<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM CONSTELLATION FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[ COVER IMAGE ]
-------------------------------------
STARRY NIGHT OVER THE RHONE BY VINCENT VAN GOGH
STARS, PARTICULARLY CONSTELLATIONS, HAVE LONG BEEN
USED AS SIGNS BY WHICH FARMERS PLANTED AND HARVESTED
THEIR CROPS AND SAILORS NAVIGATED THE SEAS. ALTHOUGH
DIFFERENT CONSTELLATIONS ARE VISIBLE AT DIFFERENT TIMES
OF THE YEAR, THEIR CONSTANCY IN THE SKY MAKES THEM RELIABLE
FOR MEASURING THE PASSAGE OF TIME AND DISTANCE. AIM
CONSTELLATION FUND SEEKS OUT THE STARS OF
THE STOCK UNIVERSE.
-------------------------------------
AIM Constellation Fund is for shareholders who seek growth of capital by
investing principally in common stocks of companies the portfolio managers
believe are likely to benefit from new or innovative products, services or
processes, as well as those that have experienced above-average long-term growth
in earnings and have excellent prospects for future growth.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Constellation 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 In addition to returns as of the close of the fiscal year, found later in
this report, 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, 48.54%; five years,
18.59%; 10 years, 24.22%. Class B shares, one year, 50.91%; inception
(11/3/97), 22.37%. Class C shares, one year, 54.93%; inception (8/4/97),
20.70%.
o Investing in micro-, small and mid-sized companies may involve risks not
associated with investing in more established companies. Also, micro and
small companies may have a 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 Lipper Multi-Cap Growth Fund Index represents an average of
the performance of the 30 largest multi-capitalization growth funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o The 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 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 CONSTELLATION 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 CONSTELLATION FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND EXCELS IN CHALLENGING MARKET ENVIRONMENT
AFTER SETTING RECORDS DURING THE FIRST HALF OF THE FISCAL YEAR, STOCK-MARKET
INDEXES PLUMMETED IN THE SECOND HALF. HOW DID AIM CONSTELLATION FUND PERFORM?
Although stocks were particularly volatile over the last seven months of the
fiscal year, the fund's performance was excellent. Excluding sales charges,
total returns for Class A, Class B and Class C shares were 36.56%, 35.51% and
35.52%, respectively, for the 12-month period ended October 31, 2000. By
comparison, the S&P 500 and the Lipper Multi-Cap Growth Fund Index posted
returns of 6.08% and 26.81%, respectively, over the same period.
Your 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.
During the fiscal year, the fund's total net assets grew from $15.3 billion
to $21.3 billion.
WHAT WERE THE MAJOR STOCK-MARKET TRENDS?
A strong market rally in the first half of the fiscal year was followed by a
choppy, downward-trending market in the second half. In late 1999 and early
2000, technology stocks led the market surge. The tech-laden Nasdaq soared to
record levels well into March. Toward the end of the month, however, investors
became concerned that tech stocks might be overvalued, sparking a sharp sell-off
in this sector. The stocks of Internet companies with no earnings were
particularly hard hit. Investors were also concerned that the Federal Reserve
Board (the Fed) might continue to raise interest rates to slow torrid economic
growth and contain inflation. Interest-rate concerns prompted a sell-off that
affected nearly every stock-market sector in April and caused markets to be
extremely volatile.
After raising interest rates in May, the Fed ceased its monetary tightening
policy for the remainder of the fiscal year. Markets rallied in late May and
June amid mounting evidence that economic growth was slowing, reducing the
probability of additional Fed rate hikes. However, in late summer and early
fall, rising oil prices, unrest in the Middle East and, perhaps most
importantly, concern about corporate earnings converged to produce another steep
market decline. A number of major corporations reported earnings disappointments
in September and October, as rising oil prices and a weak euro cut into profit
margins.
Because of strong performance during the first half of the fiscal year, most
market indexes recorded gains for the reporting period. After tech stocks faded,
stocks in several other sectors, such as health care, financial services, energy
and utilities, posted healthy gains. Mid-cap stocks outperformed large- and
small-cap stocks. During the first half of the year, growth stocks outperformed
value stocks by a wide margin. But in the second half of the year, the situation
was reversed, with value stocks emerging as the clear-cut market leaders.
HOW WAS THE FUND MANAGED?
During the fiscal year, we reduced the number of holdings in the portfolio from
171 to 111 as we sold the stocks of companies that failed to meet our earnings
expectations. Simultaneously, we enhanced the fund's positions in the stocks of
companies that we believe have solid long-term growth prospects.
Relative to its benchmark, the S&P 500, the portfolio was overweighted in
technology and consumer-cyclical stocks. While both sectors struggled at times,
portfolio managers found a number of companies with solid earnings-growth
prospects in these sectors. Indeed, the portfolio's technology holdings boosted
performance, particularly because we avoided volatile dot-com stocks. The
portfolio also bene-
-------------------------------------
INDEED, THE PORTFOLIO'S TECHNOLOGY
HOLDINGS BOOSTED PERFORMANCE,
PARTICULARLY BECAUSE WE AVOIDED
VOLATILE DOT-COM STOCKS.
-------------------------------------
================================================================================
FUND PROVIDES SOLID RETURNS
Total returns, year ended 10/31/00,
excluding sales charges
================================================================================
FUND CLASS A SHARES 36.56%
FUND CLASS B SHARES 35.51%
FUND CLASS C SHARES 35.52%
S&P 500 6.08%
LIPPER MULTI-CAP GROWTH FUND INDEX 26.81%
================================================================================
================================================================================
GROWTH OF TOTAL NET ASSETS
================================================================================
10/31/99 $15.3 billion
10/31/00 $21.3 billion
================================================================================
See important fund and index disclosures inside front cover.
AIM CONSTELLATION FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
fited from its health-care holdings, especially pharmaceutical stocks, and
its energy holdings Demand for health-care services tends to remain constant,
regardless of economic trends, while energy stocks benefited from rising oil
prices.
Early in the fiscal year, the fund was given increased flexibility to seek
out the most attractive stocks regardless of market capitalization. This
strategy has allowed the fund to take advantage of rallies within various
segments of the market and to hold on to strong-performing stocks as they grow
in market capitalization. The fund thus got a boost from its mid-cap holdings.
At the end of the fiscal year, large-cap stocks made up about 75% of the
portfolio, while mid-cap stocks made up more than 20%. The fund had relatively
limited exposure to small-cap stocks.
WHAT WERE THE LEADING TECH STOCKS IN THE PORTFOLIO?
The top tech holdings changed relatively little over the six months since our
last report. At the close of the fiscal year, VERITAS was the fund's top
holding. The company is the world's leading maker of storage-management
software, which protects networks against data loss from crashes and errors,
expedites data recovery and manages corporate storage. Corning, the fund's
second-largest holding, is the inventor and one of the world's top manufacturers
of fiber-optic cable, while Check Point Software Technologies supplies software
that protects corporate networks from unauthorized access.
