<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM MID CAP OPPORTUNITIES FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
-------------------------------------
THE ARTIST'S GARDEN AT VETHEUIL BY CLAUDE MONET
A BEAUTIFUL GARDEN, SUCH AS THE ONE DEPICTED IN MONET'S CLAS-
SIC PAINTING, IS USUALLY A PLEASING COMBINATION OF MANY DIFFER-
ENT FLOWERING PLANTS. SIMILARLY, IN AIM MID CAP OPPORTUNITIES
FUND, WE SEEK TO OWN THE STOCKS OF A BROAD CROSS-SECTION OF
RAPIDLY GROWING MID-SIZED COMPANIES IN AN EFFORT TO PRODUCE
ATTRACTIVE TOTAL RETURN.
-------------------------------------
AIM Mid Cap Opportunities Fund is for shareholders who seek long-term growth of
capital by investing in a portfolio consisting primarily of the stocks of
medium-sized companies which management believes involve "special
opportunities."
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Mid 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 Average annual total returns (including sales charges) for the fund's Class
A shares for the period ended 9/30/00 (the most recent calendar quarter-end)
are as follows: one year, 48.81%; inception (12/30/98), 70.86%. Total
returns since inception (11/12/99) were 31.28% for Class B shares and 35.33%
for Class C shares. Because the fund's Class B and Class C shares have been
offered for less than a year, total returns provided are cumulative figures
that have not been annualized.
o Effective 3/21/00, the fund was closed to new investors.
o The fund participates in the initial public offering (IPO) market, and a
significant portion of its returns are attributable to its investment in
IPOs, which had a magnified impact when its asset base was relatively small.
With a larger asset base, there is no guarantee that the fund will continue
to experience substantially similar performance by investing in IPOs.
o Leveraging and short-selling, along with other hedging strategies, may
present higher risks, but also offer greater potential rewards. Short sales
are riskier because they rely on the managers' ability to anticipate a
security's future value.
o Investing in micro-, small and mid-sized companies may involve risks not
associated with investing in more established companies. Also, micro and
small companies may have business risk, significant stock-price fluctuations
and illiquidity.
o The fund's investment return and principal value will fluctuate, so an
investor's shares (when redeemed) may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Dow Jones Industrial Average (the Dow) is a price-weighted
average of 30 actively traded blue-chip stocks.
o The unmanaged Lipper Mid-Cap Growth Fund Index represents an average of the
performance of the 30 largest mid-capitalization growth funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The National Association of Securities Dealers Automated Quotation System
Composite Index (the Nasdaq) is a market-value-weighted index comprising all
domestic and non-U.S.-based common stocks listed on the Nasdaq system. It
includes more than 5,000 companies, and it is often considered
representative of the small and medium-sized company universe. While it
includes many small and mid-sized company stocks, large-capitalization
technology companies tend to dominate the index.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
represents the performance of the U.S. stock market.
o The unmanaged Standard & Poor's MidCap 400 Index (the S&P 400) represents
the performance of mid-capitalization stocks.
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 MID CAP OPPORTUNITIES FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
It's an honor to address you as the AIM Funds' new chairman.
[PHOTO OF I feel privileged to succeed Ted Bauer, who recently retired
Robert H. from the funds' board and will soon retire as A I M
Graham, Management Group's chairman after a long, successful career
Chairman of in the investment industry. Ted has always shown the highest
the Board of degree of integrity and commitment to excellence, and I have
THE FUND always admired him. I'm also proud to be part of the team
APPEARS HERE] that launched AIM almost 25 years ago. From the beginning,
AIM has been a very people-oriented, service-minded company,
and I plan to carry on the tradition for our shareholders,
financial advisors and employees.
UNCERTAIN MARKETS
The markets this year have been particularly volatile and
confusing for many investors, especially for those who have
only experienced the bull market of the 1990s. After almost
a decade of double-digit returns, the S&P 500 was down 1.81% year-to-date as of
October 31, 2000. But market returns in the 20% to 30% range, such as we have
seen in recent years, are not typical. If you expect these kinds of returns
every year, you'll be disappointed. Historically, markets decline in one out of
every four years. What we're seeing now is a normal downturn.
This appears to be a worldwide trend. Throughout 2000, overseas markets
generally have been more turbulent than their U.S. counterpart.
REASONS FOR OPTIMISM
While investors may need to temper their expectations, there are plenty of
reasons to be optimistic. Economic fundamentals remain strong, and many believe
that the Federal Reserve Board may have succeeded in bringing the economy to a
"soft landing." Gross domestic product growth slowed to 2.4% in the third
quarter from the rapid pace of about 7% a year ago. With this slowdown, it seems
unlikely that the Fed will raise interest rates in the near future, and stable
interest rates provide a solid environment for both stocks and bonds.
