<PAGE> 1
SEMIANNUAL REPORT / JANUARY 31, 2000
AIM SMALL CAP OPPORTUNITIES FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[PHOTO APPEARS HERE] THE INDEPENDENCE DAY PARADE BY JANE
WOOSTER SCOTT
JUST AS SMALL BUSINESSES ARE A KEY
COMPONENT OF THIS FESTIVE PAINTING,
SMALL COMPANIES ARE AN IMPORTANT PART
OF THE U.S. ECONOMIC LANDSCAPE. IN
AIM SMALL CAP OPPORTUNITIES FUND, WE
ENDEAVOR TO OWN THE STOCKS OF SMALLER
COMPANIES THAT WE BELIEVE HAVE EXCITING
POTENTIAL.
AIM Small Cap Opportunities Fund is for shareholders who seek long-term growth
of capital by investing in a portfolio consisting primarily of small-company
stocks which management believes involve "special opportunities."
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Small Cap Opportunities Fund's performance figures are historical, and
they reflect changes in net asset value and the reinvestment of
distributions.
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 expenses.
o The fund's average annual total returns, including sales charges, for the
periods ended 12/31/99 (the most recent calendar quarter end), were as
follows. Class A shares, one year, 74.09%, inception (6/29/98), 60.77%. Class
B shares, one year, 77.93%, inception (7/13/98), 65.00%. Class C shares, one
year, 82.19%; inception (12/30/98), 87.19%.
o The fund has been closed to new investors since 11/4/99.
o The fund's base management fee is 1.00%. Effective January 1, 2001, this fee
is subject to a maximum 0.75% performance adjustment upward or downward. As a
result, beginning January 1, 2001, the fund could pay a management fee that
ranges from 0.25% to 1.75% of average daily net assets based on its
performance.
o The fund participates in the initial public offering (IPO) market, and a
portion of the fund's returns is attributable to its investment in IPOs,
which have a magnified impact due to the fund's relatively small asset base.
There is no guarantee that as the fund's assets grow, it will continue to
experience substantially similar performance by investing in IPOs.
o Investing in smaller companies may involve greater risk and potential reward
than investing in more established companies.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The unmanaged Lipper Small Cap Funds Index represents an average of the
performance of the 30 largest small-capitalization growth funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 2000 Index is generally considered representative of
the performance of stocks of small-capitalization companies. The unmanaged
Russell 2000 Growth Index measures the performance of those Russell 2000
companies with higher price-to-book ratios and higher forecasted growth
values.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends and 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 SMALL CAP OPPORTUNITIES FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
[PHOTO OF Dear Fellow Shareholder:
Charles T.
Bauer, During 1999 and very early this year, well-known indicators of
Chairman of large-company stocks such as the Dow Jones Industrial Average
the Board of and the S&P 500 began to seem unstoppable. Yet toward the close
the Fund, of the six-month period covered by this report, both came to an
APPEARS HERE] abrupt halt. The Dow had reached an all-time high of 11,723 in
mid-January; by January 31, it had declined to 10,940.
Similarly, the S&P 500 reached its all-time high of 1,469 at the
end of 1999; one month later that index stood at 1,394.
However, some sectors of the stock market, particularly technology, remained
favorites. The tech-dominated NASDAQ Composite Index continued to rise, reaching
3,940 on January 31, up 49.52% in six months and headed toward new highs after
the close of the reporting period. The ascent of this sector had many worried,
however, as market valuations of some tech companies soared to untested heights.
While a number of observers anticipated a change in market sentiment, no one can
predict when that might occur.
We think this divergent market is a good environment for the long-short
strategy pursued by your fund. The strategy, which is explained in further
detail in the pages that follow, attempts to take advantage of downturns in
segments of the market as well as rallies.
LOOKING AHEAD
As we look about at the close of this reporting period, we are encouraged by
multiple signs of economic health in Europe and Asia, not to mention the U.S.
economic expansion, which is now the longest on record; and we welcome the
Federal Reserve's vigilant stance on inflation. However, we know how quickly
the fortunes of the market or of a market segment can change. For our
shareholders, we therefore reiterate our commitment to investing through a
financial advisor. In addition to helping you select investments appropriate to
your time horizon and risk tolerance, a financial advisor can keep you informed
about how shifting market conditions affect you and your portfolio--and help
assure that when you do alter your investments, there's a logical reason for
doing so. AIM believes every investor should be guided by a financial
professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the six months ended January 31, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative. If you have any questions or comments, we invite you to
contact us, either at our Web site, aimfunds.com, or through our Client Services
department at 800-959-4246. Information about your account is also available
through our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
---------------------------
WE THINK THIS
DIVERGENT MARKET IS A
GOOD ENVIRONMENT FOR
THE LONG-SHORT STRATEGY
PURSUED BY YOUR FUND.
---------------------------
AIM SMALL CAP OPPORTUNITIES FUND
<PAGE> 4
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
TECH-STOCK RALLY HELPS FUND POST EXCELLENT RETURNS
SMALLER-COMPANY STOCKS REGISTERED IMPRESSIVE GAINS DURING THE REPORTING PERIOD.
HOW DID AIM SMALL CAP OPPORTUNITIES FUND PERFORM?
The fund's performance was excellent. Excluding sales charges, total returns
were 48.68%, 48.12% and 48.06% for Class A, Class B and Class C shares,
respectively, for the six months ended January 31, 2000. The fund significantly
outperformed the Russell 2000 Index and the Lipper Small Cap Funds Index, which
posted gains of 12.25% and 28.85%, respectively, for the same period.
During the six-month reporting period, the fund's total net assets increased
from $365 million to $698 million. The fund was closed to new investors on
November 4, 1999.
HOW DID THE STOCK MARKET FARE DURING THE REPORTING PERIOD?
Several stock indexes, including the Dow, soared to new heights during the
reporting period, but this record-setting performance masked a relatively narrow
market. The best-performing stocks were those with the most perceived growth
potential: technology, telecommunications and broadcasting. Computers,
e-commerce and the Internet are changing the way the world communicates and
conducts business, and investors sought to capitalize on this revolution.
Stock markets were volatile as investors were concerned about rising interest
rates. During the reporting period, the Federal Reserve Board (the Fed) raised
the key federal funds rate from 5% to 5.50%. In December, a Fed decision to
leave rates unchanged sparked a market rally. Markets dipped in late January
amid heightened concerns that the Fed would again tighten monetary policy.
Large-, mid- and small-cap stock indexes all posted impressive gains for the
period. Indeed, the Russell 2000 Index, a benchmark for the performance of
small-cap stocks, erased the deep losses it sustained in 1998, rising to a
record level before retreating as the reporting period closed.
WHAT WAS BEHIND THE STRONG PERFORMANCE OF SMALL-CAP STOCKS?
The underperformance of small-cap stocks in recent years left them favorably
priced in comparison to large-cap stocks. That made smaller-company issues more
attractive to investors. Additionally, smaller companies are experiencing more
dramatic earnings growth than large firms. Unlike many large, multinational
corporations, smaller companies conduct most of their business in the United
States, where economic growth has been robust. Consequently, the profits of
smaller firms are usually less affected by economic downturns abroad.
WHAT WAS BEHIND THE FUND'S SOLID PERFORMANCE?
The fund's heavy weighting in technology stocks allowed it to take advantage of
the strong rally in that sector. Over the reporting period, we increased the
fund's technology holdings from 42% to 65% of the portfolio. Simultaneously, we
reduced the consumer-cyclical weighting from 29% to about 9% of the fund's
holdings.