Other tech stocks in the portfolio included JDS Uniphase, which makes laser
equipment to increase the carrying capacity of optical fibers; Comverse
Technology, the leading maker of voice-mail messaging systems; and Cisco
Systems, a leading provider of products that link networks and power the
Internet.
WHAT OTHER STOCKS PERFORMED WELL FOR THE FUND?
In the financial sector, the fund benefited from owning the stocks of J.P.
Morgan and Goldman Sachs, two leading investment-banking firms. J.P. Morgan,
which also offers commercial-banking services, has agreed to be acquired by
Chase Manhattan, another fund holding. Goldman Sachs, with more than 40 offices
worldwide, went public last year. In the health-care sector, PE Biosystems
provides technology for research in the life sciences.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
At the close of the reporting period, the economic climate appeared favorable
for stocks despite often extreme market volatility. The nation's unemployment
rate was at its lowest level in three decades. And except for higher oil prices,
inflation was moderate.
Interest rates stabilized as the Fed took at least a temporary respite from
its monetary tightening policy, which had periodically roiled markets for more
than a year. Perhaps most importantly, corporate profit growth, while declining,
was still impressive for many companies. However, because of a degree of
uncertainty surrounding near-term economic, political and foreign trends and
developments, markets may continue to be volatile.
================================================================================
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
===========================================================================================
TOP 10 INDUSTRIES TOP 10 HOLDINGS
===========================================================================================
<S> <C> <C> <C>
1. Computers (Software & Services) 13.64% 1. VERITAS Software Corp. 3.31%
2. Communications Equipment 10.98 2. Corning Inc. 2.96
3. Electronics (Semiconductors) 9.64 3. Check Point Software 2.66
Technologies Ltd. (Israel)
4. Oil & Gas (Drilling & Equipment) 5.37 4. JDS Uniphase Corp. 2.10
5. Investment Banking/Brokerage 4.86 5. Comverse Technology, Inc 2.10
6. Computers (Networking) 3.53 6. Cisco Systems, Inc. 1.77
7. Broadcasting 3.45 7. J.P. Morgan & Co., Inc. 1.75
(Television, Radio & Cable)
8. Health Care 2.92 8. PE Corp-PE Biosystems Group 1.65
(Medical Products & Supplies)
9. Computers (Peripherals) 2.77 9. Goldman Sachs Group, Inc. (The) 1.59
10. Financial (Diversified) 2.73 10. PMC-Sierra, Inc. (Canada) 1.59
The fund's holdings are 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
read-ing 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 CONSTELLATION FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
4/30/76-10/31/00
This chart compares your fund to benchmark indexes. It is intended to give you a
general idea of how your fund performed compared to the stock market over the
period 4/30/76-10/31/00. It is important to understand the difference between
your fund and an index. An index measures the performance of a hypothetical
portfolio, in this case the S&P 500 and the Nasdaq. Market indexes such as the
S&P 500 and the Nasdaq are 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 (4/30/76) 19.01%
10 Years 23.81
5 Years 17.58
1 Year 29.03*
*36.56%, excluding sales charges
CLASS B SHARES
Inception (11/3/97) 18.81%
1 Year 30.51*
*35.51%, excluding CDSC
CLASS C SHARES
Inception (8/4/97) 17.55%
1 Year 34.52*
*35.52%, excluding CDSC
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
For fund performance calculations and descriptions of the indexes on this page,
please see the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
AIM CONSTELLATION FUND
4
<PAGE> 7
ANNUAL REPORT / PERFORMANCE HISTORY
in thousands
================================================================================
AIM CONSTELLATION FUND NASDAQ S&P 500
--------------------------------------------------------------------------------
4/30/76 9443 10000 10000
10/76 9102 10115.5 10284.7
10/77 8575 11450.9 10010.9
10/78 10329 12732 10541.5
10/79 15619 16014.7 12479.8
10/80 31348 23107.1 17415.5
10/81 30638 22354.5 16481.4
10/82 29000 25789.2 19150.2
10/83 40569 31712.9 24047.6
10/84 35867 26923.8 24770
10/85 39649 34852.3 31943.3
10/86 58139 39916.7 40780.5
10/87 56748 33876.6 38869.3
10/88 69979 41235.6 47917.8
10/89 94817 50631.6 62671.5
10/90 79482 39860.1 60495.8
10/91 141356 58159.4 72773.1
10/92 162306 72461.1 86193.3
10/93 208732 83746.6 94878.4
10/94 224288 83294.8 95867.4
10/95 299259 117584 131273
10/96 332949 143496 167828
10/97 395745 177681 215665
10/98 386638 216423 266742
10/99 521227 370355 322472
10/00 711761 374071 335256
$711,761 $374,071 $335,256
AIM CONSTELLATION FUND NASDAQ S&P 500
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
AIM CONSTELLATION FUND
5
<PAGE> 8
ANNUAL REPORT / FOR CONSIDERATION
[ART WORK]
CHOOSE YOUR INVESTMENT PALETTE
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and to
spread their risk over several different funds, rather than painting their
portfolios all one color.
GROWTH VS. INCOME
If you look at the list of AIM's retail mutual funds on the back of your fund
report, you'll notice that they are divided into different types. Two that
frequently appear are growth and income. Common stock is normally the growth
component of a mutual fund with growth as a primary or secondary objective.
Bonds are typically the income components of a mutual fund with income as a
primary or secondary objective.
Let's take a closer look at the categories into which AIM's retail mutual
funds are divided. Keep in mind that funds listed under the same category don't
necessarily have the same kind of investment strategy or portfolio, even if they
have the same objective.
DOMESTIC MUTUAL FUNDS
GROWTH FUNDS
Growth funds typically invest in common stocks of companies whose businesses are
growing. Growth companies tend to reinvest their profits toward expansion of
their potential to produce greater returns instead of paying dividends. So
growth mutual funds focus on generating capital gains--increasing the value of
the stocks they hold--rather than current income, which means they generally
don't pay regular income dividends. Growth funds usually do, however, make one
capital-gains distribution per year, when there are gains.
An increase over time in the value of a growth fund's portfolio means the
fund's value, or share price, increases over time also. Shareholders in a growth
fund, then, make money by selling their shares for more than they paid for them.
Of course, the opposite is also true--shareholders can lose money by selling
their shares for less than they paid for them. Growth funds usually range from
moderate to very aggressive, depending on the size and types of companies in
which they invest.
GROWTH AND INCOME FUNDS
A growth and income fund generally invests in common and preferred stocks and
bonds of older, more established companies that have a longer track record of
growth and paying dividends.
A typical growth and income mutual fund will pay quarterly or annual income
dividends to its shareholders. (Monthly dividends are not common.) In this way,
growth and income funds can potentially provide long-term growth of investments
and also current income. These funds tend to be more conservative than growth
funds.