In Europe, the region's economic and investment future continues to look
bright despite the weak euro. Restructuring, merger activity and tax reform bode
well for European economies. In Asia, most analysts think the continuing
strength of the U.S. economy will help boost Asian stock markets.
THE VALUE OF ADVICE
The current environment illustrates the value of professional money management.
Knowing when to buy and sell takes expertise and discipline even in the best of
markets. During downturns, many investors may be tempted to make decisions based
on emotions instead of strategy. The wisest choice is to rely on a professional
money manager to make these decisions for you.
In these uncertain times, it's important to keep market volatility in
perspective. Mutual fund investing should be a long-term endeavor. Remember why
you're investing, whether it's for your retirement or your child's education,
and think about your time frame. If you're unsure about whether your investments
can meet your goals, visit your financial advisor for help.
In the following pages, your fund's portfolio managers discuss market
activity, how they managed your fund during the fiscal year and their near-term
outlook. If you have any questions or comments, please contact us through our
Web site, www.aimfunds.com, or call our Client Services Department at
800-959-4246 during normal business hours. Information about your account is
available at our Web site and on our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
--Registered Trademark--.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
-------------------------------------
THE CURRENT
ENVIRONMENT
ILLUSTRATES THE VALUE
OF PROFESSIONAL
MONEY MANAGEMENT.
KNOWING WHEN TO BUY
AND SELL TAKES
EXPERTISE AND
DISCIPLINE EVEN IN THE
BEST OF MARKETS.
-------------------------------------
AIM MID CAP OPPORTUNITIES FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND PERFORMS WELL IN DIFFICULT MARKET ENVIRONMENT
HOW DID AIM MID CAP OPPORTUNITIES FUND PERFORM THIS YEAR?
During the fiscal year ended October 31, 2000, the 12 months ended shares
returned 42.72% at net asset value (excluding sales charges). This compares
favorably with its benchmark, the S&P 400, which returned 31.65% for the same
period, as well as with the Lipper Mid-Cap Growth Fund Index, which returned
34.54%.
Class B and Class C shares began sales on November 12, 1999, so their
performance period through October 31, 2000 is just under a year. During that
period, both classes posted cumulative total returns of 29.65%, excluding sales
charges.
The fund's performance includes gains made during late 1999 and early 2000,
when markets were more exuberant. Later in the year, performance was affected by
the sell-off in the technology sector and other market difficulties. At the end
of the reporting period, the fund's net assets stood at $631.3 million. The fund
was closed to new investors on March 21, 2000.
WHAT WERE THE KEY TRENDS IN THE STOCK MARKET?
A strong market rally in the first half of the year was followed by a choppy,
downward-trending market in the second half.
Technology stocks led the market surge in late 1999 and early 2000 as the
Dow set a record in January. The tech-laden Nasdaq continued to soar to record
levels well into March. Toward the end of the month, however, investors became
concerned that tech stocks might be overvalued, sparking a sharp sell-off in
this sector. The stocks of Internet companies with no earnings were particularly
hard hit. Investors were also concerned that the Federal Reserve Board (the Fed)
might continue raising interest rates to contain inflation by slowing torrid
economic growth. Interest-rate concerns prompted a rush of selling that affected
nearly every sector and caused markets to be extremely volatile.
After raising interest rates in May, the Fed ceased its monetary tightening
policy for the remainder of the fiscal year. Markets rallied in late May and
June amid mounting evidence that economic growth was slowing, reducing the
probability of additional Fed rate hikes. However, in late summer and early
fall, rising oil prices, unrest in the Middle East and (perhaps most
importantly) concern about corporate earnings converged to produce another steep
market decline. A number of major corporations reported earnings disappointments
in September and October, as rising oil prices and a weak euro cut into profit
margins.
Because of strong performance during the first half of the fiscal year, most
market indexes recorded gains for that period, but by the close of the fiscal
year, the major market indexes such as the S&P 500 and the Nasdaq were below the
peak levels they had reached in the spring.
HOW DID THE FUND MANEUVER TO ACHIEVE GOOD RESULTS?
We attribute the fund's excellent performance to careful stock selection. Our
bottom-up securities analysis and our focus on income statements led us to
viable companies with solid earnings and strong business models. By following
this strategy, we generally avoided stocks that lost value because of
disappointing earnings.
Also, the fund can employ alternative investment strategies such as
short-selling and leveraging. Short-selling means selling borrowed securities
(called short positions) in anticipation of a decline in price in order to buy
them back at the lower price. Securities bought and held for capital
appreciation are called long positions. Leveraging means borrowing money to buy
securities. We believe that a mixed portfolio of long and short positions can
potentially protect the fund during market downturns while allowing it to take
advantage of market rallies. Both the long and the short positions contributed
to the fund's solid risk-adjusted returns this year.
