<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM LARGE CAP BASIC VALUE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
-------------------------------------
STILL LIFE WITH CURTAIN AND FLOWERED PITCHER
BY PAUL CEZANNE
THE FRENCH PAINTER CEZANNE FOUND BEAUTY IN EVERYDAY OBJECTS
WITHOUT HAVING TO REMAKE THEM. HE PAINTED WHAT HE SAW--WHAT
EVERYONE SEES--AND HIS WORK MADE THE ORDINARY SEEM EXTRAORDINARY.
IN A SIMILAR FASHION, AIM LARGE CAP BASIC VALUE FUND
BELIEVES THAT VALUE CAN BE FOUND IN LARGE, FAMILIAR COMPANIES.
-------------------------------------
AIM Large Cap Basic Value Fund seeks long-term growth of capital, with current
income as a secondary objective, by investing in the equity securities of
large-capitalization companies.
ABOUT PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Large Cap Basic Value Fund's performance figures are historical, and
they reflect the reinvestment of distributions and changes in net asset
value.
o Had the advisor not absorbed fund expenses during the reporting period,
returns would have been lower.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of its Class A shares due to different sales-charge structure and class
expenses.
o The fund participates in the initial public offering (IPO) market, and a
significant portion of its returns may be attributable to its investment in
IPOs, which may have a magnified impact due to the fund's relatively small
asset base. As the fund's assets grow, there is no guarantee that it will
continue to experience substantially similar performance by investing in
IPOs.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Large-Cap Value Fund Index represents an average of the
performance of the 30 largest large-capitalization value funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 1000 Index represents the performance of the stocks of
large-capitalization companies.
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 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 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 of the fund.
In addition to the returns as of the close of the fiscal year found on page 4,
industry regulations require us to provide average annual total returns
(including sales charges) as of 9/30/00, the most recent calendar quarter-end,
which were:
================================================================================
CLASS A SHARES
Inception (6/30/99) 10.01%
1 Year 25.89
CLASS B SHARES
Inception (8/1/00) 1.45%*
CLASS C SHARES
Inception (8/1/00) 5.36%*
* Because the fund's Class B and Class C shares have been offered for less than
a year, the returns provided are cumulative total returns that have not yet been
annualized.
================================================================================
AIM LARGE CAP BASIC VALUE 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 LARGE CAP BASIC VALUE FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
AIM LARGE CAP BASIC VALUE FUND OUTPERFORMS INDEXES
HOW DID THE FUND PERFORM?
Despite a wild ride for U.S. and some foreign stock markets, AIM Large Cap Basic
Value Fund delivered outstanding returns and handily outperformed its benchmark
indexes. For the fiscal year ended October 31, 2000, the fund's Class A shares
returned 32.21% at net asset value, that is, excluding sales charges. The fund's
Class B and Class C shares boasted cumulative returns of 10.78% at net asset
value since their inception on August 1, 2000.
By comparison, the fund's indexes were up only modestly for the fiscal year:
the Russell 1000 Index gained 9.06% and the Lipper Large-Cap Value Fund Index
rose just 5.92%.
The fund's total net assets stood at $9.84 million at the close of the
fiscal year on October 31, 2000.
WHAT WERE THE MAJOR TRENDS IN THE FINANCIAL MARKETS?
U.S. stock markets were volatile for most of 2000, with significant sell-offs
in March through May and again in August through October. In the spring,
investors worried that the Federal Reserve Board (the Fed) would continue
raising interest rates to slow torrid economic growth and to forestall
inflation. The Fed raised the federal funds rate (the rate banks charge one
another for overnight loans) from 6.0% to 6.5% in May--the sixth increase since
June 1999. But with data showing that economic growth was slowing and that
inflation was in check, the Fed kept rates unchanged at its June, August and
October meetings.
Early in 2000, investors became concerned that many technology stocks that
had propelled the markets higher in 1999 might have become overvalued. In late
summer and fall, rising oil prices and Middle East tensions made investors
skittish, sparking a second major stock-market sell-off. Investors also became
concerned about a string of corporate earnings warnings and disappointing
third-quarter earnings announcements by a number of major corporations. Higher
oil prices and a weak euro (the common currency adopted in 1999 by 11 European
nations) negatively affected corporate profits.
WHAT EFFECT DID MARKET VOLATILITY HAVE ON THE FUND?