INCOME FUNDS
Income funds are generally designed to provide high current income rather than
long-term growth. To that end, income funds usually invest chiefly in
interest-paying corporate and government bonds. They may also own stocks of
companies that pay regular dividends. Some income funds are more aggressive than
others. The aggressiveness of a particular fund depends not only on the kinds of
securities in which it invests, but also on the fund's sector allocation and
maturity structure.
For example, Treasury securities are considered a relatively safe investment
because they are guaranteed by the U.S. government. However, lower risk also
means lower return potential. On the other hand, lower-rated corporate bonds,
often called junk bonds, involve more risk because they are not guaranteed--they
are only as good as the companies that issue them. But the added risk also means
higher return potential.
Income funds are considered more conservative and are suited for investors
seeking income rather than growth.
[ART WORK]
AIM CONSTELLATION FUND
6
<PAGE> 9
ANNUAL REPORT / FOR CONSIDERATION
TAX-FREE INCOME OR MUNICIPAL FUNDS
These funds provide shareholders with current income that is tax-exempt at some
level, depending on the securities in which they invest. So municipal mutual
funds appeal to investors who are looking to reduce income that would otherwise
be subject to tax. Municipal bonds or notes, which are issued by state or local
governments, are generally exempt from federal taxes. Federal securities, like
Treasury bonds, are usually exempt from state taxes. And then there are some
securities that are exempt from both federal and state taxes.(1)
MONEY MARKET FUNDS
A money market fund is one of the safest types of mutual funds available because
its main goal is preserving your investment while paying current income in the
form of interest. As a result, these funds tend to appeal to investors looking
for safety, liquidity and some income from their investment. Money market funds
invest in high-quality short-term securities such as commercial paper and U.S.
government agency securities. Although money market funds are not guaranteed or
insured by the U.S. government, the securities they hold are less risky than
other types of fixed-income securities. The trade-off for safety of principal
investment is a lower rate of return.(2)
[ART WORK]
INTERNATIONAL AND GLOBAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
An international growth fund has the same objective as a domestic growth fund,
except it invests in stocks of companies located outside the United States. Like
their domestic counterparts, international growth funds tend to pay
distributions in the form of capital gains rather than dividends. An
international growth mutual fund might invest in a particular country, region or
continent depending on the investment strategy shown in its prospectus.
International funds carry different risks than domestic funds because most
foreign markets are not as established as the markets in the United States.
Other risks include changes in the value of the U.S. dollar compared to foreign
currencies, accounting differences, political risks and foreign regulatory
differences.
GLOBAL GROWTH, GLOBAL GROWTH AND INCOME, AND GLOBAL INCOME FUNDS
These funds are similar to their domestic equivalents in terms of their goals
and the income distributions they pay. Global funds are comparable to
international funds in that they can invest in stocks of companies outside the
United States. But global funds can also invest substantially in U.S. stocks;
international funds generally do not. The amount of a global fund's portfolio
that can be invested in the United States varies greatly from fund to fund,
according to a fund's prospectus. Global funds carry the same risks as
international funds.
SPECIALIZED FUNDS
THEME FUNDS
Theme or sector funds invest primarily in a particular industry or sector of the
economy, either domestically or globally. Theme funds are required by prospectus
to invest a certain percentage of their assets in their industry or sector of
choice under normal market conditions. As a result, theme funds present greater
risk and potential reward than more diversified funds. The types of securities
held by a theme fund determine its goal of growth and/or income.
================================================================================
TYPES OF FUND DISTRIBUTIONS
INCOME DIVIDENDS are paid from dividends and/or interest from securities in a
fund's portfolio. For example, if a company in which a mutual fund owns stock
distributes some of its earnings to its shareholders as a dividend, the fund
passes on those earnings to its own shareholders. Income dividends are usually
taxed as ordinary income.
CAPITAL GAINS represent the net profit realized from the growth in value of the
holdings in a fund's portfolio. These distributions are usually made once per
year. There are two types of capital gains:
o Short-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for less than a year. Short-term capital
gains are taxed as ordinary income.
o Long-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for more than a year. Long-term capital
gains are usually taxed at the capital-gains rate, which is typically lower
than ordinary income-tax rates.
================================================================================
(1) Investors in tax-free income funds still have a risk of incurring taxes on
capital-gains distributions, for example, so it's wise to see your tax advisor
before investing in such funds.
(2) There is no guarantee that a money market fund will be able to maintain a
stable net asset value of $1.00 per share.
See the back cover for a complete list of AIM's retail mutual funds. For more
information about your fund's objective, read your fund prospectus. For more
complete information about any AIM fund(s), including sales charges and
expenses, ask your financial advisor or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.
AIM CONSTELLATION FUND
7
<PAGE> 10
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-91.25%
BANKS (MAJOR REGIONAL)-1.56%
Northern Trust Corp. 2,250,000 $ 192,093,750
---------------------------------------------------------------
State Street Corp. 1,125,000 140,332,500
===============================================================
332,426,250
===============================================================
BANKS (MONEY CENTER)-0.64%
Chase Manhattan Corp. (The) 3,000,000 136,500,000
===============================================================
BIOTECHNOLOGY-0.31%
Amgen Inc.(a) 1,137,800 65,921,287
===============================================================
BROADCASTING (TELEVISION, RADIO
& CABLE)-3.45%
Comcast Corp.-Class A(a) 2,500,000 101,875,000
---------------------------------------------------------------
General Motors Corp.-Class H(a) 9,050,000 293,220,000
---------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 5,750,000 179,687,500
---------------------------------------------------------------
Univision Communications
Inc.-Class A(a) 3,329,600 127,357,200
---------------------------------------------------------------
Westwood One, Inc.(a) 1,706,300 32,313,143
===============================================================
734,452,843
===============================================================
COMMUNICATIONS EQUIPMENT-10.98%
ADC Telecommunications, Inc.(a) 13,250,000 283,218,750
---------------------------------------------------------------
Alcatel S.A.-ADR (France) 5,250,000 327,468,750
