<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM DENT DEMOGRAPHIC TRENDS FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
-------------------------------------
ALL IN A CROWD BY DIANA ONG
ONG'S VIVID WATERCOLOR EVOKES THE ENERGY AND OPTIMISM OF THE
BABY-BOOM GENERATION. WITH THEIR DRIVE AND INNOVATION, THIS
GENERATION DOMINATES THE ECONOMY AND MAY PROPEL THE STOCK
MARKET FOR THE NEXT DECADE.
-------------------------------------
AIM Dent Demographic Trends Fund is for shareholders who seek long-term growth
of capital.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Dent Demographic Trends 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 The fund's average total returns as of the close of the reporting period are
shown in a table on the performance history page that follows. In addition,
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, one year, 42.32%; inception
(6/7/99), 42.01%. Class B shares, one year, 44.77%; inception (6/7/99),
44.59%. Class C shares, one year, 48.77%; inception (6/7/99), 47.29%.
o Harry S. Dent's stock-market scenario for the coming decade, which is based
on historical data, represents his opinion. Unforeseen events such as rising
inflation, declining productivity, irregular spending and savings patterns,
and other social, political and economic uncertainty could affect corporate
earnings and the stock market, negatively altering Mr. Dent's view.
o The fund participates in the initial public offering (IPO) market, and a
significant portion of its returns are attributable to its investment in
IPOs, which had a magnified impact when the fund's asset base was
relatively small. There is no guarantee that with a larger asset base, the
fund will continue to experience substantially similar performance by
investing in IPOs.
o Investing in micro-, small and mid-sized companies may involve risks not
associated with 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 National Association of Securities Dealers Automated Quotation
System Composite Index (the Nasdaq) is a market-value-weighted index
comprising all domestic and non-U.S.-based common stocks listed on the
Nasdaq system. It includes more than 5,000 companies, and it is often
considered representative of the small and medium-sized company stock
universe. While it includes many small and mid-sized company stocks,
large-capitalization technology companies tend to dominate the index.
o The unmanaged Russell 3000 Index represents the performance of the broad
market.
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 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 DENT DEMOGRAPHIC TRENDS 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
APPEARS HERE] in the investment industry. Ted has always shown the highest
degree of integrity and commitment to excellence, and I have
always admired him. I'm also proud to be part of the team
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 DENT DEMOGRAPHIC TRENDS FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
DEMOGRAPHIC SECTOR SELECTION BOOSTS FUND PERFORMANCE
VOLATILITY BECAME QUITE PRONOUNCED IN THE MARKET DURING THE PAST YEAR. HOW DID
AIM DENT DEMOGRAPHIC TRENDS FUND PERFORM?
Even with the uncertain stock-market environment, AIM Dent Demographic Trends
Fund continued its excellent performance. For the fiscal year ended October 31,
2000, the fund posted total returns of 26.85% for Class A shares, 26.01% for
Class B shares and 26.01% for Class C shares. (These returns are at net asset
value, which does not include sales charges.) The fund outperformed the Russell
3000 Index, which had a return of 9.63% for the reporting period. Net assets in
the fund skyrocketed from $393 million to $1.7 billion during the fiscal year.
AIM Dent Demographic Trends Fund's performance for the fiscal year ended
October 31 includes gains made during late 1999 and early 2000, when markets
were more exuberant than they became later in the fiscal year. More recently,
the fund's performance has been affected by the technology sector sell-off and
other market difficulties.
WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE PAST 12 MONTHS?
Markets rallied strongly during the first half of the fiscal year, but
experienced a choppy, downward trend in the second half. In late 1999 and early
2000, technology stocks led the surge, with the tech-laden Nasdaq soaring to
record levels well into March. However, investor concern about possible
overvaluations sparked a sharp tech sell-off late in the month. Investors were
also concerned that the Federal Reserve Board (the Fed) would keep raising
interest rates to slow torrid economic growth and to contain inflation. The
ensuing sell-off affected nearly every stock-market sector in April and caused
severe market volatility.
Amid mounting evidence that economic growth was slowing, markets rallied in
May and June at the prospect of no more Fed rate hikes. Indeed, the Fed left
interest rates unchanged for the rest of the fiscal year. However, in late
summer and early fall, a combination of rising oil prices, unrest in the Middle
East and concern about corporate earnings created another steep market decline.
