<PAGE> 1
ANNUAL REPORT / OCTOBER 31 1999
AIM CONSTELLATION FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
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STARRY NIGHT OVER THE RHONE BY VINCENT VAN GOGH
STARS, PARTICULARLY CONSTELLATIONS, HAVE LONG BEEN USED AS
SIGNS BY WHICH FARMERS PLANTED AND HARVESTED THEIR CROPS AND
SAILORS NAVIGATED THE SEAS. ALTHOUGH DIFFERENT CONSTELLATIONS
ARE VISIBLE AT DIFFERENT TIMES OF THE YEAR, THEIR CONSTANCY IN
THE SKY MAKES THEM RELIABLE FOR MEASURING THE PASSAGE OF TIME
AND DISTANCE. AIM CONSTELLATION FUND SEEKS OUT THE STARS OF
THE MID-CAPITALIZATION STOCK UNIVERSE.
-------------------------------------
AIM Constellation Fund is for shareholders who seek capital appreciation through
investments in common stocks, with emphasis on medium-sized and smaller emerging
growth companies.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Constellation Fund's performance figures are historical and reflect
changes in net asset value and the reinvestment of all distributions.
o Had fees and expenses not been waived during the fiscal year, 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 its Class A shares due to differences in sales-charge structure and
fund 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, 31.92%; five years, 17.44%; 10 years, 17.08%.
For Class B shares, one year, 30.77%; inception (11/3/97), 8.71%. For Class
C shares, one year, 30.78%; inception (8/4/97), 7.19%.
o During the fiscal year ended 10/31/99, the fund paid distributions of
$0.7312 per share.
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 Dow Jones Industrial Average (Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o Lipper, Inc. is an independent mutual fund performance monitor.
o The unmanaged National Association of Securities Dealers Automated Quotation
System Composite Index (Nasdaq) is a group of more than 5,000
over-the-counter securities widely regarded by investors to represent the
small and medium-sized company universe.
o The unmanaged Russell Midcap Index is generally considered representative of
the performance of the stocks of 800 select domestic mid-capitalization
companies. The results reflect the reinvestment of dividends.
o The unmanaged Standard & Poor's 400 MidCap Index (S&P 400) comprises the
common stocks of approximately 400 mid-capitalization companies.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a
group of securities widely regarded by investors to represent the stock
market in general. The results shown assume the reinvestment of dividends.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends, and they do not
reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT IN A BANK AND IS NEITHER INSURED NOR
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 for the fund.
AIM CONSTELLATION 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 large-
THE FUND capitalization stocks and high-quality bonds, especially
APPEARS HERE] 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 CONSTELLATION FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
SMALL-AND MID-CAP STOCKS SHOW SOME SIZZLE
-------------------------------------
AT THE END OF THE FISCAL YEAR,
TECHNOLOGY STOOD AT JUST UNDER
50% OF THE FUND'S ASSETS.
-------------------------------------
HOW DID THE FUND PERFORM DURING THE FISCAL YEAR?
AIM Constellation Fund's technology exposure boosted its returns for the fiscal
year and helped it outperform its benchmarks. The fund produced an impressive
34.81% total return for Class A shares, 33.64% for Class B shares and 33.65% for
Class C shares. These returns are at net asset value, without a sales charge.
Fund returns outstripped the 21.07% total return of the S&P MidCap 400 Index
during the same period. They were nearly double that of the Russell Midcap
Index, whose total return was 17.12%. Net assets closed the period at $15.3
billion, up from $12.9 billion at the close of the last fiscal year.
WHAT WERE MARKETS LIKE DURING THE FISCAL YEAR?
The fiscal year started well, as mid-cap stocks benefited from interest-rate
cuts by the Federal Reserve Board (the Fed) in the fall of 1998, which spurred a
market rally. Historically, mid-capitalization stocks have done well when
interest rates fall.
Then a technology sell-off affected the fund because of our significant tech
holdings (the S&P 400 MidCap Index, the portfolio's benchmark, hit its
fiscal-year low of 340.31 late in 1998). But the markets rebounded when
first-quarter 1999 earnings came in quite strong.
In May, the Fed hinted that it might raise interest rates, and in June it
did so, raising the federal funds rate to 5% and announcing its shift to a
neutral bias, reducing the odds of further rate hikes in the near future. That
announcement sparked a "relief rally" in the markets. At this point, the S&P 400
MidCap Index saw its high for the year of 427.82.
Late August and most of September saw a pretty severe sell-off as investors
fretted about the trade deficit, the dollar and the possibility of higher
interest rates when the Federal Reserve Board switched gears and adopted a
"tightening bias." Markets began to recover during October, so the fiscal year
ended on a positive note.
DID THE FUND REMAIN HEAVILY INVESTED IN TECHNOLOGY?
At the end of the fiscal year, technology stood at just under 50% of the fund's
assets. Technology has been the big winner for most of this year. Industries
such as semiconductors, communications equipment and computer software and
services have really outperformed, and the fund has quite a bit of exposure in
all three, as shown in the Top 10 Industries list.
Chip makers have recovered after several years in the doldrums, expecting a
15% production increase this year over last. The increase is fueled by the
proliferation of chips for communications and Internet infrastructure. One such
company is Analog Devices, a leading maker of both analog and digital integrated
circuits, which translate real-world phenomena such as pressure, temperature and
sound into digital signals. We increased our holding in Analog Devices during
the fiscal year.
DID YOU FAVOR ANY OTHER INDUSTRIES?
Consumer cyclicals, at roughly 19% of the portfolio, is one area in which we
have made a conscious effort to add to positions on weakness. Retailers usually
underperform in the summer and the fall, as portfolio managers become worried
about back-to-school sales and same-store sales results. Also, when interest
rates rise, the outlook for consumer spending darkens. However, when a company
continues to produce solid sales numbers and to exceed analysts' expectations,
we have taken advantage of the opportunity to buy the stock at a lower
FUND PROVIDES SOLID RETURNS
================================================================================
Fund Class A Shares 34.81%
Fund Class C Shares 33.65%
Fund Class B Shares 33.64%
S&P Midcap 400 Index 21.07%
Russell Midcap Index 17.12%
================================================================================
GROWTH OF TOTAL NET ASSETS
================================================================================
10/31/98 $12.9 billion
10/31/99 $15.3 billion
================================================================================
See important fund and index disclosures inside front cover.
AIM CONSTELLATION FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
price. Talbots is a good example; a constant in the ever-changing fashion world,
it sells traditional and classic ladies' apparel. Another excellent cyclical
stock added during the fiscal year is Tandy, which sells audio/video equipment,
cellular and everyday telephones, computers and other like items at its
RadioShack chain.
