<PAGE> 1
ANNUAL REPORT / JULY 31 2000
AIM LARGE CAP OPPORTUNITIES FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[ COVER IMAGE ]
-------------------------------------
MIDMORNING, DONNINGTON, GLOUCESTER BY CHARLES NEAL
A BEAUTIFUL PAINTING IS A PLEASING BLEND OF CAREFULLY SELECTED
COLORS. SIMILARLY, IN CONSTRUCTING THE PORTFOLIO OF AIM LARGE
CAP OPPORTUNITIES FUND, WE CAREFULLY SELECT THE STOCKS OF
LARGE COMPANIES THAT WE BELIEVE HAVE EXCITING PROSPECTS.
-------------------------------------
For shareholders who seek long-term growth of capital by investing in a
portfolio consisting primarily of large-company stocks which management believes
involve "special opportunities."
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Large Cap Opportunities Fund's performance figures are historical, and
they reflect the reinvestment of distributions and changes in net asset
value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of its Class A shares due to different sales-charge structure and class
expenses.
o The fund's average annual total returns, including sales charges, for the
periods ended 6/30/00 (the most recent calendar quarter end) were as
follows. Class A shares, inception (12/30/99), 21.36%. Class B shares,
inception (3/31/00), -4.92%. Class C shares, inception (3/31/00), -0.92%.
o Because the fund has been in existence for less than a year, total return
provided is cumulative total return that has not yet been annualized.
o The fund participates in the initial public offering (IPO) market, and a
significant portion of its returns may be attributable to its investment in
IPOs, which have a magnified impact due to the fund's relatively small asset
base. As the fund's assets grow, it is probable that the effect of its
investment in IPOs on its total return will decline, which may reduce the
fund's total return.
o Leveraging and short-selling, along with other hedging strategies, may
present higher risks, but also offer greater potential rewards. The fund,
which is not a complete investment program, may not be appropriate for all
investors. There is no guarantee that the fund managers' investment
strategies will help investors attain their goals. Please see the prospectus
for more information about specific investment strategies and risks.
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 Dow Jones Industrial Average (the Dow) is a price-weighted
average of 30 actively traded primarily industrial stocks.
o The unmanaged National Association of Securities Dealers Automated Quotation
System Composite Index (the Nasdaq) is a market-value-weighted index
comprising all domestic and non-U.S.-based common stocks listed on the
Nasdaq system. It includes more than 5,000 companies, and it is often
considered representative of the small and medium-sized company stock
universe. While it includes many small and mid-sized company stocks,
large-capitalization technology companies tend to dominate the index.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is widely regarded as representative of 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 LARGE CAP OPPORTUNITIES FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
When we started AIM in 1976, we had only a table, two chairs
[PHOTO OF and a telephone. At the time, Bob Graham, Gary Crum and I
Charles T. had the idea of creating a mutual fund company that put
Bauer, people first. Our slogan, "people are the product," means
Chairman of that people-our employees and our investors-are our company.
the Board of Almost a quarter-century later, we've grown to more than
THE FUND eight million investors with $176 billion in assets under
APPEARS HERE] management. Over that time, the industry as a whole has
grown from $51 billion in assets to more than $7 trillion
[PHOTO OF today. I never dreamed we would see such phenomenal growth.
Robert H. You are the main reason for our success, and I want you to
Graham know how much I appreciate your loyalty and trust over the
APPEARS HERE] past 24 years.
Usually in this letter I review market activity during
the period covered by the report. This time, I'd just like
to say thank you. I am retiring as chairman of the AIM Funds
effective September 30, and as chairman of AIM effective December 31, 2000. Bob
Graham, whose picture appears under mine, will succeed me as AIM's chairman and
chairman of the AIM Funds. Gary Crum will remain president of A I M Capital
Management, Inc., leading our investment division. I am enormously proud to
leave AIM in such capable hands.
I'm also very proud of our team of employees, now more than 2,500 strong.
Because of their collective commitment to excellence and ethical business
practices, AIM has earned the trust of investors and financial advisors alike.
And every employee, from portfolio managers to client services representatives,
is dedicated to serving our shareholders.
Rest assured that nothing at AIM will change because of my retirement. You
can still depend on this company to manage your money responsibly and provide
you with top-notch service. As chairman of AIM and chairman of the AIM Funds,
Bob is committed to preserving the things that have made AIM great in the past
and positioning it to succeed in the future. And Gary is dedicated to
maintaining the quality and long-term performance you've come to expect from
AIM.
In the pages that follow, the managers of your fund comment on recent market
activity, how they have managed your fund since its inception on December 30,
1999 and their outlook for the coming months. We trust you will find their
comments helpful.
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 again for the support and trust you've shown us. I feel privileged
to have helped you with your financial goals, and I wish you success in all your
endeavors.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
AIM LARGE CAP OPPORTUNITIES FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND POSTS IMPRESSIVE GAINS DESPITE LACKLUSTER MARKET PERFORMANCE
STOCK MARKETS WERE EXTREMELY VOLATILE DURING THE REPORTING PERIOD. HOW DID AIM
LARGE CAP OPPORTUNITIES FUND FARE?
The fund's Class A shares, which began sales on December 30, 1999, registered
outstanding returns for the reporting period ended July 31, 2000. Excluding
sales charges, Class A shares posted a cumulative total return of 31.20%-far
better than the -1.66% return of the S&P 500 for the same period.
Class B and Class C shares began sales on March 31, 2000, and posted
cumulative total returns, excluding sales charges, of 2.26% and 2.19%,
respectively, through July 31. Over that same period, the S&P 500 returned
-4.18%.
WHAT WERE THE KEY TRENDS IN THE STOCK MARKET?