A number of major corporations reported earnings disappointments in September
and October, as rising oil prices and a weak euro negatively affected profit
margins.
Major market indexes such as the S&P 500 and the Nasdaq peaked fairly early
in 2000, and as of the close of the fiscal year they had not regained those
levels. Even so, most market indexes recorded gains for the 12-month reporting
period. After tech stocks faded, stocks in several other sectors--including
health care, financial services, energy and utilities--posted healthy gains.
Mid-cap stocks outperformed large- and small-cap stocks. And while growth stocks
(those perceived to have above-average growth potential) outperformed value
stocks (those perceived to be undervalued relative to the broader market) during
the first half of the year, value made a comeback in the second half, leaving
growth behind.
HOW DID YOU MANAGE THE FUND AGAINST THIS BACKDROP?
We continued to focus on market sectors that we expect to benefit from such
current and future demographic trends as
o consumer spending
o saving and investing
o the use of new and more numerous health-care products
o the technological structure that supports products and services
Currently, the sectors that we think stand to benefit most from these trends are
technology, financials and health care, because these are the areas on which we
think the lifestyle habits of baby boomers--a major segment of the
population--will have the most impact.
================================================================================
FUND PERFORMANCE
GROWTH OF NET ASSETS
10/31/99-10/31/00
================================================================================
10/31/99 $393 MILLION
10/31/00 $1.7 BILLION
================================================================================
FUND BEATS RUSSELL 3000 INDEX
Total returns for the fiscal year ended
10/31/00, excluding sales charges
================================================================================
FUND CLASS A SHARES 26.85%
FUND CLASS B SHARES 26.01%
FUND CLASS C SHARES 26.01%
RUSSELL 3000 INDEX 9.63%
================================================================================
See important fund and index disclosures inside front cover.
AIM DENT DEMOGRAPHIC TRENDS FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
As of the end of the fiscal year, technology holdings made up about 49% of
the portfolio, with financials at about 21% and health-care stocks at around
16%. Consumer cyclicals, especially retail companies, were hurt by a general
trend of decreasing consumer spending, so the fund's retail exposure was
reduced as this area continued to struggle.
As a flex-cap fund, while we are able to buy stocks in any market-cap range
for the portfolio, we are currently focusing on mid- and large-cap stocks. The
fund's exposure to mid-cap stocks helped its performance.
HOW DID SECTOR SELECTION AFFECT THE FUND'S PERFORMANCE?
The fund's financial and health-care holdings proved to be beneficial to
performance because as tech stocks fell out of favor, investors fled to stocks
perceived as more earnings-stable than tech, which included financials and
health care. The fund was well positioned to take advantage of this shift,
particularly in financials, where we increased our weighting from a year ago by
adding to positions with more earnings-growth potential.
Even though tech stocks have taken a beating in 2000, we continued to find
good growth prospects in this sector. Because stock selection is so important in
a volatile market, we focused on tech stocks with solid earnings-growth
potential, selecting those companies that provide the infrastructure for growth
in technological advancements and focusing on those that provide exposure to
portions of the tech sector affected by consumer spending.
WHAT WERE SOME HOLDINGS YOU FAVORED?
Among our financial holdings were Citigroup, American International Group (AIG)
and Merrill Lynch. Citigroup, the country's largest financial-services company,
posted a 27% increase in third-quarter earnings over the same period last year.
The world's largest insurer by market value, AIG reported especially good
results in its financial-services and asset-management businesses. And Merrill
Lynch, the world's top brokerage company, easily beat analysts' estimates on the
strength of record asset management and service fees.
In health care, pharmaceutical giant Pfizer, which earlier this year merged
with Warner-Lambert, continued to be a standout performer for the fund. The
company reported a 30% jump in third-quarter profits over the previous year as
sales of its top drugs posted strong gains.
Technology stocks that we liked included Brocade Communications Systems and
Cisco Systems. Brocade makes fiber channel switches that allow customers to
connect their servers to external storage, creating a storage-area network. The
company's revenue shot up 360% over the previous year. Cisco makes
computer-networking equipment--switches and routers for the Internet
infrastructure.
WHAT IS YOUR NEAR-TERM OUTLOOK?