Please keep in mind that our sector weightings were the result of our
stock-selection process, which is based on company earnings and not
macro-economic predictions. We believe that earnings drive stock prices. We are
finding more companies with excellent growth prospects in the technology sector.
The fund participates in the Initial Public Offering (IPO) market, and a
portion of the fund's return is attributable to its investment in IPO's, which
had a magnified impact due to the fund's relatively small asset base. There is
no guarantee that as the fund's assets grow, it will con-
See important fund and index disclosures inside front cover.
AIM SMALL CAP OPPORTUNITIES FUND
================================================================================
CUMULATIVE TOTAL RETURNS
For the six months ended 1/31/00, excluding sales charges
Class A Shares 48.68%
Class B Shares 48.12%
Class C Shares 48.06%
Russell 2000 Index 12.25%
Lipper Small Cap Funds Index 28.85%
AVERAGE ANNUAL TOTAL RETURNS
As of 1/31/00, including sales charges
CLASS A SHARES
Inception (6/29/98) 58.89%
1 year 71.53*
* 81.54% excluding sales charges
CLASS B SHARES
Inception (7/13/98) 62.80%
1 year 75.39*
* 80.39% excluding CDSC
CLASS C SHARES
Inception (12/30/98) 81.69%
1 year 79.55*
* 80.55% excluding CDSC
================================================================================
Past performance cannot guarantee comparable future results.
Your fund's total return includes sales charges, expenses and management fees.
For fund performance calculations and descriptions of the indexes cited 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.
2
<PAGE> 5
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
<TABLE>
<CAPTION>
====================================================================================================================================
PORTFOLIO COMPOSITION
As of 1/31/00, based on total net assets
- ------------------------------------------------------------------------------------------------------------------------------------
TOP 10 STOCK HOLDINGS TOP 10 INDUSTRIES TOP 10 SHORT POSITIONS
<S> <C> <C> <C> <C> <C>
1. QLogic Corp. 2.04% 1. Computers (Software & Services) 26.50% 1. Waters Corp. 1.22%
2. Verio, Inc. 2.03 2. Electronics (Semiconductors) 10.90 2. IDEC Pharmaceuticals Corp. 1.08
3. Mercury Interactive Corp. 1.96 3. Communications Equipment 8.39 3. Royal Caribbean Cruise Ltd. 1.06
4. Jones Pharma, Inc. 1.89 4. Electrical Equipment 6.80 4. Chemdex Corp. 1.05
5. Sawtek, Inc. 1.86 5. Electronics (Instrumentation) 5.41 5. Guidant Corp. 0.94
6. Digex, Inc. 1.82 6. Computers (Peripherals) 4.99 6. Whole Foods Market, Inc. 0.92
7. Newport Corp. 1.53 7. Oil & Gas (Drilling & Equipment) 4.70 7. Polaroid Corp. 0.90
8. Polycom, Inc. 1.51 8. Equipment (Semiconductor) 3.44 8. Blyth Industries, Inc. 0.83
9. SanDisk Corp. 1.42 9. Retail (Specialty-Apparel) 3.29 9. Ocular Sciences, Inc. 0.80
10. PSW Technologies, Inc. 1.30 10. Health Care (Drugs-Generic & Other) 2.38 10. Gap, Inc. (The) 0.80
Keep in mind that the fund's portfolio is subject to change and there is no assurance the fund will continue to hold any
particular security.
====================================================================================================================================
</TABLE>
tinue to experience substantially similar performance by investing in IPOs.
CAN YOU DESCRIBE THE FUND'S ALTERNATIVE INVESTMENT STRATEGY?
The fund may employ short selling and leveraging. While the fund owns the stocks
of companies expected to experience rapid earnings growth, it can borrow the
stocks of firms expected to experience declining earnings. These borrowed stocks
(short positions) are later sold, with the intention of buying them at an
anticipated lower price. We believe a mixed portfolio of owned and borrowed
stocks (long and short positions) can potentially protect the fund during market
downturns while allowing it to take advantage of rallies. Leveraging involves
borrowing money, usually to buy additional stocks.
HOW WAS THE FUND STRUCTURED AT THE END OF THE REPORTING PERIOD?
As of January 31, 2000, the fund owned 119 stocks and held 34 short positions.
Small- and micro-cap stocks made up 54% of the fund's long positions while
mid-cap stocks made up the remainder.
WHAT TECHNOLOGY STOCKS DID YOU LIKE?
Tech stocks in the portfolio included QLogic, the fund's top holding. The
company makes products for connecting peripheral devices (such as scanners) to
computers. Verio, the fund's second largest holding, is an Internet service
provider that has been growing through acquisitions while Mercury Interactive
makes products to eliminate Web-site bottlenecks.
Other tech stocks that the fund owned were Sawtek, which makes products used
in telecommunications systems, cellular telephones and satellite systems; Digex,
which hosts Web sites and Web-based applications for more than 500 institutions
and businesses; and Newport Corp., which makes laser/electro-optical equipment
for fiber-optic communications, computer peripherals and other products.
We remain optimistic about the growth prospects for tech companies. Technology
is assuming an increasingly important position in the U.S. and world economies.
Just recently, adjustments were made to the Dow to reflect this development.
WHAT OTHER STOCKS PERFORMED WELL FOR THE FUND?
Jones Pharma distributes specialty pharmaceutical products while Lamar
Advertising specializes in billboard and other forms of outdoor advertising.
WHAT IS YOUR OUTLOOK?
The unprecedented economic expansion of the past few years has helped push
stock-market indexes to record heights. Over the near term, we expect the
healthy economic growth to continue. While such a trend would seemingly bode
well for stocks, it could contribute to volatility in the market, especially if
the Fed deems that the economy is growing too rapidly. On February 2, shortly
after the close of the reporting period, the central bank raised the federal
funds rate to 5.75%. Although by no means a certainty, it appears that the Fed
is poised to raise interest rates again in the months ahead to slow economic
growth and forestall inflation. Uncertainty about the Fed's direction could have
an unsettling effect on the stock market.
However, we remain optimistic about the long-term prospects for small-cap
stocks because of their attractive prices and the encouraging earnings-growth
projections for many smaller companies.
See important fund and index disclosures inside front cover.
AIM SMALL CAP OPPORTUNITIES FUND
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-98.19%
AIR FREIGHT-0.35%
Eagle USA Airfreight, Inc.(a) 75,000 $ 2,456,250
- --------------------------------------------------------------
BANKS (REGIONAL)-0.78%
Greater Bay Bancorp 75,000 3,159,375
- --------------------------------------------------------------
Trustmark Corp. 125,000 2,257,812
- --------------------------------------------------------------
5,417,187
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-8.39%
Aspect Communications Group(a) 150,000 7,331,250
- --------------------------------------------------------------
Davox Corp.(a) 250,000 7,156,250
- --------------------------------------------------------------
Gilat Satellite Networks Ltd.