---------------------------------------------------------------
CIENA Corp.(a) 1,125,800 118,349,725
---------------------------------------------------------------
Comverse Technology, Inc.(a) 4,000,000 447,000,000
---------------------------------------------------------------
Corning Inc. 8,250,000 631,125,000
---------------------------------------------------------------
JDS Uniphase Corp.(a) 5,500,000 447,562,500
---------------------------------------------------------------
Scientific-Atlanta, Inc. 1,250,000 85,546,875
===============================================================
2,340,271,600
===============================================================
COMPUTERS (HARDWARE)-2.69%
Palm, Inc.(a) 4,500,000 241,031,250
---------------------------------------------------------------
Sun Microsystems, Inc.(a) 3,000,000 332,625,000
===============================================================
573,656,250
===============================================================
COMPUTERS (NETWORKING)-3.53%
Cisco Systems, Inc.(a) 7,000,000 377,125,000
---------------------------------------------------------------
Juniper Networks, Inc.(a) 1,250,000 243,750,000
---------------------------------------------------------------
VeriSign, Inc.(a) 1,000,000 132,000,000
===============================================================
752,875,000
===============================================================
COMPUTERS (PERIPHERALS)-2.77%
Brocade Communications Systems,
Inc.(a) 1,425,000 324,009,375
---------------------------------------------------------------
EMC Corp.(a) 3,000,000 267,187,500
===============================================================
591,196,875
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE &
SERVICES)-13.64%
Ariba, Inc.(a) 2,200,000 $ 278,025,000
---------------------------------------------------------------
BEA Systems, Inc.(a) 2,200,000 157,850,000
---------------------------------------------------------------
Business Objects S.A.-ADR
(France)(a) 1,000,000 78,796,875
---------------------------------------------------------------
Check Point Software
Technologies Ltd. (Israel)(a) 3,581,300 567,188,387
---------------------------------------------------------------
Gemstar-TV Guide International,
Inc.(a) 1,000,000 68,562,500
---------------------------------------------------------------
i2 Technologies, Inc.(a) 1,400,000 238,000,000
---------------------------------------------------------------
InfoSpace, Inc.(a) 4,025,000 81,003,125
---------------------------------------------------------------
Intuit Inc.(a) 2,000,000 122,875,000
---------------------------------------------------------------
Oracle Corp.(a) 5,147,200 169,857,600
---------------------------------------------------------------
Portal Software, Inc.(a) 2,500,000 87,968,750
---------------------------------------------------------------
Rational Software Corp.(a) 2,283,700 136,308,452
---------------------------------------------------------------
Siebel Systems, Inc.(a) 2,039,800 214,051,512
---------------------------------------------------------------
VERITAS Software Corp.(a) 5,000,000 705,078,125
===============================================================
2,905,565,326
===============================================================
CONSUMER FINANCE-1.48%
Capital One Financial Corp. 2,000,000 126,250,000
---------------------------------------------------------------
Providian Financial Corp. 1,825,000 189,800,000
===============================================================
316,050,000
===============================================================
ELECTRICAL EQUIPMENT-1.32%
American Power Conversion
Corp.(a) 4,099,100 53,032,106
---------------------------------------------------------------
Sanmina Corp.(a) 2,000,000 228,625,000
===============================================================
281,657,106
===============================================================
ELECTRONICS
(INSTRUMENTATION)-0.17%
Newport Corp. 322,000 36,773,406
===============================================================
ELECTRONICS
(SEMICONDUCTORS)-9.06%
Altera Corp.(a) 3,000,000 122,812,500
---------------------------------------------------------------
Analog Devices, Inc.(a) 5,138,700 334,015,500
---------------------------------------------------------------
Celestica Inc. (Canada)(a) 3,728,000 267,950,000
---------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 1,386,400 78,071,650
---------------------------------------------------------------
Linear Technology Corp. 2,000,000 129,125,000
---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 2,000,000 132,625,000
---------------------------------------------------------------
Microchip Technology Inc.(a) 3,000,168 94,880,313
---------------------------------------------------------------
PMC-Sierra, Inc. (Canada)(a) 2,000,000 339,000,000
---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 3,575,000 250,026,563
---------------------------------------------------------------
Xilinx, Inc.(a) 2,500,000 181,093,750
===============================================================
1,929,600,276
===============================================================
EQUIPMENT (SEMICONDUCTOR)-0.36%
KLA-Tencor Corp.(a) 2,250,000 76,078,125
===============================================================
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-2.73%
American Express Co. 2,500,000 $ 150,000,000
---------------------------------------------------------------
Freddie Mac 988,200 59,292,000
---------------------------------------------------------------
J.P. Morgan & Co., Inc. 2,250,000 372,375,000
===============================================================
581,667,000
===============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.19%
Forest Laboratories, Inc.(a) 1,000,000 132,500,000
---------------------------------------------------------------
Medicis Pharmaceutical
Corp.-Class A(a)(b) 1,654,100 121,783,113
===============================================================
254,283,113
===============================================================
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-1.01%
Pfizer Inc. 5,000,000 215,937,500
===============================================================
HEALTH CARE (HOSPITAL
MANAGEMENT)-1.69%
HCA-Healthcare Corp. (The) 3,000,000 119,812,500
---------------------------------------------------------------
Health Management Associates,
Inc.- Class A(a) 8,143,900 161,351,019
---------------------------------------------------------------
Tenet Healthcare Corp.(a) 2,000,000 78,625,000
===============================================================
359,788,519
===============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-2.92%
Biomet, Inc. 2,962,050 107,189,184
---------------------------------------------------------------
Medtronic, Inc. 3,000,000 162,937,500
---------------------------------------------------------------
PE Corp-PE Biosystems Group 3,000,000 351,000,000
===============================================================
621,126,684
===============================================================
INSURANCE (LIFE/HEALTH)-1.06%
AFLAC, Inc. 3,103,100 226,720,244
===============================================================
INSURANCE (MULTI-LINE)-0.57%
Ace, Ltd. (Bermuda) 3,100,000 121,675,000
===============================================================
INSURANCE BROKERS-0.40%
Aon Corp. 2,046,400 84,797,700
===============================================================
INVESTMENT
BANKING/BROKERAGE-4.86%