WERE THERE INDUSTRIES IN WHICH YOU REDUCED YOUR HOLDINGS?
We have fewer assets in financial-services companies than we did at the outset
of the fiscal year. Rising interest rates have led to relatively poor
performance in this group. We reduced our exposure by selling quite a few
financial-services companies that reported disappointing earnings.
Health-care stocks continue to languish for several reasons. A major factor
is concern about political reform in Washington. In particular, the health-care
services area has suffered, largely because of changes in Medicare's
reimbursement programs; these affect hospitals, nursing homes and other service
providers.
We also removed waste-management stocks from the portfolio over the last
six months. Waste Management missed its third-quarter earnings estimates, and
another holding in the industry encountered regulatory troubles during an
acquisition.
WERE THERE OTHER WAYS IN WHICH YOU ALTERED THE PORTFOLIO?
At the beginning of the fiscal year, the fund held the securities of 265
companies; as of October 31, 1999, the fund held 172 issues. Also, the fund's
median market capitalization has grown from $3.2 billion to $5.6 billion. These
changes have occurred largely because we continue to focus on finding and
holding high-quality growth stocks for the portfolio.
WHAT IS YOUR NEAR-TERM OUTLOOK?
Small- and mid-cap stocks are still historically undervalued. We expect them to
outperform large-cap stocks over the next 12 months. With valuations as low as
they are, we don't see the risk to smaller stocks that we did at this time last
year. Mid-caps, often overshadowed by the comforting, familiar large-caps and
the sizzling dot-com small-caps, offer unique advantages: their management is
usually a bit more seasoned than that of small-caps and startups, and they have
a better chance than large-caps to beat GDP growth and to attack niche markets.
FUND BROADENING ITS INVESTMENT SCOPE
Effective December 1, 1999, the Fund's Board of Directors changed AIM
Constellation Fund's prospectus by deleting the language specifying the
capitalization range within which the fund is allowed to invest and thus
broadening its scope beyond small- and mid-sized companies. Constellation will
now be a multi-cap fund, with the flexibility to invest across the full market
spectrum. This means that for the first time in many years, the fund will be
able to invest in the best and fastest-growing companies in the market
regardless of size. AIM Constellation Fund's objective to seek growth of capital
is not changing, only the strategy used to achieve that objective.
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
<TABLE>
<CAPTION>
================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. America Online, Inc. 2.23% 1. Computers (Software & Services) 15.30%
2. VERITAS Software Corp. 1.76 2. Communications Equipment 9.95
3. EMC Corp. 1.67 3. Electronics (Semiconductors) 9.30
4. Corning, Inc. 1.64 4. Electrical Equipment 5.18
5. JDS Uniphase Corp. 1.64 5. Broadcasting (TV, Radio & Cable) 4.64
6. Lucent Technologies, Inc. 1.62 6. Oil & Gas (Drilling & Equipment) 3.60
7. PMC-Sierra, Inc. 1.54 7. Services (Advertising & Marketing) 3.31
8. Solectron Corp. 1.48 8. Computers (Peripherals) 3.06
9. Omnicom Group, Inc. 1.44 9. Services (Data Processing) 3.02
10. Providian Financial Corp. 1.28 10. Retail (Computers & Electronics) 2.95
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 CONSTELLATION FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
THE AIM CONSTELLATION FUND GROWTH STORY
RESULTS OF A $10,000 INVESTMENT
4/30/76-10/31/99
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 these
indexes over the period 4/30/76-10/31/99.
It is important to understand the difference between your fund and an index.
An index measures the performance of a hypothetical portfolio.
Market indexes like the S&P 500 and the Nasdaq are unmanaged, 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
For periods ended 10/31/99, including sales charges
================================================================================
Class A Shares
Inception (4/30/76) 18.32%
10 years 17.91
5 years 17.03
1 year 27.41
Class B Shares
Inception (11/3/97) 10.41%
1 year 28.64
* 33.64% excluding sales charges
Class C Shares
Inception (8/4/97) 10.32%
1 year 32.65*
* 33.65% excluding sales charges
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class B and C shares will differ from that of its
Class A shares due to different sales-charge structure and expenses. For fund
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 CONSTELLATION FUND
4
<PAGE> 7
in thousands
================================================================================
AIM
Constellation
Fund Class A
Shares Nasdaq S&P 500
- --------------------------------------------------------------------------------
4/30/76 9500 10000 10000
10/31/76 9102 10030 10327.2
10/31/77 8575 10825.9 9703.72
10/31/78 10329 12335.7 10319.9
10/31/79 15619 15045.5 11913.8
10/31/80 31348 21400.9 15739.1
10/31/81 30638 21638 15829
10/31/82 29000 23604.5 18406.8
10/31/83 40569 30478.5 23550.8
10/31/84 35867 27423.4 25050.5
10/31/85 39649 32475.6 29892.9
10/31/86 58139 40050 39813.3
10/31/87 56748 35890.3 42360.8
10/31/88 69979 42457.8 48612.2
10/31/89 94817 50580.6 61423.9
10/31/90 79482 36616.3 56829.6
10/31/91 141356 60277.5 75819.7
10/31/92 162306 67181.4 83362.6
10/31/93 208732 86507.6 95791.3
10/31/94 224288 86311.1 99486.1
10/31/95 299259 115016 125759
10/31/96 332949 135603 156043
10/31/97 395745 176911 206131
10/31/98 386638 196646 251505
10/31/99 521213 329311 316047
Past performance cannot guarantee comparable future results.
================================================================================
Source: Lipper, Inc.
AIM CONSTELLATION FUND
5
<PAGE> 8
ANNUAL REPORT / FOR CONSIDERATION
CHOOSE YOUR INVESTMENT PALETTE
[BRUSH ART WORK]
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and
spread their risk over several different funds, rather than painting their
portfolios all one color.
GROWTH VS. INCOME
If you look at the list of AIM's retail mutual funds on the back of your fund
report, you'll notice that they are divided into different types. Two that
frequently appear are growth and income. Common stock is normally the growth
component of a mutual fund with growth as a primary or secondary objective.
Bonds are typically the income components of a mutual fund with income as a
primary or secondary objective.
Let's take a closer look at the categories into which AIM's retail mutual
funds are divided. Keep in mind that funds listed under the same category don't
necessarily have the same kind of investment strategy or portfolio, even if they
have the same objective.