(Israel)(a) 60,000 6,405,000
- --------------------------------------------------------------
Harmonic, Inc.(a) 90,000 8,668,125
- --------------------------------------------------------------
Intertrust Technologies Corp.(a) 42,000 6,063,750
- --------------------------------------------------------------
MCK Communications, Inc.(a) 135,000 3,628,125
- --------------------------------------------------------------
Polycom, Inc.(a) 175,000 10,565,625
- --------------------------------------------------------------
Tollgrade Communications, Inc.(a) 150,000 8,718,750
- --------------------------------------------------------------
58,536,875
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-1.99%
MRV Communications, Inc. 125,000 9,093,750
- --------------------------------------------------------------
VeriSign, Inc.(a) 30,000 4,807,500
- --------------------------------------------------------------
13,901,250
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-4.99%
Media 100 Inc.(a) 200,000 4,500,000
- --------------------------------------------------------------
QLogic Corp.(a) 93,000 14,223,187
- --------------------------------------------------------------
SanDisk Corp.(a) 74,200 9,933,525
- --------------------------------------------------------------
Xircom, Inc.(a) 125,000 6,164,062
- --------------------------------------------------------------
34,820,774
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-25.66%
724 Solutions Inc.(a) 4,000 271,500
- --------------------------------------------------------------
Active Voice Corp.(a) 100,000 4,600,000
- --------------------------------------------------------------
Aspect Development, Inc.(a) 78,400 5,252,800
- --------------------------------------------------------------
Diamond Technology Partners Inc.(a) 45,000 3,687,187
- --------------------------------------------------------------
Digex, Inc.(a) 150,000 12,731,250
- --------------------------------------------------------------
Entrust Technologies, Inc. 60,000 2,842,500
- --------------------------------------------------------------
IONA Technologies PLC-ADR
(Ireland)(a) 137,700 6,540,750
- --------------------------------------------------------------
ISS Group, Inc.(a) 70,000 4,633,125
- --------------------------------------------------------------
Kronos, Inc.(a) 40,000 2,400,000
- --------------------------------------------------------------
Macromedia, Inc.(a) 95,000 6,501,562
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Macrovision Corp.(a) 51,300 $ 4,806,169
- --------------------------------------------------------------
McAfee.com Corp.(a) 80,000 2,700,000
- --------------------------------------------------------------
Mercury Interactive Corp.(a) 125,000 13,671,875
- --------------------------------------------------------------
Micromuse, Inc.(a) 31,400 5,124,087
- --------------------------------------------------------------
Natural MicroSystems Corp.(a) 135,000 5,189,062
- --------------------------------------------------------------
Open Market, Inc.(a) 157,500 8,111,250
- --------------------------------------------------------------
Orbotech, Ltd. (Israel)(a) 93,000 7,068,000
- --------------------------------------------------------------
Preview Systems, Inc.(a) 141,000 6,909,000
- --------------------------------------------------------------
PSW Technologies, Inc.(a) 225,000 9,098,438
- --------------------------------------------------------------
QRS Corp.(a) 73,700 5,324,825
- --------------------------------------------------------------
Radiant Systems, Inc.(a) 150,000 5,625,000
- --------------------------------------------------------------
RadiSys Corp.(a) 135,000 5,501,250
- --------------------------------------------------------------
Rational Software Corp.(a) 165,000 8,580,000
- --------------------------------------------------------------
Tanning Technology Corp.(a) 115,000 5,016,875
- --------------------------------------------------------------
Telescan, Inc.(a) 281,000 6,006,375
- --------------------------------------------------------------
Verio, Inc.(a) 220,000 14,162,500
- --------------------------------------------------------------
Verity, Inc.(a) 175,000 5,950,000
- --------------------------------------------------------------
Webhire, Inc.(a) 250,000 2,156,250
- --------------------------------------------------------------
WebTrends Corp.(a) 100,000 8,612,500
- --------------------------------------------------------------
179,074,130
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES &
GIFTS)-0.56%
Fossil, Inc.(a) 200,000 3,887,500
- --------------------------------------------------------------
CONSUMER FINANCE-0.34%
Advanta Corp.-Class B 175,000 2,395,313
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-6.80%
California Amplifier, Inc.(a) 250,000 8,453,125
- --------------------------------------------------------------
Cohu, Inc. 125,000 5,156,250
- --------------------------------------------------------------
CommScope, Inc.(a) 170,000 6,470,625
- --------------------------------------------------------------
NetOptix Corp.(a) 105,000 8,898,750
- --------------------------------------------------------------
Sawtek, Inc.(a) 205,000 12,966,250
- --------------------------------------------------------------
Veeco Instruments Inc.(a) 100,000 5,487,500
- --------------------------------------------------------------
47,432,500
- --------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.73%
Kent Electronics Corp.(a) 220,000 5,073,750
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-1.68%
Anaren Microwave, Inc.(a) 125,000 7,359,375
- --------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (DEFENSE)-(CONTINUED)
Mercury Computer Systems, Inc.(a) 115,000 $ 4,377,188
- --------------------------------------------------------------
11,736,563
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-5.41%
Alpha Industries, Inc.(a) 70,000 5,862,500
- --------------------------------------------------------------
Newport Corp. 150,000 10,668,750
- --------------------------------------------------------------
Photon Dynamics, Inc.(a) 110,000 6,283,750
- --------------------------------------------------------------
Varian Inc.(a) 250,000 7,187,500
- --------------------------------------------------------------
Varian Semiconductor Equipment
Associates, Inc.(a) 160,000 7,740,000
- --------------------------------------------------------------
37,742,500
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-10.90%
Alliance Semiconductor Corp.(a) 350,000 5,250,000
- --------------------------------------------------------------
Amkor Technology, Inc.(a) 175,000 5,556,250
- --------------------------------------------------------------
Burr-Brown Corp.(a) 150,000 5,550,000
- --------------------------------------------------------------
Elantec Semiconductor, Inc.(a) 125,000 5,000,000
- --------------------------------------------------------------
Exar Corp.(a) 100,000 6,300,000
- --------------------------------------------------------------
Flextronics International Ltd.