HOW WAS THE FUND POSITIONED AT THE END OF THE YEAR?
As of October 31, 2000, the fund had 134 long positions. Technology stocks made
up more than 42% of the portfolio. Within the tech sector, the focus was on
optical networking and data-storage equipment
-------------------------------------
THE FUND'S PERFORMANCE INCLUDES
GAINS MADE DURING LATE 1999
AND EARLY 2000, WHEN MARKETS
WERE MORE EXUBERANT.
-------------------------------------
-------------------------------------
READ THIS REPORT ONLINE!
Early in 2001, a new service will be available--electronic delivery of
fund reports and prospectuses. Soon, you can read the same AIM report
you are reading now--online. Once you sign up for the service, we will
send you a link to the report via e-mail. If you choose to receive
your reports online, you will not receive a paper copy by mail. You
may cancel the service at any time by visiting our Web site.
Please visit our Web site at www.aimfunds.com and go to "Your AIM
Account." Log into your account and then click on the "View Other
Account Options" dropdown menu and select "eDelivery."
-------------------------------------
See important fund and index disclosures inside front cover.
AIM MID CAP OPPORTUNITIES FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
[ART WORK]
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
==================================================================================================================================
TOP 10 LONG HOLDINGS TOP 10 INDUSTRIES TOP 10 SHORT POSITIONS
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Medicis Pharmaceutical Corp. - 1. Computers (Software & Services) 11.77% 1. Adobe Systems, Inc. 1.03%
Class A 2.27%
2. Comverse Technology, Inc. 2.06 2. Oil & Gas (Drilling & Equipment) 9.64 2. Symbol Technologies, Inc. 0.90
3. Bed Bath & Beyond Inc. 1.92 3. Electronics (Semiconductors) 7.12 3. Administaff, Inc. 0.84
4. Health Management Associates, 4. Communications Equipment 6.88 4. Fastenal Co. 0.84
Inc. - Class A 1.76
5. Sanmina Corp. 1.63 5. Electronics (Instrumentation) 4.48 5. Home Depot, Inc. (The) 0.84
6. Research In Motion Ltd. (Canada) 1.58 6. Retail (Specialty) 4.21 6. eBay, Inc. 0.82
7. Newport Corp. 1.58 7. Retail (Specialty - Apparel) 3.71 7. Amazon.com, Inc. 0.80
8. Nasdaq 100 Index Tracking Stock 1.53 8. Broadcasting (TV, Radio & Cable) 3.26 8. King Pharmaceuticals, Inc. 0.78
9. SanDisk Corp. 1.53 9. Electrical Equipment 3.15 9. Corvis Corp. 0.72
10. Methode Electronics, Inc. - 10. Health Care (Drugs - Generic 10. Coca-Cola Co. (The) 0.72
Class A 1.52 & Other) 2.95
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>
companies, as well as firms providing products and services that facilitate
business-to-business networking structures. Energy stocks (which got a boost
from rising oil prices) made up nearly 20% of the portfolio, while the stocks of
financial companies made up 13%. The fund closed the fiscal year holding lower
positions than its benchmark in health care and utilities and a higher position
in energy, based on our bottom-up analysis of potential earnings growth.
WHAT WERE SOME OF THE FUND'S LEADING TECH STOCKS?
o Comverse designs, manufactures and supports computer and telecommunication
systems and software for multimedia communications and
information-processing applications.
o Sanmina provides custom integrated electronic manufacturing services to
original equipment manufacturers.
o Research In Motion designs and produces wireless solutions for the
mobile-communications market.
o Newport is a global supplier of high-precision components, instruments,
micropositioning and measurement products and systems to the high-tech
market.
o SanDisk designs, manufactures and markets flash memory data-storage products
for industrial, communications, highly portable computing and consumer
electronics.
o Methode Electronics manufactures component devices worldwide for
manufacturers of information-processing and networking equipment, voice and
data communication systems, consumer electronics, automobiles, aerospace
vehicles and industrial equipment.
WHAT WERE A FEW OF ITS HOLDINGS OUTSIDE THE TECH SECTOR?
o Medicis is an independent pharmaceutical company that offers prescription
and over-the-counter products to treat a number of dermatological
conditions.
o Bed Bath & Beyond is a nationwide chain of superstores selling high-quality
domestic merchandise and home furnishings.
o Health Management Associates provides general acute health services in
non-urban locations through 32 general hospitals and four psychiatric
hospitals.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
At the close of the reporting period, the economic climate appeared favorable
for stocks despite often extreme market volatility. The nation's unemployment
rate was at its lowest level in three decades. Consumer spending, slow for much
of the second half of the fiscal year, picked up again in September. And except
for higher oil prices, inflation was moderate. Interest rates had stabilized as
the Fed had taken a respite from its monetary tightening policy.