The economic climate appeared favorable for stocks at the close of the reporting
period despite often-extreme market volatility. The nation's unemployment rate
had fallen to its lowest level in three decades. Consumer spending, down for
much of the second half of the fiscal year, started to pick up again. And
inflation was moderate, despite higher oil prices.
Perhaps most importantly, corporate profit growth, while declining for some,
was still impressive for many companies. However, because of a degree of
uncertainty surrounding near-term economic trends and international
developments, markets may continue to be volatile. Investors would be wise to
maintain a long-term perspective in such an environment.
================================================================================
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. VERITAS Software Corp. 4.99% 1. Computers (Software & Services) 14.43%
2. Pfizer Inc. 3.88 2. Electronics (Semiconductors) 10.21
3. Chase Manhattan Corp. (The) 3.30 3. Investment Banking/Brokerage 8.42
4. Cisco Systems, Inc. 3.28 4. Health Care (Drugs-Major Pharmaceuticals) 6.41
5. Brocade Communications Systems, Inc. 3.03 5. Communications Equipment 6.10
6. Morgan Stanley Dean Witter & Co. 2.98 6. Computers (Networking) 5.26
7. Citigroup Inc. 2.59 7. Computers (Peripherals) 5.20
8. American International Group, Inc. 2.39 8. Financial (Diversified) 4.21
9. Schwab (Charles) Corp. (The) 2.29 9. Health Care (Medical Products & Supplies) 3.49
10. PE Corp.-PE Biosystems Group 2.20 10. Banks (Money Center) 3.30
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>
-------------------------------------
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 hard 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 DENT DEMOGRAPHIC TRENDS FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM DENT DEMOGRAPHIC TRENDS FUND VS. BENCHMARK INDEX
6/7/99-10/31/00
in thousands
================================================================================
DATE CLASS C SHARES CLASS B SHARES CLASS A SHARES RUSSELL 3000 INDEX
--------------------------------------------------------------------------------
6/99 10000 10000 9452 10000
8/99 11100 11100 10501 10071
11/99 13290 13290 12599 10721
2/00 16890 16900 16040 11059
5/00 14550 14550 13837 11182
8/00 17690 17700 16862 12149
10/00 15260 14860 14556 11433
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 shares to a benchmark index. It is intended to
give you an idea of how your fund performed compared to this benchmark over the
period 6/7/99-10/31/00. (Please note that performance results for the Russell
3000 Index are for the period 5/31/99-10/31/00.)
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 3000 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.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (6/7/99) 30.75%
1 Year 19.84*
*26.85% excluding sales charges
CLASS B SHARES
Inception (6/7/99) 32.70%
1 Year 21.01*
*26.01% excluding CDSC
CLASS C SHARES
Inception (6/7/99) 35.24%
1 Year 25.01*
*26.01% excluding CDSC
================================================================================
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 different sales-charge structure and class
expenses. For fund performance calculations and a description of the index on
this page, please see the inside front cover.
AIM DENT DEMOGRAPHIC TRENDS FUND
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
CHOOSE YOUR INVESTMENT PALETTE
[ART WORK]
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and 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.
[ART WORK]
AIM DENT DEMOGRAPHIC TRENDS 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 DENT DEMOGRAPHIC TRENDS FUND
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-95.01%
BANKS (MONEY CENTER)-3.30%
Chase Manhattan Corp. (The) 1,250,000 $ 56,875,000
===============================================================
BANKS (REGIONAL)-1.37%
Dah Sing Financial Group (Hong
Kong) 2,550,000 10,953,327
---------------------------------------------------------------
Silicon Valley Bancshares(a) 275,000 12,718,750
===============================================================
23,672,077
===============================================================
BIOTECHNOLOGY-3.27%
Amgen Inc.(a) 450,000 26,071,875
---------------------------------------------------------------
Celgene Corp.(a) 150,000 9,656,250
---------------------------------------------------------------
Millennium Pharmaceuticals,
Inc.(a) 100,000 7,256,250
---------------------------------------------------------------
Protein Design Labs, Inc.(a) 100,000 13,507,812
===============================================================
56,492,187
===============================================================
BROADCASTING (TELEVISION, RADIO &
CABLE)-1.29%
AT&T Corp.-Liberty Media
Corp.-Class A 750,000 13,500,000
---------------------------------------------------------------
Cox Communications, Inc.-Class
A(a) 200,000 8,812,500
===============================================================
22,312,500
===============================================================
COMMUNICATIONS EQUIPMENT-6.10%
Comverse Technology, Inc.(a) 300,000 33,525,000
---------------------------------------------------------------
Nortel Networks Corp. (Canada) 750,000 34,125,000
---------------------------------------------------------------
Redback Networks Inc.(a) 250,000 26,609,375
---------------------------------------------------------------
UTStarcom, Inc.(a) 550,000 11,000,000
===============================================================
105,259,375
===============================================================
COMPUTERS (HARDWARE)-2.74%
McDATA Corp.-Class B(a) 50,000 4,167,969
---------------------------------------------------------------
Sun Microsystems, Inc.(a) 275,000 30,490,625