(Singapore)(a) 80,000 3,975,000
- --------------------------------------------------------------
GlobeSpan, Inc.(a) 60,000 6,660,000
- --------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 100,000 2,850,000
- --------------------------------------------------------------
PMC-Sierra, Inc.(a) 38,300 6,913,150
- --------------------------------------------------------------
Power Integrations, Inc.(a) 60,000 2,193,750
- --------------------------------------------------------------
RF Micro Devices, Inc.(a) 75,000 6,075,000
- --------------------------------------------------------------
Semtech Corp.(a) 100,000 6,000,000
- --------------------------------------------------------------
TranSwitch Corp.(a) 135,000 6,707,813
- --------------------------------------------------------------
Zoran Corp.(a) 155,000 7,071,875
- --------------------------------------------------------------
76,102,838
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-3.44%
Advanced Energy Industries, Inc.(a) 125,000 6,359,375
- --------------------------------------------------------------
Credence Systems Corp.(a) 100,000 8,487,500
- --------------------------------------------------------------
Cymer, Inc.(a) 100,000 5,512,500
- --------------------------------------------------------------
Helix Technology Corp. 75,000 3,646,875
- --------------------------------------------------------------
24,006,250
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.30%
SEI Investments Co. 20,000 2,085,000
- --------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-1.25%
Isle of Capri Casinos, Inc.(a) 400,000 4,412,500
- --------------------------------------------------------------
Station Casinos, Inc.(a) 201,300 4,327,950
- --------------------------------------------------------------
8,740,450
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC &
OTHER)-2.38%
Alpharma, Inc.-Class A 100,400 $ 3,413,600
- --------------------------------------------------------------
Jones Pharma, Inc. 227,500 13,209,219
- --------------------------------------------------------------
16,622,819
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.96%
ArthroCare Corp.(a) 75,000 5,109,375
- --------------------------------------------------------------
Cyberonics, Inc.(a) 200,000 4,600,000
- --------------------------------------------------------------
Zoll Medical Corp.(a) 100,000 3,937,500
- --------------------------------------------------------------
13,646,875
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-1.93%
Priority Healthcare Corp.(a) 250,000 7,234,375
- --------------------------------------------------------------
Techne Corp.(a) 100,000 6,237,500
- --------------------------------------------------------------
13,471,875
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.51%
Investment Technology Group, Inc.(a) 100,000 3,550,000
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-0.35%
Federated Investors, Inc.-Class B 125,000 2,468,750
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.97%
Zomax Media, Inc.(a) 150,000 6,750,000
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.30%
Applied Science and Technology,
Inc.(a) 130,000 4,013,750
- --------------------------------------------------------------
Dril-Quip, Inc.(a) 160,000 5,050,000
- --------------------------------------------------------------
9,063,750
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-4.70%
Cal Dive International, Inc.(a) 230,000 7,015,000
- --------------------------------------------------------------
Grey Wolf, Inc.(a) 1,000,000 3,000,000
- --------------------------------------------------------------
National-Oilwell, Inc.(a) 225,000 4,218,750
- --------------------------------------------------------------
Newpark Resources, Inc.(a) 700,000 4,418,750
- --------------------------------------------------------------
Patterson Energy, Inc.(a) 350,000 5,818,750
- --------------------------------------------------------------
Precision Drilling Corp.-ADR
(Canada)(a) 150,000 3,834,375
- --------------------------------------------------------------
Unit Corp.(a) 602,500 4,518,750
- --------------------------------------------------------------
32,824,375
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.58%
Spinnaker Exploration Co.(a) 265,000 4,041,250
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.85%
Zebra Technologies Corp.(a) 100,000 5,918,750
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RESTAURANTS-1.09%
RARE Hospitality International,
Inc.(a) 150,000 $ 2,479,688
- --------------------------------------------------------------
Sonic Corp.(a) 179,000 5,146,250
- --------------------------------------------------------------
7,625,938
- --------------------------------------------------------------
RETAIL (COMPUTERS &
ELECTRONICS)-0.95%
Tweeter Home Entertainment Group,
Inc.(a) 140,000 4,016,250
- --------------------------------------------------------------
Ultimate Electronics, Inc.(a) 150,000 2,606,250
- --------------------------------------------------------------
6,622,500
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-3.29%
AnnTaylor Stores Corp.(a) 66,000 1,452,000
- --------------------------------------------------------------
Charming Shoppes, Inc.(a) 1,000,000 6,812,500
- --------------------------------------------------------------
Chico's Fas, Inc.(a) 240,000 3,540,000
- --------------------------------------------------------------
Deb Shops, Inc. 250,000 3,859,375
- --------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 130,000 3,103,750
- --------------------------------------------------------------
Too Inc.(a) 254,900 4,221,781
- --------------------------------------------------------------
22,989,406
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-1.26%
Lamar Advertising Co.(a) 150,000 8,793,750
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.52%
Championship Auto Racing Teams,
Inc.(a) 175,000 3,664,063
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.58%
FactSet Research Systems, Inc. 60,000 4,020,000
- --------------------------------------------------------------
TEXTILES (APPAREL)-1.40%
Guess?, Inc.(a) 275,000 6,445,313
- --------------------------------------------------------------
Tefron Ltd. (Israel)(a) 235,000 3,348,750
- --------------------------------------------------------------
9,794,063
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests
(Cost $431,406,223) 685,277,294
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CORPORATE CONVERTIBLE BONDS-0.80%
COMPUTERS (SOFTWARE & SERVICES)-0.80%
Rational Software Corp., Conv.
Bonds
5.00%, 02/01/07 (Acquired
01/27/00-01/28/00; Cost
$5,694,625)(b) $5,670,000 5,584,950
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION MARKET
CONTRACTS PRICE DATE VALUE
<S> <C> <C> <C> <C>
OPTIONS PURCHASED-3.06%
CALLS-0.22%
Mirage Resorts, Inc.
(Gaming, Lottery &
Parimutuel
Companies) 6,602 $ 15 Feb-00 $ 165,050
- -----------------------------------------------------------------------
Morgan Stanley
Cyclical Index
(Investments) 1,230 590 Mar-00 284,437
- -----------------------------------------------------------------------
Network Associates,
Inc. (Computers-
Software &
Services) 3,854 30 Feb-00 264,963
- -----------------------------------------------------------------------
OSX Index (Oil & Gas
Services) 3,550 90 Feb-00 843,125
- -----------------------------------------------------------------------
1,557,575
- -----------------------------------------------------------------------
PUTS-2.84%
S&P 500 Index 1,000 1,375 Feb-00 2,062,500
1,000 1,400 Feb-00 2,950,000
1,096 1,375 Mar-00 3,657,900
1,000 1,400 Mar-00 4,206,250
1,000 1,450 Mar-00 6,950,000
- -----------------------------------------------------------------------
19,826,650
- -----------------------------------------------------------------------
Total Options Purchased (Cost
$22,429,071) 21,384,225
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-2.28%
STIC Liquid Assets Portfolio(c) 7,941,816 7,941,816
- --------------------------------------------------------------
STIC Prime Portfolio(c) 7,941,816 7,941,816
- --------------------------------------------------------------
Total Money Market Funds
(Cost $15,883,632) 15,883,632
- --------------------------------------------------------------
TOTAL INVESTMENTS-104.33%
(Cost $475,413,551) 728,130,101
- --------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS-(4.33%) (30,252,133)
- --------------------------------------------------------------
NET ASSETS-100.00% $697,877,968
==============================================================
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(D)
Abercrombie & Fitch Co.-Class A 180,000 $ 3,847,500
- -------------------------------------------------------------
Administaff, Inc. 154,000 4,042,500
- -------------------------------------------------------------
Blyth Industries, Inc. 246,300 5,772,656
- -------------------------------------------------------------
Cardinal Health, Inc. 72,300 3,456,844
- -------------------------------------------------------------
Chemdex Corp. 75,000 7,312,500
- -------------------------------------------------------------
Enhance Financial Services Group,
Inc. 124,300 1,732,431
- -------------------------------------------------------------
Equifax, Inc. 185,000 3,977,500
- -------------------------------------------------------------
4 Kids Entertainment, Inc. 150,000 3,468,750
- -------------------------------------------------------------
Gap, Inc. (The) 125,000 5,585,938
- -------------------------------------------------------------
Globalstar Telecommunications Ltd. 135,000 4,446,563
- -------------------------------------------------------------
Guidant Corp. 125,000 6,578,125
- -------------------------------------------------------------
IDEC Pharmaceuticals Corp. 60,000 7,571,250
- -------------------------------------------------------------
Inhale Therapeutic Systems, Inc. 30,000 1,753,125
- -------------------------------------------------------------
Interphase Corp. 170,000 2,932,500
- -------------------------------------------------------------
iVillage Inc. 50,000 818,750
- -------------------------------------------------------------
Lernout & Hauspie Speech Products
N.V. (Belgium) 90,000 4,230,000
- -------------------------------------------------------------
Medquist, Inc. 71,100 1,417,556
- -------------------------------------------------------------
Newell Rubbermaid, Inc. 155,000 4,650,000
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(D)-(CONTINUED)
Ocular Sciences Inc. 277,100 $ 5,611,275
- -------------------------------------------------------------
Polaroid Corp. 263,000 6,246,250
- -------------------------------------------------------------
Profit Recovery Group International,
Inc. (The) 179,200 4,860,800
- -------------------------------------------------------------
Progressive Corp. (The) 35,900 2,234,775
- -------------------------------------------------------------
Quintiles Transnational Corp. 200,600 5,303,363
- -------------------------------------------------------------
Ramp Networks, Inc. 175,000 2,351,562
- -------------------------------------------------------------
Rex Stores Corp. 50,000 768,750
- -------------------------------------------------------------
Royal Caribbean Cruises Ltd. 150,000 7,415,625
- -------------------------------------------------------------
Stryker Corp. 85,000 5,355,000
- -------------------------------------------------------------
Tech Data Corp. 131,900 2,938,897
- -------------------------------------------------------------
Tidewater Inc. 192,000 5,460,000
- -------------------------------------------------------------
Tyco International Ltd. 68,200 2,915,550
- -------------------------------------------------------------
VISX, Inc. 125,000 3,546,875
- -------------------------------------------------------------
Waters Corp. 114,900 8,488,237
- -------------------------------------------------------------
Whole Foods Market, Inc. 140,000 6,440,000
- -------------------------------------------------------------
World Wrestling Federation
Entertainment 150,000 2,315,625
- -------------------------------------------------------------
$145,847,072
=============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of this security has been determined in accordance
with procedures established by the Board of Trustees. The market value of
this security represented 0.80% of the Fund's net assets.
