<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM EMERGING GROWTH FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
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INDOOR CYCLING BY LEROY NEIMAN
LIKE A BICYCLIST BATTLING TO TAKE THE LEAD IN A HOTLY
CONTESTED RACE, COMPANIES VIE FOR POSITION WITHIN THEIR
RESPECTIVE INDUSTRIES. IN AIM EMERGING GROWTH FUND,
WE SEEK TO OWN THE STOCKS OF COMPANIES WE BELIEVE ARE
RISING TO THE FOREFRONT IN NEW OR EXISTING INDUSTRIES.
------------------------------------
AIM Emerging Growth Fund is for shareholders who seek long-term growth of
capital by investing in securities of companies that are likely to benefit from
new or innovative products, services or processes.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Emerging Growth Fund's performance figures are historical, and they
reflect the reinvestment of distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 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 different sales-charge structure and class
expenses.
o Because the fund has been in existence for less than a year (since 3/31/00),
total return is cumulative total return that has not yet been annualized.
o The fund's cumulative total return (including sales charges) for the period
ended 9/30/00 (the most recent calendar quarter-end) are as follows: Class A
shares, inception (3/31/00), 12.95%. Class B shares, inception (3/31/00),
14.10%. Class C shares, inception (3/31/00), 18.00%.
o The fund participates in the initial public offering (IPO) market, and a
significant portion of the fund's return is attributable to its investment
in IPOs, which may have a magnified impact due to the fund's relatively
small asset base. There is no guarantee that as the fund's assets grow, it
will continue to experience substantially similar perfomance by investing in
IPOs.
o Investing in micro-, small and mid-sized companies may involve risks not
associated with investing in more established companies. Also, micro and
small companies may have business risk, significant stock-price fluctuations
and illiquidity.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Russell 2500 Index measures the performance of the 2,500
smallest companies in the Russell 3000 Index, which measures the performance
of the 3,000 largest U.S. companies based on total market capitalization.
o The unmanaged Russell 2500 Growth Index measures the performance of those
Russell 2500 companies with higher price-to-book ratios and higher
forecasted growth values.
o The unmanaged Standard & Poor's Composite Index of 500 stocks (the S&P 500)
represents the performance of the U.S. stock market.
o The unmanaged Standard & Poor's MidCap 400 Index (the S&P 400) comprises the
common stocks of approximately 400 mid-capitalization companies.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM EMERGING GROWTH FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
It's an honor to address you as the AIM Funds' new chairman.
[PHOTO OF I feel privileged to succeed Ted Bauer, who recently retired
Robert H. from the funds' board and will soon retire as A I M
Graham, Management Group's chairman after a long, successful career
Chairman of in the investment industry. Ted has always shown the highest
the Board of degree of integrity and commitment to excellence, and I have
THE FUND always admired him. I'm also proud to be part of the team
APPEARS HERE] that launched AIM almost 25 years ago. From the beginning,
AIM has been a very people-oriented, service-minded company,
and I plan to carry on the tradition for our shareholders,
financial advisors and employees.
UNCERTAIN MARKETS
The markets this year have been particularly volatile and
confusing for many investors, especially for those who have
only experienced the bull market of the 1990s. After almost a
decade of double-digit returns, the S&P 500 was down 1.81% year-to-date as of
October 31, 2000. But market returns in the 20% to 30% range, such as we have
seen in recent years, are not typical. If you expect these kinds of returns
every year, you'll be disappointed. Historically, markets decline in one out of
every four years. What we're seeing now is a normal downturn.
This appears to be a worldwide trend. Throughout 2000, overseas markets
generally have been more turbulent than their U.S. counterpart.
REASONS FOR OPTIMISM
While investors may need to temper their expectations, there are plenty of
reasons to be optimistic. Economic fundamentals remain strong, and many believe
that the Federal Reserve Board may have succeeded in bringing the economy to a
"soft landing." Gross domestic product growth slowed to 2.4% in the third
quarter from the rapid pace of about 7% a year ago. With this slowdown, it seems
unlikely that the Fed will raise interest rates in the near future, and stable
interest rates provide a solid environment for both stocks and bonds.
In Europe, the region's economic and investment future continues to look
bright despite the weak euro. Restructuring, merger activity and tax reform bode
well for European economies. In Asia, most analysts think the continuing
strength of the U.S. economy will help boost Asian stock markets.
THE VALUE OF ADVICE
The current environment illustrates the value of professional money management.
Knowing when to buy and sell takes expertise and discipline even in the best of
markets. During downturns, many investors may be tempted to make decisions based
on emotions instead of strategy. The wisest choice is to rely on a professional
money manager to make these decisions for you.
In these uncertain times, it's important to keep market volatility in
perspective. Mutual fund investing should be a long-term endeavor. Remember why
you're investing, whether it's for your retirement or your child's education,
and think about your time frame. If you're unsure about whether your investments
can meet your goals, visit your financial advisor for help.
