired (1,766) (139,631)
- --------------------------------------------------------------------------------------
End of year 22,500 $ 25,481,560
======================================================================================
</TABLE>
Open call option contracts written at October 31, 1999 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 1999 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
- --------------------------------------- -------- ------ --------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
International Business Machines Corp. Jan-00 $80 12,500 $20,804,105 $25,156,250 $(4,352,145)
- --------------------------------------------------------------------------------------------------------------------
Tyco International Ltd. Nov-99 50 10,000 4,677,455 500,000 4,177,455
- --------------------------------------------------------------------------------------------------------------------
22,500 $25,481,560 $25,656,250 $ (174,690)
====================================================================================================================
</TABLE>
NOTE 8-PUT OPTION CONTRACTS
Transactions in put options during the year ended October 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS PAID
--------- -----------
<S> <C> <C>
Beginning of year -- $ --
- -------------------------------------------------------------------------------------
Purchased 24,165 6,379,447
- -------------------------------------------------------------------------------------
Closed (20,165) (4,215,217)
- -------------------------------------------------------------------------------------
Exercised -- --
- -------------------------------------------------------------------------------------
Expired (4,000) (2,164,230)
- -------------------------------------------------------------------------------------
End of year -- $ --
=====================================================================================
</TABLE>
NOTE 9-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 51,272,783 $ 809,088,837 65,753,775 $ 868,543,898
- --------------------------------------------------------------------------------------------------------------------
Class B 36,310,602 576,056,633 32,991,364 431,938,545
- --------------------------------------------------------------------------------------------------------------------
Class C 6,968,661 111,866,437 2,736,777 36,139,093
- --------------------------------------------------------------------------------------------------------------------
Institutional Class 828,138 13,421,969 568,334 7,594,968
- --------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 10,532,077 149,384,623 29,328,588 355,378,824
- --------------------------------------------------------------------------------------------------------------------
Class B 3,894,826 54,866,091 8,807,895 105,930,618
- --------------------------------------------------------------------------------------------------------------------
Class C 107,859 1,525,822 67,166 810,828
- --------------------------------------------------------------------------------------------------------------------
Institutional Class 134,608 1,929,704 351,483 4,295,496
- --------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (51,731,503) (806,978,103) (75,327,509) (988,726,895)
- --------------------------------------------------------------------------------------------------------------------
Class B (16,551,587) (260,030,165) (14,417,738) (187,443,571)
- --------------------------------------------------------------------------------------------------------------------
Class C (1,788,368) (28,462,097) (376,288) (4,880,836)
- --------------------------------------------------------------------------------------------------------------------
Institutional Class (372,429) (5,920,476) (636,014) (8,425,955)
- --------------------------------------------------------------------------------------------------------------------
39,605,667 $ 616,749,275 49,847,833 $ 621,155,013
====================================================================================================================
</TABLE>
14
<PAGE> 17
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the five-year period ended October 31,
1999, for a share of Class B capital stock outstanding during each of the years
in the four-year period ended October 31, 1999 and the period June 26, 1995
(date sales commenced) through October 31, 1995, and for a share of Class C
capital stock outstanding during each of the two years in the period ended
October 31, 1999 and the period August 4, 1997 (date sales commenced) through
October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.32 $ 13.41 $ 11.19 $ 10.63 $ 8.90
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.02 0.12 0.10 0.19 0.15
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Net gains (losses) on securities (both realized and
unrealized) 4.39 1.23 2.91 1.43 2.11
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total from investment operations 4.41 1.35 3.01 1.62 2.26
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.03) (0.10) (0.12) (0.16) (0.20)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Distributions from net realized gains (0.54) (1.34) (0.67) (0.90) (0.33)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total distributions (0.57) (1.44) (0.79) (1.06) (0.53)
- ------------------------------------------------------------ ---------- ---------- ---------- ----------
Net asset value, end of period $ 17.16 $ 13.32 $ 13.41 $ 11.19 $ 10.63
============================================================ ========== ========== ========== ========== ==========
Total return(a) 34.05% 11.20% 28.57% 16.70% 27.03%
============================================================ ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,948,666 $3,706,938 $3,466,912 $2,647,208 $1,974,417
============================================================ ========== ========== ========== ========== ==========
Ratio of expenses (exclusive of interest) to average net
assets(b) 1.05%(c) 1.08% 1.09% 1.12% 1.17%
============================================================ ========== ========== ========== ========== ==========
Ratio of net investment income to average net assets(d) 0.11%(c) 0.95% 0.79% 1.81% 1.55%
============================================================ ========== ========== ========== ========== ==========
Portfolio turnover rate 107% 154% 170% 164% 161%
============================================================ ========== ========== ========== ========== ==========
</TABLE>
(a) Does not deduct sales charges.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.07%, 1.10%, 1.10% for 1999-1997.