---------------------------------------------------------------
Sycamore Networks, Inc.(a) 200,000 12,650,000
===============================================================
47,308,594
===============================================================
COMPUTERS (NETWORKING)-5.26%
Cisco Systems, Inc.(a) 1,050,000 56,568,750
---------------------------------------------------------------
Juniper Networks, Inc.(a) 175,000 34,125,000
===============================================================
90,693,750
===============================================================
COMPUTERS (PERIPHERALS)-5.20%
Brocade Communications Systems,
Inc.(a) 230,000 52,296,250
---------------------------------------------------------------
EMC Corp.(a) 420,000 37,406,250
===============================================================
89,702,500
===============================================================
COMPUTERS (SOFTWARE &
SERVICES)-14.43%
Ariba, Inc.(a) 175,000 22,115,625
---------------------------------------------------------------
BEA Systems, Inc.(a) 170,000 12,197,500
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
i2 Technologies, Inc.(a) 115,000 $ 19,550,000
---------------------------------------------------------------
Oracle Corp.(a) 800,000 26,400,000
---------------------------------------------------------------
Rational Software Corp.(a) 350,000 20,890,625
---------------------------------------------------------------
Siebel Systems, Inc.(a) 280,000 29,382,500
---------------------------------------------------------------
Software.com, Inc.(a) 100,000 14,900,000
---------------------------------------------------------------
VERITAS Software Corp.(a) 610,000 86,019,531
---------------------------------------------------------------
Vitria Technology, Inc.(a) 650,000 17,468,750
===============================================================
248,924,531
===============================================================
ELECTRONICS
(INSTRUMENTATION)-1.26%
Waters Corp.(a) 300,000 21,768,750
===============================================================
ELECTRONICS
(SEMICONDUCTORS)-10.21%
Analog Devices, Inc.(a) 250,000 16,250,000
---------------------------------------------------------------
Celestica Inc. (Canada)(a) 500,000 35,937,500
---------------------------------------------------------------
Cirrus Logic, Inc.(a) 325,000 14,015,625
---------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 250,000 14,078,125
---------------------------------------------------------------
Intersil Holding Corp.(a) 400,000 19,175,000
---------------------------------------------------------------
PMC-Sierra, Inc. (Canada)(a) 100,000 16,950,000
---------------------------------------------------------------
SDL, Inc.(a) 130,000 33,702,500
---------------------------------------------------------------
TranSwitch Corp.(a) 450,000 25,987,500
===============================================================
176,096,250
===============================================================
ENTERTAINMENT-1.87%
Time Warner Inc. 425,000 32,261,750
===============================================================
EQUIPMENT (SEMICONDUCTOR)-0.97%
Broadcom Corp.-Class A(a) 75,000 16,678,125
===============================================================
FINANCIAL (DIVERSIFIED)-4.21%
American Express Co. 465,000 27,900,000
---------------------------------------------------------------
Citigroup Inc. 850,000 44,731,250
===============================================================
72,631,250
===============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-2.94%
Andrx Group(a) 44,600 3,211,200
---------------------------------------------------------------
Genentech, Inc.(a) 310,000 25,575,000
---------------------------------------------------------------
Shire Pharmaceuticals Group
PLC-ADR (United Kingdom)(a) 350,000 22,006,250
===============================================================
50,792,450
===============================================================
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-6.41%
Allergan, Inc. 225,000 18,914,063
---------------------------------------------------------------
Pfizer Inc. 1,550,000 66,940,625
---------------------------------------------------------------
Pharmacia Corp. 450,000 24,750,000
===============================================================
110,604,688
===============================================================
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.92%
Health Management Associates,
Inc.-Class A(a) 800,000 $ 15,850,000
===============================================================
HEALTH CARE (MANAGED CARE)-2.17%
First Health Group Corp.(a) 400,000 15,600,000
---------------------------------------------------------------
UnitedHealth Group Inc. 200,000 21,875,000
===============================================================
37,475,000
===============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-3.49%
Medtronic, Inc. 245,000 13,306,563
---------------------------------------------------------------
Novoste Corp.(a) 350,000 8,837,500
---------------------------------------------------------------
PE Corp-PE Biosystems Group 325,000 38,025,000
===============================================================
60,169,063
===============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-0.70%
HEALTHSOUTH Corp.(a) 1,000,000 12,000,000
===============================================================
INSURANCE (MULTI-LINE)-2.39%
American International Group, Inc. 420,000 41,160,000
===============================================================
INSURANCE BROKERS-0.83%
Marsh & McLennan Cos., Inc. 110,000 14,382,500
===============================================================
INVESTMENT BANKING/BROKERAGE-8.42%
Goldman Sachs Group, Inc. (The) 250,000 24,953,125