Corporate profits, while declining, were still impressive for many
companies, particularly medium-sized and smaller firms. However, because of a
degree of uncertainty surrounding near-term economic, political and foreign
trends and developments, markets may continue to be volatile.
-------------------------------------
SINCE OUR LAST REPORT
to you, AIM Mid Cap Opportunities Fund's fiscal year-end was changed
from July 31 to October 31. This change was made to better manage
distribution requirements in light of current excise tax rules. You
will receive an annual report dated October 31 and a semiannual report
dated April 30 each year.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM MID CAP OPPORTUNITIES FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM MID CAP OPPORTUNITIES FUND VS. BENCHMARK INDEXES
12/30/98-10/31/00
in thousands
================================================================================
AIM Midcap Lipper
Opportunities Fund, Mid-Cap Growth S&P
Class A Shares Fund Index 400 Index
--------------------------------------------------------------------------------
12/30/98 $9,452 $10,000 $10,000
1/99 10,312 10,496 9,611
4/99 12,477 10,797 10,100
7/99 14,914 11,459 10,460
10/99 17,031 12,771 10,289
1/00 21,233 17,074 11,149
4/00 25,217 17,231 12,476
7/00 24,694 17,367 12,699
10/00 24,309 17,183 13,545
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
ABOUT THIS CHART
This chart compares your fund's Class A shares to benchmark indexes. It is
intended to give you an idea of how your fund performed compared to those
indexes over the period 12/30/98-10/31/00. (The data for the indexes are for the
period 12/31/98-10/31/00.) It is important to understand the differences between
your fund and an index. An index measures the performance of a hypothetical
portfolio. A market index such as the S&P MidCap 400 Index is unmanaged,
incurring no sales charges, expenses or fees. If you could buy all the
securities that make up a market index, you would incur expenses that would
affect the return on your investment. An index of funds such as the Lipper
Mid-Cap Growth Fund Index includes a number of mutual funds grouped by
investment objective. Each of those funds interprets that objective differently,
and each employs a different management style and investment strategy.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (12/30/98) 62.24%
1 Year 34.87*
*42.72%, excluding sales charges
CLASS B SHARES (cumulative total return)
Inception (11/12/99) 24.65%*
*29.65%, excluding CDSC
CLASS C SHARES (cumulative total return)
Inception (11/12/99) 28.65%*
*29.65%, excluding CDSC
================================================================================
YOUR FUND'S TOTAL RETURN INCLUDES SALES CHARGES, EXPENSES AND MANAGEMENT FEES.
THE PERFORMANCE OF THE FUND'S CLASS B AND CLASS C SHARES WILL DIFFER FROM THAT
OF ITS CLASS A SHARES DUE TO DIFFERENT SALES-CHARGE STRUCTURE AND CLASS
EXPENSES. FOR FUND PERFORMANCE CALCULATIONS AND DESCRIPTIONS OF THE INDEXES
CITED ON THIS PAGE, PLEASE SEE THE INSIDE FRONT COVER.
AIM MID CAP OPPORTUNITIES FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS & OTHER
EQUITY INTERESTS-84.40%
BIOTECHNOLOGY-2.67%
Affymetrix, Inc. 115,000 $ 6,368,125
--------------------------------------------------------------
Celera Genomics(a) 82,900 5,595,750
--------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(a) 67,200 4,876,200
==============================================================
16,840,075
==============================================================
BROADCASTING (TELEVISION, RADIO &
CABLE)-3.26%
Hispanic Broadcasting Corp.(a) 225,000 7,031,250
--------------------------------------------------------------
Pegasus Communications Corp.(a) 182,700 6,497,269
--------------------------------------------------------------
Univision Communications Inc.-Class
A(a) 152,600 5,836,950
--------------------------------------------------------------
Westwood One, Inc.(a) 63,100 1,194,956
==============================================================
20,560,425
==============================================================
COMMUNICATIONS EQUIPMENT-5.62%
Acterna Corp.(a) 135,900 2,174,400
--------------------------------------------------------------
ADC Telecommunications, Inc.(a) 191,500 4,093,312
--------------------------------------------------------------
Andrew Corp.(a) 247,100 6,501,819
--------------------------------------------------------------
Comverse Technology, Inc.(a) 116,400 13,007,700
--------------------------------------------------------------
Polycom, Inc.(a) 120,100 7,806,500
--------------------------------------------------------------
Tollgrade Communications, Inc.(a) 19,900 1,905,425
==============================================================
35,489,156
==============================================================
COMPUTERS (NETWORKING)-0.61%
Tellium, Inc.-Series E, Conv.