(c) Ratios are based on average net assets of $4,518,746,255.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 0.09%, 0.93%, 0.78% for 1999-1997.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------------- -----------------------------
1999 1998 1997 1996 1995 1999 1998 1997
---------- ---------- ---------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 13.24 $ 13.37 $ 11.18 $ 10.62 $ 9.81 $ 13.27 $ 13.39 $ 13.86
- ----------------------------------- ---------- ---------- ---------- -------- ------- -------- ------- -------
Income from investment operations:
Net investment income (loss) (0.10) 0.02 0.01 0.10 0.03 (0.09) 0.02(a) --
- ----------------------------------- ---------- ---------- ---------- -------- ------- -------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 4.37 1.22 2.89 1.45 0.80 4.37 1.23 (0.45)
- ----------------------------------- ---------- ---------- ---------- -------- ------- -------- ------- -------
Total from investment operations 4.27 1.24 2.90 1.55 0.83 4.28 1.25 (0.45)
- ----------------------------------- ---------- ---------- ---------- -------- ------- -------- ------- -------
Less distributions:
Dividends from net investment
income -- (0.03) (0.04) (0.09) (0.02) -- (0.03) --
- ----------------------------------- ---------- ---------- ---------- -------- ------- -------- ------- -------
Distributions from net realized
gains (0.54) (1.34) (0.67) (0.90) -- (0.54) (1.34) (0.02)
- ----------------------------------- ---------- ---------- ---------- -------- ------- -------- ------- -------
Total distributions (0.54) (1.37) (0.71) (0.99) (0.02) (0.54) (1.37) (0.02)
- ----------------------------------- ---------- ---------- ---------- -------- ------- -------- ------- -------
Net asset value, end of period $ 16.97 $ 13.24 $ 13.37 $ 11.18 $ 10.62 $ 17.01 $ 13.27 $ 13.39
=================================== ========== ========== ========== ======== ======= ======== ======= =======
Total return(b) 33.06% 10.33% 27.54% 15.90% 8.48% 33.06% 10.39% (3.24)%
=================================== ========== ========== ========== ======== ======= ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $2,206,752 $1,408,687 $1,056,094 $515,672 $67,592 $138,467 $37,846 $ 5,669
=================================== ========== ========== ========== ======== ======= ======== ======= =======
Ratio of expenses (exclusive of
interest) to average net assets(c) 1.80%(d) 1.84%(d) 1.85% 1.94% 1.98%(f) 1.80%(d) 1.84% 1.82%(f)
=================================== ========== ========== ========== ======== ======= ======== ======= =======
Ratio of net investment income
(loss) to average net assets(e) (0.64)%(d) 0.19%(d) 0.03% 0.99% 0.74%(f) (0.64)%(d) 0.19% 0.06%(f)
=================================== ========== ========== ========== ======== ======= ======== ======= =======
Portfolio turnover rate 107% 154% 170% 164% 161% 107% 154% 170%
=================================== ========== ========== ========== ======== ======= ======== ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.82%, 1.86%, 1.86% for 1999-1997 for Class B and 1.82%, 1.86%, 1.83%
(annualized) for 1999-1997 for Class C.
(d) Ratios are based on average net assets of $1,863,108,558 and $80,932,531 for
Class B and Class C, respectively.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.66)%, 0.17%, 0.02% for 1999-1997 for Class B and
(0.66)%, 0.17%, 0.04% (annualized) for 1999-1997 for Class C.
(f) Annualized.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Equity Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of the AIM Charter Fund (a portfolio of AIM
Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1999, the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years in the five-year period
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 audits.