Goldman Sachs Group, Inc. (The) 3,400,000 339,362,500
---------------------------------------------------------------
Merrill Lynch & Co., Inc. 2,200,000 154,000,000
---------------------------------------------------------------
Morgan Stanley Dean Witter &
Co. 3,900,000 313,218,750
---------------------------------------------------------------
Schwab (Charles) Corp. (The) 6,500,000 228,312,500
===============================================================
1,034,893,750
===============================================================
INVESTMENT MANAGEMENT-0.92%
Federated Investors, Inc.-Class B 538,800 15,692,550
---------------------------------------------------------------
Stilwell Financial, Inc. 4,000,000 179,250,000
===============================================================
194,942,550
===============================================================
LEISURE TIME (PRODUCTS)-1.19%
Harley-Davidson, Inc. 5,250,000 252,984,375
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MANUFACTURING
(DIVERSIFIED)-0.59%
Danaher Corp. 2,000,000 $ 126,250,000
===============================================================
MANUFACTURING
(SPECIALIZED)-0.32%
Millipore Corp. 1,286,900 67,562,250
===============================================================
NATURAL GAS-0.54%
Enron Corp. 1,400,000 114,887,500
===============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-5.37%
BJ Services Co.(a) 1,000,000 52,437,500
---------------------------------------------------------------
Cooper Cameron Corp.(a) 2,206,200 120,237,900
---------------------------------------------------------------
ENSCO International Inc. 3,500,000 116,375,000
---------------------------------------------------------------
Grant Prideco, Inc.(a) 3,983,300 73,940,006
---------------------------------------------------------------
Nabors Industries, Inc.(a) 4,232,700 215,444,430
---------------------------------------------------------------
R&B Falcon Corp.(a) 2,674,900 66,872,500
---------------------------------------------------------------
Rowan Cos., Inc.(a) 3,622,700 91,246,756
---------------------------------------------------------------
Smith International, Inc.(a) 2,070,600 145,977,300
---------------------------------------------------------------
Transocean Sedco Forex Inc. 3,500,000 185,500,000
---------------------------------------------------------------
Weatherford International,
Inc.(a) 2,100,000 76,650,000
===============================================================
1,144,681,392
===============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-0.72%
Anadarko Petroleum Corp. 1,250,000 80,062,500
---------------------------------------------------------------
Kerr-McGee Corp. 1,115,000 72,823,438
===============================================================
152,885,938
===============================================================
RESTAURANTS-0.49%
Brinker International, Inc.(a) 2,639,400 103,596,450
===============================================================
RETAIL (BUILDING
SUPPLIES)-0.86%
Lowe's Cos., Inc. 4,000,000 182,750,000
===============================================================
RETAIL (COMPUTERS &
ELECTRONICS)-1.46%
Best Buy Co., Inc.(a) 1,553,900 77,986,356
---------------------------------------------------------------
CDW Computer Centers, Inc.(a) 1,500,000 96,656,250
---------------------------------------------------------------
RadioShack Corp. 2,294,400 136,803,600
===============================================================
311,446,206
===============================================================
RETAIL (DEPARTMENT
STORES)-1.02%
Kohl's Corp.(a) 4,000,000 216,750,000
===============================================================
RETAIL (DISCOUNTERS)-0.50%
Dollar Tree Stores, Inc.(a) 2,715,900 106,259,588
===============================================================
RETAIL (SPECIALTY)-1.61%
Bed Bath & Beyond Inc.(a) 10,000,000 258,125,000
---------------------------------------------------------------
Tiffany & Co. 2,000,000 85,375,000
===============================================================
343,500,000
===============================================================
RETAIL
(SPECIALTY-APPAREL)-1.14%
Intimate Brands, Inc. 3,000,000 71,625,000
---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
Men's Wearhouse, Inc.
(The)(a)(b) 2,487,800 $ 72,768,150
---------------------------------------------------------------
Talbots, Inc. (The) 1,250,000 98,828,125
===============================================================
243,221,275
===============================================================
SERVICES (ADVERTISING/
MARKETING)-2.10%
Lamar Advertising Co.(a)(b) 4,500,000 216,000,000
---------------------------------------------------------------
Omnicom Group Inc. 2,500,000 230,625,000
===============================================================
446,625,000
===============================================================
SERVICES (COMPUTER
SYSTEMS)-0.72%
SunGard Data Systems Inc.(a) 3,000,000 153,375,000
===============================================================
SERVICES (DATA
PROCESSING)-1.78%
Ceridian Corp.(a) 1,000,000 25,000,000
---------------------------------------------------------------
Fiserv, Inc.(a) 5,000,000 262,187,500
---------------------------------------------------------------
Paychex, Inc. 1,641,200 93,035,525
===============================================================
380,223,025
===============================================================
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-1.29%
Crown Castle International
Corp.(a) 3,500,000 106,093,750
---------------------------------------------------------------
Phone.com, Inc.(a) 1,825,000 168,926,563
===============================================================
275,020,313
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-0.24%
Qwest Communications
International Inc.(a) 1,050,000 $ 51,056,250
===============================================================
Total Common Stocks & Other
Equity Interests (Cost
$11,788,064,742) 19,441,930,966
===============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE
BONDS-0.59%
ELECTRONICS
(SEMICONDUCTORS)-0.59%
Celestica Inc. (Canada), Conv.
Yankee Bonds, 3.19%, 08/01/20
(Cost $122,154,597)(c) $244,200,000 125,152,500
===============================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-7.38%
STIC Liquid Assets Portfolio(d) 786,842,293 786,842,293
---------------------------------------------------------------
STIC Prime Portfolio(d) 786,842,293 786,842,293
===============================================================
Total Money Market Funds
(Cost $1,573,684,586) 1,573,684,586
===============================================================
TOTAL INVESTMENTS-99.22% (Cost
$13,483,903,925) 21,140,768,053
===============================================================
OTHER ASSETS LESS
LIABILITIES-0.78% 166,373,812
===============================================================
NET ASSETS-100.00% $21,307,141,865
_______________________________________________________________
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)Affiliated issuer in which the Fund's holdings of the issuer represent 5% or
more of the outstanding voting securities of the issuer. The Fund has not
owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer.
The market value as of 10/31/00 was $410,551,263, which represented 1.93% of
the Fund's net assets.
(c)Zero coupon bond issued at a discount. The interest rate shown represents the
rate of original issue discount.