Markets were extremely volatile. During the first three months of 2000, several
key market indexes rose to new heights, with the Dow setting a record in January
and the technology-dominated Nasdaq following suit in March. High-flying
technology stocks helped propel these advances. Toward the end of March,
however, investors became concerned that tech stocks might be overvalued,
sparking a sharp sell-off in this sector. In April, a federal court ruling
against software giant Microsoft (not a fund holding) helped extend the
sell-off. 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 to contain
inflation. On May 16, the Fed, which launched a monetary tightening policy in
June 1999, raised the key federal funds rate-the rate banks charge one another
for overnight loans-from 6.0% to 6.5%. Interest-rate concerns before and after
the Fed's action prompted a sell-off that affected nearly every stock-market
sector in April and May, causing markets to be extremely volatile.
Markets rallied in June as key economic data, such as housing starts and
retail sales, indicated that the economy might be slowing, diminishing the
possibility of further Fed rate hikes. At its June 28 meeting, the Fed left
interest rates unchanged. The rally continued until mid-July when fresh
evidence, namely the revelation that the gross domestic product grew 5.2% in the
second quarter of 2000, indicated that the economy might not be slowing as much
as anticipated. That raised the specter of another possible Fed rate hike,
sending markets downward
WHAT WAS BEHIND THE FUND'S SOLID PERFORMANCE IN A DIFFICULT MARKET?
We credit stock selection for the fund's impressive performance. In choosing
holdings for the portfolio, we seek to own large-cap stocks of high-quality
companies with accelerating earnings growth. The fund invests primarily in the
stocks of companies that we believe represent "special opportunities." These
include companies that have made significant technological advances or have
undergone management changes. Important economic or political developments and
shifts in the competitive outlook also can create special opportunities.
The fund participates in the initial public offering (IPO) market, and a
significant portion of its returns may be attributable to its investment in
IPOs, which have a magnified impact due to the fund's relatively small asset
base. As the fund's assets grow, it is probable that the effect of its
investment in IPOs on its total return will decline, which may reduce the fund's
total return.
The fund also benefited from its alternative investment strategy.
CAN YOU DESCRIBE THIS ALTERNATIVE INVESTMENT STRATEGY?
The fund can employ short-selling and leveraging. While the fund owns the stocks
of companies expected to experience strong earnings growth, it can borrow the
stocks of firms expected to experience declining earnings. These borrowed stocks
(short positions) are subsequently sold,
FUND PERFORMANCE
TOTAL RETURNS OF
CLASS A SHARES VS. INDEXES
12/30/99-7/31/00
================================================================================
FUND CLASS A SHARES 31.20%
S&P 500 INDEX -1.66%
================================================================================
CUMULATIVE TOTAL RETURNS
As of 7/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (12/30/99) 24.01%*
*31.20% excluding sales charges
CLASS B SHARES
Inception (3/31/00) -2.74%*
*2.26% excluding CDSC
CLASS C SHARES
Inception (3/31/00) 1.19%*
*2.19% excluding CDSC
Past performance cannot guarantee comparable future results.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
See important fund and index disclosures inside front cover.
AIM LARGE CAP OPPORTUNITIES FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
with the intention of buying them later at an anticipated lower price. We
believe that 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 market rallies. Leveraging involves borrowing
money, usually to buy additional stocks.
HOW WAS THE FUND STRUCTURED?
As of July 31, 2000, the fund had 97 long positions. Technology stocks made up
36% of the long portfolio. Although tech stocks were extremely volatile during
the reporting period, we generally avoided investing in companies with no
earnings. The stocks of these companies proved particularly vulnerable to the
spring sell-off.
Financial-company stocks made up 9% of the long portfolio while energy
stocks made up 6%. Please note that our sector weightings were the result of our
earnings-based stock-selection process, not macroeconomic predictions. We found
more companies with excellent growth prospects in the technology, financial and
energy sectors.
WHAT WERE A FEW OF THE TECH STOCKS IN THE PORTFOLIO AT THE END OF THE
REPORTING PERIOD?
o Corning, the fund's largest holding, is the inventor and one of the world's
top manufacturers of fiber-optic cable.
o Brocade Communications Systems makes fiber channel switches and related
software for connecting corporate storage systems and servers, transforming them
into storage-area networks
o Cisco makes products that link networks and power the Internet, including
routers and switches.
o Juniper Networks makes a variety of Internet routers that move traffic along
different points in a network.
o Nortel Networks is North America's second-largest maker of
telecommunications products, including fiber-optic systems for voice systems.
o VERITAS is the world's largest maker of storage-management software, which
protects networks against data loss from crashes and errors, expedites data
recovery and manages corporate storage.
WHAT OTHER STOCKS PERFORMED WELL FOR THE FUND?
o J.P. Morgan, a leading international banking company, offers commercial-and
investment-banking services.
o Goldman Sachs is a leader in global investment banking, with more than 40
offices worldwide.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
The near-term outlook for stocks could depend to a large extent on the Fed's
ability to bring the economy to a "soft landing." If new evidence indicates that
economic growth is slowing, the Fed may refrain from further interest rate
increases. Moreover, if Fed policy ultimately succeeds in slowing economic
growth to a more sustainable rate and in keeping inflation at bay, it could
prolong the current record economic expansion. Such an environment could help
sustain corporate earnings growth and prove favorable for stocks.
However, uncertainty over the Fed's actions and other factors could
perpetuate the volatility that has characterized markets in recent months. In
such an environment, investors would be well advised to take a long-term
perspective on their investment.