In the following pages, your fund's portfolio managers discuss market
activity, how they managed your fund during the fiscal year and their near-term
outlook. If you have any questions or comments, please contact us through our
Web site, www.aimfunds.com, or call our Client Services Department at
800-959-4246 during normal business hours. Information about your account is
available at our Web site and on our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
--Registered Trademark--.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
------------------------------------
THE CURRENT
ENVIRONMENT
ILLUSTRATES THE VALUE
OF PROFESSIONAL
MONEY MANAGEMENT.
KNOWING WHEN TO BUY
AND SELL TAKES
EXPERTISE AND
DISCIPLINE EVEN IN THE
BEST OF MARKETS.
------------------------------------
AIM EMERGING GROWTH FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
NEW FUND CONTENDS WITH CHALLENGING STOCK MARKET
DURING THE FIRST SEVEN MONTHS OF AIM EMERGING GROWTH FUND'S EXISTENCE, STOCK
MARKETS WERE EXTREMELY VOLATILE. HOW DID THE FUND PERFORM?
The fund, which began sales on March 31, 2000, posted respectable returns
despite a market environment that was generally unfavorable toward growth
stocks. Excluding sales charges, cumulative total returns were 5.10%, 4.70% and
4.60% for Class A, Class B and Class C shares, respectively, for the seven-month
period ended October 31. The fund outperformed the Russell 2500 Index and the
Russell 2500 Growth Index, which recorded returns of -4.39% and -15.23%,
respectively, for the same period.
During the six months since our initial report, total net assets in the fund
increased from $95 million to $283 million as of October 31.
WHAT WERE THE MAJOR STOCK-MARKET TRENDS?
A choppy, downward-trending market was dominant during the period from the
fund's inception through the end of October. In April, investors were concerned
that the Federal Reserve Board (the Fed) might continue to raise interest rates
to slow torrid economic growth and to contain inflation.
These concerns prompted a sell-off that affected nearly every stock-market
sector in April and caused markets to be extremely volatile. Technology stocks,
especially those of Internet companies with no earnings, were particularly hard
hit. After raising interest rates in May, the Fed ceased its monetary tightening
policy for the remainder of the reporting period. Markets rallied in late May
and June amid mounting evidence that economic growth was slowing, reducing the
probability of additional Fed rate hikes. However, in late summer and early
fall, rising oil prices, unrest in the Middle East and, perhaps most
importantly, concern about corporate earnings converged to produce another steep
market decline. A number of major corporations reported earnings disappointments
in September and October, as rising oil prices and a weak euro cut into profit
margins.
Many key market indexes sustained losses over the seven-month reporting
period. However, after tech stocks faded, stocks in several other sectors, such
as health care, financial services, energy and utilities, posted healthy gains.
Mid-cap stocks outperformed large- and small-cap stocks. During most of the
reporting period, value stocks outperformed growth stocks as investors sought
more reasonably priced issues.
HOW WAS THE FUND POSITIONED AS OF OCTOBER 31?
The fund invests in companies which management believes are on the verge of
substantial growth. Particularly, we look for startup and developing companies
that are emerging in an existing or new industry. We select the stocks of firms
that we think have the potential to become the brand-name companies of tomorrow.
While we may consider the stocks of companies with small revenue bases and/or no
earnings, our emphasis has been on firms with tangible earnings. This strategy
helped the fund's performance during the volatile market environment that was
prevalent during the reporting period.
As of October 31, the fund had 81 holdings, with technology stocks making up
approximately 55% of the portfolio. Although tech stocks were volatile, the
fund's tech holdings boosted performance. The fund also benefited from its
health-care stocks, particularly its pharmaceutical and medical-technology
holdings. The demand for health-care products and services tends to be constant
regardless of economic trends. We generally avoided the stocks of biotech
companies as many of these firms have tended to be unprofitable.
Although the fund can hold stocks in all market-capitalization categories,
small- and mid-cap stocks made up nearly 80% of the holdings at the end of the
reporting period. We found more companies with dynamic growth potential in the
small- and mid-capitalization ranges. The portfolio's large-cap holdings
consisted primarily of companies whose assets have grown since the fund has
owned their stocks.
WHAT WERE SOME OF THE TECH STOCKS IN THE PORTFOLIO?
o Extreme Networks, the fund's top holding, makes switches that permit the
more rapid transmission of information over computer networks.
o Zoran makes integrated circuits and software for digital-video and
audio-compression applications.
FUND VS. INDEXES
Cumulative total returns, excluding sales charges
3/31/00-- 10/31/00
================================================================================
FUND CLASS A SHARES 5.10%
FUND CLASS B SHARES 4.70%
FUND CLASS C SHARES 4.60%
RUSSELL 2500 INDEX -4.39%
RUSSELL 2500 GROWTH INDEX -15.23%
================================================================================
See important fund and index disclosures inside front cover.
AIM EMERGING GROWTH FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
o Microchip Technology makes low-cost embedded control products for the
automotive, consumer, communications, industrial and office automation
markets.
o Integrated Device Technology provides semiconductor products for computers,
peripherals and communications and networking devices.
o Alpha Industries provides integrated circuits and semiconductors for
wireless-communications applications.
o TranSwitch designs digital and mixed-signal semiconductors.
o Photon Dynamics makes test, inspection and repair equipment for flat-panel
display manufacturers.
o JDS Uniphase makes laser equipment to increase the carrying capacity of
optical fibers.