(d)The money market fund and the fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$13,483,903,925) $21,140,768,053
-------------------------------------------------------------
Receivables for:
Collateral for securities loaned 1,751,204,824
-------------------------------------------------------------
Investments sold 195,686,141
-------------------------------------------------------------
Fund shares sold 102,466,015
-------------------------------------------------------------
Dividends 7,238,899
-------------------------------------------------------------
Investment for deferred compensation plan 240,744
-------------------------------------------------------------
Other assets 1,264,576
-------------------------------------------------------------
Total assets 23,198,869,252
=============================================================
LIABILITIES:
Payables for:
Investments purchased 90,980,392
-------------------------------------------------------------
Collateral upon return of securities
loaned 1,751,204,824
-------------------------------------------------------------
Fund shares reacquired 21,690,805
-------------------------------------------------------------
Deferred compensation plan 240,744
-------------------------------------------------------------
Accrued advisory fees 10,344,044
-------------------------------------------------------------
Accrued administrative services fees 65,764
-------------------------------------------------------------
Accrued distribution fees 8,412,780
-------------------------------------------------------------
Accrued trustees' fees 6,051
-------------------------------------------------------------
Accrued transfer agent fees 7,115,992
-------------------------------------------------------------
Accrued operating expenses 1,665,991
=============================================================
Total liabilities 1,891,727,387
=============================================================
Net assets applicable to shares outstanding $21,307,141,865
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $19,268,977,253
_____________________________________________________________
=============================================================
Class B $ 1,315,523,852
_____________________________________________________________
=============================================================
Class C $ 434,544,168
_____________________________________________________________
=============================================================
Institutional Class $ 288,096,592
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 442,936,863
_____________________________________________________________
=============================================================
Class B 31,116,870
_____________________________________________________________
=============================================================
Class C 10,281,339
_____________________________________________________________
=============================================================
Institutional Class 6,324,588
_____________________________________________________________
=============================================================
Class A:
Net asset value and redemption price per
share $ 43.50
-------------------------------------------------------------
Offering price per share:
(Net asset value of $43.50 divided by
94.50%) $ 46.03
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 42.28
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 42.27
_____________________________________________________________
=============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 45.55
_____________________________________________________________
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$435,333) $ 34,073,020
-------------------------------------------------------------
Dividends from affiliated money market funds 57,256,376
-------------------------------------------------------------
Interest 3,750,253
-------------------------------------------------------------
Security lending income 497,347
=============================================================
Total investment income 95,576,996
=============================================================
EXPENSES:
Advisory fees 128,677,520
-------------------------------------------------------------
Administrative services fees 731,392
-------------------------------------------------------------
Custodian fees 966,983
-------------------------------------------------------------
Distribution fees -- Class A 56,629,759
-------------------------------------------------------------
Distribution fees -- Class B 10,309,561
-------------------------------------------------------------
Distribution fees -- Class C 3,222,875
-------------------------------------------------------------
Transfer agent fees -- Class A 27,560,458
-------------------------------------------------------------
Transfer agent fees -- Class B 2,176,576
-------------------------------------------------------------
Transfer agent fees -- Class C 680,420
-------------------------------------------------------------
Transfer agent fees -- Institutional Class 47,441
-------------------------------------------------------------
Trustees' fees 59,789
-------------------------------------------------------------
Other 5,694,169
-------------------------------------------------------------
Total expenses 236,756,943
=============================================================
Less: Fees waived (6,187,566)
-------------------------------------------------------------
Expenses paid indirectly (428,909)
=============================================================
Net expenses 230,140,468
=============================================================
Net investment income (loss) (134,563,472)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN SECURITIES,
AND OPTION CONTRACTS
Net realized gain from:
Investment securities 3,909,425,835
-------------------------------------------------------------
Option contracts written 87,874,405
=============================================================
3,997,300,240
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 1,648,464,708
-------------------------------------------------------------
Foreign currencies (1,500)
-------------------------------------------------------------
Option contracts written 1,248,599
=============================================================
1,649,711,807
=============================================================
Net gain on investment securities, foreign
currencies, and option contracts 5,647,012,047
=============================================================
Net increase in net assets resulting from
operations $5,512,448,575
_____________________________________________________________
=============================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
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 (loss) $ (134,563,472) $ (76,875,258)
------------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, and option contracts 3,997,300,240 1,644,017,203
------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, and option contracts 1,649,711,807 2,669,133,759
================================================================================================
Net increase in net assets resulting from operations 5,512,448,575 4,236,275,704
================================================================================================
Distributions to shareholders from net realized gains:
Class A (1,341,534,330) (337,206,115)
------------------------------------------------------------------------------------------------
Class B (59,304,397) (8,290,207)
------------------------------------------------------------------------------------------------
Class C (16,589,886) (2,229,567)
------------------------------------------------------------------------------------------------
Institutional Class (23,400,833) (5,075,580)
------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,156,513,412 (1,783,881,252)
------------------------------------------------------------------------------------------------
Class B 575,351,569 205,093,817
------------------------------------------------------------------------------------------------
Class C 231,744,660 55,508,352
------------------------------------------------------------------------------------------------
Institutional Class (16,568,699) (4,793,973)
================================================================================================
Net increase in net assets 6,018,660,071 2,355,401,179
================================================================================================
NET ASSETS:
Beginning of year 15,288,481,794 12,933,080,615
------------------------------------------------------------------------------------------------
End of year $21,307,141,865 $15,288,481,794
________________________________________________________________________________________________
================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $10,009,800,678 $ 7,663,956,851
------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (652,603) (551,737)
------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, and option contracts 3,641,131,584 1,617,926,281
------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, and option contracts 7,656,862,206 6,007,150,399
================================================================================================
$21,307,141,865 $15,288,481,794
________________________________________________________________________________________________
================================================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation 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 four different classes of shares: Class A
shares, Class B shares, Class C shares and the Institutional Class. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Institutional Class shares are
sold without a sales charge. Matters affecting each portfolio or class will be
voted on exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is growth of capital.
The preparation of financial statements in conformity with 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
$134,462,606, undistributed net realized gains decreased by $533,265,491 and
paid in capital increased by $398,802,885 as a result of differing book/tax
differences due to utilization of a portion of the proceeds from redemptions
as distributions for federal income tax purposes and net operating loss
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security
13
<PAGE> 16
at the time the option is written. When the Fund writes a covered call
option, an amount equal to the premium received by the Fund is recorded as an
asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the sale
of the underlying security and the proceeds of the sale are increased by the
premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
F. Put Options -- The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, the
Fund pays an option premium. The option's underlying instrument may be a
security or a futures contract. Put options may be used by the Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or a
portion of the Fund's resulting losses. At the same time, because the maximum
the Fund has at risk is the cost of the option, purchasing put options does
not eliminate the potential for the Fund to profit from an increase in the
value of the securities hedged.
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"). Under the terms of the master investment agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.0% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
agreed to waive advisory fees payable by the Fund to AIM at the annual rate of
0.025% for each $5 billion increment in net assets over $5 billion, up to a
maximum waiver of 0.175% on net assets in excess of $35 billion. During the year
ended October 31, 2000, AIM waived fees of $6,187,566. Under the terms of a
master sub-advisory agreement between AIM and A I M Capital Management, Inc.
("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2000, AIM was
paid $731,392 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 $12,000,634 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, Class C and the Institutional Class 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 0.30% of the Fund's average daily net assets
of Class A shares and 1.00% of the average daily net assets of Class B and C
shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class A, Class B or Class C shares to selected dealers
and financial institutions who furnish continuing personal shareholder services
to their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended October 31, 2000, the Class A, Class B and Class
C shares paid AIM Distributors $56,629,759, $10,309,561 and $3,222,875,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $5,088,774 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 $411,140 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 $35,398
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.
14
<PAGE> 17
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 $279,535 and reductions in
custodian fees of $149,374 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $428,909.
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-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities.
At October 31, 2000, securities with an aggregate value of $1,709,326,329 were
on loan to brokers. The loans were secured by cash collateral of $1,751,204,824.
For the year ended October 31, 2000, the Fund received fees of $497,347 for
securities lending.
NOTE 7-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
$17,152,741,955 and $17,749,731,694, 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 $8,003,057,896
----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (355,852,740)
==========================================================
Net unrealized appreciation of investment
securities $7,647,205,156
__________________________________________________________
==========================================================
Cost of investments for tax purposes is $13,493,562,897.