PORTFOLIO COMPOSITION
As of 7/31/00, based on total net assets
<TABLE>
<CAPTION>
=============================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Corning Inc. 2.81% 1. Communications Equipment 13.83%
2. Brocade Communications Systems, Inc. 2.75 2. Computers (Software & Services) 6.51
3. JDS Uniphase Corp. 2.64 3. Electronics (Semiconductors) 4.78
4. Cisco Systems, Inc. 2.07 4. Oil & Gas (Drilling & Equipment) 3.68
5. Juniper Networks, Inc. 1.94 5. Investment Banking/Brokerage 3.46
6. J.P. Morgan & Co. Inc. 1.93 6. Computers (Peripherals) 3.37
7. Nortel Networks Corp. 1.75 7. Biotechnology 3.36
8. VERITAS Software Corp. 1.74 8. Financial (Diversified) 3.15
9. Goldman Sachs Group, Inc. (The) 1.61 9. Computers (Networking) 2.96
10. i2 Technologies, Inc. 1.53 10. Telecommunications (Cellular/Wireless) 2.31
<CAPTION>
TOP 10 SHORT POSITIONS
<S> <C>
1. United Parcel Service, Inc.-Class B 1.06%
2. Stryker Corp. 0.82
3. Yahoo! Inc. 0.82
4. UnitedHealth Group, Inc. 0.81
5. Newell Rubbermaid, Inc. 0.68
6. Fastenal Co. 0.63
7. Orthodontic Centers of America, Inc. 0.59
8. Costco Wholesale Corp. 0.59
9. Silicon Storage Technology, Inc. 0.56
10. Express Scripts, Inc. 0.56
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
=============================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM LARGE CAP OPPORTUNITIES FUND
3
<PAGE> 6
ANNUAL REPORT / FOR CONSIDERATION
EVERY INVESTMENT PORTFOLIO CAN BENEFIT FROM REGULAR CHECKUPS
CONSULTATION CHECKLIST
WHAT TO BRING:
[ ] A list of all your assets, including real estate, life insurance, stocks and
bonds, and mutual funds
[ ] A list of all your expenses, including likely future expenses
[ ] A timetable of your financial goals, including an estimate of when you want
to retire
WHAT TO ASK:
[ ] How can I estimate what my goals will cost?
[ ] How much money do I need to invest, and how often?
[ ] How many different kinds of investments do I need?
[ ] How do I determine my risk tolerance?
[ ] What are the possible risks of the investments you've suggested?
[ ] What effect will these investments have on my taxes? What forms will I need
to file?
[ ] How often do I need to revise my plan?
[ ] How will I know how my investments are doing?
[ ] How can I make changes to my plan?
[ ] What kinds of communication will I get from you?
[ ] Where can I get more information on what we've talked about?
[ ] What do I need to do after this meeting?
[PHOTO]
Once a year, you and your financial advisor should meet to look ahead, review
investments and take another look at your goals, according to the Forum for
Investor Advice, a nonprofit association that educates investors about the role
and value of professional financial advisors.
Financial advisors can help you with every kind of financial goal, whether
that's saving up for a house, eliminating debt or saving for a comfortable
retirement. An advisor who knows you well and understands your needs can make
all the difference in your financial future. He or she can
o evaluate your total financial situation and help you formulate a
comprehensive financial plan;
o explain different types of investments, as well as their potential risks and
benefits;
o suggest an investment portfolio that can handle changing market conditions;
and
o help you make clear-headed decisions during market volatility.
GETTING THE MOST FROM YOUR PLANNING SESSION
Your advisor needs a complete picture of your financial status to prepare a
workable plan. Come prepared to talk about your financial situation, your goals
and your feelings about risk. And don't be afraid to ask lots of questions. Good
financial advisors take investor education seriously, so take advantage of their
store of knowledge and materials.
The Forum for Investor Advice suggests that you discuss the following with
your financial advisor:
o changes in the financial markets
o changes in your goals and current situation
o retirement plans
o estate planning
o outlook for the markets
Take along our checklist (left) to get you started on the path to good
planning. And don't forget to stay in touch. Maintaining regular contact with
your financial advisor can keep you moving toward your goals, especially when
your life circumstances or financial needs change.
AIM LARGE CAP OPPORTUNITIES FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
July 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-75.18%
BANKS (MAJOR REGIONAL)-0.93%
Bank of New York Co., Inc. (The) 55,000 $ 2,574,687
--------------------------------------------------------------
BANKS (MONEY CENTER)-1.94%
J.P. Morgan & Co., Inc. 40,000 5,340,000
--------------------------------------------------------------
BIOTECHNOLOGY-3.36%
Affymetrix, Inc.(a) 23,500 3,208,852
--------------------------------------------------------------
Amgen Inc.(a) 38,300 2,487,106
--------------------------------------------------------------
Biogen, Inc.(a) 67,500 3,577,500
--------------------------------------------------------------
9,273,458
--------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.46%
Pegasus Communications Corp.(a) 30,000 1,267,500
--------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-13.83%
Alcatel-ADR (France) 48,000 3,510,000
--------------------------------------------------------------
Avici Systems, Inc.(a) 13,880 1,365,445
--------------------------------------------------------------
Comverse Technology, Inc.(a) 41,300 3,624,075
--------------------------------------------------------------
Corning Inc. 33,200 7,766,725
--------------------------------------------------------------
JDS Uniphase Corp.(a) 61,700 7,288,312
--------------------------------------------------------------
Juniper Networks, Inc.(a) 37,500 5,341,406
--------------------------------------------------------------
Nextel Communications, Inc.-Class
A(a) 47,500 2,657,031
--------------------------------------------------------------
Nortel Networks Corp. (Canada) 65,000 4,834,375
--------------------------------------------------------------
Sycamore Networks, Inc.(a) 14,500 1,788,031
--------------------------------------------------------------
38,175,400
--------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.89%
Check Point Software Technologies
Ltd.-ADR (Israel)(a) 21,200 2,459,200
--------------------------------------------------------------
COMPUTERS (HARDWARE)-2.18%
Palm, Inc.(a) 100,000 3,900,000
--------------------------------------------------------------
Sun Microsystems, Inc.(a) 20,000 2,108,750
--------------------------------------------------------------
6,008,750
--------------------------------------------------------------
COMPUTERS (NETWORKING)-2.96%
Cisco Systems, Inc.(a) 87,500 5,725,781
--------------------------------------------------------------
Exodus Communications, Inc.(a) 55,000 2,444,062
--------------------------------------------------------------
8,169,843
--------------------------------------------------------------
COMPUTERS (PERIPHERALS)-3.37%
Brocade Communications Systems,
Inc.(a) 42,500 7,591,562
--------------------------------------------------------------
EMC Corp.(a) 20,000 1,702,500
--------------------------------------------------------------
9,294,062
--------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-6.51%
i2 Technologies, Inc.(a) 32,500 4,216,875
--------------------------------------------------------------
Mainspring, Inc.(a) 20,900 313,500
--------------------------------------------------------------
Mercury Interactive Corp.(a) 7,500 744,492
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Oracle Corp.(a) 21,000 $ 1,578,937
--------------------------------------------------------------
Quest Software, Inc.(a) 80,000 3,780,000
--------------------------------------------------------------
Rational Software Corp.(a) 25,000 2,543,750
--------------------------------------------------------------
VERITAS Software Corp.(a) 47,000 4,791,062
--------------------------------------------------------------
17,968,616
--------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.77%
General Motors Corp.-Class H(a) 82,500 2,134,688
--------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-4.78%
ASM Lithography Holding N.V.