Pfd.(a)(b) 129,001 3,870,030
==============================================================
COMPUTERS (PERIPHERALS)-1.53%
SanDisk Corp.(a) 180,000 9,672,187
==============================================================
COMPUTERS (SOFTWARE & SERVICES)-11.77%
Advanced Fibre Communications, Inc.(a) 153,200 4,988,575
--------------------------------------------------------------
Check Point Software Technologies
Ltd. (Israel)(a) 59,400 9,407,475
--------------------------------------------------------------
HomeStore.com, Inc.(a) 146,500 4,981,000
--------------------------------------------------------------
Interwoven, Inc.(a) 66,600 6,709,950
--------------------------------------------------------------
Macrovision Corp.(a) 131,100 9,553,912
--------------------------------------------------------------
Mercury Interactive Corp.(a) 79,800 8,857,800
--------------------------------------------------------------
Orbotech, Ltd. (Israel)(a) 95,550 5,058,178
--------------------------------------------------------------
Portal Software, Inc.(a) 125,000 4,398,437
--------------------------------------------------------------
Quest Software, Inc.(a) 150,000 6,553,125
--------------------------------------------------------------
Rational Software Corp.(a) 143,200 8,547,250
--------------------------------------------------------------
webMethods, Inc.(a) 25,000 2,221,875
--------------------------------------------------------------
Websense, Inc.(a) 169,700 3,054,600
==============================================================
74,332,177
==============================================================
CONSUMER FINANCE-1.06%
Capital One Financial Corp. 105,900 6,684,937
==============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-3.15%
Cree, Inc.(a) 46,900 $ 4,654,825
--------------------------------------------------------------
Sanmina Corp.(a) 89,900 10,276,694
--------------------------------------------------------------
Veeco Instruments Inc.(a) 75,000 4,965,234
==============================================================
19,896,753
==============================================================
ELECTRONICS (INSTRUMENTATION)-4.48%
Methode Electronics, Inc.-Class A 254,700 9,583,087
--------------------------------------------------------------
Newport Corp. 87,500 9,992,773
--------------------------------------------------------------
PerkinElmer, Inc. 72,900 8,711,550
==============================================================
28,287,410
==============================================================
ELECTRONICS (SEMICONDUCTORS)-7.12%
Elantec Semiconductor, Inc.(a) 39,500 4,394,375
--------------------------------------------------------------
Exar Corp.(a) 177,200 7,918,625
--------------------------------------------------------------
Integrated Device Technology, Inc.(a) 81,500 4,589,469
--------------------------------------------------------------
Microchip Technology Inc.(a) 145,425 4,599,066
--------------------------------------------------------------
MIPS Technologies, Inc.-Class A(a) 124,900 5,011,613
--------------------------------------------------------------
Semtech Corp.(a) 143,200 4,618,200
--------------------------------------------------------------
TranSwitch Corp.(a) 89,200 5,151,300
--------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 124,000 8,672,250
==============================================================
44,954,898
==============================================================
FINANCIAL (DIVERSIFIED)-1.36%
SEI Investments Co. 94,400 8,566,800
==============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-2.95%
Forest Laboratories, Inc.(a) 32,100 4,253,250
--------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class
A(a) 194,800 14,342,150
==============================================================
18,595,400
==============================================================
HEALTH CARE (HOSPITAL MANAGEMENT)-1.76%
Health Management Associates,
Inc.-Class A(a) 561,700 11,128,681
==============================================================
HEALTH CARE (MANAGED CARE)-0.69%
Caremark Rx, Inc.(a) 350,000 4,375,000
==============================================================
HEALTH CARE (SPECIALIZED SERVICES)-0.61%
Laboratory Corp. of America
Holdings(a) 28,600 3,857,425
==============================================================
INSURANCE (MULTI-LINE)-1.20%
ACE Ltd. (Bermuda) 193,300 7,587,025
==============================================================
INSURANCE BROKERS-0.59%
Aon Corp. 89,500 3,708,656
==============================================================
INVESTMENT BANKING/BROKERAGE-2.29%
Edwards (A.G.), Inc. 70,000 3,552,500
--------------------------------------------------------------
Legg Mason, Inc. 85,800 4,456,238
--------------------------------------------------------------
Lehman Brothers Holdings Inc. 100,000 6,450,000
==============================================================
14,458,738
==============================================================
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT MANAGEMENT-0.85%
Federated Investors, Inc.-Class B 29,700 $ 865,013
------------------------------------------------------------------------
Stilwell Financial, Inc. 100,000 4,481,250
========================================================================
5,346,263
========================================================================
INVESTMENTS-1.53%
Nasdaq 100 Shares(a)(c) 117,800 9,644,875
========================================================================
LEISURE TIME (PRODUCTS)-1.29%
Harley-Davidson, Inc. 169,000 8,143,688
========================================================================
MANUFACTURING (SPECIALIZED)-0.43%
Millipore Corp. 51,600 2,709,000