---------------------------------------------------------------
Merrill Lynch & Co., Inc. 420,000 29,400,000
---------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 640,000 51,400,000
---------------------------------------------------------------
Schwab (Charles) Corp. (The) 1,125,000 39,515,625
===============================================================
145,268,750
===============================================================
INVESTMENT MANAGEMENT-0.78%
Stilwell Financial, Inc. 300,000 13,443,750
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LEISURE TIME (PRODUCTS)-0.70%
Harley-Davidson, Inc. 250,000 $ 12,046,875
===============================================================
RETAIL (COMPUTERS &
ELECTRONICS)-0.42%
Tweeter Home Entertainment Group,
Inc.(a) 300,000 7,218,750
===============================================================
RETAIL (DEPARTMENT STORES)-0.55%
Kohl's Corp.(a) 175,000 9,482,813
===============================================================
RETAIL (SPECIALTY-APPAREL)-1.09%
Abercrombie & Fitch Co.-Class A(a) 800,000 18,850,000
===============================================================
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-1.15%
China Mobile Ltd. (Hong Kong)(a) 1,600,000 10,257,725
---------------------------------------------------------------
Powerwave Technologies, Inc.(a) 200,000 9,625,000
===============================================================
19,882,725
===============================================================
TELECOMMUNICATIONS (LONG
DISTANCE)-0.57%
Corvis Corp.(a) 150,000 9,843,750
===============================================================
Total Common Stocks & Other
Equity Interests (Cost
$1,355,898,674) 1,639,147,753
===============================================================
MONEY MARKET FUNDS-5.35%
STIC Liquid Assets Portfolio(b) 46,162,850 46,162,850
---------------------------------------------------------------
STIC Prime Portfolio(b) 46,162,850 46,162,850
===============================================================
Total Money Market Funds (Cost
$92,325,700) 92,325,700
===============================================================
TOTAL INVESTMENTS-100.36% (Cost
$1,448,224,374) 1,731,473,453
===============================================================
LIABILITIES LESS OTHER
ASSETS-(0.36%) (6,243,447)
===============================================================
NET ASSETS-100.00% $1,725,230,006
_______________________________________________________________
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,448,224,374) $1,731,473,453
-------------------------------------------------------------
Receivables for:
Investments sold 14,794,899
-------------------------------------------------------------
Fund shares sold 10,015,779
-------------------------------------------------------------
Dividends 498,644
-------------------------------------------------------------
Investment for deferred compensation plan 9,953
=============================================================
Total assets 1,756,792,728
=============================================================
LIABILITIES:
Payables for:
Investments purchased 23,819,751
-------------------------------------------------------------
Fund shares reacquired 4,571,397
-------------------------------------------------------------
Deferred compensation plan 9,953
-------------------------------------------------------------
Accrued advisory fees 1,243,824
-------------------------------------------------------------
Accrued administrative services fees 13,071
-------------------------------------------------------------
Accrued distribution fees 1,212,499
-------------------------------------------------------------
Accrued trustees' fees 799
-------------------------------------------------------------
Accrued transfer agent fees 368,066
-------------------------------------------------------------
Accrued operating expenses 323,362
=============================================================
Total liabilities 31,562,722
=============================================================
Net assets applicable to shares outstanding $1,725,230,006
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $ 666,929,456
_____________________________________________________________
=============================================================
Class B $ 748,479,874
_____________________________________________________________
=============================================================
Class C $ 309,820,676
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 43,308,538
_____________________________________________________________
=============================================================
Class B 49,033,199
_____________________________________________________________
=============================================================
Class C 20,300,537
_____________________________________________________________
=============================================================
Class A:
Net asset value and redemption price per
share $ 15.40
-------------------------------------------------------------
Offering price per share:
(Net asset value of $15.40 divided by
94.50%) $ 16.30
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 15.26
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 15.26
_____________________________________________________________
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$40,978) $ 3,432,943
------------------------------------------------------------
Dividends from affiliated money market funds 3,694,098
------------------------------------------------------------
Interest 27,335
============================================================
Total investment income 7,154,376
============================================================
EXPENSES:
Advisory fees 10,757,633
------------------------------------------------------------