(Netherlands)(a) 16,000 636,000
--------------------------------------------------------------
Broadcom Corp.-Class A(a) 12,500 2,803,125
--------------------------------------------------------------
Celestica Inc. (Canada)(a) 46,500 2,906,250
--------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 45,000 2,972,813
--------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 65,000 3,875,625
--------------------------------------------------------------
13,193,813
--------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.16%
KLA-Tencor Corp.(a) 60,000 3,195,000
--------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-3.15%
American Express Co. 55,000 3,117,813
--------------------------------------------------------------
Citigroup Inc. 40,000 2,822,500
--------------------------------------------------------------
Fannie Mae 55,000 2,743,125
--------------------------------------------------------------
8,683,438
--------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-2.08%
American Home Products Corp. 65,000 3,449,063
--------------------------------------------------------------
Pfizer Inc. 53,000 2,285,625
--------------------------------------------------------------
5,734,688
--------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.34%
PE Corp-PE Biosystems Group 42,500 3,705,469
--------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-3.46%
Goldman Sachs Group, Inc. (The) 45,000 4,452,188
--------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 32,500 2,965,625
--------------------------------------------------------------
Schwab (Charles) Corp. (The) 59,050 2,133,181
--------------------------------------------------------------
9,550,994
--------------------------------------------------------------
INVESTMENT MANAGEMENT-0.49%
John Nuveen Co. (The)-Class A 30,000 1,340,625
--------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.14%
Harley-Davidson, Inc. 70,000 3,141,250
--------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.52%
Coflexip S.A.-ADR (France) 37,500 2,172,656
--------------------------------------------------------------
Millipore Corp. 32,000 2,012,000
--------------------------------------------------------------
4,184,656
--------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS-0.73%
Enron Corp. 27,500 $ 2,024,688
--------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-3.68%
ENSCO International Inc. 62,500 2,109,375
--------------------------------------------------------------
Grant Prideco, Inc.(a) 47,500 955,938
--------------------------------------------------------------
Lone Star Technologies, Inc.(a) 49,500 2,017,125
--------------------------------------------------------------
Schlumberger Ltd. 42,500 3,142,344
--------------------------------------------------------------
Transocean Sedco Forex Inc. 21,000 1,039,500
--------------------------------------------------------------
Weatherford International, Inc.(a) 22,500 901,406
--------------------------------------------------------------
10,165,688
--------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-2.29%
Apache Corp. 50,000 2,487,500
--------------------------------------------------------------
Kerr-McGee Corp. 70,000 3,841,250
--------------------------------------------------------------
6,328,750
--------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-0.50%
Valero Energy Corp.-$1.94 Conv.
Pfd. 60,000 1,387,500
--------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.10%
Calpine Corp.(a) 42,500 3,028,125
--------------------------------------------------------------
PUBLISHING-0.40%
Ziff Davis Media, Inc.(a) 77,000 1,102,063
--------------------------------------------------------------
RAILROADS-0.64%
Stilwell Financial, Inc.(a) 40,000 1,762,500
--------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.11%
Lowe's Cos., Inc. 72,500 3,058,594
--------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-1.24%
Lamar Advertising Co.(a) 75,000 3,421,875
--------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-1.37%
Ariba, Inc.(a) 32,500 3,767,969
--------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.73%
Critical Path, Inc.(a) 36,400 2,027,025
--------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.21%
CheckFree Corp.(a) 55,000 3,341,250
--------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-2.31%
Level 3 Communications, Inc.(a) 20,000 1,368,750
--------------------------------------------------------------
Phone.com, Inc.(a) 40,000 3,195,000
--------------------------------------------------------------
Powerwave Technologies, Inc.(a) 52,000 1,803,750
--------------------------------------------------------------
6,367,500
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.87%
Corvis Corp.(a) 29,270 2,409,744
--------------------------------------------------------------
TELEPHONE-0.68%
Qwest Communications International
Inc.(a) 40,000 1,877,500
--------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$191,972,166) 207,466,908
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS &
NOTES-1.42%
COMMUNICATIONS EQUIPMENT-0.59%
Kestrel Solutions, Conv. Bonds,
5.50%, 07/15/05 (Acquired
07/20/00; Cost $1,500,000)(b) $1,500,000 $ 1,620,000
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.83%
Primus Telecommunications Group,
Inc., Conv. Notes, 5.75%,
02/15/07 (Acquired 02/17/00-
07/24/00; Cost $2,823,192)(b) 4,000,000 2,295,000
--------------------------------------------------------------
Total Convertible Corporate
Bonds & Notes (Cost
$4,331,881) 3,915,000
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
<S> <C> <C> <C> <C>
OPTIONS PURCHASED-6.03%
CALLS-0.48%
Freddie Mac (Financial-
Diversified) 703 $ 40 Aug-00 94,466
-----------------------------------------------------------------------
Lycos, Inc. (Computers-
Software & Services) 366 60 Oct-00 402,600
-----------------------------------------------------------------------
Micron Technology, Inc.