CAN YOU NAME A FEW NON-TECH HOLDINGS IN THE PORTFOLIO?
Linens 'n Things, the fund's second-largest holding, sells bedding, towels and
other home accessories, including bath items and curtains. The company operates
about 250 superstores in the United States and offers brand-name merchandise at
reduced prices. Alpharma makes pharmaceuticals and animal-health products. The
company sells its generic drugs, over-the-counter pain relievers and creams and
lotions to pharmaceutical wholesalers, retail chains, hospitals and managed-care
providers. Shire Pharmaceuticals markets treatments for cancer,
central-nervous-system disorders and metabolic diseases.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
At the close of the reporting period, the economic climate appeared favorable
for stocks despite often extreme market volatility, and for rapidly growing
companies emerging as potential leaders in their respective industries. The
nation's unemployment rate was at its lowest level in three decades. And except
for higher oil prices, inflation was moderate.
Interest rates had stabilized as the Fed had taken at least a temporary
respite from its monetary tightening policy, which had periodically roiled
markets for more than a year. Perhaps most importantly, corporate profits, while
declining, were still impressive for many companies, particularly medium-sized
and smaller firms. Mid- and small-cap stocks were also favorably priced in
comparison to large-cap issues. However, because of a degree of uncertainty
surrounding near-term economic, political and international trends and
developments, markets may continue to be volatile.
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
==============================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extreme Networks, Inc. 3.66% 1. Electronics (Semiconductors) 18.92%
2. Linens 'n Things, Inc. 2.44 2. Communications Equipment 11.38
3. Zoran Corp. 2.30 3. Computers (Networking) 8.90
4. Microchip Technology Inc. 2.26 4. Computers (Software & Services) 6.04
5. Integrated Device Technology, Inc. 2.19 5. Electronics (Instrumentation) 5.75
6. Alpha Industries, Inc. 2.04 6. Health Care (Drugs-Generic & Other) 5.23
7. Alpharma Inc.-Class A 1.64 7. Telecommunications (Cellular/Wireless) 5.13
8. TranSwitch Corp. 1.63 8. Electrical Equipment 4.49
9. Photon Dynamics, Inc. 1.59 9. Health Care (Medical Products & Supplies) 4.14
10. JDS Uniphase Corp. 1.58 10. Computers (Peripherals) 3.33
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
==============================================================================================================
</TABLE>
CUMULATIVE TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (3/31/00) -0.66%*
*5.10%, excluding sales charges
CLASS B SHARES
Inception (3/31/00) -0.30%*
*4.70%, excluding CDSC
CLASS C SHARES
Inception (3/31/00) 3.60%*
*4.60%, excluding CDSC
================================================================================
Past performance cannot guarantee comparable future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
------------------------------------
READ THIS REPORT ONLINE!
Early in 2001, a new service will be
available--electronic delivery of fund
reports and prospectuses. Soon, you can
read the same AIM report you are reading
now--online. Once you sign up for the
service, we will send you a link to the
report via e-mail. If you choose to receive
your reports online, you will not receive a
paper copy by mail. You may cancel the
service at any time by visiting our Web site.
Please visit our Web site at
www.aimfunds.com and go to "Your AIM
Account." Log into your account and then
click on the "View Other Account Options"
dropdown menu and select "eDelivery."
------------------------------------
See important fund and index disclosures inside front cover.
AIM EMERGING GROWTH FUND
3
<PAGE> 6
ANNUAL REPORT / FOR CONSIDERATION
[ART WORK]
CHOOSE YOUR INVESTMENT PALETTE
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 to
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.
[ART WORK]
AIM EMERGING GROWTH FUND
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
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)
[ART WORK]
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 EMERGING GROWTH FUND
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-82.84%
BIOTECHNOLOGY-0.81%
Invitrogen Corp.(a) 30,000 $ 2,281,875
==============================================================
COMMUNICATIONS EQUIPMENT-11.38%
Acterna Corp.(a) 210,000 3,360,000
--------------------------------------------------------------
ADC Telecommunications, Inc.(a) 185,000 3,954,375
--------------------------------------------------------------
Avanex Corp.(a) 10,000 1,015,625
--------------------------------------------------------------
Avici Systems Inc.(a) 40,000 1,735,000
--------------------------------------------------------------
BreezeCom Ltd. (Israel)(a) 55,000 1,020,937
--------------------------------------------------------------
CommScope, Inc.(a) 140,000 3,543,750
--------------------------------------------------------------
Exfo Electro-Optical Engineering
Inc. (Canada)(a) 13,700 522,312
--------------------------------------------------------------
JDS Uniphase Corp.(a) 55,000 4,475,625
--------------------------------------------------------------
Proxim, Inc.(a) 55,000 3,334,375
--------------------------------------------------------------
REMEC, Inc. (a) 110,000 3,279,375
--------------------------------------------------------------
Sunrise Telecom Inc.(a) 100,000 2,487,500
--------------------------------------------------------------
UTStarcom, Inc.(a) 175,000 3,500,000
==============================================================
32,228,874
==============================================================
COMPUTERS (HARDWARE)-0.66%
National Instruments Corp.(a) 40,000 1,867,500
==============================================================
COMPUTERS (NETWORKING)-8.90%
Emulex Corp.(a) 10,000 1,468,750
--------------------------------------------------------------
Extreme Networks, Inc.(a) 125,000 10,367,187
--------------------------------------------------------------
Foundry Networks, Inc.(a) 60,000 3,986,250
--------------------------------------------------------------
Juniper Networks, Inc.(a) 17,500 3,412,500
--------------------------------------------------------------
MRV Communications, Inc.(a) 65,000 2,567,500
--------------------------------------------------------------
SonicWALL, Inc.(a) 120,000 1,792,500
--------------------------------------------------------------
Tellium, Inc.-Series E Conv. Pfd.