Administrative services fees 142,614
------------------------------------------------------------
Custodian fees 153,696
------------------------------------------------------------
Distribution fees -- Class A 1,761,595
------------------------------------------------------------
Distribution fees -- Class B 5,500,548
------------------------------------------------------------
Distribution fees -- Class C 2,122,364
------------------------------------------------------------
Transfer agent fees -- Class A 1,009,494
------------------------------------------------------------
Transfer agent fees -- Class B 1,226,657
------------------------------------------------------------
Transfer agent fees -- Class C 473,301
------------------------------------------------------------
Trustees' fees 8,433
------------------------------------------------------------
Other 909,443
============================================================
Total expenses 24,065,778
============================================================
Less: Expenses paid indirectly (24,736)
============================================================
Net expenses 24,041,042
============================================================
Net investment income (loss) (16,886,666)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (152,006,074)
------------------------------------------------------------
Foreign currencies 31,086
============================================================
(151,974,988)
============================================================
Change in net unrealized appreciation of
investment securities 243,388,002
============================================================
Net gain from investment securities and
foreign currencies 91,413,014
============================================================
Net increase in net assets resulting from
operations $ 74,526,348
____________________________________________________________
============================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENTS 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 (loss) $ (16,886,666) $ (1,112,143)
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (151,974,988) (3,389,798)
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 243,388,002 39,861,077
============================================================================================
Net increase in net assets resulting from operations 74,526,348 35,359,136
============================================================================================
Share transactions-net:
Class A 467,782,934 148,625,216
--------------------------------------------------------------------------------------------
Class B 537,342,137 161,925,702
--------------------------------------------------------------------------------------------
Class C 252,670,086 46,998,447
============================================================================================
Net increase in net assets 1,332,321,505 392,908,501
============================================================================================
NET ASSETS:
Beginning of year 392,908,501 --
============================================================================================
End of year $1,725,230,006 $392,908,501
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,597,415,192 $356,470,945
--------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (38,438) (33,769)
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (155,395,827) (3,389,752)
--------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 283,249,079 39,861,077
============================================================================================
$1,725,230,006 $392,908,501
____________________________________________________________________________________________
============================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Dent Demographic Trends Fund (the "Fund") is a series portfolio of AIM
Equity Funds (the "Trust"). The Trust is a Delaware business trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of eleven separate
portfolios, each having an unlimited number of shares of beneficial interest.
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.
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
$16,881,997, undistributed net realized gains decreased by $31,087 and paid
in capital decreased by $16,850,910 as a result of differing book/tax
treatment of foreign currency transactions and net operating loss
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions -- Distributions from income and net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds from
redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the
requirements of the Internal Revenue Code necessary to qualify as a regulated
investment company and, as such, will not be subject to federal income taxes
on otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund has a capital loss carryforward of $147,966,009 as of October 31,
2000 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2008.
11
<PAGE> 14
E. Foreign Currency Translations -- Portfolio securities and other
assets and liabilities denominated in foreign currencies are translated into
U.S. dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions. The
Fund does not separately account for the portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is
an obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. The Fund may enter into a foreign currency contract
to attempt to minimize the risk to the Fund from adverse changes in the
relationship between currencies. The Fund may also enter into a foreign
currency contract for the purchase or sale of a security denominated in a
foreign currency in order to "lock in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value of
the foreign currency changes unfavorably.