(Electronics-
Semiconductors) 850 85 Aug-00 371,875
-----------------------------------------------------------------------
OSX Index (Oil & Gas-
Services) 589 140 Sep-00 121,481
-----------------------------------------------------------------------
Philadelphia
Semiconductor Index
(Electronics-
Semiconductors) 85 1,100 Aug-00 161,500
-----------------------------------------------------------------------
S&P 500 Index
(Investments) 434 1,550 Aug-00 23,056
-----------------------------------------------------------------------
SDL, Inc. (Electronics-
Semiconductors) 60 390 Sep-00 141,375
-----------------------------------------------------------------------
1,316,353
-----------------------------------------------------------------------
PUTS-5.55%
AMEX Pharmaceutical
Index (Health
Care-Drugs-Major
Pharmaceuticals) 400 370 Oct-00 385,000
-----------------------------------------------------------------------
Calpine Corp. (Power
Producers-Independent) 425 70 Oct-00 329,375
-----------------------------------------------------------------------
Hewlett-Packard Co.
(Computers-Hardware) 400 115 Aug-00 362,500
-----------------------------------------------------------------------
Morgan Stanley Internet
Index
(Computers-Software &
Services) 837 70 Dec-00 816,075
-----------------------------------------------------------------------
Nasdaq 100 Index
(Investments) 175 3,300 Sep-00 2,185,313
-----------------------------------------------------------------------
45 3,600 Dec-00 1,708,875
-----------------------------------------------------------------------
Pegasus Communications
Corp.
(Broadcasting-Television,
Radio, & Cable) 300 32 Sep-00 43,125
-----------------------------------------------------------------------
Russell 2000 Index
(Investments) 1,244 510 Dec-00 4,385,100
-----------------------------------------------------------------------
S&P 500 Index
(Investments) 303 1,425 Aug-00 1,465,750
-----------------------------------------------------------------------
159 1,450 Aug-00 1,534,500
-----------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION MARKET
CONTRACTS PRICE DATE VALUE
<S> <C> <C> <C> <C>
PUTS-(CONTINUED)
S&P 500 Index
(Investments) 200 $1,400 Sep-00 $ 640,087
-----------------------------------------------------------------------
330 1,400 Dec-00 532,650
-----------------------------------------------------------------------
451 1,350 Dec-00 477,500
-----------------------------------------------------------------------
Symbol Technologies,
Inc. (Electrical
Equipment) 456 50 Aug-00 456,000
-----------------------------------------------------------------------
15,321,850
-----------------------------------------------------------------------
Total Options
Purchased (Cost
$18,842,123) 16,638,203
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-13.09%
STIC Liquid Assets Portfolio(c) 18,069,286 18,069,286
--------------------------------------------------------------
STIC Prime Portfolio(c) 18,069,286 18,069,286
--------------------------------------------------------------
Total Money Market Funds (Cost
$36,138,572) 36,138,572
--------------------------------------------------------------
TOTAL INVESTMENTS-95.72% (Cost
$251,284,742) 264,158,683
--------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-4.28% 11,813,415
--------------------------------------------------------------
NET ASSETS-100.00% $275,972,098
==============================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(d)
Advanced Micro Devices, Inc. 13,000 $ 935,188
--------------------------------------------------------------
Amazon.com, Inc. 42,700 1,286,338
--------------------------------------------------------------
ANTEC Corp. 20,000 756,250
--------------------------------------------------------------
ARM Holdings plc 29,400 1,008,788
--------------------------------------------------------------
AT&T Wireless Group 50,000 1,375,000
--------------------------------------------------------------
Atmel Corp. 39,300 1,176,544
--------------------------------------------------------------
Audiovox Corp.-Class A 31,400 486,700
--------------------------------------------------------------
Broadvision Inc. 28,300 1,024,106
--------------------------------------------------------------
Carrier Access Corp. 14,200 850,225
--------------------------------------------------------------
CNET Networks, Inc. 26,200 784,363
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(d)-(CONTINUED)
Costco Wholesale Corp. 50,000 $ 1,628,125
--------------------------------------------------------------
CVS Corp. 29,200 1,151,575
--------------------------------------------------------------
Digital Island, Inc. 20,000 573,750
--------------------------------------------------------------
DoubleClick Inc. 19,600 704,375
--------------------------------------------------------------
Echelon Corp. 27,500 1,020,938
--------------------------------------------------------------
Express Scripts, Inc. 23,900 1,535,575
--------------------------------------------------------------
Fastenal Co. 28,000 1,729,000
--------------------------------------------------------------
Globalstar Telecommunications Ltd. 25,000 193,750
--------------------------------------------------------------
Hewlett-Packard Co. 4,500 491,344
--------------------------------------------------------------
Knight Trading Group, Inc. 14,500 385,156
--------------------------------------------------------------
Krispy Kreme Doughnuts, Inc. 14,000 952,000
--------------------------------------------------------------
Magna International Inc. 25,000 1,245,313
--------------------------------------------------------------
Newell Rubbermaid, Inc. 70,000 1,885,625
--------------------------------------------------------------
Orthodontic Centers of America, Inc. 63,400 1,640,475
--------------------------------------------------------------
QLogic Corp. 10,200 759,900
--------------------------------------------------------------
QLT Inc. 15,000 988,125
--------------------------------------------------------------
QUALCOMM Inc. 20,400 1,324,725
--------------------------------------------------------------
Scient Corp. 13,000 606,125
--------------------------------------------------------------
Sigma-Aldrich Corp. 45,000 1,226,250
--------------------------------------------------------------
Silicon Storage Technology, Inc. 24,500 1,548,094
--------------------------------------------------------------
Starbucks Corp. 25,000 937,500
--------------------------------------------------------------
Stryker Corp. 52,500 2,254,219
--------------------------------------------------------------
Sunoco, Inc. 40,000 975,000
--------------------------------------------------------------
Symbol Technologies, Inc. 32,500 1,295,938
--------------------------------------------------------------
TMP Worldwide, Inc. 8,700 626,400
--------------------------------------------------------------
United Parcel Service-Class B 50,000 2,937,500
--------------------------------------------------------------
UnitedHealth Group Inc. 27,400 2,241,663
--------------------------------------------------------------
Vignette Corp. 17,000 575,875
--------------------------------------------------------------
Yahoo! Inc. 17,500 2,252,031
--------------------------------------------------------------
$ 45,369,848
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 7/31/00 was $3,915,000, which
represented 1.45% 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
$48,532,285, which represents 106.97% of market value of securities sold
short.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$251,284,742) $264,158,683
------------------------------------------------------------
Cash 1,378,032
------------------------------------------------------------
Receivables for:
Investments sold 9,164,141
------------------------------------------------------------
Fund shares sold 12,957,317
------------------------------------------------------------
Dividends and interest 298,822
------------------------------------------------------------
Investments sold short 46,493,930
------------------------------------------------------------
Short positions 899,779
------------------------------------------------------------
Short stock rebates 195,994
------------------------------------------------------------
Investment for deferred compensation plan 2,620
------------------------------------------------------------
Other assets 6,396
------------------------------------------------------------
Total assets 335,555,714
------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 13,455,605