========================================================================
OIL & GAS (DRILLING & EQUIPMENT)-9.64%
BJ Services Co.(a) 37,400 1,961,163
------------------------------------------------------------------------
Cal Dive International, Inc.(a) 68,000 3,383,000
------------------------------------------------------------------------
Chiles Offshore, Inc.(a) 161,000 2,576,000
------------------------------------------------------------------------
Cooper Cameron Corp.(a) 64,600 3,520,700
------------------------------------------------------------------------
ENSCO International Inc. 137,100 4,558,575
------------------------------------------------------------------------
Grant Prideco, Inc.(a) 256,000 4,752,000
------------------------------------------------------------------------
Nabors Industries, Inc.(a) 143,200 7,288,880
------------------------------------------------------------------------
National-Oilwell, Inc.(a) 256,000 7,488,000
------------------------------------------------------------------------
Patterson Energy, Inc.(a) 216,200 6,080,625
------------------------------------------------------------------------
Rowan Cos., Inc.(a) 169,200 4,261,725
------------------------------------------------------------------------
Smith International, Inc.(a) 71,500 5,040,750
------------------------------------------------------------------------
Transocean Sedco Forex Inc. 104,400 5,533,200
------------------------------------------------------------------------
Weatherford International, Inc.(a) 120,000 4,380,000
========================================================================
60,824,618
========================================================================
OIL & GAS (EXPLORATION & PRODUCTION)-2.23%
Anadarko Petroleum Corp. 92,800 5,943,840
------------------------------------------------------------------------
Kerr-McGee Corp. 125,000 8,164,063
========================================================================
14,107,903
========================================================================
OIL & GAS (REFINING & MARKETING)-0.67%
Valero Energy Corp.-$1.94 Conv. Pfd 150,000 4,200,000
========================================================================
RETAIL (DISCOUNTERS)-0.95%
Dollar Tree Stores, Inc.(a) 154,000 6,025,250
========================================================================
RETAIL (SPECIALTY)-4.21%
Bed Bath & Beyond Inc.(a) 469,800 12,126,713
------------------------------------------------------------------------
Linens 'n Things, Inc.(a) 237,800 7,312,350
------------------------------------------------------------------------
Tiffany & Co. 166,500 7,107,469
========================================================================
26,546,532
========================================================================
RETAIL (SPECIALTY-APPAREL)-3.71%
American Eagle Outfitters, Inc.(a) 147,500 5,079,531
------------------------------------------------------------------------
AnnTaylor Stores Corp.(a) 115,800 3,474,000
------------------------------------------------------------------------
Intimate Brands, Inc. 240,000 5,730,000
------------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 112,600 3,293,550
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
Talbots, Inc. (The) 74,100 $ 5,858,531
========================================================================
23,435,612
========================================================================
SERVICES (ADVERTISING/MARKETING)-1.14%
Lamar Advertising Co.(a) 150,000 7,200,000
========================================================================
SERVICES (DATA PROCESSING)-0.82%
Fiserv, Inc.(a) 99,100 5,196,556
========================================================================
SHIPPING-1.66%
Frontline Ltd. (Norway)(a) 437,000 7,206,480
------------------------------------------------------------------------
Frontline Ltd.-ADR (Norway)(a) 13,000 208,812
------------------------------------------------------------------------
Teekay Shipping Corp. (Bahamas) 81,200 3,034,850
========================================================================
10,450,142
========================================================================
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-2.55%
Crown Castle International Corp.(a) 201,000 6,092,813
------------------------------------------------------------------------
Research in Motion Ltd. (Canada)(a) 100,000 10,000,000
========================================================================
16,092,813
========================================================================
Total Domestic Common Stocks &
Other Equity Interests (Cost
$478,558,361) 532,789,025
========================================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE NOTES-1.26%
COMMUNICATIONS EQUIPMENT-1.26%
Cyras Systems, Inc., Conv. Sub.
Notes, 4.50%, 08/15/05 (Acquired
08/15/00; Cost $2,500,000)(b) $2,500,000 2,900,000
------------------------------------------------------------------------
Kestrel Solutions, Conv. Sub.
Notes, 5.50%, 07/15/05 (Acquired
07/20/00-10/10/00; Cost
$4,762,500)(b) 4,750,000 5,035,000
========================================================================
Total Convertible Notes (Cost
$7,262,500) 7,935,000
========================================================================
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
<S> <C> <C> <C> <C>
OPTIONS PURCHASED-2.78%
CALLS-0.82%
AMEX Biotechnology
Index (Biotechnology) 220 $600 Jan-01 3,693,250
------------------------------------------------------------------------
Philadelphia Oil
Service Sector Index
(Oil & Gas-Exploration
& Production) 1,978 125 Dec-00 1,087,900
------------------------------------------------------------------------
Read-Rite Corp.