In one sense, the fund benefited from the volatility that affected U.S. equity
markets during 2000. The decelerating economy (and other factors) adversely
affected corporate earnings and prompted many investors to reassess their
tolerance for risk. While companies in a variety of industries saw their share
prices decline, technology stocks were hardest hit; the shares of many dot-com
companies were devastated. As a result, investors sought out more established
companies with proven management, well-known products, more reasonable
valuations--and earnings. That shift in investor sentiment benefited value
stocks. According to Frank Russell Co., an independent mutual fund monitor,
value stocks have outperformed growth stocks in every market-cap category
year-to-date.
Fund performance was further enhanced by careful stock selection. We
research individual companies, not sectors or industries. We select holdings for
the portfolio one stock at a time, looking for stocks that sell at a discount to
their intrinsic value as well as companies with proven track records and
attractive long-term prospects. Just as important, we maintain a strong sell
discipline--selling holdings when their intrinsic value is reflected in their
stock price.
WHAT STOCKS HELPED FUND PERFORMANCE?
The primary drivers of our performance were health-care and financial stocks. In
health care, United Health Group, Health Management Associates and McKesson were
stand-out performers; all appreciated more than 50% during the year. All our
financial stocks did well, but the strongest performer was Associates First
Capital, which rose 75% after Citigroup, a fund holding, announced its intention
to acquire it. In the utilities sector, Dynegy rose more than 200% during the
year to a level that in our opinion reflected its intrinsic value.
-------------------------------------
VALUE STOCKS HAVE
OUTPERFORMED GROWTH
STOCKS IN EVERY MARKET-CAP
CATEGORY YEAR-TO-DATE.
-------------------------------------
FUND VS. INDEXES
For the fiscal year ended 10/31/00, excluding sales charges
================================================================================
FUND CLASS A SHARES 32.21%
FUND CLASS B SHARES 10.78%*
FUND CLASS C SHARES 10.78%*
RUSSELL 1000 INDEX 9.06%
LIPPER LARGE-CAP VALUE FUND INDEX 5.92%
* Cumulative total return since inception on 8/1/00
================================================================================
See important fund and index disclosures inside front cover.
AIM LARGE CAP BASIC VALUE FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
--------------------------------------------------------------------------------
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. Waste Management, Inc. 3.71% 1. Financial (Diversified) 8.72%
2. Freddie Mac 3.56 2. Manufacturing (Diversified) 5.83
3. Kroger Co. (The) 3.51 3. Oil & Gas (Drilling & Equipment) 5.00
4. Aon Corp. 3.46 4. Insurance Brokers 4.97
5. HCA-Healthcare Corp. (The) 3.25 5. Banks (Money Center) 4.82
6. SBC Communications Inc. 3.02 6. Health Care (Hospital Management) 4.66
7. Chase Manhattan Corp. (The) 2.74 7. Telephone 3.71
8. First Data Corp. 2.67 8. Waste Management 3.71
9. Computer Associates International, Inc. 2.63 9. Services (Computer Systems) 3.58
10. Target Corp. 2.36 10. Retail (Food Chains) 3.51
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
==========================================================================================================
</TABLE>
As a result, we reduced our position in Dynegy, which had previously been a top
10 holding. The fund also benefited from its investment in Honeywell; in
October, General Electric (not a fund holding) announced a bid to acquire
Honeywell at a significant premium to its market price.
HOW WAS THE FUND POSITIONED AT THE CLOSE OF THE FISCAL YEAR?
The fund remained well diversified by sector, with representation in every
sector except one: transportation. The fund maintained overweighted positions in
the healthcare and financial sectors and in the oil-service industry. The fund
remained underweighted in communication-services stocks.
The portfolio was composed of roughly three-quarters large-cap stocks and
one-quarter mid-cap holdings; the average market capitalization was $46 billion.
The fund held 48 stocks at the close of the fiscal year, virtually unchanged
from a year earlier.
WHAT WERE SOME OF THE FUND'S MAJOR HOLDINGS AT THE END OF THIS FISCAL YEAR?
The fund's major holdings included Freddie Mac. The congressionally chartered
company buys conventional residential mortgages from banks and mortgage bankers
and securitizes most of them for sale in the secondary market. Freddie Mac
indirectly finances one out of six homes in the United States.