(c)The money market fund has the same investment advisor as the Fund.
(d)Collateral on short sales was segregated by the Fund in the amount of
$155,809,965 which represents 106.83% of market value.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$475,413,551) $728,130,101
- ---------------------------------------------------------
Cash 687,077
- ---------------------------------------------------------
Receivables for:
Investments sold 3,613,946
- ---------------------------------------------------------
Investments sold short 140,725,900
- ---------------------------------------------------------
Short position covered 70,097
- ---------------------------------------------------------
Fund shares sold 929,588
- ---------------------------------------------------------
Dividends and interest 455,390
- ---------------------------------------------------------
Investment for deferred compensation plan 9,691
- ---------------------------------------------------------
Other assets 155,776
- ---------------------------------------------------------
Total assets 874,777,566
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 8,256,885
- ---------------------------------------------------------
Fund shares reacquired 1,444,378
- ---------------------------------------------------------
Deferred compensation plan 9,691
- ---------------------------------------------------------
Loans 20,000,000
- ---------------------------------------------------------
Dividends on short sales 44,603
- ---------------------------------------------------------
Market value of securities sold short
(proceeds from sales $140,725,900) 145,847,072
- ---------------------------------------------------------
Accrued advisory fees 591,749
- ---------------------------------------------------------
Accrued distribution fees 418,417
- ---------------------------------------------------------
Accrued trustees' fees 630
- ---------------------------------------------------------
Accrued transfer agent fees 45,359
- ---------------------------------------------------------
Accrued operating expenses 240,814
- ---------------------------------------------------------
Total liabilities 176,899,598
- ---------------------------------------------------------
Net assets applicable to shares outstanding $697,877,968
- ---------------------------------------------------------
NET ASSETS:
Class A $386,325,106
=========================================================
Class B $279,884,799
=========================================================
Class C $ 31,668,063
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 18,299,035
=========================================================
Class B 13,404,269
=========================================================
Class C 1,515,038
=========================================================
Class A:
Net asset value and redemption price per
share $ 21.11
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $21.11 divided by
94.50%) $ 22.34
=========================================================
Class B:
Net asset value and offering price per
share $ 20.88
=========================================================
Class C:
Net asset value and offering price per
share $ 20.90
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended January 31, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 1,697,790
- ---------------------------------------------------------
Dividends 315,846
- ---------------------------------------------------------
Total investment income 2,013,636
- ---------------------------------------------------------
EXPENSES:
Advisory fees 2,630,520
- ---------------------------------------------------------
Administrative services fees 61,439
- ---------------------------------------------------------
Custodian fees 42,817
- ---------------------------------------------------------
Interest expense 866,782
- ---------------------------------------------------------
Transfer agent fees-Class A 122,610
- ---------------------------------------------------------
Transfer agent fees-Class B 112,621
- ---------------------------------------------------------
Transfer agent fees-Class C 9,091
- ---------------------------------------------------------
Trustees' fees 4,130
- ---------------------------------------------------------
Distribution fees-Class A 513,719
- ---------------------------------------------------------
Distribution fees-Class B 1,075,281
- ---------------------------------------------------------
Distribution fees-Class C 90,657
- ---------------------------------------------------------
Dividends on short sales 126,527
- ---------------------------------------------------------
Other 417,375
- ---------------------------------------------------------
Total expenses 6,073,569
- ---------------------------------------------------------
Less: Expenses paid indirectly (5,213)
- ---------------------------------------------------------
Net expenses 6,068,356
- ---------------------------------------------------------
Net investment income (loss) (4,054,720)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, SECURITIES SOLD
SHORT, FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 95,434,417
- ---------------------------------------------------------
Securities sold short (16,678,833)
- ---------------------------------------------------------
Futures contracts (218,627)
- ---------------------------------------------------------
Option contracts written 1,773,864
- ---------------------------------------------------------
80,310,821
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 147,654,316
- ---------------------------------------------------------
Securities sold short (6,420,053)
- ---------------------------------------------------------
Option contracts written 258,044
- ---------------------------------------------------------
141,492,307
- ---------------------------------------------------------
Net gain from investment securities,
securities sold short, futures and option
contracts 221,803,128
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $217,748,408
=========================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended January 31, 2000 and the year ended July 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (4,054,720) $ (4,494,793)
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities, securities
sold short, futures and option contracts 80,310,821 8,988,418
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, securities sold short, futures and option
contracts 141,492,307 113,395,076
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 217,748,408 117,888,701
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A -- (102,881)
- -----------------------------------------------------------------------------------------
Class B -- (48,732)
- -----------------------------------------------------------------------------------------
Class C -- --
- -----------------------------------------------------------------------------------------
Distributions from net realized gains:
Class A (15,798,563) --
- -----------------------------------------------------------------------------------------
Class B (11,509,981) --
- -----------------------------------------------------------------------------------------
Class C (1,189,843) --
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 74,776,708 30,818,297
- -----------------------------------------------------------------------------------------
Class B 49,401,951 19,845,339
- -----------------------------------------------------------------------------------------
Class C 18,957,958 5,266,423
- -----------------------------------------------------------------------------------------
Net increase in net assets 332,386,638 173,667,147
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 365,491,330 191,824,183
- -----------------------------------------------------------------------------------------
End of period $697,877,968 $365,491,330
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $396,799,356 $253,662,739
- -----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (4,152,091) (97,371)
- -----------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, securities sold short, futures and option
contracts 57,635,325 5,822,891
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
securities sold short, futures and option contracts 247,595,378 106,103,071
- -----------------------------------------------------------------------------------------
$697,877,968 $365,491,330
=========================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
January 31, 2000
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Small Cap Opportunities Fund (the "Fund") is a series portfolio of AIM
Special Opportunities 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 three
separate portfolios, each having an unlimited number of shares of beneficial
interest. The Fund consists of three different classes of shares: Class A
shares, Class B shares and Class C shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. The Fund is closed to new investors as of
November 4, 1999. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term capital appreciation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price 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 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, quality, 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 trading 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 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 as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date.