DOMESTIC MUTUAL FUNDS
GROWTH FUNDS
Growth funds typically invest in common stocks of companies whose businesses are
growing. Growth companies tend to reinvest their profits toward expansion of
their potential to produce greater returns instead of paying dividends. So
growth mutual funds focus on generating capital gains--increasing the value of
the stocks they hold--rather than current income, which means they generally
don't pay regular income dividends. Growth funds usually do, however, make one
capital-gains distribution per year, when there are gains.
An increase over time in the value of a growth fund's portfolio means the
fund's value, or share price, increases over time also. Shareholders in a growth
fund, then, make money by selling their shares for more than they paid for them.
Of course, the opposite is also true--shareholders can lose money by selling
their shares for less than they paid for them. Growth funds usually range from
moderate to very aggressive, depending on the size and types of companies in
which they invest.
GROWTH AND INCOME FUNDS
A growth and income fund generally invests in common and preferred stocks and
bonds of older, more established companies that have a longer track record of
growth and paying dividends.
A typical growth and income mutual fund will pay quarterly or annual income
dividends to its shareholders. (Monthly dividends are not common.) In this way,
growth and income funds can potentially provide long-term growth of investments
and also current income. These funds tend to be more conservative than growth
funds.
INCOME FUNDS
Income funds are generally designed to provide high current income rather than
long-term growth. To that end, income funds usually invest chiefly in
interest-paying corporate and government bonds. They may also own stocks of
companies that pay regular dividends. Some income funds are more aggressive than
others. The aggressiveness of a particular fund depends not only on the kinds of
securities in which it invests, but also on the fund's sector allocation and
maturity structure.
For example, Treasury securities are considered a relatively safe investment
because they are guaranteed by the U.S. government. However, lower risk also
means lower return potential. On the other hand, lower-rated corporate bonds,
often called junk bonds, involve more risk because they are not guaranteed--they
are only as good as the companies that issue them. But the added risk also means
higher return potential.
Income funds are considered more conservative and are suited for investors
seeking income rather than growth.
[ARTIST'S PALLETTE ART WORK]
AIM CONSTELLATION FUND
6
<PAGE> 9
TAX-FREE INCOME OR MUNICIPAL FUNDS
These funds provide shareholders with current income that is tax-exempt at
some level, depending on the securities in which they invest. So municipal
mutual funds appeal to investors who are looking to reduce income that would
otherwise be subject to tax. Municipal bonds or notes, which are issued by
state or local governments, are generally exempt from federal taxes. Federal
securities, like Treasury bonds, are usually exempt from state taxes. And then
there are some securities that are exempt from both federal and state taxes.(1)
MONEY MARKET FUNDS
A money market fund is one of the safest types of mutual funds available because
its main goal is preserving your investment while paying current income in the
form of interest. As a result, these funds tend to appeal to investors looking
for safety, liquidity and some income from their investment. Money market funds
invest in high-quality, short-term securities such as commercial paper and U.S.
government agency securities. Although money market funds are not guaranteed or
insured by the U.S. government, the securities they hold are less risky than
other types of fixed-income securities. The trade-off for safety of principal
investment is a lower rate of return.(2)
INTERNATIONAL AND GLOBAL
MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
An international growth fund has the same objective as a domestic growth fund,
except it invests in stocks of companies located outside the United States. Like
their domestic counterparts, international growth funds tend to pay
distributions in the form of capital gains rather than dividends. An
international growth mutual fund might invest in a particular country, region or
continent depending on the investment strategy shown in its prospectus.
International funds carry different risks than domestic funds because most
foreign markets are not as established as the markets in the United States.
Other risks include changes in the value of the U.S. dollar compared to foreign
currencies, accounting differences, political risks and foreign regulatory
differences.
GLOBAL GROWTH, GLOBAL GROWTH AND INCOME, AND GLOBAL INCOME FUNDS
These funds are similar to their domestic equivalents in terms of their goals
and the income distributions they pay. Global funds are comparable to
international funds in that they can invest in stocks of companies outside the
United States. But global funds can also invest substantially in U.S. stocks;
international funds generally do not. The amount of a global fund's portfolio
that can be invested in the United States varies greatly from fund to fund,
according to a fund's prospectus. Global funds carry the same risks as
international funds.
SPECIALIZED FUNDS
THEME FUNDS
Theme or sector funds invest primarily in a particular industry or sector of the
economy, either domestically or globally. Theme funds are required by prospectus
to invest a certain percentage of their assets in their industry or sector of
choice under normal market conditions. As a result, theme funds present greater
risk and potential reward than more diversified funds. The types of securities
held by a theme fund determine its goal of growth and/or income.
TYPES OF FUND DISTRIBUTIONS
INCOME DIVIDENDS are paid from dividends and/or interest from securities in a
fund's portfolio. For example, if a company in which a mutual fund owns stock
distributes some of its earnings to its shareholders as a dividend, the fund
passes on those earnings to its own shareholders. Income dividends are usually
taxed as ordinary income.
CAPITAL GAINS represent the net profit realized from the growth in value of the
holdings in a fund's portfolio. These distributions are usually made once per
year. There are two types of capital gains:
o Short-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for less than a year. Short-term capital
gains are taxed as ordinary income.
o Long-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for more than a year. Long-term capital
gains are usually taxed at the capital-gains rate, which is typically lower
than ordinary income-tax rates.
(1) Investors in tax-free income funds still have a risk of incurring taxes on
capital-gains distributions, for example, so it's wise to see your tax advisor
before investing in such funds.
(2) There is no guarantee that a money market fund will be able to maintain a
stable net asset value of $1.00 per share.
See the back cover for a complete list of AIM's retail mutual funds. For more
information about your fund's objective, read your fund prospectus. 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.