Another major holding was Waste Management, which serves municipal, business
and residential customers in the United States, Canada and Mexico. It operates a
network of landfills and collection operations and offers waste-transfer,
disposal and recycling services.
Investors have been selling off Target in recent months, pushing the stock
down some 40% from its highs. We recently added Target to our holdings because
we believe that the company is executing well in a difficult environment. The
company's store brands include Target, Mervyn's California, Dayton's, Hudson's
and Marshall Field's.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
At the close of the fiscal year, we remained cautiously optimistic about the
direction of the U.S. economy. While economic growth is slowing, the economy
continues to grow at a sustainable pace. Unemployment dropped to 3.9% in
September--matching a 30-year low. Consumer spending continues to grow, albeit
at a somewhat more subdued pace than last year, and except for the potential
threat of higher oil prices, inflation remains in check.
We continue to see potential risk in many technology stocks despite the
recent sell-offs, because valuations remain high by historical standards. We
continue to emphasize health care, financials, oil services and selective
opportunities in quality companies that are temporarily out of favor and
therefore undervalued.
Interest rates seem to have stabilized as the Fed has taken a respite from
its string of interest-rate increases, which have roiled the markets for more
than a year. However, because of a degree of uncertainty surrounding short-term
economic trends and international developments, markets may continue to be
volatile. In such an environment, investors would be well advised to remain
diversified and maintain a long-term investment perspective.
-------------------------------------
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 LARGE CAP BASIC VALUE FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM LARGE CAP BASIC VALUE FUND VS. BENCHMARK INDEXES
6/30/99-10/31/00
in thousands
================================================================================
AIM LARGE CAP
BASIC VALUE FUND, RUSSELL LIPPER LARGE-CAP
CLASS A SHARES 1000 INDEX VALUE FUND INDEX
--------------------------------------------------------------------------------
$11,746 $10,870 $10,199
Source: Lipper, Inc.
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.
ABOUT THIS CHART
This chart compares your fund's Class A shares to its benchmark indexes. It is
intended to give you an idea of how your fund performed compared to these
indexes over the period 6/30/99-10/31/00.
It is important to understand the differences between your fund and an index. An
index measures the performance of a hypothetical portfolio. A market index such
as the Russell 1000 Index is not managed, incurring no sales charges, expenses
or fees. If you could buy all the securities that make up a market index, you
would incur expenses that would affect your investment's return. An index of
funds such as the Lipper Large-Cap Value Fund Index includes a number of mutual
funds grouped by investment objective. Each of those funds interprets that
objective differently, and each employs a different management style and
investment strategy.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (6/30/99) 12.79%
1 Year 24.90*
*32.21% excluding sales charges
CLASS B SHARES
Inception (8/1/00) 5.78%*+
*10.78% excluding CDSC
CLASS C SHARES
Inception (8/1/00) 9.78%*+
*10.78% excluding CDSC
+Cumulative total return since inception on 8/1/00
================================================================================
YOUR FUND'S TOTAL RETURN INCLUDES SALES CHARGES, EXPENSES AND MANAGEMENT FEES.
THE PERFORMANCE OF THE FUND'S CLASS B AND CLASS C SHARES WILL DIFFER FROM THAT
OF ITS CLASS A SHARES DUE TO DIFFERING FEES AND EXPENSES. FOR FUND PERFORMANCE
CALCULATIONS AND A DESCRIPTION OF THE INDEXES CITED ON THIS PAGE, PLEASE SEE THE
INSIDE FRONT COVER.
AIM LARGE CAP BASIC VALUE FUND
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
[ARTWORK]
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.
[ARTWORK]
AIM LARGE CAP BASIC VALUE FUND
5
<PAGE> 8
ANNUAL REPORT / FOR CONSIDERATION
Income funds are considered more conservative and are suited for investors
seeking income rather than growth.