(Acquired 09/19/00; Cost
$1,604,370)(a)(b) 53,479 1,604,370
==============================================================
25,199,057
==============================================================
COMPUTERS (PERIPHERALS)-3.33%
Brocade Communications Systems,
Inc.(a) 5,000 1,136,875
--------------------------------------------------------------
QLogic Corp.(a) 40,000 3,870,000
--------------------------------------------------------------
SanDisk Corp.(a) 82,500 4,433,086
==============================================================
9,439,961
==============================================================
COMPUTERS (SOFTWARE &
SERVICES)-6.04%
BEA Systems, Inc.(a) 25,000 1,793,750
--------------------------------------------------------------
Check Point Software Technologies
Ltd. (Israel)(a) 20,000 3,167,500
--------------------------------------------------------------
Interwoven, Inc.(a) 15,000 1,511,250
--------------------------------------------------------------
Macromedia, Inc.(a) 35,000 2,697,187
--------------------------------------------------------------
Macrovision Corp.(a) 30,000 2,186,250
--------------------------------------------------------------
RADVision Ltd. (Israel)(a) 100,000 2,212,500
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Ulticom, Inc.(a) 15,000 $ 716,250
--------------------------------------------------------------
VERITAS Software Corp.(a) 20,000 2,820,312
==============================================================
17,104,999
==============================================================
ELECTRICAL EQUIPMENT-4.49%
Cree, Inc.(a) 17,500 1,736,875
--------------------------------------------------------------
Merix Corp.(a) 70,000 3,269,219
--------------------------------------------------------------
TTM Technologies, Inc.(a) 120,000 2,400,000
--------------------------------------------------------------
Veeco Instruments Inc.(a) 40,000 2,648,125
--------------------------------------------------------------
Viasystems Group, Inc.(a) 187,900 2,665,831
==============================================================
12,720,050
==============================================================
ELECTRONICS (DEFENSE)-0.55%
Anaren Microwave, Inc.(a) 15,000 1,560,000
==============================================================
ELECTRONICS (INSTRUMENTATION)-5.75%
Alpha Industries, Inc.(a) 145,000 5,781,875
--------------------------------------------------------------
Newport Corp. 15,000 1,713,047
--------------------------------------------------------------
Photon Dynamics, Inc.(a) 125,000 4,500,000
--------------------------------------------------------------
Tektronix, Inc. 60,000 4,275,000
==============================================================
16,269,922
==============================================================
ELECTRONICS (SEMICONDUCTORS)-18.92%
Applied Micro Circuits Corp.(a) 45,000 3,439,687
--------------------------------------------------------------
C-Cube Microsystems Inc.(a) 125,000 2,437,500
--------------------------------------------------------------
Elantec Semiconductor, Inc.(a) 25,000 2,781,250
--------------------------------------------------------------
GlobeSpan, Inc.(a) 30,000 2,308,125
--------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 110,000 6,194,375
--------------------------------------------------------------
Microchip Technology Inc.(a) 202,500 6,404,063
--------------------------------------------------------------
MIPS Technologies, Inc.-Class A(a) 100,000 4,012,500
--------------------------------------------------------------
Oak Technology, Inc.(a) 60,000 1,683,750
--------------------------------------------------------------
PMC-Sierra, Inc. (Canada)(a) 7,500 1,271,250
--------------------------------------------------------------
SDL, Inc.(a) 13,500 3,499,875
--------------------------------------------------------------
Semtech Corp.(a) 100,000 3,225,000
--------------------------------------------------------------
TranSwitch Corp.(a) 80,000 4,620,000
--------------------------------------------------------------
Virage Logic Corp.(a) 100,000 1,000,000
--------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 60,000 4,196,250
--------------------------------------------------------------
Zoran Corp.(a) 130,000 6,516,250
==============================================================
53,589,875
==============================================================
HEALTH CARE (DRUGS-GENERIC & OTHER)-5.23%
Alpharma Inc.-Class A 120,000 4,657,500
--------------------------------------------------------------
Barr Laboratories, Inc.(a) 42,500 2,682,813
--------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class
A(a) 40,000 2,945,000
--------------------------------------------------------------
Pain Therapeutics, Inc.(a) 65,000 1,393,438
--------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-(CONTINUED)
Shire Pharmaceuticals Group PLC-ADR
(United Kingdom)(a) 50,000 $ 3,143,750
==============================================================
14,822,501
==============================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-4.14%
Akorn, Inc.(a) 125,000 578,125
--------------------------------------------------------------
ATS Medical, Inc.(a) 150,000 2,746,875
--------------------------------------------------------------
ICU Medical, Inc.(a) 85,000 2,125,000
--------------------------------------------------------------
Syncor International Corp.(a) 100,000 2,568,750
--------------------------------------------------------------
Zoll Medical Corp.(a) 75,000 3,717,188
==============================================================
11,735,938
==============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-1.09%
Accredo Health, Inc.(a) 35,000 1,513,750
--------------------------------------------------------------
Aksys, Ltd.(a) 99,800 1,559,375
==============================================================
3,073,125
==============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-2.03%
Grant Prideco, Inc.(a) 175,000 3,248,438
--------------------------------------------------------------
Patterson Energy, Inc.(a) 50,000 1,406,250
--------------------------------------------------------------
UTI Energy Corp.(a) 55,000 1,103,438
==============================================================
5,758,126
==============================================================
RETAIL (COMPUTERS &
ELECTRONICS)-1.95%
CDW Computer Centers, Inc.(a) 57,500 3,705,156
==============================================================
Tweeter Home Entertainment Group,
Inc.(a) 75,000 1,804,688
==============================================================
5,509,844
==============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-2.44%
Linens 'n Things, Inc.(a) 225,000 $ 6,918,750
==============================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-5.13%
AirGate PCS, Inc.(a) 75,000 2,915,625
--------------------------------------------------------------