</TABLE>
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2000 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -------------
<S> <C> <C>
Beginning of year 22,091 $ 3,848,894
-----------------------------------------------------------
Written 386,055 173,074,240
-----------------------------------------------------------
Closed (327,716) (147,865,412)
-----------------------------------------------------------
Exercised (78,989) (28,781,664)
-----------------------------------------------------------
Expired (1,441) (276,058)
===========================================================
End of year -- $ --
___________________________________________________________
===========================================================
</TABLE>
15
<PAGE> 18
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999
were as follows:
<TABLE>
<CAPTION>
2000 1999
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 86,430,817 $3,725,450,424 98,564,141 $ 2,981,238,092
---------------------------------------------------------------------------------------------------------------------------
Class B 16,075,085 679,865,751 10,942,571 332,728,027
---------------------------------------------------------------------------------------------------------------------------
Class C 6,309,791 266,777,259 5,133,893 156,450,704
---------------------------------------------------------------------------------------------------------------------------
Institutional Class 3,694,065 165,186,338 1,596,295 51,100,608
===========================================================================================================================
Issued as reinvestment of dividends:
Class A 34,136,740 1,274,304,836 11,320,463 318,895,308
---------------------------------------------------------------------------------------------------------------------------
Class B 1,560,370 57,000,776 286,888 7,992,642
---------------------------------------------------------------------------------------------------------------------------
Class C 430,722 15,725,642 75,962 2,115,494
---------------------------------------------------------------------------------------------------------------------------
Institutional Class 593,714 23,119,167 170,003 4,957,282
===========================================================================================================================
Reacquired:
Class A (90,168,284) (3,843,241,848) (167,354,090) (5,084,014,652)
---------------------------------------------------------------------------------------------------------------------------
Class B (3,863,116) (161,514,958) (4,443,036) (135,626,852)
---------------------------------------------------------------------------------------------------------------------------
Class C (1,210,375) (50,758,241) (3,390,263) (103,057,846)
---------------------------------------------------------------------------------------------------------------------------
Institutional Class (4,750,277) (204,874,204) (1,915,980) (60,851,863)
===========================================================================================================================
49,239,252 $1,947,040,942 (49,013,153) $(1,528,073,056)
___________________________________________________________________________________________________________________________
===========================================================================================================================
</TABLE>
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.65 $ 26.37 $ 29.23 $ 25.48 $ 23.69
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.26) (0.17) (0.14) (0.11) (0.06)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 12.39 9.18 (0.62) 4.75 2.60
=================================================================================================================================
Total from investment operations 12.13 9.01 (0.76) 4.64 2.54
=================================================================================================================================
Less distributions:
Distributions from net realized gains (3.28) (0.73) (2.10) (0.89) (0.75)
=================================================================================================================================
Net asset value, end of period $ 43.50 $ 34.65 $ 26.37 $ 29.23 $ 25.48
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(a) 36.56% 34.81% (2.30)% 18.86% 11.26%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $19,268,977 $14,292,905 $12,391,844 $14,319,441 $11,255,506
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.11%(b) 1.10% 1.10% 1.11% 1.14%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.08%(b) 1.12% 1.12% 1.13% 1.16%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.61)%(b) (0.50)% (0.47)% (0.40)% (0.27)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 88% 62% 76% 67% 58%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</TABLE>
(a)Does not include sales charges.
(b)Ratios are based on average daily net assets of $18,876,586,178.
16
<PAGE> 19
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------
YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997
---------------------- (DATE SALES COMMENCED)
2000(a) 1999 TO OCTOBER 31, 1998(a)
---------- -------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 34.00 $ 26.11 $ 30.04
--------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.58) (0.42) (0.37)
--------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 12.14 9.04 (1.46)
==============================================================================================================
Total from investment operations 11.56 8.62 (1.83)
==============================================================================================================
Less distributions:
Distributions from net realized gains (3.28) (0.73) (2.10)
==============================================================================================================
Net asset value, end of period $ 42.28 $ 34.00 $ 26.11
______________________________________________________________________________________________________________
==============================================================================================================
Total return(b) 35.51% 33.64% (5.86)%
______________________________________________________________________________________________________________
==============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,315,524 $589,718 $275,676
______________________________________________________________________________________________________________
==============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.88%(c) 1.98% 1.98%(d)
--------------------------------------------------------------------------------------------------------------
Without fee waivers 1.85%(c) 2.00% 2.00%(d)
==============================================================================================================
Ratio of net investment income (loss) to average net assets (1.38)%(c) (1.38)% (1.36)%(d)
______________________________________________________________________________________________________________
==============================================================================================================
Portfolio turnover rate 88% 62% 76%
______________________________________________________________________________________________________________
==============================================================================================================
</TABLE>
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charge and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $1,030,956,088.
(d)Annualized.
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------
YEAR ENDED OCTOBER 31, AUGUST 4, 1997
------------------------------- (DATE SALES COMMENCED)
2000(a) 1999 1998(a) TO OCTOBER 31, 1997
-------- -------- ------- ----------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 33.99 $ 26.10 $ 29.18 $ 30.32
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.59) (0.42) (0.37) (0.04)
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 12.15 9.04 (0.61) (1.10)
=======================================================================================================================
Total from investment operations 11.56 8.62 (0.98) (1.14)
=======================================================================================================================
Less distributions:
Distributions from net realized gains (3.28) (0.73) (2.10) --
=======================================================================================================================
Net asset value, end of period $ 42.27 $ 33.99 $ 26.10 $ 29.18
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) 35.52% 33.65% (3.12)% (3.76)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $434,544 $161,490 $76,522 $21,508
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.88%(c) 1.98% 1.97% 1.84%(d)
-----------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.85%(c) 2.00% 1.99% 1.86%(d)
=======================================================================================================================
Ratio of net investment income (loss) to average net assets (1.38)%(c) (1.38)% (1.35)% (1.12)%(d)
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 88% 62% 76% 67%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</TABLE>
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charge and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $322,287,527.
(d)Annualized.
17
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees
AIM Equity Funds:
We have audited the accompanying statement of assets and
liabilities of the AIM Constellation Fund (a portfolio of
AIM Equity Funds), including the schedule of investments,
as of October 31, 2000, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended, and the financial highlights
for each of the periods in the five-year period then
ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with 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
Constellation Fund as of October 31, 2000, and the
results of its operations for the year then ended, the
changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights
for each of the periods in the five-year period then
ended, in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
December 6, 2000
Houston, Texas
18
<PAGE> 21
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM Constellation 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 approve changing the fundamental investment restrictions of the Fund.