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 LARGE CAP BASIC VALUE FUND
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-90.62%
AUTOMOBILES-1.50%
General Motors Corp. 2,400 $ 149,100
==============================================================
BANKS (MAJOR REGIONAL)-1.76%
FleetBoston Financial Corp. 4,600 174,800
==============================================================
BANKS (MONEY CENTER)-4.82%
Bank of America Corp. 4,300 206,669
--------------------------------------------------------------
Chase Manhattan Corp. (The) 6,000 273,000
==============================================================
479,669
==============================================================
CHEMICALS-1.52%
Air Products & Chemicals, Inc. 4,050 151,116
==============================================================
COMPUTERS (HARDWARE)-2.11%
Compaq Computer Corp. 6,900 209,829
==============================================================
COMPUTERS (SOFTWARE & SERVICES)-2.63%
Computer Associates International,
Inc. 8,200 261,375
==============================================================
DISTRIBUTORS (FOOD & HEALTH)-1.63%
McKesson HBOC, Inc. 5,800 162,762
==============================================================
ELECTRIC COMPANIES-2.90%
Edison International 4,300 102,662
--------------------------------------------------------------
PG&E Corp. 5,900 158,931
--------------------------------------------------------------
Southern Energy, Inc.(a) 1,000 27,250
==============================================================
288,843
==============================================================
ELECTRICAL EQUIPMENT-1.39%
Koninklijke (Royal) Philips
Electronics N.V.-ADR (Netherlands) 3,470 138,583
==============================================================
FINANCIAL (DIVERSIFIED)-8.72%
Associates First Capital Corp.-Class
A 4,900 181,912
--------------------------------------------------------------
Citigroup Inc. 2,033 106,987
--------------------------------------------------------------
Freddie Mac 5,900 354,000
--------------------------------------------------------------
MGIC Investment Corp. 3,300 224,812
==============================================================
867,711
==============================================================
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-2.08%
Pharmacia Corp. 3,757 206,635
==============================================================
HEALTH CARE (HOSPITAL
MANAGEMENT)-4.66%
HCA-Healthcare Corp. (The) 8,100 323,494
--------------------------------------------------------------
Health Management Associates,
Inc.-Class A(a) 7,100 140,669
==============================================================
464,163
==============================================================
HEALTH CARE (MANAGED CARE)-2.31%
UnitedHealth Group Inc. 2,100 229,687
==============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (LIFE/HEALTH)-2.19%
UnumProvident Corp. 7,700 $ 217,525
==============================================================
INSURANCE (MULTI-LINE)-1.92%
American International Group, Inc. 1,947 190,806
==============================================================
INSURANCE (PROPERTY & CASUALTY)-0.93%
XL Capital Ltd.-Class A (Bermuda) 1,200 92,250
==============================================================
INSURANCE BROKERS-4.97%
Aon Corp. 8,300 343,931
--------------------------------------------------------------
Marsh & McLennan Cos., Inc. 1,150 150,362
==============================================================
494,293
==============================================================
LEISURE TIME (PRODUCTS)-1.47%
Mattel, Inc. 11,300 146,194
==============================================================
MANUFACTURING (DIVERSIFIED)-5.83%
Honeywell International Inc. 3,600 193,725
--------------------------------------------------------------
Illinois Tool Works Inc. 3,700 205,581
--------------------------------------------------------------
Tyco International Ltd. (Bermuda) 3,200 181,400
==============================================================
580,706
==============================================================
NATURAL GAS-1.26%
Dynegy Inc.-Class A 2,700 125,044
==============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-5.00%
ENSCO International Inc. 3,200 106,400
--------------------------------------------------------------
Schlumberger Ltd. 1,800 137,025
--------------------------------------------------------------
Transocean Sedco Forex Inc. 2,877 152,481
--------------------------------------------------------------
Weatherford International, Inc.(a) 2,800 102,200
==============================================================
498,106
==============================================================
OIL (INTERNATIONAL INTEGRATED)-1.74%
Exxon Mobil Corp. 1,946 173,559
==============================================================
PAPER & FOREST PRODUCTS-1.29%
International Paper Co. 3,500 128,187
==============================================================
PHOTOGRAPHY/IMAGING-1.58%
Eastman Kodak Co. 3,500 157,063
==============================================================
RETAIL (FOOD CHAINS)-3.51%
Kroger Co. (The)(a) 15,500 349,719
==============================================================
RETAIL (GENERAL MERCHANDISE)-2.36%
Target Corp. 8,500 234,813
==============================================================
RETAIL (SPECIALTY-APPAREL)-0.47%
Gap, Inc. (The) 1,800 46,463
==============================================================
SERVICES (COMMERCIAL &
CONSUMER)-2.19%
H&R Block, Inc. 6,100 217,694
==============================================================
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMPUTER SYSTEMS)-3.58%
Electronic Data Systems Corp. 4,000 $ 187,750
--------------------------------------------------------------
SunGard Data Systems Inc.(a) 3,300 168,713
==============================================================
356,463
==============================================================
SERVICES (DATA PROCESSING)-2.67%
First Data Corp. 5,300 265,663
==============================================================
TELECOMMUNICATIONS (LONG
DISTANCE)-2.21%
AT&T Corp. 9,500 220,281
==============================================================
TELEPHONE-3.71%