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 of fund share 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. Securities Sold Short -- When the Fund sells common stock short, an amount
equal to the proceeds of the sales is recorded as an asset. This asset is
offset by a liability (representing the borrowed security) recorded on the
books of the Fund at the market value of the common stock determined each day
in accordance with the procedures for security valuations disclosed in "A"
above. The Fund's risk is that the value of the security will increase rather
than decline and thus an unrealized loss will be recorded. When the Fund
closes out a short position by delivering the stock sold short, the Fund will
realize a gain or loss and the liability related to such short position will
be eliminated. The Fund is required to segregate cash or securities as
collateral at a level that is equal to the obligation to the broker who
delivered such securities to the
10
<PAGE> 13
buyer on behalf of the Fund. The amount segregated as collateral deposits
will not at any time exceed 25% of the Fund's net assets. Dividend expense on
short sales is recorded on ex-dividend date.
F. Call Options -- The Fund may write and buy call options, including securities
index options. Options written by the Fund normally will have expiration
dates between three and nine months from the date written. The exercise price
of a call option may be below, equal to, or above the current market value of
the underlying security at the time the option is written. When the Fund
writes a 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.
An option on a securities index gives the holder the right to receive a cash
"exercise settlement amount" equal to the difference between the exercise
price of the option and the value of the underlying stock index on the
exercise date, multiplied by a fixed "index multiplier." A securities index
fluctuates with changes in the market values of the securities included in the
index. In the purchase of securities index options the principal risk is that
the premium and transaction costs paid by the Fund in purchasing an option
will be lost if the changes in the level of the index do not exceed the cost
of the option. In writing securities index options, the principal risk is that
the Fund could bear a loss on the options that would be only partially offset
(or not offset at all) by the increased value or reduced cost of hedged
securities. Moreover, in the event the Fund were unable to close an option it
had written, it might be unable to sell the securities used as cover.
The Fund will not write options if, immediately thereafter, the aggregate
value of the securities underlying all such options, determined as of the
dates such options were written, would exceed 50% of the total assets of the
Fund.
G. Put Options -- The Fund may purchase and write put options including
securities index options. By purchasing a put option, the Fund obtains the
right (but not the obligation) to sell the options' underlying instrument at
a fixed strike price. In return for this right, a Fund pays an option
premium. The option's underlying instrument may be a security, securities
index, or a futures contract. Put options may be used by a 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 hedge. The Fund may write put options to earn
additional income in the form of option premiums if it expects the price of
the underlying securities to remain stable or rise during the option period
so that the option will not be exercised. The risk in this strategy is that
the price of the underlying securities may decline by an amount greater than
the premium received. The Fund will not purchase options if, at the time of
the investment, the aggregate premiums paid for outstanding options will
exceed 25% of the Fund's total assets.
H. Futures Contracts -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits required
upon entering into futures contracts are satisfied by the segregation of
specific securities as collateral for the account of the broker (the Fund's
agent in acquiring the futures position). During the period the futures
contracts are open, changes in the value of the contracts are recognized as
unrealized gains or losses by "marking to market" on a daily basis to reflect
the market value of the contracts at the end of each day's trading. Variation
margin payments are made or received depending upon whether unrealized gains
or losses are incurred. When the contracts are closed, the Fund recognizes a
realized gain or loss equal to the difference between the proceeds from, or
cost of, the closing transaction and the Fund's basis in the contract. Risks
include the possibility of an illiquid market and that a change in value of
the contracts may not correlate with changes in the value of the securities
being hedged.
I. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
11
<PAGE> 14
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays AIM a base management fee calculated at the annual rate
of 1.00% of the Fund's average daily net assets. The base management fee will be
adjusted, on a monthly basis starting January 1, 2001, (i) upward at the rate of
0.15%, on a pro rata basis, for each percentage point the 12-month rolling
investment performance of the Class A shares exceeds the sum of 2.00% and the
12-month rolling investment record of the Russell 2000 Index, or (ii) downward
at the rate of 0.15%, on a pro rata basis, for each percentage point the
12-month rolling investment record of the Russell 2000 Index less 2.00% exceeds
the 12-month rolling investment performance of the Class A shares.
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 six months ended January 31, 2000, AIM
was paid $61,439 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 six months ended January 31, 2000, AFS
was paid $119,744 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the six months ended January 31,
2000, the Class A, Class B and Class C shares paid AIM Distributors $513,719,
$1,075,281 and $90,657, respectively, as compensation under the Plans.
AIM Distributors received commissions of $218,444, from sales of the Class A
shares of the Fund during the six months ended January 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 six months
ended January 31, 2000, AIM Distributors received $18,635 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 six months ended January 31, 2000, the Fund paid legal fees of
$1,899 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel
to the Company's directors. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the six months ended January 31, 2000, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $3,013 and $2,200, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $5,213 during the six months ended January 31, 2000.
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 The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $240,000,000 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. The funds which
are party to the line of credit are charged a commitment fee of 0.10% on the
unused balance of the committed line. Commitment fees paid by the Fund for the
six months ended January 31, 2000 were $87,190.
During the six months ended January 31, 2000, the average outstanding daily
balance of bank loans for the Fund was $25,760,870 with a weighted average
interest rate of 6.02%. Interest expense for the Fund for the six months ended
January 31, 2000 was $779,592.
12
<PAGE> 15
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended January 31, 2000 was
$569,180,618 and $533,859,437, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
and securities sold short, for tax purposes, as of January 31, 2000 was as
follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of:
Investment securities $267,368,127
- --------------------------------------------------------------------------
Securities sold short 10,919,828
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of:
Investment securities (14,824,857)
- --------------------------------------------------------------------------
Securities sold short (16,041,000)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $247,422,098
==========================================================================
Cost of investments for tax purposes is $475,586,831. Proceeds from
securities sold short is the same for tax and financial reporting
purposes.
</TABLE>
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended January 31, 2000 and
the year ended July 31, 1999 were as follows:
<TABLE>
<CAPTION>
JANUARY 31, 2000 JULY 31, 1999
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 5,471,540 $ 91,930,400 9,086,718 $ 99,751,555
- -------------------------------------------------------------------------------------------------------------------
Class B* 3,426,734 56,201,283 4,403,590 48,831,913
- -------------------------------------------------------------------------------------------------------------------
Class C* 1,159,653 19,611,762 463,451 5,940,023
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 778,550 14,954,295 8,677 96,302
- -------------------------------------------------------------------------------------------------------------------
Class B* 531,918 10,112,040 3,755 41,572
- -------------------------------------------------------------------------------------------------------------------
Class C* 57,775 1,099,468 -- --
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,799,631) (32,107,987) (6,264,993) (69,029,559)
- -------------------------------------------------------------------------------------------------------------------
Class B* (982,486) (16,911,372) (2,617,703) (29,028,148)
- -------------------------------------------------------------------------------------------------------------------
Class C* (106,954) (1,753,272) (58,887) (673,599)
- -------------------------------------------------------------------------------------------------------------------
8,537,099 $143,136,617 5,024,608 $ 55,930,059
===================================================================================================================
</TABLE>
* Class B and Class C shares commenced sales on July 13, 1998 and December 30,
1998, respectively.