Alamosa PCS Holdings, Inc.(a) 100,000 1,518,750
--------------------------------------------------------------
Powerwave Technologies, Inc.(a) 45,000 2,165,625
--------------------------------------------------------------
Research in Motion Ltd. (Canada)(a) 25,000 2,500,000
--------------------------------------------------------------
Rural Cellular Corp.-Class A(a) 30,000 1,612,500
--------------------------------------------------------------
Western Wireless Corp.-Class A(a) 80,000 3,800,000
==============================================================
14,512,500
==============================================================
Total Common Stocks & Other
Equity Interests (Cost
$243,627,510) 234,592,897
==============================================================
MONEY MARKET FUNDS-6.93%
STIC Liquid Assets Portfolio(c) 9,815,930 9,815,930
--------------------------------------------------------------
STIC Prime Portfolio(c) 9,815,930 9,815,930
==============================================================
Total Money Market Funds (Cost
$19,631,860) 19,631,860
==============================================================
TOTAL INVESTMENTS-89.77% (Cost
$263,259,370) 254,224,757
==============================================================
OTHER ASSETS LESS
LIABILITIES-10.23% 28,976,824
==============================================================
NET ASSETS-100.00% $283,201,581
______________________________________________________________
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value at 10/31/00 represented 0.57% of the
Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$263,259,370) $254,224,757
------------------------------------------------------------
Receivables for:
Investments sold 25,849,781
------------------------------------------------------------
Fund shares sold 9,576,139
------------------------------------------------------------
Dividends 104,650
------------------------------------------------------------
Investment for deferred compensation plan 2,540
------------------------------------------------------------
Other assets 107,352
============================================================
Total assets 289,865,219
============================================================
LIABILITIES:
Payables for:
Investments purchased 5,587,130
------------------------------------------------------------
Fund shares reacquired 649,470
------------------------------------------------------------
Deferred compensation plan 2,540
------------------------------------------------------------
Accrued advisory fees 229,816
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 186,912
------------------------------------------------------------
Accrued transfer agent fees 2,520
------------------------------------------------------------
Accrued operating expenses 1,015
============================================================
Total liabilities 6,663,638
============================================================
Net assets applicable to shares outstanding $283,201,581
____________________________________________________________
============================================================
NET ASSETS:
Class A $147,101,308
____________________________________________________________
============================================================
Class B $ 94,739,630
____________________________________________________________
============================================================
Class C $ 41,360,643
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 14,011,084
____________________________________________________________
============================================================
Class B 9,052,023
____________________________________________________________
============================================================
Class C 3,954,091
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 10.50
------------------------------------------------------------
Offering price per share:
(Net asset value of $10.50 divided by
94.50%) $ 11.11
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 10.47
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 10.46
____________________________________________________________
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the period March 31, 2000 (date operations commenced) through October 31,
2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 13,625
------------------------------------------------------------
Dividends from affiliated money market funds 640,391
------------------------------------------------------------
Interest 27,557
============================================================
Total investment income 681,573
============================================================
EXPENSES:
Advisory fees 908,443
------------------------------------------------------------
Administrative services fees 29,235
------------------------------------------------------------
Custodian fees 21,328
------------------------------------------------------------
Distribution fees -- Class A 198,509
------------------------------------------------------------
Distribution fees -- Class B 349,519
------------------------------------------------------------
Distribution fees -- Class C 152,068
------------------------------------------------------------
Transfer agent fees -- Class A 94,652
------------------------------------------------------------
Transfer agent fees -- Class B 72,249
------------------------------------------------------------
Transfer agent fees -- Class C 31,434
------------------------------------------------------------
Trustees' fees 4,083
------------------------------------------------------------
Registration and filing fees 252,000
------------------------------------------------------------
Other 33,531
============================================================
Total expenses 2,147,051
============================================================
Less: Expenses paid indirectly (6,005)
============================================================
Net expenses 2,141,046
============================================================
Net investment income (loss) (1,459,473)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain from:
Investment securities 10,994,086
------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (9,034,614)
============================================================
Net gain from investment securities 1,959,472
============================================================
Net increase in net assets resulting from
operations $ 499,999
____________________________________________________________
============================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the period March 31, 2000 (date operations commenced) through October 31,
2000
<TABLE>
<CAPTION>
2000
------------
<S> <C>
OPERATIONS:
Net investment income (loss) $ (1,459,473)
--------------------------------------------------------------------------