SBC Communications Inc. 5,200 299,975
--------------------------------------------------------------
Verizon Communications 1,200 69,375
==============================================================
369,350
==============================================================
WASTE MANAGEMENT-3.71%
Waste Management, Inc. 18,450 369,000
==============================================================
Total Common Stocks & Other
Equity Interests (Cost
$8,330,962) 9,017,452
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-11.63%
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")
Discount Notes, 6.45%, 11/01/00 (Cost
$1,157,000)(b) 1,157,000 $ 1,157,000
==============================================================
TOTAL INVESTMENTS-102.25%
(Cost $9,487,962) 10,174,452
==============================================================
LIABILITIES LESS OTHER ASSETS-(2.25%) (223,905)
==============================================================
NET ASSETS-100.00% $ 9,950,547
______________________________________________________________
==============================================================
</TABLE>
Investment Abbreviation:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The Interest rate shown represents the rate of discount paid or received at
the time of purchase by the Fund.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $9,487,962) $10,174,452
------------------------------------------------------------
Cash 1,178
------------------------------------------------------------
Receivables for:
Investments sold 26,209
------------------------------------------------------------
Fund shares sold 314,812
------------------------------------------------------------
Dividends 7,114
------------------------------------------------------------
Investment for deferred compensation plan 6,329
------------------------------------------------------------
Due from advisor 10,855
------------------------------------------------------------
Other assets 14,371
============================================================
Total assets 10,555,320
============================================================
LIABILITIES:
Payables for:
Investments purchased 527,099
------------------------------------------------------------
Fund shares reacquired 35,034
------------------------------------------------------------
Deferred compensation plan 6,329
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 3,874
------------------------------------------------------------
Accrued trustees' fees 546
------------------------------------------------------------
Accrued transfer agent fees 561
------------------------------------------------------------
Accrued operating expenses 27,095
============================================================
Total liabilities 604,773
============================================================
Net assets applicable to shares outstanding $ 9,950,547
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 5,888,058
____________________________________________________________
============================================================
Class B $ 2,814,613
____________________________________________________________
============================================================
Class C $ 1,247,876
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 488,797
____________________________________________________________
============================================================
Class B 234,142
____________________________________________________________
============================================================
Class C 103,826
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 12.05
------------------------------------------------------------
Offering price per share:
(Net asset value of $12.05 divided by
94.50%) $ 12.75
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 12.02
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 12.02
____________________________________________________________
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$52) $ 25,653
-----------------------------------------------------------
Interest 13,471
===========================================================
Total investment income 39,124
===========================================================
EXPENSES:
Advisory fees 12,555
-----------------------------------------------------------
Administrative services fee 50,000
-----------------------------------------------------------
Custodian fees 10,073
-----------------------------------------------------------
Distribution fees -- Class A 5,816
-----------------------------------------------------------
Distribution fees -- Class B 3,172
-----------------------------------------------------------
Distribution fees -- Class C 1,135
-----------------------------------------------------------
Transfer agent fees -- Class A 2,111
-----------------------------------------------------------
Transfer agent fees -- Class B 292
-----------------------------------------------------------
Transfer agent fees -- Class C 104
-----------------------------------------------------------
Trustees' fees 7,251
-----------------------------------------------------------
Registration and filing fees 28,222
-----------------------------------------------------------
Printing 14,474
-----------------------------------------------------------
Professional fees 35,552
-----------------------------------------------------------
Other 3,897
===========================================================
Total expenses 174,654
===========================================================
Less: Fees waived and expenses reimbursed (145,517)
-----------------------------------------------------------
Expenses paid indirectly (64)
===========================================================
Net expenses 29,073
===========================================================
Net investment income 10,051
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities 454
-----------------------------------------------------------
Futures contracts (429)
===========================================================
25
===========================================================
Change in net unrealized appreciation of
investment securities 771,563