G. 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"). H.S. Dent Advisors, Inc. ("H.S. Dent") is the Fund's
subadvisor. Under the terms of the master investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $2
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily net assets exceeding $2 billion. Under the terms of a subadvisory
agreement between AIM and H.S. Dent, AIM pays H.S. Dent at the annual rate of
0.13% of the first $1 billion of the Fund's average daily net assets, plus 0.10%
of the next $1 billion of the Fund's average daily net assets, plus 0.07% of the
Fund's average daily net assets exceeding $2 billion.
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 $142,614 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 $1,416,730 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 $1,761,595,
$5,500,548 and $2,122,364, respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,007,746 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 $91,369 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 $5,640 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 $17,188 and reductions in
custodian fees of $7,548 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $24,736.
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.
12
<PAGE> 15
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
$2,250,742,114 and $1,070,740,762, 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 $331,644,263
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (55,825,002)
==========================================================================
Net unrealized appreciation of investment securities $275,819,261
__________________________________________________________________________
==========================================================================
Cost of investments for tax purposes is $1,455,654,192.
</TABLE>
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the year ended October 31, 2000 and the
period June 7, 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 34,788,634 $ 547,265,482 14,146,708 $155,933,583
------------------------------------------------------------------------------------------------------------------------
Class B 37,284,984 583,389,114 14,828,511 163,946,584
------------------------------------------------------------------------------------------------------------------------
Class C 17,532,275 276,260,624 4,372,731 48,262,483
========================================================================================================================
Reacquired:
Class A (4,975,363) (79,482,548) (651,441) (7,308,367)
------------------------------------------------------------------------------------------------------------------------
Class B (2,900,834) (46,046,977) (179,461) (2,020,882)
------------------------------------------------------------------------------------------------------------------------
Class C (1,492,566) (23,590,538) (111,903) (1,264,036)
========================================================================================================================
80,237,130 $1,257,795,157 32,405,145 $357,549,365
________________________________________________________________________________________________________________________
========================================================================================================================
</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 7, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 12.14 $ 10.00
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.03)
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.37 2.17
==================================================================================================
Total from investment operations 3.26 2.14
==================================================================================================
Net asset value, end of period $ 15.40 $ 12.14
__________________________________________________________________________________________________
==================================================================================================
Total return(a) 26.85% 21.40%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $666,929 $163,872
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets 1.50%(b) 1.60%(c)(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (0.93)%(b) (1.00)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate 90% 29%
__________________________________________________________________________________________________
==================================================================================================
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are based on average daily net assets of $503,312,753.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.65% (annualized).
(d) Annualized.
13
<PAGE> 16
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B
------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 12.11 $ 10.00
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.04)
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.33 2.15
==================================================================================================
Total from investment operations 3.15 2.11
==================================================================================================
Net asset value, end of period $ 15.26 $ 12.11
__________________________________________________________________________________________________
==================================================================================================
Total return(a) 26.01% 21.10%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $748,480 $177,430
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets 2.17%(b) 2.24%(c)(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (1.60)%(b) (1.64)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate 90% 29%
__________________________________________________________________________________________________
==================================================================================================
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average daily net assets of $550,054,811.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.29% (annualized).
(d) Annualized.
<TABLE>
<CAPTION>
CLASS C
------------------------------------
JUNE 7, 1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
OCTOBER 31, 2000 OCTOBER 31, 1999
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 12.11 $ 10.00
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.17) (0.04)
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.32 2.15
==================================================================================================
Total from investment operations 3.15 2.11
==================================================================================================
Net asset value, end of period $ 15.26 $ 12.11
__________________________________________________________________________________________________
==================================================================================================
Total return(a) 26.01% 21.10%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $309,821 $51,605
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets 2.17%(b) 2.24%(c)(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (1.60)%(b) (1.64)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate 90% 29%
__________________________________________________________________________________________________
==================================================================================================
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average daily net assets of $212,236,361.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.29% (annualized).
(d) Annualized.