Net realized gain from investment securities 10,994,086
--------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (9,034,614)
==========================================================================
Net increase in net assets resulting from operations 499,999
==========================================================================
Share transactions-net:
Class A 145,911,913
--------------------------------------------------------------------------
Class B 95,639,839
--------------------------------------------------------------------------
Class C 41,149,830
==========================================================================
Net increase in net assets 283,201,581
==========================================================================
NET ASSETS:
Beginning of year --
==========================================================================
End of year $283,201,581
__________________________________________________________________________
==========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $283,472,289
--------------------------------------------------------------------------
Undistributed net investment income (loss) (138,021)
--------------------------------------------------------------------------
Undistributed net realized gain from investment securities 8,901,927
--------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (9,034,614)
==========================================================================
$283,201,581
__________________________________________________________________________
==========================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Emerging Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
commenced operations on March 31, 2000. Prior to June 17, 2000 the Fund was
organized as a series portfolio of AIM Equity Funds, Inc. At a meeting held on
February 3, 2000, the Board of Directors of AIM Equity Funds, Inc. approved an
Agreement and Plan of Reorganization (the "Reorganization") which reorganized
the Fund as a series portfolio of the Trust. The Fund currently offers three
different classes of shares: Class A shares, Class B shares and Class C shares.
Class A shares are sold with a front-end sales charge. Class B shares and Class
C shares are sold with a contingent deferred sales charge. Matters affecting
each portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The Fund's investment objective is long-term growth
of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Securities, including restricted
securities, are valued according to the following policy. A security listed
or traded on an exchange (except convertible bonds) is valued at its last
sales price as of the close of the customary trading session on the exchange
where the security is principally traded, or lacking any sales on a
particular day, the security is valued at the closing bid price on that day.
Each security reported on the NASDAQ National Market System is valued at the
last sales price as of the close of the customary trading session on the
valuation date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate and
maturity date. Securities for which market prices are not provided by any of
the above methods are valued based upon quotes furnished by independent
sources and are valued at the last bid price in the case of equity securities
and in the case of debt obligations, the mean between the last bid and asked
prices. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued at amortized cost which approximates market
value. For
9
<PAGE> 12
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
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 customary
trading session 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 Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On October 31, 2000, undistributed net investment income was increased by
$1,321,452, undistributed net realized gains decreased by $2,092,159 and paid
in capital increased by $770,707 as a result of book/tax differences due to
utilization of a portion of the proceeds from redemptions as distributions
for federal income tax purposes, stock issuance cost reclassifications and
net operating loss reclassifications. Net assets of the Fund were unaffected
by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of
the first $1 billion of the Fund's average daily net assets plus 0.80% of the
Fund's average daily net assets over $1 billion.
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 period March 31, 2000 (date
operations commenced) through October 31, 2000, AIM was paid $29,235 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 period March 31, 2000 (date
operations commenced) through October 31, 2000, AFS was paid $127,769 for such
services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. During the period March 31, 2000
(date operations commenced) through October 31, 2000, the Class A, Class B and
Class C shares paid AIM Distributors $198,509, $349,519 and $152,068,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $336,338 from sales of the Class A
shares of the Fund during the period March 31, 2000 (date operations commenced)
through October 31, 2000. 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 period March 31, 2000 (date operations commenced) through
October 31, 2000, AIM Distributors received $9,199 in contingent deferred sales
charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the period March 31, 2000 (date operations commenced) through October
31, 2000, the Fund paid legal fees of $2,215 for services rendered by Kramer,
Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A member of
that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the period March 31, 2000 (date operations commenced) through October 31,
2000, the Fund received reductions in transfer agency fees from AFS (an
affiliate of AIM) of $1,506 and reductions in custodian fees of $4,499 under
expense offset arrangements which resulted in a reduction of the Fund's total
expenses of $6,005.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
10
<PAGE> 13
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 period
March 31, 2000 (date operations commenced) through October 31, 2000, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.09% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the period March 31, 2000 (date operations
commenced) through October 31, 2000 was $408,985,049 and $176,351,624,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 22,689,393
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (35,332,021)
==========================================================================
Net unrealized appreciation (depreciation) of investment
securities $(12,642,628)
__________________________________________________________________________
==========================================================================
Cost of investments for tax purposes is $266,867,384.