===========================================================
Net gain from investment securities and futures
contracts 771,588
===========================================================
Net increase in net assets resulting from
operations $ 781,639
___________________________________________________________
===========================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,051 $ 3,308
--------------------------------------------------------------------------------------
Net realized gain from investment securities and futures
contracts 25 8,496
--------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and futures contracts 771,563 (85,073)
======================================================================================
Net increase (decrease) in net assets resulting from
operations 781,639 (73,269)
======================================================================================
Distributions to shareholders from net investment income:
Class A (19,234) --
--------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (12,288) --
--------------------------------------------------------------------------------------
Share transactions-net:
Class A 4,188,609 1,226,376
--------------------------------------------------------------------------------------
Class B 2,671,623 --
--------------------------------------------------------------------------------------
Class C 1,187,091 --
======================================================================================
Net increase in net assets 8,797,440 1,153,107
======================================================================================
NET ASSETS:
Beginning of year 1,153,107 --
======================================================================================
End of year $9,950,547 $1,153,107
______________________________________________________________________________________
======================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $9,238,062 $1,222,360
--------------------------------------------------------------------------------------
Undistributed net investment income 29,765 7,324
--------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and futures contracts (3,770) 8,496
--------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and futures contracts 686,490 (85,073)
======================================================================================
$9,950,547 $1,153,107
______________________________________________________________________________________
======================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Basic Value Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of eleven separate portfolios,
each having an unlimited number of shares of beneficial interest. 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.
Shareholders of the Fund approved the Reorganization at a meeting held on June
16, 2000. The Fund currently offers three different classes of shares: Class A
shares, Class B shares and Class C shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is long-term growth of capital with a
secondary objective of current income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of the
customary trading session on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price as of the close of
the customary trading session on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the New
York Stock Exchange ("NYSE").
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
$31,624, undistributed net realized gains decreased by $3 and paid in capital
decreased by $31,621 as a nondeductible organizational expense
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. Futures Contracts -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits required
upon entering into futures
11
<PAGE> 14
contracts are satisfied by the segregation of specific securities as
collateral for the account of the broker (the Fund's agent in acquiring the
futures position). During the period the futures contracts are open, changes
in the value of the contracts are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market value of the
contracts at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contracts are closed, the Fund recognizes a realized gain
or loss equal to the difference between the proceeds from, or cost of, the
closing transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in value of the contracts
may not correlate with changes in the value of the securities being hedged.
F. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.60% of
the first $1 billion of the Fund's average daily net assets, plus 0.575% over $1
billion to and including $2 billion of the Fund's average daily net assets and
0.55% of the Fund's average daily net assets over $2 billion. During the year
ended October 31, 2000, AIM waived fees of $12,555 and reimbursed expenses of
$132,962.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2000, AIM was
paid $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended October 31, 2000, AFS was
paid $1,108 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $5,816, $3,172 and
$1,135, respectively, as compensation under the Plans.
AIM Distributors received commissions of $12,029 from sales of the Class A
shares of the Fund during the year ended 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 year ended October 31, 2000,
AIM Distributors received $502 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended October 31, 2000, the Fund paid legal fees of $3,949 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $24 and reductions in custodian
fees of $40 under expense offset arrangements which resulted in a reduction of
the Fund's total expenses of $64.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
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 year ended October 31, 2000 was
$8,436,977 and $1,232,827, 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 $ 775,069
--------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (137,872)
========================================================
Net unrealized appreciation of investment
securities $ 637,197
________________________________________________________
========================================================
Cost of investments for tax purposes is $9,537,255.