(Computers-Peripherals) 7,500 15 Jan-01 375,000
========================================================================
5,156,150
========================================================================
PUTS-1.96%
Mylan Laboratories,
Inc. (Health
Care-Drugs-Generic &
Other) 3,000 30 Nov-00 787,500
------------------------------------------------------------------------
Nasdaq 100 Index
(Investments) 80 310 Dec-00 1,239,000
------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE MARKET VALUE
<S> <C> <C> <C> <C>
PUTS-(CONTINUED)
Nasdaq 100 Index
(Investments) 280 $302 Dec-00 $ 3,633,000
-------------------------------------------------------------------------
Russell 2000 Index
(Investments) 1,717 460 Dec-00 1,545,300
-------------------------------------------------------------------------
Russell 2000 Index
(Investments) 2,585 480 Dec-00 3,554,375
-------------------------------------------------------------------------
S&P 500 Index
(Investments) 590 135 Nov-00 339,250
-------------------------------------------------------------------------
S&P 500 Index
(Investments) 420 137 Nov-00 393,750
-------------------------------------------------------------------------
S&P 500 Index
(Investments) 1,010 130 Dec-00 883,750
=========================================================================
12,375,925
=========================================================================
Total Options Purchased
(Cost $30,740,520) 17,532,075
=========================================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-10.49%
STIC Liquid Assets Portfolio(d) 33,131,432 33,131,432
-------------------------------------------------------------------------
STIC Prime Portfolio(d) 33,131,432 33,131,432
=========================================================================
Total Money Market Funds (Cost
$66,262,864) 66,262,864
=========================================================================
TOTAL INVESTMENTS-98.93% (Cost
$582,824,245) 624,518,964
=========================================================================
OTHER ASSETS LESS LIABILITIES-1.07% 6,749,106
=========================================================================
NET ASSETS-100.00% $631,268,070
_________________________________________________________________________
=========================================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(e)
Administaff, Inc. 150,000 $ 5,325,000
-------------------------------------------------------------
Adobe Systems Inc. 85,400 6,495,737
-------------------------------------------------------------
Advanced Micro Devices, Inc. 78,100 1,767,013
-------------------------------------------------------------
Allergan, Inc. 40,900 3,438,156
-------------------------------------------------------------
Amazon.com, Inc. 138,000 5,054,250
-------------------------------------------------------------
Andrx Group 46,000 3,312,000
-------------------------------------------------------------
Autodesk, Inc. 103,000 2,272,438
-------------------------------------------------------------
BroadVision, Inc. 125,500 3,733,625
-------------------------------------------------------------
California Pizza Kitchen, Inc. 100,000 3,500,000
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(e)-(CONTINUED)
Clear Channel Communications, Inc. 60,700 $ 3,645,794
-------------------------------------------------------------
Coca-Cola Co. (The) 75,000 4,528,125
-------------------------------------------------------------
CompuCredit Corp. 63,000 1,945,125
-------------------------------------------------------------
Computer Sciences Corp. 33,000 2,079,000
-------------------------------------------------------------
Corvis Corp. 69,100 4,534,688
-------------------------------------------------------------
Costco Wholesale Corp. 100,000 3,662,500
-------------------------------------------------------------
Cytyc Corp. 39,500 2,345,313
-------------------------------------------------------------
eBay Inc. 100,000 5,150,000
-------------------------------------------------------------
Exodus Communications 81,900 2,748,769
-------------------------------------------------------------
Fastenal Co. 92,000 5,284,250
-------------------------------------------------------------
First Tennessee National Corp. 91,300 2,099,900
-------------------------------------------------------------
Fluor Corp. 80,000 2,800,000
-------------------------------------------------------------
Guidant Corp. 47,900 2,535,706
-------------------------------------------------------------
Home Depot, Inc. (The) 122,800 5,280,400
-------------------------------------------------------------
King Pharmaceuticals, Inc. 110,100 4,933,856
-------------------------------------------------------------
MGM Mirage Inc. 50,000 1,728,125
-------------------------------------------------------------
Network Appliance, Inc. 20,400 2,427,600
-------------------------------------------------------------
NIKE, Inc.-Class B 86,800 3,466,575
-------------------------------------------------------------
Nortel Networks Corp. (Canada) 50,000 2,275,000
-------------------------------------------------------------
NVIDIA Corp. 50,000 3,107,031
-------------------------------------------------------------
Outback Steakhouse, Inc. 125,000 3,562,500
-------------------------------------------------------------
PolyMedica Corp. 41,300 2,374,750
-------------------------------------------------------------
QLT Inc. (Canada) 62,000 3,083,531
-------------------------------------------------------------
SCI Systems, Inc. 76,400 3,285,200
-------------------------------------------------------------
Scient Corp. 7,300 131,400
-------------------------------------------------------------
724 Solutions Inc. (Canada) 95,000 2,582,812
-------------------------------------------------------------
Sigma-Aldrich Corp. 100,000 3,575,000
-------------------------------------------------------------
Silicon Storage Technology, Inc. 92,800 2,111,200
-------------------------------------------------------------
Solectron Corp. 65,000 2,860,000
-------------------------------------------------------------
Stryker Corp. 75,000 3,534,375
-------------------------------------------------------------
Symbol Technologies, Inc. 125,000 5,679,687
-------------------------------------------------------------
United Rentals, Inc. 95,900 2,061,850
-------------------------------------------------------------
WatchGuard Technologies, Inc. 66,800 3,340,000
-------------------------------------------------------------
Whole Foods Market, Inc. 65,000 3,006,250
=============================================================
Total Securities Sold Short $142,664,531
_____________________________________________________________
=============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Ctfs. - Certificates
Pfd. - Preferred
Sub. - Subordinated
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 aggregate market value of these securities at 10/31/00
was $11,805,030, which represented 1.87% of the Fund's net assets.