</TABLE>
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the period March 31, 2000 (date operations
commenced) through October 31, 2000 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
2000
--------------------------
SHARES AMOUNT
---------- ------------
<S> <C> <C>
Sold:
Class A 18,240,329 $192,061,883
----------------------------------------------------------------------------------------
Class B 9,701,917 102,240,743
----------------------------------------------------------------------------------------
Class C 4,148,798 43,170,645
========================================================================================
Reacquired:
Class A (4,229,245) (46,149,970)
----------------------------------------------------------------------------------------
Class B (649,894) (6,600,904)
----------------------------------------------------------------------------------------
Class C (194,707) (2,020,815)
========================================================================================
27,017,198 $282,701,582
________________________________________________________________________________________
========================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------- ---------------- ----------------
MARCH 31, 2000 MARCH 31, 2000 MARCH 31, 2000
(DATE OPERATIONS (DATE OPERATIONS (DATE OPERATIONS
COMMENCED) TO COMMENCED) TO COMMENCED) TO
OCTOBER 31, OCTOBER 31, OCTOBER 31,
2000 2000 2000
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.07) (0.07)
--------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.54 0.54 0.53
====================================================================================================================
Total from investment operations 0.50 0.47 0.46
====================================================================================================================
Net asset value, end of period $ 10.50 $ 10.47 $ 10.46
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(a) 5.00% 4.70% 4.60%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $147,101 $ 94,740 $ 41,361
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets 1.68%(b) 2.37%(b) 2.37%(b)
====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.04)%(b) (1.73)%(b) (1.73)%(b)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 111% 111% 111%
____________________________________________________________________________________________________________________
====================================================================================================================
</TABLE>
(a) Does not include sales charges or contingent deferred sales charges and is
not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $96,550,776,
$59,499,434 and $25,886,903 for Class A, Class B and Class C, respectively.
11
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees
AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Emerging Growth Fund (a portfolio of
AIM Equity Funds), including the schedule of investments,
as of October 31, 2000, the related statement of
operations, the statement of changes in net assets, and
financial highlights for the period March 31, 2000 (date
operations commenced) through October 31, 2000. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audit.
We conducted our audit in accordance with auditing
standards generally accepted in the United States of
America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as
of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Emerging Growth Fund as of October 31, 2000, the results
of its operations, the changes in its net assets and the
financial highlights for the period March 31, 2000 (date
operations commenced) through October 31, 2000 in
conformity with accounting principles generally accepted
in the United States of America.
KPMG LLP
December 6, 2000
Houston, Texas
12
<PAGE> 15
ABOUT YOUR FUND'S BOARD
The board of trustees is elected by you to look after your interests as a
mutual-fund shareholder. Trustees' responsibilities include choosing investment
advisors for your fund; keeping an eye on performance, operations and expenses;
making decisions regarding dividends and other duties.
Nine of your fund's 10 trustees are independent. In other words, they have no
affiliation with AIM except as independent fund trustees charged with
representing the interest of fund investors. Representing a cross section of
businesses and industries, they have achieved success and recognition in their
respective fields. They bring their considerable expertise and experience to
their positions as trustees.
Listed below are the members of the board of trustees of your mutual fund and
their respective titles.
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman, President and Chairman and President Suite 100
Chief Executive Officer Houston, TX 77046
A I M Management Group Inc. Carol F. Relihan
Senior Vice President and Secretary INVESTMENT ADVISOR
Bruce L. Crockett
Director Gary T. Crum A I M Advisors, Inc.
ACE Limited; Senior Vice President 11 Greenway Plaza
Formerly Director, President, and Suite 100
Chief Executive Officer Edgar M. Larsen Houston, TX 77046
COMSAT Corporation Vice President
TRANSFER AGENT
Owen Daly II Dana R. Sutton
Formerly Director Vice President and Treasurer A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Melville B. Cox Houston, TX 77210-4739
Albert R. Dowden Vice President
Chairman of the Board of Directors, CUSTODIAN
The Cortland Trust and DHJ Media, Inc.; and Mary J. Benson
Director, Magellan Insurance Company, Assistant Vice President and State Street Bank and Trust Company
Formerly Director, President and Assistant Treasurer 225 Franklin Street
Chief Executive Officer, Boston, MA 02110
Volvo Group North America, Inc.; and Sheri Morris
Senior Vice President, AB Volvo Assistant Vice President and COUNSEL TO THE FUND
Assistant Treasurer
Edward K. Dunn Jr. Ballard Spahr
Chairman, Mercantile Mortgage Corp.; Jim A. Coppedge Andrews & Ingersoll, LLP
Formerly Vice Chairman and President, Assistant Secretary 1735 Market Street
Mercantile-Safe Deposit & Trust Co.; and Philadelphia, PA 19103
President, Mercantile Bankshares Renee A. Friedli
Assistant Secretary COUNSEL TO THE TRUSTEES
Jack Fields
Chief Executive Officer P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
Twenty First Century, Inc.; Assistant Secretary 919 Third Avenue
Formerly Member New York, NY 10022
of the U.S. House of Representatives Nancy L. Martin
Assistant Secretary DISTRIBUTOR
Carl Frischling
Partner Ofelia M. Mayo A I M Distributors, Inc.