</TABLE>
12
<PAGE> 15
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the year ended October 31, 2000 and the
period June 30, 1999 (date operations commenced) through October 31, 1999 were
as follows:
<TABLE>
<CAPTION>
2000 1999
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Sold:
Class A 406,940 $4,618,456 125,927 $1,256,078
------------------------------------------------------------------------------------------------------------
Class B 238,116 2,718,547 -- --
------------------------------------------------------------------------------------------------------------
Class C 104,697 1,197,020 -- --
============================================================================================================
Issued as reinvestment of dividends:
Class A 3,346 31,522 -- --
============================================================================================================
Reacquired:
Class A (44,224) (461,369) (3,192) (29,702)
------------------------------------------------------------------------------------------------------------
Class B (3,974) (46,924) -- --
------------------------------------------------------------------------------------------------------------
Class C (871) (9,929) -- --
============================================================================================================
704,030 $8,047,323 122,735 $1,226,376
____________________________________________________________________________________________________________
============================================================================================================
</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
-------------------------------
JUNE 30, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999
----------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 9.40 $10.00
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.07 0.03
-----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 2.88 (0.63)
===============================================================================================
Total from investment operations 2.95 (0.60)
===============================================================================================
Less distributions:
Dividends from net investment income (0.18) --
-----------------------------------------------------------------------------------------------
Distributions from net realized gains (0.12) --
===============================================================================================
Total distributions (0.30) --
===============================================================================================
Net asset value, end of period $12.05 $ 9.40
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 32.21% (6.00)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,888 $1,153
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.25%(c) 1.25%(d)
-----------------------------------------------------------------------------------------------
Without fee waivers 8.21%(c) 10.02%(d)
===============================================================================================
Ratio of net investment income to average net assets 0.62%(c) 0.87%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 57% 10%
_______________________________________________________________________________________________
===============================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average daily net assets of $1,661,756.
(d) Annualized.
13
<PAGE> 16
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B
--------------
AUGUST 1, 2000
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2000
--------------
<S> <C>
Net asset value, beginning of period $10.85
------------------------------------------------------------------------------
Income from investment operations:
Net investment income --
------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.17
==============================================================================
Total from investment operations 1.17
==============================================================================
Net asset value, end of period $12.02
______________________________________________________________________________
==============================================================================
Total return(a) 10.78%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,815
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.93%(b)
------------------------------------------------------------------------------
Without fee waivers 8.89%(b)
==============================================================================
Ratio of net investment loss to average net assets (0.06)%(b)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 57%
______________________________________________________________________________
==============================================================================
</TABLE>
(a) Does not include 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 $1,262,046.
<TABLE>
<CAPTION>
CLASS C
--------------
AUGUST 1, 2000
(DATE SALES
COMMENCED) TO
OCTOBER 31,
2000
--------------
<S> <C>
Net asset value, beginning of period $10.85
------------------------------------------------------------------------------
Income from investment operations:
Net investment income --
==============================================================================
Net gains on securities (both realized and unrealized) 1.17
==============================================================================
Total from investment operations 1.17
==============================================================================
Net asset value, end of period $12.02
______________________________________________________________________________
==============================================================================
Total return(a) 10.78%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,248
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.93%(b)
------------------------------------------------------------------------------
Without fee waivers 8.89%(b)
==============================================================================
Ratio of net investment loss to average net assets (0.06)%(b)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 57%
______________________________________________________________________________
==============================================================================
</TABLE>
(a) Does not include 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 $451,456.
14
<PAGE> 17
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 Large Cap Basic Value Fund (a
portfolio of AIM Equity Funds), including the schedule of
investments, as of October 31, 2000, the related
statement of operations for the year ended, the statement
of changes in net assets, and financial highlights for
the one-year period then ended and the period June 30,
1999 (date operations commenced) through October 31,
1999. 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 auditing
standards generally accepted in the United States of
America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as
of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Large
Cap Basic Value Fund as of October 31, 2000, the results
of its operations for the year ended, the changes in its
net assets and the financial highlights for the one-year
period then ended and the period June 30, 1999 (date
operations commenced) through October 31, 1999 in
conformity with accounting principles generally accepted
in the United States of America.
KPMG LLP
December 6, 2000
Houston, Texas
15
<PAGE> 18
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM Large Cap Basic Value Fund (the
"Fund"), a portfolio of AIM Equity Funds, Inc., a Maryland corporation (the
"Company"), reorganized as AIM Equity Funds, a Delaware business trust (the
"Trust"), was held on May 3, 2000. The meeting was held for the following
purposes:
(1)* To elect the following Directors: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H.
Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provides for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To ratify the selection of KPMG LLP as independent accountants of the Fund
for the fiscal year ending in 2000.