13
<PAGE> 16
NOTE 8-CALL OPTION CONTRACTS
Transactions in call option contracts written during the six months ended
January 31, 2000 are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period -- $ --
- -------------------------------------------------------------------------------------
Written 1,000 703,686
- -------------------------------------------------------------------------------------
Closed (1,000) (703,686)
- -------------------------------------------------------------------------------------
Expired -- --
- -------------------------------------------------------------------------------------
End of period -- $ --
- -------------------------------------------------------------------------------------
</TABLE>
NOTE 9-PUT OPTION CONTRACTS
Transactions in put option contracts written during the six months ended
January 31, 2000 are summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period 1,683 $ 1,266,631
- -------------------------------------------------------------------------------------
Written 1,485 1,070,657
- -------------------------------------------------------------------------------------
Closed (3,168) (2,337,288)
- -------------------------------------------------------------------------------------
Expired -- --
- -------------------------------------------------------------------------------------
End of period -- $ --
- -------------------------------------------------------------------------------------
</TABLE>
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during the six months ended January 31, 2000, the year ended July 31, 1999 and
the period June 29, 1998 (date sales commenced) through July 31, 1998, for a
share of Class B outstanding during the six months ended January 31, 2000, the
year ended July 31, 1999 and the period July 13, 1998 (date sales commenced)
through July 31, 1998, and for a share of Class C outstanding during the six
months ended January 31, 2000 and the period December 30, 1998 (date sales
commenced) through July 31, 1999.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------------------- ---------------------------------- ----------------------
JANUARY 31, JULY 31, JULY 31, JANUARY 31, JULY 31, JULY 31, JANUARY 31, JULY 31,
2000(a) 1999(a) 1998(a) 2000(a) 1999(a) 1998(a) 2000(a) 1999(a)
----------- -------- -------- ----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 14.86 $ 9.76 $ 10.00 $ 14.75 $ 9.76 $ 10.07 $ 14.78 $11.70
- ------------------------------ -------- -------- -------- -------- -------- ------- ------- ------
Income from investment
operations:
Net investment income (loss) (0.11) (0.09) 0.02 (0.17) (0.17) 0.01 (0.18) (0.11)
- ------------------------------ -------- -------- -------- -------- -------- ------- ------- ------
Net gains (losses) on
securities (both realized
and unrealized) 7.26 5.20 (0.26) 7.20 5.17 (0.32) 7.20 3.19
- ------------------------------ -------- -------- -------- -------- -------- ------- ------- ------
Total from investment
operations 7.15 5.11 (0.24) 7.03 5.00 (0.31) 7.02 3.08
- ------------------------------ -------- -------- -------- -------- -------- ------- ------- ------
Dividends from net investment
income -- (0.01) -- -- (0.01) -- -- --
- ------------------------------ -------- -------- -------- -------- -------- ------- ------- ------
Dividends from net realized
capital gains (0.90) -- -- (0.90) -- -- (0.90) --
- ------------------------------ -------- -------- -------- -------- -------- ------- ------- ------
Net asset value, end of period $ 21.11 $ 14.86 $ 9.76 $ 20.88 $ 14.75 $ 9.76 $ 20.90 $14.78
============================== ======== ======== ======== ======== ======== ======= ======= ======
Total return(b) 48.68% 52.36% (2.40)% 48.12% 51.30% (3.08)% 48.06% 29.31%
============================== ======== ======== ======== ======== ======== ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000
omitted) $386,325 $205,721 $107,540 $279,885 $153,793 $84,285 $31,668 $5,977
============================== ======== ======== ======== ======== ======== ======= ======= ======
Ratio of expenses to average
net assets including interest
expense and dividends on
short sales expense 2.01%(c) 2.35% 1.59%(d) 2.68%(c) 3.03% 2.30%(d) 2.68%(c) 3.03%(d)
============================== ======== ======== ======== ======== ======== ======= ======= ======
Ratio of expenses to average
net assets excluding interest
expense and dividends on
short sales expense 1.63%(c) 1.74% 1.59%(d) 2.30%(c) 2.42% 2.30%(d) 2.30%(c) 2.42%(d)
============================== ======== ======== ======== ======== ======== ======= ======= ======
Ratio of interest expense and
dividends on short sales
expense to average net asset 0.38%(c) 0.61% --%(d) 0.38%(c) 0.61% --%(d) 0.38%(c) 0.61%(d)
============================== ======== ======== ======== ======== ======== ======= ======= ======
Ratio of net investment income
(loss) to average net assets (1.24)%(c) (1.44)% 2.00%(d) (1.91)%(c) (2.12)% 1.29%(d) 1.91)%(c) (2.12)%(d)
============================== ======== ======== ======== ======== ======== ======= ======= ======
Portfolio turnover rate 103% 220% 13% 103% 220% 13% 103% 220%
============================== ======== ======== ======== ======== ======== ======= ======= ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets of $291,958,584,
$213,887,374, and $18,032,870 for Class A, Class B and Class C shares,
respectively.
(d) Annualized.
14
<PAGE> 17
PROXY RESULTS
(UNAUDITED)
A meeting of shareholders of certain portfolios of AIM Special Opportunities
Funds (the "Trust"), was held on December 20, 1999. The meeting was held for the
following purposes:
(1) To elect Trustees as follows: Charles T. Bauer, Bruce L. Crockett, Owen Daly
II, Edward K. Dunn, Jr., Jack Fields, Carl Frischling, Robert H. Graham,
Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc. with respect to AIM Mid Cap Opportunities Fund and AIM Small Cap
Opportunities Fund, each a portfolio of the Trust (each a "Fund," and
collectively, the "Funds").
(3) To approve amending the Funds' fundamental investment restrictions.
(4) To approve changing the Funds' investment objectives from fundamental
policies to non-fundamental policies.