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 Dent Demographics Trends 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 then ended, the
statement of changes in net assets, and financial
highlights for the one-year period then ended and the
period June 7, 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 Dent
Demographics Trends Fund as of October 31, 2000, the
results of its operations for the year then ended, the
changes in its net assets and the financial highlights
for the one-year period then ended and the period June 7,
1999 (date operations commenced) through October 31, 1999
in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
December 6, 2000
Houston, Texas
15
<PAGE> 18
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM Dent Demographic Trends 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......................................... 23,804,101 417,131 11,079,527**
(4) Ratification of the selection of KPMG LLP as Independent
Accountants of the Fund..................................... 33,769,691 228,182 1,302,886
</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 of 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 Chief Executive Officer Chairman and President Suite 100
A I M Management Group Inc. Houston, TX 77046
Carol F. Relihan
Bruce L. Crockett Senior Vice President and Secretary INVESTMENT ADVISOR
Director
ACE Limited; Gary T. Crum A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Edgar M. Larsen Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Formerly Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer H.S. Dent Advisors, Inc.
6515 Gwin Road
Albert R. Dowden Melville B. Cox Oakland, CA 94611
Chairman of the Board of Directors, Vice President
The Cortland Trust and DHJ Media, Inc.; and TRANSFER AGENT
Director, Magellan Insurance Company, Mary J. Benson
Formerly Director, President and Assistant Vice President and A I M Fund Services, Inc.
Chief Executive Officer, Assistant Treasurer P.O. Box 4739
Volvo Group North America, Inc.; and Houston, TX 77210-4739
Senior Vice President, AB Volvo Sheri Morris
Assistant Vice President and CUSTODIAN
Edward K. Dunn Jr. Assistant Treasurer
Chairman, Mercantile Mortgage Corp.; State Street Bank and Trust Company
Formerly Vice Chairman and President, Jim A. Coppedge 225 Franklin Street
Mercantile-Safe Deposit & Trust Co.; and Assistant Secretary Boston, MA 02110
President, Mercantile Bankshares
Renee A. Friedli COUNSEL TO THE FUND
Jack Fields Assistant Secretary
Chief Executive Officer Ballard Spahr
Twenty First Century, Inc.; P. Michelle Grace Andrews & Ingersoll, LLP
Formerly Member Assistant Secretary 1735 Market Street
of the U.S. House of Representatives Philadelphia, PA 19103
Nancy L. Martin
Carl Frischling Assistant Secretary COUNSEL TO THE TRUSTEES
Partner
Kramer, Levin, Naftalis & Frankel LLP Ofelia M. Mayo Kramer, Levin, Naftalis & Frankel LLP
Assistant Secretary 919 Third Avenue
Prema Mathai-Davis New York, NY 10022
Formerly Chief Executive Officer, Lisa A. Moss
YWCA of the U.S.A.; Commissioner, Assistant Secretary DISTRIBUTOR
New York City Dept. for the Aging;
and member of the Board of Directors, Kathleen J. Pflueger A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
Houston, TX 77046
Lewis F. Pennock
Partner AUDITORS
Pennock & Cooper
KPMG LLP
Louis S. Sklar 700 Louisiana
Executive Vice President Houston, TX 77002
Hines Interests
Limited Partnership
</TABLE>
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
EQUITY FUNDS A I M Management Group Inc. has provided
leadership in the mutual fund industry
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS since 1976 and managed approximately
$183 billion in assets for more than
MORE AGGRESSIVE MORE AGGRESSIVE eight million shareholders, including
individual investors, corporate clients
AIM Small Cap Opportunities(1) AIM Latin American Growth and financial institutions, as of
AIM Mid Cap Opportunities(2) AIM Developing Markets September 30, 2000.
AIM Large Cap Opportunities(3) AIM European Small Company The AIM Family of Funds--Registered
AIM Emerging Growth AIM Asian Growth Trademark-- is distributed nationwide,
AIM Small Cap Growth(4) AIM Japan Growth and AIM today is the eighth-largest
AIM Aggressive Growth AIM International Emerging Growth mutual fund complex in the United
AIM Mid Cap Growth AIM European Development States in assets under management,
AIM Small Cap Equity AIM Euroland Growth according to Strategic Insight, an
AIM Capital Development AIM Global Aggressive Growth independent mutual fund monitor.
AIM Constellation AIM International Equity AIM is a subsidiary of AMVESCAP PLC,
AIM Dent Demographic Trends AIM Advisor International Value one of the world's largest independent
AIM Select Growth AIM Global Trends financial services companies with $414
AIM Large Cap Growth AIM Global Growth billion in assets under management as of
AIM Weingarten September 30, 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
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)
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. DDT-AR-1