The results of the voting on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES WITHHELD/
DIRECTORS/MATTER VOTES FOR AGAINST ABSTENTIONS
---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
(1)* Charles T. Bauer............................................ 880,499,527 N/A 21,899,315
Bruce L. Crockett........................................... 880,943,079 N/A 21,455,763
Owen Daly II................................................ 880,468,204 N/A 21,930,638
Edward K. Dunn, Jr. ........................................ 880,922,500 N/A 21,476,342
Jack M. Fields.............................................. 880,960,800 N/A 21,438,042
Carl Frischling............................................. 880,836,332 N/A 21,562,510
Robert H. Graham............................................ 880,965,547 N/A 21,433,295
Prema Mathai-Davis.......................................... 880,635,296 N/A 21,763,546
Lewis F. Pennock............................................ 880,899,481 N/A 21,499,361
Louis S. Sklar.............................................. 880,825,241 N/A 21,573,601
(2)* Adjournment of approval of an Agreement and Plan of
Reorganization which provides for the reorganization of
AIM Equity Funds, Inc. as a Delaware business trust......... 610,634,359 17,637,580 274,126,903**
(3) Approval of a new Master Investment Advisory Agreement
with A I M Advisors, Inc.................................... 109,729 0 0
(4) Ratification of the selection of KPMG LLP as Independent
Accountants of the Fund..................................... 109,729 0 0
</TABLE>
The Special Meeting of Shareholders of the Company was reconvened on May
31, 2000. The following matter was then considered:
<TABLE>
<CAPTION>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
------ ------------- --------- -----------
<S> <C> <C> <C> <C>
(2)* Adjournment of approval of an Agreement and Plan of
Reorganization which provides for the reorganization of AIM
Equity Funds, Inc. as a Delaware business trust............. 771,237,475 25,045,711 214,550,642**
</TABLE>
The Special Meeting of Shareholders of the Company was reconvened on June
16, 2000. The following matter was then considered:
<TABLE>
<CAPTION>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
------ ------------- --------- -----------
<S> <C> <C> <C> <C>
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the reorganization of AIM Equity Funds, Inc. as
a Delaware business trust................................... 824,680,935 26,389,312 203,059,248**
</TABLE>
---------------
* Proposal 1 required approval by a combined vote of all the portfolios of AIM
Equity Funds, Inc.
** Includes Broker Non-Votes.
Effective September 30, 2000, Charles T. Bauer retired from his positions as an
officer and trustee of the Trust and Robert H. Graham succeeded Mr. Bauer as
Chairman of the Board.
16
<PAGE> 19
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>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended
October 31, 2000, 25.04% is eligible for the dividends received deduction for
corporations.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
EQUITY FUNDS
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc. has provided
leadership in the mutual fund industry
MORE AGGRESSIVE MORE AGGRESSIVE since 1976 and managed approximately $183
AIM Small Cap Opportunities(1) AIM Latin American Growth billion in assets for more than eight
AIM Mid Cap Opportunities(2) AIM Developing Markets million shareholders, including
AIM Large Cap Opportunities(3) AIM European Small Company individual investors, corporate clients
AIM Emerging Growth AIM Asian Growth and financial institutions, as of
AIM Small Cap Growth(4) AIM Japan Growth September 30, 2000.
AIM Aggressive Growth AIM International Emerging Growth The AIM Family of Funds--Registered
AIM Mid Cap Growth AIM European Development Trademark-- is distributed nationwide,
AIM Small Cap Equity AIM Euroland Growth and AIM today is the eighth-largest
AIM Capital Development AIM Global Aggressive Growth mutual fund complex in the United States
AIM Constellation AIM International Equity in assets under management, according to
AIM Dent Demographic Trends AIM Advisor International Value Strategic Insight, an independent mutual
AIM Select Growth AIM Global Trends fund monitor.
AIM Large Cap Growth AIM Global Growth AIM is a subsidiary of AMVESCAP PLC,
AIM Weingarten MORE CONSERVATIVE one of the world's largest independent
AIM Mid Cap Equity financial services companies with $414
AIM Value II billion in assets under management as of
AIM Charter SECTOR EQUITY FUNDS September 30, 2000.
AIM Value
AIM Blue Chip MORE AGGRESSIVE
AIM Basic Value AIM New Technology
AIM Large Cap Basic Value AIM Global Telecommunications and Technology
AIM Balanced AIM Global Resources
AIM Advisor Flex 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
FIXED-INCOME FUNDS
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) MORE CONSERVATIVE
AIM Intermediate Government
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--
LCBV-AR-1
A I M Distributors, Inc.