AIM CONSTELLATION FUND
7
<PAGE> 10
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-95.54%
AIRLINES-0.25%
Southwest Airlines Co. 2,250,000 $ 37,828,125
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.67%
Danaher Corp. 1,250,000 60,390,625
- ---------------------------------------------------------------
SPX Corp.(a) 500,000 42,375,000
- ---------------------------------------------------------------
102,765,625
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.58%
Northern Trust Corp. 925,000 89,320,312
- ---------------------------------------------------------------
BANKS (REGIONAL)-1.01%
Bank United Corp.-Class A 1,000,000 39,000,000
- ---------------------------------------------------------------
Compass Bancshares, Inc. 1,000,000 26,687,500
- ---------------------------------------------------------------
Old Kent Financial Corp. 817,425 33,310,069
- ---------------------------------------------------------------
TCF Financial Corp. 700,000 20,650,000
- ---------------------------------------------------------------
Zions Bancorp 600,000 35,362,500
- ---------------------------------------------------------------
155,010,069
- ---------------------------------------------------------------
BIOTECHNOLOGY-1.53%
Biogen, Inc.(a) 2,500,000 185,312,500
- ---------------------------------------------------------------
Chiron Corp.(a) 1,000,000 28,562,500
- ---------------------------------------------------------------
Genzyme Corp.(a) 527,300 20,169,225
- ---------------------------------------------------------------
234,044,225
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-4.64%
Adelphia Communications Corp.(a) 1,000,000 54,625,000
- ---------------------------------------------------------------
AMFM Inc.(a) 2,250,000 157,500,000
- ---------------------------------------------------------------
AT&T Corp.-Liberty Media
Group-Class A(a) 3,000,000 119,062,500
- ---------------------------------------------------------------
Cox Communications, Inc.-Class
A(a) 1,500,000 68,156,250
- ---------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 1,050,000 85,050,000
- ---------------------------------------------------------------
Univision Communications,
Inc.-Class A(a) 1,465,400 124,650,587
- ---------------------------------------------------------------
USA Networks, Inc.(a) 1,317,800 59,383,362
- ---------------------------------------------------------------
Westwood One, Inc.(a) 887,400 40,931,325
- ---------------------------------------------------------------
709,359,024
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-9.95%
ADC Telecommunications, Inc.(a) 1,750,000 83,453,125
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 1,500,000 170,250,000
- ---------------------------------------------------------------
Corning, Inc. 3,186,600 250,546,425
- ---------------------------------------------------------------
General Instrument Corp.(a) 1,900,000 102,243,750
- ---------------------------------------------------------------
JDS Uniphase Corp.(a) 1,500,000 250,312,500
- ---------------------------------------------------------------
Lucent Technologies Inc.(b) 3,849,120 247,305,960
- ---------------------------------------------------------------
Motorola, Inc. 750,000 73,078,125
- ---------------------------------------------------------------
Nokia Oyj-ADR (Finland) 1,500,000 173,343,750
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 250,000 55,687,500
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-(CONTINUED)
Scientific-Atlanta, Inc. 2,000,000 $ 114,500,000
- ---------------------------------------------------------------
1,520,721,135
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.39%
Apple Computer, Inc.(a) 1,000,000 80,125,000
- ---------------------------------------------------------------
Gateway, Inc.(a) 2,000,000 132,125,000
- ---------------------------------------------------------------
212,250,000
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.87%
Exodus Communications, Inc.(a) 341,700 29,386,200
- ---------------------------------------------------------------
VeriSign, Inc.(a) 835,000 103,122,500
- ---------------------------------------------------------------
132,508,700
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-3.06%
Adaptec, Inc.(a) 3,000,000 135,000,000
- ---------------------------------------------------------------
EMC Corp.(a)(b)(c) 3,500,000 255,500,000
- ---------------------------------------------------------------
Lexmark International Group,
Inc.- Class A(a) 1,000,000 78,062,500
- ---------------------------------------------------------------
468,562,500
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-15.30%
America Online, Inc.(a) 2,625,000 340,429,687
- ---------------------------------------------------------------
At Home Corp.(a) 1,150,000 42,981,250
- ---------------------------------------------------------------
BMC Software, Inc.(a) 2,500,000 160,468,750
- ---------------------------------------------------------------
Business Objects S.A.-ADR
(France)(a) 675,000 48,600,000
- ---------------------------------------------------------------
Check Point Software
Technologies Ltd. (Israel)(a) 750,000 86,765,625
- ---------------------------------------------------------------
Citrix Systems, Inc.(a) 2,800,000 179,550,000
- ---------------------------------------------------------------
Compuware Corp.(a) 1,250,000 34,765,625
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 1,250,000 101,015,625
- ---------------------------------------------------------------
Electronics for Imaging, Inc.(a) 2,000,000 80,625,000
- ---------------------------------------------------------------
Inktomi Corp.(a) 750,000 76,078,125
- ---------------------------------------------------------------
Intuit, Inc.(a) 3,750,000 109,218,750
- ---------------------------------------------------------------
J.D. Edwards & Co.(a) 1,050,000 25,134,375
- ---------------------------------------------------------------
Lycos, Inc.(a) 3,000,000 160,500,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 1,150,000 106,446,875
- ---------------------------------------------------------------
Novell, Inc.(a) 1,000,000 20,062,500
- ---------------------------------------------------------------
RealNetworks, Inc.(a) 1,000,000 109,687,500
- ---------------------------------------------------------------
Siebel Systems, Inc.(a) 600,000 65,887,500
- ---------------------------------------------------------------
Synopsys, Inc.(a) 1,000,000 62,312,500
- ---------------------------------------------------------------
Verio, Inc.(a) 2,125,000 79,289,063
- ---------------------------------------------------------------
VERITAS Software Corp.(a) 2,500,000 269,687,500
- ---------------------------------------------------------------
Yahoo! Inc.(a) 1,000,000 179,062,500
- ---------------------------------------------------------------
2,338,568,750
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-2.41%
Capital One Financial Corp. 2,323,700 $ 123,156,100
- ---------------------------------------------------------------
Providian Financial Corp. 1,800,000 196,200,000
- ---------------------------------------------------------------
SLM Holding Corp. 1,000,000 48,937,500
- ---------------------------------------------------------------
368,293,600
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-5.18%
American Power Conversion
Corp.(a) 5,250,000 117,796,875
- ---------------------------------------------------------------
Conexant Systems, Inc.(a) 2,000,000 186,750,000
- ---------------------------------------------------------------
Sanmina Corp.(a) 1,000,000 90,062,500
- ---------------------------------------------------------------
Solectron Corp.(a) 3,000,000 225,750,000
- ---------------------------------------------------------------
Symbol Technologies, Inc. 2,625,000 104,343,750
- ---------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 2,750,000 67,203,125
- ---------------------------------------------------------------
791,906,250
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.11%
AVX Corp. 428,100 17,124,000
- ---------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.29%
General Motors Corp.-Class H(a) 600,000 43,687,500
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.88%
PE Corp-PE Biosystems Group 1,550,000 100,556,250
- ---------------------------------------------------------------
Waters Corp.(a) 650,000 34,531,250
- ---------------------------------------------------------------
135,087,500
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-9.30%
Altera Corp.(a) 2,875,000 139,796,875
- ---------------------------------------------------------------
Analog Devices, Inc.(a) 3,000,000 159,375,000
- ---------------------------------------------------------------
ASM Lithography Holding N.V.