------------------------------------------------------------
Fund shares reacquired 136,567
------------------------------------------------------------
Options written (premiums received $398,246) 86,950
------------------------------------------------------------
Deferred compensation plan 2,620
------------------------------------------------------------
Short stock account interest 1,767
------------------------------------------------------------
Market value of securities sold short
(proceeds from short sales $46,493,930) 45,369,848
------------------------------------------------------------
Accrued advisory fees 353,087
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 133,971
------------------------------------------------------------
Accrued trustees' fees 728
------------------------------------------------------------
Accrued transfer agent fees 21,943
------------------------------------------------------------
Accrued operating expenses 16,295
------------------------------------------------------------
Total liabilities 59,583,616
------------------------------------------------------------
Net assets applicable to shares outstanding $275,972,098
============================================================
NET ASSETS:
Class A $138,205,142
============================================================
Class B $102,795,275
============================================================
Class C $ 34,971,681
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 10,532,971
============================================================
Class B 7,848,407
============================================================
Class C 2,670,782
============================================================
Class A:
Net asset value and redemption price per
share $ 13.12
------------------------------------------------------------
Offering price per share:
(Net asset value of $13.12 divided by
94.50%) $ 13.88
============================================================
Class B:
Net asset value and offering price per share $ 13.10
============================================================
Class C:
Net asset value and offering price per share $ 13.09
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the period December 30, 1999
(date operations commenced) through July 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Short stock rebates $ 443,705
------------------------------------------------------------
Dividends -- affiliated issuers 423,405
------------------------------------------------------------
Dividends (net of foreign withholding tax
$4,961) 159,509
------------------------------------------------------------
Interest 69,932
------------------------------------------------------------
Total investment income 1,096,551
------------------------------------------------------------
EXPENSES:
Advisory fees 749,188
------------------------------------------------------------
Administrative services fee 29,372
------------------------------------------------------------
Custodian fees 24,373
------------------------------------------------------------
Distribution fees -- Class A 98,668
------------------------------------------------------------
Distribution fees -- Class B 162,407
------------------------------------------------------------
Distribution fees -- Class C 55,143
------------------------------------------------------------
Interest 10,212
------------------------------------------------------------
Transfer agent fees -- Class A 31,715
------------------------------------------------------------
Transfer agent fees -- Class B 23,773
------------------------------------------------------------
Transfer agent fees -- Class C 8,072
------------------------------------------------------------
Trustees' fees 4,117
------------------------------------------------------------
Dividends on short sales 24,835
------------------------------------------------------------
Other 171,138
------------------------------------------------------------
Total expenses 1,393,013
------------------------------------------------------------
Less: Fees waived (39,872)
------------------------------------------------------------
Expenses paid indirectly (4,522)
------------------------------------------------------------
Net expenses 1,348,619
------------------------------------------------------------
Net investment income (loss) (252,068)
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, SECURITIES SOLD SHORT,
FUTURES AND OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities (2,400,360)
------------------------------------------------------------
Futures contracts (881,182)
------------------------------------------------------------
Option contracts 2,403,105
------------------------------------------------------------
Securities sold short 1,764,828
------------------------------------------------------------
886,391
------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 12,873,942
------------------------------------------------------------
Option contracts 311,296
------------------------------------------------------------
Securities sold short 1,124,086
------------------------------------------------------------
14,309,324
------------------------------------------------------------
Net gain on investment securities, securities
sold short, futures and option contracts 15,195,715
------------------------------------------------------------
Net increase in net assets resulting from
operations $14,943,647
============================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the period December 30, 1999 (date operations commenced) through July 31,
2000
<TABLE>
<CAPTION>
2000
------------
<S> <C>
OPERATIONS:
Net investment income (loss) $ (252,068)
--------------------------------------------------------------------------
Net realized gain from investment securities, securities
sold short, futures and option contracts 886,391
--------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, securities sold short and option contracts 14,309,324
--------------------------------------------------------------------------
Net increase in net assets resulting from operations 14,943,647
--------------------------------------------------------------------------
Share transactions-net:
Class A 130,133,895
--------------------------------------------------------------------------
Class B 97,595,645
--------------------------------------------------------------------------
Class C 33,298,911
--------------------------------------------------------------------------
Net increase in net assets 275,972,098
--------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
--------------------------------------------------------------------------
End of period $275,972,098
==========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $261,023,720
--------------------------------------------------------------------------
Undistributed net investment income (loss) (49,823)
--------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, securities sold short, futures and option
contracts 688,877
--------------------------------------------------------------------------
Unrealized appreciation of investment securities,
securities sold short, futures and option contracts 14,309,324
--------------------------------------------------------------------------
$275,972,098
==========================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
July 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Large 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 commenced operations on December 30, 1999. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Class A shares commenced sales on December 30, 1999. Class B and C shares
commenced sales on March 31, 2000. Matters affecting each portfolio or class
will be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of the
customary trading session on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price as of the close of
the customary trading session on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the New
York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income and short stock rebate income are recorded on the accrual
basis. Dividend income and dividend expense on short sales are recorded on
the ex-dividend date.
On July 31, 2000 additional paid-in capital was decreased by $4,731,
undistributed net investment income was increased by $202,245 and
undistributed net realized gains was decreased by $197,514 as a result of
reclassifications of a net operating loss and other reclassifications. Net
assets of the Fund were unaffected by the reclassifications.