We conducted our audits in accordance with generally
accepted auditing standards. 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, 1999, 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 statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Charter
Fund as of October 31, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 3, 1999
Houston, Texas
16
<PAGE> 19
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Capital Management, Inc.
11 Greenway Plaza
Edward K. Dunn Jr. Dana R. Sutton Suite 100
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer Houston, TX 77046
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox TRANSFER AGENT
President, Mercantile Bankshares Vice President
A I M Fund Services, Inc.
Jack Fields Mary J. Benson P.O. Box 4739
Chief Executive Officer Assistant Vice President and Houston, TX 77210-4739
Texana Global, Inc.; Assistant Treasurer
Formerly Member CUSTODIAN
of the U.S. House of Representatives Sheri Morris
Assistant Vice President and State Street Bank and Trust Company
Carl Frischling Assistant Treasurer 225 Franklin Street
Partner Boston, MA 02110
Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli
Assistant Secretary COUNSEL TO THE FUND
Robert H. Graham
President and Chief Executive Officer P. Michelle Grace Ballard Spahr
A I M Management Group Inc. Assistant Secretary Andrews & Ingersoll, LLP
1735 Market Street
Prema Mathai-Davis Nancy L. Martin Philadelphia, PA 19103
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary
Commissioner, New York City Dept. for the COUNSEL TO THE DIRECTORS
Aging; and member of the Board of Directors, Ofelia M. Mayo
Metropolitan Transportation Authority of Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
New York State 919 Third Avenue
Lisa A. Moss New York, NY 10022
Lewis F. Pennock Assistant Secretary
Attorney DISTRIBUTOR
Kathleen J. Pflueger
Louis S. Sklar Assistant Secretary A I M Distributors, Inc.
Executive Vice President 11 Greenway Plaza
Hines Interests Samuel D. Sirko Suite 100
Limited Partnership Assistant Secretary Houston, TX 77046
Stephen I. Winer AUDITORS
Assistant Secretary
KPMG LLP
700 Louisiana
Houston, TX 77002
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Charter Fund paid ordinary dividends in the amount of $0.052 to Class A
shareholders, $0.150 to Class B and Class C shareholders per share,
respectively, during the Fund's tax year ended October 31, 1999. Of this amount
21.00% is eligible for the dividends received deduction for corporations. The
Fund also distributed long-term capital gains of $231,102,000 for Class A, Class
B and Class C shares during the Fund's tax year ended October 31, 1999.
REQUIRED STATE INCOME TAX INFORMATION
Of the total income dividends paid to Class A shareholders, 5.99% was derived
from U.S. Treasury obligations.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual fund industry since
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund 1976 and managed approximately $120 billion
AIM Capital Development Fund in assets for more than 6.4 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual investors,
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund corporate clients and financial institutions,
AIM Large Cap Growth Fund AIM Asian Growth Fund as of September 30, 1999.
AIM Mid Cap Equity Fund AIM Developing Markets Fund The AIM Family of Funds--Registered
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) Trademark-- is distributed nationwide, and AIM
AIM Mid Cap Opportunities Fund AIM European Development Fund today is the 10th-largest mutual fund complex
AIM Select Growth Fund AIM International Equity Fund in the United States in assets under
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund management, according to Strategic Insight,
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund an independent mutual fund monitor.
AIM Value Fund AIM New Pacific Growth Fund
AIM Weingarten Fund
GLOBAL GROWTH FUNDS
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund
AIM Advisor Flex Fund AIM Global Growth Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors on November 16, 1998.
(2) AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (3)
AIM Small Cap Opportunities Fund closed to new investors on November 4, 1999.
(4) On September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth
Fund. Previously the fund invested in all size companies in most areas of
Europe. The fund now seeks to invest at least 65% of its assets in large-cap
companies within countries using the euro as their currency (EMU-member
countries). (5) On June 1, 1999, AIM Global Telecommunications Fund was renamed
AIM Global Telecommunications and Technology Fund. (6) Effective August 27,
1999, AIM Global Trends Fund was restructured to operate as a traditional mutual
fund. Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after January 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE
--Registered Trademark--
CHT-AR-1
A I M Distributors, Inc.