(Netherlands)(a) 650,000 47,206,250
- ---------------------------------------------------------------
Atmel Corp.(a) 916,800 35,411,400
- ---------------------------------------------------------------
Cypress Semiconductor Corp.(a) 4,000,000 102,250,000
- ---------------------------------------------------------------
Linear Technology Corp. 2,000,000 139,875,000
- ---------------------------------------------------------------
LSI Logic Corp.(a) 2,000,000 106,375,000
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 1,500,000 118,406,250
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 1,338,375 89,169,234
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 2,499,700 235,596,725
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 2,000,000 91,750,000
- ---------------------------------------------------------------
Xilinx, Inc.(a) 2,000,000 157,250,000
- ---------------------------------------------------------------
1,422,461,734
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.67%
Applied Materials, Inc.(a) 500,000 44,906,250
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 1,200,000 95,025,000
- ---------------------------------------------------------------
Novellus Systems, Inc.(a) 500,000 38,750,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 2,000,000 77,000,000
- ---------------------------------------------------------------
255,681,250
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.36%
American Express Co. 575,000 88,550,000
- ---------------------------------------------------------------
Citigroup, Inc. 1,100,000 59,537,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-(CONTINUED)
MGIC Investment Corp. 1,000,000 $ 59,750,000
- ---------------------------------------------------------------
207,837,500
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.46%
Park Place Entertainment(a) 5,304,000 69,615,000
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.80%
Forest Laboratories, Inc.(a) 1,500,000 68,812,500
- ---------------------------------------------------------------
Jones Pharma, Inc.(d) 3,691,275 114,429,525
- ---------------------------------------------------------------
Medicis Pharmaceutical
Corp.-Class A(a) 1,200,000 36,600,000
- ---------------------------------------------------------------
MedImmune, Inc.(a) 500,000 56,000,000
- ---------------------------------------------------------------
275,842,025
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.32%
Express Scripts, Inc.-Class A(a) 1,000,000 49,125,000
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.38%
Bausch & Lomb, Inc. 1,000,000 54,000,000
- ---------------------------------------------------------------
Biomet, Inc. 2,500,000 75,312,500
- ---------------------------------------------------------------
Medtronic, Inc. 1,500,000 51,937,500
- ---------------------------------------------------------------
Sybron International Corp.(a) 1,250,000 29,765,625
- ---------------------------------------------------------------
211,015,625
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.33%
AFLAC, Inc. 1,000,000 51,125,000
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-1.02%
Schwab (Charles) Corp. (The) 4,000,000 155,750,000
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.53%
Federated Investors, Inc.-Class
B 2,064,000 35,604,000
- ---------------------------------------------------------------
Knight/Trimark Group, Inc.-Class
A(a) 1,750,000 45,609,375
- ---------------------------------------------------------------
81,213,375
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.91%
Harley-Davidson, Inc. 2,350,000 139,384,375
- ---------------------------------------------------------------
NATURAL GAS-0.40%
El Paso Energy Corp. 1,500,000 61,500,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-3.60%
Baker Hughes, Inc. 2,000,000 55,875,000
- ---------------------------------------------------------------
BJ Services Co.(a) 2,000,000 68,625,000
- ---------------------------------------------------------------
Cooper Cameron Corp.(a)(d) 2,750,000 106,390,625
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 1,000,000 31,750,000
- ---------------------------------------------------------------
Global Industries Ltd.(a) 3,000,000 24,000,000
- ---------------------------------------------------------------
R&B Falcon Corporation(a) 3,716,600 46,225,213
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 2,250,000 35,015,625
- ---------------------------------------------------------------
Smith International, Inc.(a) 1,750,000 60,484,375
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Transocean Offshore, Inc. 1,500,000 $ 40,781,250
- ---------------------------------------------------------------
Varco International, Inc.(a) 2,499,400 26,399,913
- ---------------------------------------------------------------
Weatherford International,
Inc.(a) 1,600,000 54,200,000
- ---------------------------------------------------------------
549,747,001
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.99%
Apache Corp. 1,790,000 69,810,000
- ---------------------------------------------------------------
EOG Resources, Inc. 3,200,000 66,600,000
- ---------------------------------------------------------------
Santa Fe Snyder Corp.(a) 1,750,000 15,093,750
- ---------------------------------------------------------------
151,503,750
- ---------------------------------------------------------------
PERSONAL CARE-0.23%
Estee Lauder Cos. Inc.-Class A 750,000 34,968,750
- ---------------------------------------------------------------
PUBLISHING-0.43%
McGraw-Hill Cos., Inc. (The) 1,100,000 65,587,500
- ---------------------------------------------------------------
RAILROADS-0.70%
Kansas City Southern Industries,
Inc. 2,250,000 106,734,375
- ---------------------------------------------------------------
RESTAURANTS-0.78%
Brinker International, Inc.(a) 2,000,000 46,625,000
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(a) 1,750,000 40,250,000
- ---------------------------------------------------------------
Papa John's International,
Inc.(a) 851,500 31,824,813
- ---------------------------------------------------------------
118,699,813
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.58%
Lowe's Companies, Inc. 1,600,000 88,000,000
- ---------------------------------------------------------------
RETAIL (COMPUTERS &
ELECTRONICS)-2.95%
Best Buy Co., Inc.(a) 1,750,000 97,234,375
- ---------------------------------------------------------------
CDW Computer Centers, Inc.(a) 1,954,600 120,696,550
- ---------------------------------------------------------------
Circuit City Stores-Circuit City
Group 2,500,000 106,718,750
- ---------------------------------------------------------------
Tandy Corp. 2,000,000 125,875,000
- ---------------------------------------------------------------
450,524,675
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.98%
Kohl's Corp.(a) 2,000,000 149,625,000
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.17%
Dollar Tree Stores, Inc.(a) 1,810,600 78,874,263
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 2,850,000 58,781,250
- ---------------------------------------------------------------
Ross Stores, Inc. 2,000,000 41,250,000
- ---------------------------------------------------------------
178,905,513
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.27%
Kroger Co. (The)(a) 2,000,000 41,625,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-2.80%
Barnes & Noble, Inc.(a) 1,153,000 23,996,813
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 2,750,100 91,612,706
- ---------------------------------------------------------------
eToys, Inc.(a) 1,169,000 69,847,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-(CONTINUED)
Linens 'n Things, Inc.(a) 1,285,300 $ 51,090,675
- ---------------------------------------------------------------
Staples, Inc.(a) 6,000,000 133,125,000
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 1,077,500 57,915,625
- ---------------------------------------------------------------
427,588,569
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.76%
American Eagle Outfitters,
Inc.(a) 808,300 34,605,344
- ---------------------------------------------------------------
Intimate Brands, Inc. 1,000,000 41,000,000
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(d) 2,310,075 50,677,270
- ---------------------------------------------------------------
Talbots, Inc. (The) 1,302,100 61,280,081
- ---------------------------------------------------------------
TJX Companies, Inc. (The) 3,000,000 81,375,000
- ---------------------------------------------------------------
268,937,695
- ---------------------------------------------------------------
SERVICES (ADVERTISING/
MARKETING)-3.31%
CMGI, Inc.(a) 500,000 54,718,750
- ---------------------------------------------------------------
Interpublic Group of Companies,
Inc. 1,000,000 40,625,000
- ---------------------------------------------------------------
Lamar Advertising Co.(a)(d) 3,025,000 163,350,000
- ---------------------------------------------------------------
Omnicom Group, Inc. 2,500,000 220,000,000
- ---------------------------------------------------------------
TMP Worldwide, Inc.(a) 450,000 28,096,875
- ---------------------------------------------------------------
506,790,625
- ---------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.91%
ChoicePoint, Inc.(a) 617,300 38,156,856
- ---------------------------------------------------------------
Cintas Corp. 1,500,000 90,375,000
- ---------------------------------------------------------------
Viad Corp. 400,500 9,837,281
- ---------------------------------------------------------------
138,369,137
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-3.02%
Affiliated Computer Services,