(5) To ratify the selection of KPMG LLP as independent accountants for each of
the Funds for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
-------------- ---------- ------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 13,630,194 7,836 417,409
Bruce L. Crockett........................................... 13,652,468 7,836 395,134
Owen Daly II................................................ 13,635,704 7,836 411,899
Edward K. Dunn, Jr.......................................... 13,649,355 7,836 398,248
Jack Fields................................................. 13,645,534 7,836 402,069
Carl Frischling............................................. 13,636,947 7,836 410,656
Robert H. Graham............................................ 13,650,808 7,836 396,795
Prema Mathai-Davis.......................................... 13,645,820 7,836 401,783
Lewis F. Pennock............................................ 13,648,072 7,836 399,531
Louis S. Sklar.............................................. 13,648,207 7,836 399,395
(2) Approval of investment advisory agreement................... 9,878,729 468,987 3,443,061*
(3)(a) Modification of Fundamental Restriction on Industry
Concentration............................................... 10,015,633 299,145 3,476,000*
(3)(b) Modification of Fundamental Restriction on Purchasing
Securities of Other Investment Companies.................... 9,975,515 358,267 3,456,995*
(3)(c) Modification of Fundamental Restriction on Underwriting
Securities.................................................. 9,879,998 418,528 3,492,252*
(3)(d) Modification of Fundamental Restriction on Purchasing or
Selling Real Estate......................................... 9,770,073 534,076 3,486,628*
(3)(e) Modification of Fundamental Restriction on Purchasing or
Selling Commodities......................................... 9,720,034 569,516 3,501,227*
(3)(f) Modification of Fundamental Restriction on Making Loans..... 9,652,353 614,846 3,523,578*
(3)(g) Modification of Fundamental Restriction on Borrowing Money
and Issuing Senior Securities............................... 9,730,424 539,178 3,521,176*
(3)(h) Modification of Fundamental Restriction on Investing in an
Investment Company with the Same Objectives, Policies and
Limitations................................................. 9,943,249 365,102 3,482,426*
(4) Approval of Changing Investment Objective from Fundamental
to Non-Fundamental.......................................... 9,633,629 634,496 3,522,652*
(5) Ratification of the selection of KPMG LLP as the Trust's
Independent Public Accountants.............................. 13,508,491 152,032 386,605
</TABLE>
- ---------------
* Includes Broker Non-Votes
15
<PAGE> 18
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer
Formerly Vice Chairman, President and CUSTODIAN
Chief Operating Officer, Melville B. Cox
Mercantile-Safe Deposit & Trust Co.; and Vice President State Street Bank and Trust Company
President, Mercantile Bankshares 225 Franklin Street
Mary J. Benson Boston, MA 02110
Jack Fields Assistant Vice President and
Chief Executive Officer Assistant Treasurer COUNSEL TO THE FUND
Texana Global, Inc.;
Formerly Member Sheri Morris Ballard Spahr
of the U.S. House of Representatives Assistant Vice President and Andrews & Ingersoll, LLP
Assistant Treasurer 1735 Market Street
Carl Frischling Philadelphia, PA 19103
Partner Renee A. Friedli
Kramer, Levin, Naftalis & Frankel LLP Assistant Secretary COUNSEL TO THE TRUSTEES
Robert H. Graham P. Michelle Grace Kramer Levin Naftalis & Frankel LLP
President and Chief Executive Officer Assistant Secretary 919 Third Avenue
A I M Management Group Inc. New York, NY 10022
Nancy L. Martin
Prema Mathai-Davis Assistant Secretary DISTRIBUTOR
Chief Executive Officer, YWCA of the U.S.A.
Ofelia M. Mayo A I M Distributors, Inc.
Lewis F. Pennock Assistant Secretary 11 Greenway Plaza
Attorney Suite 100
Lisa A. Moss Houston, TX 77046
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Kathleen J. Pflueger
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
16
<PAGE> 19
AIM FUNDS(SM) KEEPS YOU POSTED ON YOUR INVESTMENT
We inform our shareholders about their investments with regular mailings
throughout the year. Here is a description of the documents you will
receive concerning your account and fund.
o DAILY CONFIRMATION STATEMENTS. A record of the transactions you initiate.
For example, if you transfer part or all of your investment from one AIM
fund to another, you will receive a statement confirming that the
transaction took place.
o QUARTERLY STATEMENTS. These show you how your account has performed over
the fiscal quarter and provide information on any applicable dividend
payments. Statement inserts that sometimes accompany these mailings may
give specific information about your fund or may contain educational
information of general interest.
o PROXY. As a shareholder of an AIM fund, you have the right to vote on any
change to a fund's published bylaws or objectives. If the fund's board of
directors proposes such a change, AIM will send a proxy to the
shareholders. The proxy allows you to direct an authorized person to cast
your vote according to your instructions. You can vote your proxy by mail,
phone or e-mail.
o PROSPECTUS. AIM sends you an updated version of your fund's prospectus
every year. Your prospectus contains valuable information about your fund's
objectives, risks, management and fees. Because this information is
important, you should keep your prospectus with your other fund records.
o ANNUAL AND SEMIANNUAL REPORTS. AIM fund reports are sent to you twice a
year, the semiannual covering the first six months of the fiscal year for a
fund and the annual covering the entire fiscal year. These reports give you
an idea of how your fund performed compared to the market in general. The
reports also give you information about the holdings in your fund's
portfolio and how market conditions and management decisions have affected
your fund.
o YEAR-END TAX INFORMATION. This includes your year-end account statement,
cost-basis statement and any tax forms pertinent to your AIM account. The
tax forms report distributions you have received from your AIM funds,
redemptions or exchanges you have made and any contributions you have made
to tax-advantaged retirement accounts. It is important to retain the
latter, IRS Form 5498, if you need to track deductible vs. nondeductible
IRA contributions. The cost-basis statements are also important to retain
because they can be very useful for calculating capital gains or losses if
you use the "average basis single category" method of calculating cost
basis. Year-end tax information will be accompanied by tax communications
from AIM to help you fill out your tax forms. Your tax advisor can assist
you in sorting through your year-end statements and other tax
communications.
--------------------------
WE INFORM
OUR SHAREHOLDERS ABOUT
THEIR INVESTMENTS
WITH REGULAR MAILINGS
THROUGHOUT THE YEAR.
--------------------------
17
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C>
GROWTH FUNDS MONEY MARKET FUNDS* A I M Management Group Inc. has provided
AIM Aggressive Growth Fund AIM Money Market Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately
AIM Capital Development Fund $160 billion in assets for more than 6.6
AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS million shareholders, including individual
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund investors, corporate clients and financial
AIM Large Cap Growth Fund AIM Asian Growth Fund institutions, as of December 31, 1999.
AIM Mid Cap Equity Fund AIM Developing Markets Fund The AIM Family of Funds--Registered
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(5) Trademark-- is distributed nationwide,
AIM Mid Cap Opportunities Fund(2) AIM European Development Fund and AIM today is the eighth-largest mutual
AIM Select Growth Fund AIM International Equity Fund fund complex in the United States in
AIM Small Cap Growth Fund(3) AIM Japan Growth Fund assets under management, according to
AIM Small Cap Opportunities Fund(4) AIM Latin American Growth Fund Strategic Insight, an independent
AIM Value Fund AIM New Pacific Growth Fund mutual fund monitor.
AIM Weingarten Fund
GLOBAL GROWTH FUNDS
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund
AIM Advisor Flex Fund AIM Global Growth Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(6)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(7)
</TABLE>
(1)Effective December 1, 1999, AIM Constellation
Fund's investment strategy broadened to allow
investments across all market capitalizations.
(2)AIM Mid Cap Opportunities Fund closed to new
investors on March 21, 2000. (3)AIM Small Cap
Growth Fund closed to new investors on November 8,
1999. (4)AIM Small Cap Opportunities Fund closed
to new investors on November 4, 1999. (5)On
September 1, 1999, AIM Europe Growth Fund was
renamed AIM Euroland Growth Fund. Previously the
fund invested in all size companies in most areas
of Europe. The fund now seeks to invest at least
65% of its assets in large-cap companies within
countries using the euro as their currency
(EMU-member countries). (6)On June 1, 1999, AIM
Global Telecommunications Fund was renamed AIM
Global Telecommunications and Technology Fund.
(7)Effective August 27, 1999, AIM Global Trends
Fund was restructured to operate as a traditional
mutual fund. Before that date, the fund operated
as a fund of funds. For more complete information
about any AIM fund(s), including sales charges and
expenses, ask your financial advisor or securities
dealer for a free prospectus(es). Please read the
prospectus(es) carefully before you invest or send
money. If used as sales material after April 20,
2000, this report must be accompanied by a current
Quarterly Review of Performance for AIM Funds. [AIM LOGO APPEARS HERE]
(*)An investment in any AIM money market fund is
not insured by the Federal Deposit Insurance INVEST WITH DISCIPLINE
Corporation or any other government agency. --Registered Trademark--
[DALBAR LOGO APPEARS HERE]
A I M Distributors, Inc. SCO-SAR-1