(5) 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) Adjournment of approval of a new Master Investment Advisory
Agreement with A I M Advisors, Inc. ........................ 148,815,037 3,775,840 108,949,703**
(4)(a) Adjournment of approval of changing or adding the
Fundamental Restriction on Issuer Diversification........... 146,725,898 4,748,423 110,066,259**
(4)(b) Adjournment of approval of changing the Fundamental
Restriction on Borrowing Money and Issuing Senior
Securities.................................................. 145,567,651 5,945,414 110,027,515**
(4)(c) Adjournment of approval of changing the Fundamental
Restriction on Underwriting Securities...................... 146,308,708 5,185,210 110,046,662**
(4)(d) Adjournment of approval of changing the Fundamental
Restriction on Industry Concentration....................... 146,629,854 4,935,728 109,974,998**
(4)(e) Adjournment of approval of changing the Fundamental
Restriction on Purchasing or Selling Real Estate............ 145,325,584 6,234,164 109,980,832**
(4)(f) Adjournment of approval of changing the Fundamental
Restriction on Purchasing or Selling Commodities............ 144,829,553 6,767,318 109,943,709**
(4)(g) Adjournment of approval of changing the Fundamental
Restriction on Making Loans................................. 144,381,770 7,183,646 109,975,164**
(4)(h) Adjournment of approval of a new Fundamental Investment
Restriction on Investing all of the Fund's Assets in an
Open-End Fund............................................... 143,819,821 7,611,875 110,108,884**
(4)(i) Adjournment of approval of the Elimination of Fundamental
Restriction on Investing for the Purpose of Control......... 145,888,753 5,810,782 109,841,045**
(5) Ratification of the selection of KPMG LLP as Independent
Accountants of the Fund..................................... 252,917,796 1,877,459 6,745,325
</TABLE>
19
<PAGE> 22
The Special Meeting of Shareholders of the Company was reconvened on May
31, 2000. The following matters were 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 Fund, Inc. as a Delaware business trust.............. 771,237,475 25,045,711 214,550,642**
(3) Approval of a new Master Investment Advisory Agreement with
A I M Advisors, Inc. ....................................... 207,567,563 4,837,946 66,979,021**
(4)(a) Approval of changing or adding the Fundamental Restriction
on Issuer Diversification................................... 204,889,217 6,178,168 68,317,145**
(4)(b) Approval of changing the Fundamental Restriction on
Borrowing Money and Issuing Senior Securities............... 203,431,254 7,697,924 68,255,352**
(4)(c) Approval of changing the Fundamental Restriction on
Underwriting Securities..................................... 204,289,667 6,800,691 68,294,172**
(4)(d) Approval of changing the Fundamental Restriction on Industry
Concentration............................................... 204,842,375 6,345,147 68,197,008**
(4)(e) Approval of changing the Fundamental Restriction on
Purchasing or Selling Real Estate........................... 203,254,575 7,923,816 68,206,139**
(4)(f) Approval of changing the Fundamental Restriction on
Purchasing or Selling Commodities........................... 202,670,638 8,560,026 68,153,866**
(4)(g) Approval of changing the Fundamental Restriction on Making
Loans....................................................... 202,080,016 9,088,427 68,216,087**
(4)(h) Approval of a new Fundamental Investment Restriction on
Investing all of the Fund's assets in an Open-End Fund...... 201,812,739 9,181,293 68,390,498**
(4)(i) Approval of the Elimination of Fundamental Restriction on
Investing for the Purpose of Control........................ 203,831,333 7,497,035 68,056,162**
</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 and 2 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.
20
<PAGE> 23
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
SUB-ADVISOR
Owen Daly II Dana R. Sutton
Formerly Director Vice President and Treasurer A I M Capital Management, Inc.
Cortland Trust Inc. 11 Greenway Plaza
Jim A. Coppedge Suite 100
Albert R. Dowden Assistant Secretary Houston, TX 77046
Chairman of the Board of Directors,
The Cortland Trust and DHJ Media, Inc.; and Melville B. Cox TRANSFER AGENT
Director, Magellan Insurance Company, Vice President
Formerly Director, President and A I M Fund Services, Inc.
Chief Executive Officer, Mary J. Benson P.O. Box 4739
Volvo Group North America, Inc.; and Assistant Vice President and Houston, TX 77210-4739
Senior Vice President, AB Volvo Assistant Treasurer
CUSTODIAN
Edward K. Dunn Jr. Sheri Morris
Chairman, Mercantile Mortgage Corp.; Assistant Vice President and State Street Bank and Trust Company
Formerly Vice Chairman and President, Assistant Treasurer 225 Franklin Street
Mercantile-Safe Deposit & Trust Co.; and Boston, MA 02110
President, Mercantile Bankshares Renee A. Friedli
Assistant Secretary COUNSEL TO THE FUND
Jack Fields
Chief Executive Officer P. Michelle Grace Ballard Spahr
Twenty First Century, Inc.; Assistant Secretary Andrews & Ingersoll, LLP
Formerly Member 1735 Market Street
of the U.S. House of Representatives Nancy L. Martin Philadelphia, PA 19103
Assistant Secretary
Carl Frischling COUNSEL TO THE TRUSTEES
Partner Ofelia M. Mayo
Kramer, Levin, Naftalis & Frankel LLP Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
Prema Mathai-Davis Lisa A. Moss New York, NY 10022
Formerly Chief Executive Officer, Assistant Secretary
YWCA of the U.S.A. DISTRIBUTOR
Kathleen J. Pflueger
Lewis F. Pennock Assistant Secretary A I M Distributors, Inc.
Partner 11 Greenway Plaza
Pennock & Cooper Suite 100
Houston, TX 77046
Louis S. Sklar
Executive Vice President AUDITORS
Hines Interests
Limited Partnership KPMG LLP
700 Louisiana
Houston, TX 77002
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REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended
October 31, 2000, 0% is eligible for the dividends received deduction for
corporations. The Fund distributed long-term capital gains of $1,973,978,446 for
the Fund's tax year ended October 31, 2000. Of long-term capital gains
distributed, 100% is 20% rate gain.
<PAGE> 24
THE AIM FAMILY OF FUNDS--Registered Trademark--
EQUITY FUNDS
<TABLE>
<S> <C> <C>
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 billion in assets for more than eight
AIM Small Cap Opportunities(1) AIM Latin American Growth million shareholders, including
AIM Mid Cap Opportunities(2) AIM Developing Markets individual investors, corporate clients
AIM Large Cap Opportunities(3) AIM European Small Company and financial institutions, as of
AIM Emerging Growth AIM Asian Growth September 30, 2000.
AIM Small Cap Growth(4) AIM Japan Growth The AIM Family of Funds--Registered
AIM Aggressive Growth AIM International Emerging Growth Trademark-- is distributed nationwide,
AIM Mid Cap Growth AIM European Development and AIM today is the eighth-largest
AIM Small Cap Equity AIM Euroland Growth mutual fund complex in the United States
AIM Capital Development AIM Global Aggressive Growth in assets under management, according to
AIM Constellation AIM International Equity Strategic Insight, an independent mutual
AIM Dent Demographic Trends AIM Advisor International Value fund monitor.
AIM Select Growth AIM Global Trends AIM is a subsidiary of AMVESCAP PLC,
AIM Large Cap Growth AIM Global Growth one of the world's largest independent
AIM Weingarten financial services companies with $414
AIM Mid Cap Equity MORE CONSERVATIVE billion in assets under management as of
AIM Value II September 30, 2000.
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--
CST-AR-1
A I M Distributors, Inc.