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. Securities Sold Short -- The Fund may enter into short sales of securities
which it concurrently holds (against the box) or for which it holds no
corresponding position (naked). Securities sold short represent a liability
of the Fund to acquire specific securities at prevailing market prices at a
future date in order to satisfy the obligation to deliver the securities
sold. The liability is 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 will incur a loss if the
price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund realizes a
gain if the price of the security declines between those dates.
10
<PAGE> 13
The Fund is required to segregate cash or securities as collateral in
margin accounts at a level that is equal to the obligation to the broker who
delivered such securities to the buyer on behalf of the Fund. The short stock
rebate presented in the statement of operations represents income earned on
short sale proceeds held on deposit with the broker. The Fund may also earn
or incur margin interest on short sales transactions. Margin interest is the
income earned (expense incurred) as a result of the market value of
securities sold short being less than (greater than) the proceeds received
from the short sales.
F. 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 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, 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.
G. 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.
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 certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays a base management fee calculated at the annual rate of
1.50% 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
0.20%, 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 S&P 500 Index, or (ii) downward at the
rate of
11
<PAGE> 14
0.20%, on a pro rata basis, for each percentage point the 12-month rolling
investment record of the S&P 500 Index less 2.00% exceeds the 12-month rolling
investment performance of the Class A shares. During the period ended July 31,
2000, AIM waived fees of $39,872.
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 period ended July 31, 2000, AIM was
paid $29,372 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 period ended July 31, 2000, AFS was
paid $23,127 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 period ended July 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $98,668, $162,407
and $55,143, respectively, as compensation under the Plans.
AIM Distributors received commissions of $355,159, from sales of the Class A
shares of the Fund during the period ended July 31, 2000. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the period ended July 31, 2000,
AIM Distributors received $3,607 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors. During the period ended July 31, 2000, the Fund paid
legal fees of $2,270 for services rendered by Kramer, Levin, Naftalis & Frankel
LLP as counsel to the Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the period ended July 31, 2000, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $372 and reductions in custodian
fees of $4,150 under expense offset arrangements which resulted in a reduction
of the Fund's total expenses of $4,522.
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. During the period ended July 31, 2000, the
Fund did not borrow under the line of credit.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the period ended July 31, 2000 was
$288,400,654 and $92,740,607, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of July 31, 2000 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of:
Investment securities $ 23,850,469
---------------------------------------------------------
Securities sold short 3,712,964
---------------------------------------------------------
Aggregate unrealized (depreciation) of:
Investment securities (12,342,197)
---------------------------------------------------------
Securities sold short (2,588,878)
---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 12,632,358
=========================================================
Cost of investments for tax purposes is $252,650,411.
Proceeds from securities sold short for tax purposes is
$46,493,930.
</TABLE>
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the period ended July 31, 2000 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of year -- $ --
-----------------------------------------------------------
Written 3,080 4,480,974
-----------------------------------------------------------
Closed (2,590) (4,416,700)
-----------------------------------------------------------
Expired (490) (64,274)
-----------------------------------------------------------
End of year -- $ --
===========================================================
</TABLE>
12
<PAGE> 15
NOTE 8-PUT OPTION CONTRACTS
Transactions in put options contracts written during the period ended July 31,
2000 are summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of year -- $ --
------------------------------------------------------------------------------------
Purchased 1,121 1,008,570
------------------------------------------------------------------------------------
Closed (970) (498,840)
------------------------------------------------------------------------------------
Expired (104) (111,484)
------------------------------------------------------------------------------------
End of year 47 $ 398,246
====================================================================================
</TABLE>
Open put option contracts written at July 31, 2000 were as follows:
<TABLE>
<CAPTION>
JULY 31,
NUMBER 2000
CONTRACT STRIKE OF PREMIUMS MARKET UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE APPRECIATION
---------------- -------- ------ --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq 100 Index Sep-00 $260 47 $398,246 $86,950 $311,296
=====================================================================================
</TABLE>
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the period ended July 31, 2000 were as
follows:
<TABLE>
<CAPTION>
2000
-------------------------
SHARES AMOUNT
---------- ------------
<S> <C> <C>
Sold:
Class A 12,111,778 $149,479,697
---------------------------------------------------------------------------------------
Class B 7,973,127 99,165,325
---------------------------------------------------------------------------------------
Class C 2,722,459 33,913,845
---------------------------------------------------------------------------------------
Reacquired:
Class A (1,578,807) (19,345,802)
---------------------------------------------------------------------------------------
Class B (124,720) (1,569,680)
---------------------------------------------------------------------------------------
Class C (51,677) (614,934)
---------------------------------------------------------------------------------------
21,052,160 $261,028,451
=======================================================================================
</TABLE>
13
<PAGE> 16
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
-----------------
DECEMBER 30, 1999
(DATE OPERATIONS
COMMENCED) TO
JULY 31, 2000
-----------------
<S> <C>
Net asset value, beginning of year $ 10.00
------------------------------------------------------------ --------
Income from investment operations:
Net investment income (loss) (0.01)
------------------------------------------------------------ --------
Net gains on securities (both realized and unrealized) 3.13
------------------------------------------------------------ --------
Total from investment operations 3.12
------------------------------------------------------------ --------
Net asset value, end of year $ 13.12
============================================================ ========
Total return(a) 31.20%
============================================================ ========
Ratios/supplemental data:
Net assets, end of year (000s omitted) $138,205
============================================================ ========
Ratio of expenses to average net assets (including interest
expense and dividends on short sales expense):
With fee waivers 2.41%(b)
------------------------------------------------------------ --------
Without fee waivers 2.49%(b)
============================================================ ========
Ratio of expenses to average net assets (excluding interest
expense and dividends on short sales expense):
With fee waivers 2.34%(b)
------------------------------------------------------------ --------
Without fee waivers 2.42%(b)
============================================================ ========
Ratio of net investment income (loss) to average net assets (0.20)%(b)
============================================================ ========
Ratio of interest expense and dividends on short sales
expense to average net assets 0.07%(b)
============================================================ ========
Portfolio turnover rate 125%
============================================================ ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $47,989,902.