Kramer, Levin, Naftalis & Frankel LLP Assistant Secretary 11 Greenway Plaza
Suite 100
Prema Mathai-Davis Lisa A. Moss Houston, TX 77046
Formerly Chief Executive Assistant Secretary
Officer, YWCA of the U.S.A. AUDITORS
Kathleen J. Pflueger
Lewis F. Pennock Assistant Secretary KPMG LLP
Partner 700 Louisiana
Pennock & Cooper Houston, TX 77002
Louis S. Sklar
Executive Vice President
Hines Interests
Limited Partnership
</TABLE>
<PAGE> 16
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<CAPTION>
EQUITY FUNDS
<S> <C> <C>
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc. has provided
leadership in the mutual fund industry since
MORE AGGRESSIVE MORE AGGRESSIVE 1976 and managed approximately $183 billion
in assets for more than eight million
AIM Small Cap Opportunities(1) AIM Latin American Growth shareholders, including individual investors,
AIM Mid Cap Opportunities(2) AIM Developing Markets corporate clients and financial institutions,
AIM Large Cap Opportunities(3) AIM European Small Company as of September 30, 2000.
AIM Emerging Growth AIM Asian Growth The AIM Family of Funds--Registered
AIM Small Cap Growth(4) AIM Japan Growth Trademark-- is distributed nationwide, and
AIM Aggressive Growth AIM International Emerging Growth AIM today is the eighth-largest mutual fund
AIM Mid Cap Growth AIM European Development complex in the United States in assets under
AIM Small Cap Equity AIM Euroland Growth management, according to Strategic Insight,
AIM Capital Development AIM Global Aggressive Growth an independent mutual fund monitor.
AIM Constellation AIM International Equity AIM is a subsidiary of AMVESCAP PLC, one
AIM Dent Demographic Trends AIM Advisor International Value of the world's largest independent financial
AIM Select Growth AIM Global Trends services companies with $414 billion in
AIM Large Cap Growth AIM Global Growth assets under management as of September 30,
AIM Weingarten 2000.
AIM Mid Cap Equity MORE CONSERVATIVE
AIM Value II
AIM Charter SECTOR EQUITY FUNDS
AIM Value
AIM Blue Chip MORE AGGRESSIVE
AIM Basic Value
AIM Large Cap Basic Value AIM New Technology
AIM Balanced AIM Global Telecommunications and Technology
AIM Advisor Flex AIM Global Resources
AIM Global Financial Services
MORE CONSERVATIVE AIM Global Health Care
AIM Global Consumer Products and Services
AIM Global Infrastructure
AIM Advisor Real Estate
AIM Global Utilities
MORE CONSERVATIVE
</TABLE>
<TABLE>
<CAPTION>
FIXED-INCOME FUNDS
<S> <C>
TAXABLE FIXED-INCOME FUNDS TAX-FREE FIXED-INCOME FUNDS
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Strategic Income AIM High Income Municipal
AIM High Yield II AIM Tax-Exempt Bond of Connecticut
AIM High Yield AIM Municipal Bond
AIM Income AIM Tax-Free Intermediate
AIM Global Income AIM Tax-Exempt Cash
AIM Floating Rate(5)
AIM Intermediate Government MORE CONSERVATIVE
AIM Limited Maturity Treasury
AIM Money Market
MORE CONSERVATIVE
</TABLE>
The AIM Risk Spectrum illustrates equity and fixed-income funds from more
aggressive to more conservative. When assessing the degree of risk, three
factors were considered: the funds' portfolio holdings, volatility patterns over
time and diversification permitted within the fund. Fund rankings are relative
to one another within The AIM Family of Funds--Registered Trademark-- and should
not be compared with other investments. There is no guarantee that any one AIM
fund will be less volatile than any other. (1) AIM Small Cap Opportunities Fund
closed to new investors Nov. 4, 1999. (2) AIM Mid Cap Opportunities Fund closed
to new investors March 21, 2000. (3) AIM Large Cap Opportunities Fund closed to
new investors Sept. 29, 2000. (4) AIM Small Cap Growth Fund closed to new
investors Nov. 8, 1999. (5) AIM Floating Rate Fund was restructured to offer
multiple share classes April 3, 2000. Existing shares were converted to Class B
shares, and Class C shares commenced offering.
FOR MORE COMPLETE INFORMATION ABOUT ANY AIM FUND, INCLUDING SALES CHARGES
AND EXPENSES, OBTAIN THE APPROPRIATE PROSPECTUS(ES) FROM YOUR FINANCIAL ADVISOR.
PLEASE READ THE PROSPECTUS(ES) CAREFULLY BEFORE YOU INVEST OR SEND MONEY. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective fund prospectus. If used as
sales material after Jan. 20, 2001, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
[DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE]
--Registered Trademark--
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. EMG-AR-1