Inc.-Class A(a) 1,000,000 38,000,000
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 6,750,000 182,671,875
- ---------------------------------------------------------------
DST Systems, Inc.(a) 750,000 47,765,625
- ---------------------------------------------------------------
Fiserv, Inc.(a) 3,750,000 120,000,000
- ---------------------------------------------------------------
Paychex, Inc. 1,875,000 73,828,125
- ---------------------------------------------------------------
462,265,625
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.32%
Valassis Communications, Inc.(a) 1,125,000 48,375,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.63%
Crown Castle International
Corp.(a) 2,750,000 52,937,500
- ---------------------------------------------------------------
Metromedia Fiber Network,
Inc.-Class A(a) 1,290,000 42,650,625
- ---------------------------------------------------------------
95,588,125
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.23%
Global TeleSystems Group,
Inc.(a) 1,500,000 35,906,250
- ---------------------------------------------------------------
TELEPHONE-1.38%
CenturyTel, Inc. 2,249,925 90,981,342
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-(CONTINUED)
Cincinnati Bell, Inc.(a) 1,000,000 $ 20,812,500
- ---------------------------------------------------------------
NTL, Inc.(a) 687,500 51,820,313
- ---------------------------------------------------------------
RCN Corp.(a) 1,000,000 47,875,000
- ---------------------------------------------------------------
211,489,155
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.90%
Jones Apparel Group, Inc.(a) 2,563,800 81,080,175
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 2,000,000 56,500,000
- ---------------------------------------------------------------
137,580,175
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$8,597,266,374) 14,606,399,932
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION MARKET
CONTRACTS PRICE DATE VALUE
<S> <C> <C> <C> <C>
OPTIONS
PURCHASED-0.00%
COMPUTERS
(PERIPHERALS)-0.00%
EMC Corp. (Cost
$1,338,808) 5,691 $60 Dec-99 $604,669
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-4.63%
STIC Liquid Assets Portfolio(e) 353,486,756 353,486,756
- ----------------------------------------------------------------
STIC Prime Portfolio(e) 353,486,756 353,486,756
- ----------------------------------------------------------------
Total Money Market Funds
(Cost $706,973,512) 706,973,512
- ----------------------------------------------------------------
TOTAL INVESTMENTS-100.17% 15,313,978,113
- ----------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.17%) (25,496,319)
- ----------------------------------------------------------------
NET ASSETS-100.00% $15,288,481,794
================================================================
</TABLE>
Investment Abbreviation:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)A portion of this security is subject to call options.
(c)A portion of this security is subject to put options.
(d)Affiliated issuers are those in which the Fund's holdings of an issuer
represents 5% or more of the outstanding voting securities of the issuer. The
Fund has not owned enough of the outstanding voting securities of any issuer
to have control (as defined in the Investment Company Act of 1940) of that
issuer. The aggregate market value of these securities as of 10/31/99 was
$434,847,420 which represented 2.84% of the Fund's net assets.
(e)The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$9,305,578,694) $15,313,978,113
- ------------------------------------------------------------
Receivables for:
Investments sold 71,399,488
- ------------------------------------------------------------
Capital stock sold 10,526,738
- ------------------------------------------------------------
Dividends and interest 2,290,468
- ------------------------------------------------------------
Investment for deferred compensation plan 183,244
- ------------------------------------------------------------
Other assets 52,373
============================================================
Total assets 15,398,430,424
============================================================
LIABILITIES:
Payables for:
Investments purchased 56,379,176
- ------------------------------------------------------------
Capital stock reacquired 30,978,770
- ------------------------------------------------------------
Deferred compensation 183,244
- ------------------------------------------------------------
Options written (premiums received
$3,848,894) 5,097,494
- ------------------------------------------------------------
Accrued advisory fees 7,461,612
- ------------------------------------------------------------
Accrued administrative services fees 70,930
- ------------------------------------------------------------
Accrued directors' fees 9,103
- ------------------------------------------------------------
Accrued distribution fees 5,519,204
- ------------------------------------------------------------
Accrued transfer agent fees 3,222,924
- ------------------------------------------------------------
Accrued operating expenses 1,026,173
- ------------------------------------------------------------
Total liabilities 109,948,630
- ------------------------------------------------------------
Net assets applicable to shares outstanding $15,288,481,794
============================================================
NET ASSETS:
Class A $14,292,905,417
============================================================
Class B $ 589,717,520
============================================================
Class C $ 161,489,815
============================================================
Institutional Class $ 244,369,042
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 412,537,590
============================================================
Class B:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 17,344,531
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 4,751,201
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 6,787,086
============================================================
Class A:
Net asset value and redemption price per
share $ 34.65
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $34.65 / 94.50%) $ 36.67
============================================================
Class B:
Net asset value and offering price per
share $ 34.00
- ------------------------------------------------------------
Class C:
Net asset value and offering price per
share $ 33.99
- ------------------------------------------------------------
Institutional Class:
Net asset value, offering and redemption
price per share $ 36.01
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $242,135 foreign
withholding tax) $ 43,615,002
- ------------------------------------------------------------
Interest 42,276,941
============================================================
Total investment income 85,891,943
- ------------------------------------------------------------
EXPENSES:
Advisory fees 90,458,750
- ------------------------------------------------------------
Administrative services fees 431,120
- ------------------------------------------------------------
Custodian fees 801,999
- ------------------------------------------------------------
Directors' fees 93,740
- ------------------------------------------------------------
Distribution fees-Class A 40,983,445
- ------------------------------------------------------------
Distribution fees-Class B 4,365,731
- ------------------------------------------------------------
Distribution fees-Class C 1,175,217
- ------------------------------------------------------------
Transfer agent fees-Class A 23,308,682
- ------------------------------------------------------------
Transfer agent fees-Class B 1,540,074
- ------------------------------------------------------------
Transfer agent fees-Class C 368,612
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 22,937
- ------------------------------------------------------------
Other 2,563,084
============================================================
Total expenses 166,113,391
- ------------------------------------------------------------
Less: Fees waived by advisor (3,107,849)
- ------------------------------------------------------------
Expenses paid indirectly (238,341)
============================================================
Net expenses 162,767,201
============================================================
Net investment income (loss) (76,875,258)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 1,641,321,263
- ------------------------------------------------------------
Option contracts written 2,695,940
============================================================
1,644,017,203
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 2,670,530,284
- ------------------------------------------------------------
Foreign currencies (1,219)
- ------------------------------------------------------------
Option contracts written (1,395,306)
============================================================
2,669,133,759
============================================================
Net gain from investment securities,
foreign currencies, and option
contracts 4,313,150,962
============================================================
Net increase in net assets resulting from
operations $4,236,275,704
============================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
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) $ (76,875,258) $ (68,697,946)
- -------------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, and option contracts 1,644,017,203 459,324,772
- -------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, and option
contracts 2,669,133,759 (647,916,119)