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------- --------------
MARCH 31, 2000 MARCH 31, 2000
(DATE SALES (DATE SALES
COMMENCED) TO COMMENCED) TO
JULY 31, 2000 JULY 31, 2000
-------------- --------------
<S> <C> <C>
Net asset value, beginning of year $ 12.81 $ 12.81
------------------------------------------------------------ -------- --------
Income from investment operations:
Net investment income (loss) (0.02) (0.02)
------------------------------------------------------------ -------- --------
Net gains on securities (both realized and unrealized) 0.31 0.30
------------------------------------------------------------ -------- --------
Total from investment operations 0.29 0.28
------------------------------------------------------------ -------- --------
Net asset value, end of year $ 13.10 $ 13.09
============================================================ ======== ========
Total return(a) 2.26% 2.19%
============================================================ ======== ========
Ratios/supplemental data:
Net assets, end of year (000s omitted) $102,795 $ 34,972
============================================================ ======== ========
Ratio of expenses to average net assets (including interest
expense and dividends on short sales expense) 3.10%(b) 3.10%(b)
============================================================ ======== ========
Ratio of expenses to average net assets (excluding interest
expense and dividends on short sales expense) 3.03%(b) 3.03%(b)
============================================================ ======== ========
Ratio of net investment income (loss) to average net assets (0.89)%(b) (0.89)%(b)
============================================================ ======== ========
Ratio of interest expense and dividends on short sales
expense to average net assets 0.07%(b) 0.07%(b)
============================================================ ======== ========
Portfolio turnover rate 125% 125%
============================================================ ======== ========
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $48,326,013 and
$16,408,451 for Class B and Class C, respectively.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Large Cap Opportunities Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Large Cap Opportunities Fund (a series of AIM Special Opportunities Funds)
including the schedule of investments, as of July 31, 2000, and the related
statement of operations, the statement of changes in net assets, and financial
highlights for the period December 30, 1999 (date operations commenced) through
July 31, 2000. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Large Cap Opportunities Fund as of July 31, 2000, the results of its operations,
the changes in its net assets and financial highlights for the period December
30, 1999 (date operations commenced) through July 31, 2000, in conformity with
accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
September 11, 2000
Houston, Texas
15
<PAGE> 18
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Director and 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. and
Twenty First Century Group Inc.; Sheri Morris Ballard Spahr
Formerly Member Assistant Vice President and Andrews & Ingersoll, LLP
of the U.S. House of Representatives Assistant Treasurer 1735 Market Street
Philadelphia, PA 19103
Carl Frischling Renee A. Friedli
Partner Assistant Secretary COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
P. Michelle Grace Kramer Levin Naftalis & Frankel LLP
Robert H. Graham Assistant Secretary 919 Third Avenue
Director, President and New York, NY 10022
Chief Executive Officer Nancy L. Martin
A I M Management Group Inc. Assistant Secretary DISTRIBUTOR
Prema Mathai-Davis Ofelia M. Mayo A I M Distributors, Inc.
Formerly, Chief Executive Officer, Assistant Secretary 11 Greenway Plaza
YWCA of the U.S.A. Suite 100
Lisa A. Moss Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney AUDITORS
Kathleen J. Pflueger
Louis S. Sklar Assistant Secretary KPMG LLP
Executive Vice President, 700 Louisiana
Development and Operations, Houston, TX 77002
Hines Interests
Limited Partnership
</TABLE>
<PAGE> 19
-------------------------------------
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AIM INVESTOR LINE,
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PROVIDES CURRENT ACCOUNT
INFORMATION AND THE PRICE,
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DAY. YOU CAN ALSO ORDER A
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-------------------------------------
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or exchange shares of AIM funds in your AIM account simply by visiting our
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o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. You can receive
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<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C> <C>
EQUITY FUNDS
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc.
has provided leadership in the
MORE AGGRESSIVE MORE AGGRESSIVE mutual fund industry since
1976 and managed approximately
AIM Small Cap Opportunities(1) AIM Latin American Growth $176 billion in assets for
AIM Mid Cap Opportunities(2) AIM Developing Markets more than 8 million
AIM Large Cap Opportunities(6) AIM European Small Company shareholders, including
AIM Emerging Growth AIM Asian Growth individual investors,
AIM Small Cap Growth(3) AIM Japan Growth corporate clients and financial
AIM Aggressive Growth AIM International Emerging Growth institutions, as of June 30,
AIM Mid Cap Growth AIM European Development 2000.
AIM Small Cap Equity AIM Euroland Growth The AIM Family of
AIM Capital Development AIM Global Aggressive Growth Funds--Registered
AIM Constellation(4) AIM International Equity Trademark-- is distributed
AIM Dent Demographic Trends AIM Advisor International Value nationwide, and AIM today is
AIM Select Growth AIM Global Trends the eighth-largest mutual fund
AIM Large Cap Growth AIM Global Growth complex in the United States
AIM Weingarten in assets under management,
AIM Mid Cap Equity MORE CONSERVATIVE according to Strategic
AIM Value II Insight, an independent mutual
AIM Charter SECTOR EQUITY FUNDS fund monitor.
AIM Value AIM is a subsidiary of
AIM Blue Chip MORE AGGRESSIVE AMVESCAP PLC, one of the
AIM Basic Value world's largest independent
AIM Large Cap Basic Value AIM New Technology financial services companies
AIM Balanced AIM Global Telecommunications and Technology with $389 billion in assets
AIM Advisor Flex AIM Global Resources under management as of June
AIM Global Financial Services 30, 2000.
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 Small Cap Growth Fund closed to new
investors Nov. 8, 1999. (4) AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations Dec. 1, 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. (6) AIM Large Cap Opportunities Fund will close to
new investors Sept. 29, 2000, or when the fund reaches a total net asset value
of $750 million, whichever occurs first.
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 Oct. 20, 2000, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
[DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE]
--Registered Trademark--
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. LCO-AR-1