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 4,236,275,704 (257,289,293)
=================================================================================================
Distributions to shareholders from net realized gains:
Class A (337,206,115) (1,023,550,465)
- -------------------------------------------------------------------------------------------------
Class B (8,290,207) (2,750,431)
- -------------------------------------------------------------------------------------------------
Class C (2,229,567) (2,040,204)
- -------------------------------------------------------------------------------------------------
Institutional Class (5,075,580) (13,510,099)
- -------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,783,881,252) (667,156,467)
- -------------------------------------------------------------------------------------------------
Class B 205,093,817 292,437,630
- -------------------------------------------------------------------------------------------------
Class C 55,508,352 60,444,760
- -------------------------------------------------------------------------------------------------
Institutional Class (4,793,973) 17,436,212
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 2,355,401,179 (1,595,978,357)
- -------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 12,933,080,615 14,529,058,972
- -------------------------------------------------------------------------------------------------
End of period $15,288,481,794 $12,933,080,615
=================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 7,663,956,851 $ 9,156,848,152
- -------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (551,737) (994,714)
- -------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, and option contracts 1,617,926,281 439,210,537
- -------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, and option contracts 6,007,150,399 3,338,016,640
- -------------------------------------------------------------------------------------------------
$15,288,481,794 $12,933,080,615
=================================================================================================
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation 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.
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 increased by
$77,318,235, undistributed net realized gains decreased by $112,499,990
and paid in capital increased $35,181,755 as a result of net operating tax
loss 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. 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
14
<PAGE> 17
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. 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.
F. 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.
G. 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.
H. 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 of the Board of
Directors. During the year ended October 31, 1999, AIM waived fees of
$3,107,849. 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 $431,120 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 $11,438,795 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
15
<PAGE> 18
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 $40,983,445, $4,365,731 and
$1,175,217, respectively, as compensation under the Plans.
AIM Distributors received commissions of $3,182,696 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 $605,519 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 $31,683
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
$170,495 and $67,846, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $238,341 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
$8,369,125,551 and $10,276,104,460, 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 $6,146,948,281
- ----------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (161,712,109)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $5,985,236,172
==========================================================
Cost of investments for tax purposes is $9,328,741,941.
</TABLE>
16
<PAGE> 19
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 period 1,875 $ 357,644
- -------------------------------------------------------------------------------------
Written 41,226 7,516,095
- -------------------------------------------------------------------------------------
Closed (17,190) (3,487,198)
- -------------------------------------------------------------------------------------
Expired (3,820) (537,647)
- -------------------------------------------------------------------------------------
End of period 22,091 $ 3,848,894
=====================================================================================
</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>
EMC Corp. Jan. 00 $75 2,846 $1,162,552 $1,849,900 $ (687,348)
- -------------------------------------------------------------------------------------------------------------------
Lucent Technologies Inc. Nov. 99 65 19,245 2,686,342 3,247,594 (561,252)
- -------------------------------------------------------------------------------------------------------------------
22,091 $3,848,894 $5,097,494 $(1,248,600)
===================================================================================================================
</TABLE>
NOTE 8-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 98,564,141 $ 2,981,238,092 271,511,337 $ 7,555,171,888
- ------------------------------------------------------------------------------------------------------------------------
Class B 10,942,571 332,728,027 12,877,388 356,713,527
- ------------------------------------------------------------------------------------------------------------------------
Class C 5,133,893 156,450,704 2,960,570 81,123,332
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,596,295 51,100,608 2,149,830 60,442,629
- ------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 11,320,463 318,895,308 38,633,795 977,878,833
- ------------------------------------------------------------------------------------------------------------------------
Class B 286,888 7,992,642 104,498 2,643,686
- ------------------------------------------------------------------------------------------------------------------------
Class C 75,962 2,115,494 76,723 1,938,518
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class 170,003 4,957,282 494,582 12,886,955
- ------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (167,354,090) (5,084,014,652) (330,045,727) (9,200,207,188)
- ------------------------------------------------------------------------------------------------------------------------
Class B (4,443,036) (135,626,852) (2,423,778) (66,919,583)
- ------------------------------------------------------------------------------------------------------------------------
Class C (3,390,263) (103,057,846) (842,846) (22,617,090)
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class (1,915,980) (60,851,863) (1,977,243) (55,893,372)
- ------------------------------------------------------------------------------------------------------------------------
(49,013,153) $(1,528,073,056) (6,480,871) $ (296,837,865)
========================================================================================================================
</TABLE>
17
<PAGE> 20
NOTE 9-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 the year ended
October 31, 1999 and the period November 3, 1997 (date sales commenced) through
October 31, 1998 and for a share of Class C capital stock outstanding during
each of the years in the two year period ended October 31, 1999 and the period
August 4, 1997 (dates 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 $ 26.37 $ 29.23 $ 25.48 $ 23.69 $ 18.31
- ---------------------------------------------------------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income (loss) (0.17) (0.14) (0.11) (0.06) (0.05)
- ---------------------------------------------------------- ----------- ----------- ----------- ----------- ----------
Net gains (losses) on securities (both realized and
unrealized) 9.18 (0.62) 4.75 2.60 5.95
- ---------------------------------------------------------- ----------- ----------- ----------- ----------- ----------
Total from investment operations 9.01 (0.76) 4.64 2.54 5.90
- ---------------------------------------------------------- ----------- ----------- ----------- ----------- ----------
Distributions from net realized gains (0.73) (2.10) (0.89) (0.75) (0.52)
- ---------------------------------------------------------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period $ 34.65 $ 26.37 $ 29.23 $ 25.48 $ 23.69
========================================================== =========== =========== =========== =========== ==========
Total return(a) 34.81% (2.30)% 18.86% 11.26% 33.43%
========================================================== =========== =========== =========== =========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,292,905 $12,391,844 $14,319,441 $11,255,506 $7,000,350
========================================================== =========== =========== =========== =========== ==========
Ratio of expenses to average net assets(b) 1.10%(c) 1.10% 1.11%() 1.14% 1.16%
========================================================== =========== =========== =========== =========== ==========
Ratio of net investment income (loss) to average net
assets(d) (0.50)%(c) (0.47)% (0.40)%() (0.27)% (0.32)%
========================================================== =========== =========== =========== =========== ==========
Portfolio turnover rate 62% 76% 67% 58% 45%
========================================================== =========== =========== =========== =========== ==========
</TABLE>
<TABLE>
<S> <C>
(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 1.12%, 1.12%, 1.13%, 1.16% and
1.18% for 1999-1995.
(c) Ratios are based on average net assets of $13,661,148,228.
(d) After fee waivers and/or expense reimbursements. Ratios of
net investment income (loss) to average net assets prior to
fee waivers and/or expense reimbursement were (0.52)%,
(0.50)%, (0.42)%, (0.29)% and (0.34)% for 1999-1995.
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------- -------------------------------
1999 1998 1999 1998 1997
--------- -------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.11 $ 30.04 $ 26.10 $ 29.18 $ 30.32
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Income from investment operations:
Net investment income (loss) (0.42) (0.37)(a) (0.42) (0.37)(a) (0.04)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 9.04 (1.46) 9.04 (0.61) (1.10)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Total from investment operations 8.62 (1.83) 8.62 (0.98) (1.14)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Distributions from net realized gains (0.73) (2.10) (0.73) (2.10) --
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Net asset value, end of period $ 34.00 $ 26.11 $ 33.99 $ 26.10 $ 29.18
============================================================ ======== ======== ======== ======= =======
Total return(b) 33.64% (5.86)% 33.65% (3.12)% (3.76)%
============================================================ ======== ======== ======== ======= =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $589,718 $275,676 $161,490 $76,522 $21,508
============================================================ ======== ======== ======== ======= =======
Ratio of expenses to average net assets(c) 1.98%(d) 1.98%(e) 1.98%(d) 1.97% 1.84%(e)
============================================================ ======== ======== ======== ======= =======
Ratio of net investment income (loss) to average net
assets(f) (1.38)%(d) (1.36)%(e) (1.38)%(d) (1.35)% (1.12)%(e)
============================================================ ======== ======== ======== ======= =======
Portfolio turnover rate 62% 76% 62% 76% 67%
============================================================ ======== ======== ======== ======= =======
(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 2.00%, and 2.00% (annualized) for 1999-1998 for Class B and 2.00%, 1.99% and
1.86% (annualized) for 1999-1997 for Class C.
(d) Ratios are based on average net assets of $436,573,129 and $117,521,680 for Class B and Class C, respectively.
(e) Annualized.
(f) 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 (1.40)% and (1.38)% (annualized) for 1999-1998 for Class B
and (1.40)%, (1.37)% and (1.15)% (annualized) for 1999-1997 for Class C.
</TABLE>
18
<PAGE> 21
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 Constellation Fund (a portfolio of
AIM Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1999, and 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
Constellation Fund as of October 31, 1999, and 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
19
<PAGE> 22
<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 Constellation Fund distributed long-term capital gains of $465,301,469
during its tax year ended October 31, 1999.
20
<PAGE> 23
-------------------------------------
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AIM INVESTOR LINE,
800-246-5463,
PROVIDES CURRENT ACCOUNT
INFORMATION AND THE PRICE,
YIELD AND TOTAL RETURN
ON ALL AIM FUNDS
24 HOURS A DAY.
-------------------------------------
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o AIM BANK CONNECTION(SM). You can make investments in your AIM account in
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convenient feature, AIM will draw the funds from your pre-authorized
checking account at your request.
o AIM INTERNET CONNECT(SM). With this service, you can purchase, redeem or
exchange shares of AIM funds in your current AIM account simply by accessing
our Web site at www.aimfunds.com. For a retirement account, such as an IRA
or 403(b), only exchanges are allowed over the Internet because of the
tax-reporting and record-keeping requirements these accounts involve.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. You can receive
distributions in cash, or you can reinvest them in your account without
paying a sales charge. Over time, the power of compounding can significantly
increase the value of your account.
o AUTOMATIC INVESTMENT PLAN. You can add to your account by authorizing your
AIM fund to withdraw a specified amount, minimum $50, from your bank account
on a regular schedule.
o EASY ACCESS TO YOUR MONEY. You can redeem shares of your AIM fund any day
the New York Stock Exchange is open. The value of the shares may be more or
less than their original cost depending on market conditions.
o EXCHANGE PRIVILEGE. As your investment goals change, you may exchange part
or all of your shares of one fund for shares of a different AIM Fund within
the same share class. You may make up to 10 such exchanges per calendar
year.
o TAX-ADVANTAGED RETIREMENT PLANS. You can enjoy the tax advantages offered by
a variety of investment plans, including Traditional IRAs, Roth IRAs and
education IRAs, among others.
o E-MAIL ACCESS. You can contact us at [email protected] for general
information. For account information, contact us at
[email protected].
o www.aimfunds.com. Our award-winning Web site provides account information,
shareholder education and fund performance information.
<PAGE> 24
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
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately $120
AIM Capital Development Fund billion in assets for more than 6.4 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund investors, corporate clients and financial
AIM Large Cap Growth Fund AIM Asian Growth Fund institutions, 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 Mid Cap Opportunities Fund AIM European Development Fund AIM today is the 10th-largest mutual fund
AIM Select Growth Fund AIM International Equity Fund complex in the United States in assets
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund under management, according to Strategic
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund Insight, an independent mutual fund
AIM Value Fund AIM New Pacific Growth Fund monitor.
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.
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INVEST WITH DISCIPLINE
--Registered Trademark--
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A I M Distributors, Inc.