(c) A portion of this security is subject to call options written. See Note 7.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
(e) Collateral on short sales was segregated by the Fund in the amount of
$162,309,269 which represents 113.77% of the market value of securities sold
short.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $582,824,245) $624,518,964
--------------------------------------------------------------------
Cash 14,709,468
--------------------------------------------------------------------
Receivables for:
Investments sold 10,552,338
--------------------------------------------------------------------
Fund shares sold 681,631
--------------------------------------------------------------------
Dividends and interest 439,508
--------------------------------------------------------------------
Options sold 5,545,315
--------------------------------------------------------------------
Investments sold short 135,970,848
--------------------------------------------------------------------
Short stock rebates 689,671
--------------------------------------------------------------------
Investment for deferred compensation plan 10,197
--------------------------------------------------------------------
Other assets 97,692
====================================================================
Total assets $793,215,632
====================================================================
LIABILITIES:
Payables for:
Investments purchased 8,916,989
--------------------------------------------------------------------
Fund shares reacquired 964,566
--------------------------------------------------------------------
Short positions 2,266,621
--------------------------------------------------------------------
Short stock account interest & dividends 3,985
--------------------------------------------------------------------
Options written (premiums received $4,596,896) 5,778,925
--------------------------------------------------------------------
Deferred compensation plan 10,197
--------------------------------------------------------------------
Market value of securities sold short (proceeds from
short sales $135,970,848) 142,664,531
--------------------------------------------------------------------
Accrued advisory fees 811,447
--------------------------------------------------------------------
Accrued administrative services fees 10,539
--------------------------------------------------------------------
Accrued distribution fees 373,680
--------------------------------------------------------------------
Accrued trustees' fees 574
--------------------------------------------------------------------
Accrued transfer agent fees 56,520
--------------------------------------------------------------------
Accrued operating expenses 88,988
====================================================================
Total liabilities 161,947,562
====================================================================
Net assets applicable to shares outstanding $631,268,070
____________________________________________________________________
====================================================================
NET ASSETS:
Class A $309,391,278
____________________________________________________________________
====================================================================
Class B $225,059,947
____________________________________________________________________
====================================================================
Class C $ 96,816,845
____________________________________________________________________
====================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 13,354,351
____________________________________________________________________
====================================================================
Class B 9,776,531
____________________________________________________________________
====================================================================
Class C 4,205,594
____________________________________________________________________
====================================================================
Class A:
Net asset value and redemption price per share $ 23.17
--------------------------------------------------------------------
Offering price per share:
(Net asset value of $23.17 divided by 94.50%) $ 24.52
____________________________________________________________________
====================================================================
Class B:
Net asset value and offering price per share $ 23.02
____________________________________________________________________
====================================================================
Class C:
Net asset value and offering price per share $ 23.02
____________________________________________________________________
====================================================================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
OCTOBER 31, JULY 31,
2000 2000
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Short stock rebate $ 2,063,309 $ 2,762,008
---------------------------------------------------------------
Dividends from affiliated money
market funds 497,631 1,454,901
---------------------------------------------------------------
Dividends 343,144 534,381
---------------------------------------------------------------
Interest 402,550 527,559
===============================================================
Total investment income 3,306,634 5,278,849
===============================================================
EXPENSES:
Advisory fees 2,520,560 5,153,525
---------------------------------------------------------------
Administrative services fees 31,505 86,581
---------------------------------------------------------------
Custodian fees 27,380 67,327
---------------------------------------------------------------
Distribution fees -- Class A 286,379 596,038
---------------------------------------------------------------
Distribution fees -- Class B 608,018 1,287,873
---------------------------------------------------------------
Distribution fees -- Class C 253,527 485,856
---------------------------------------------------------------
Interest 129,210 576,971
---------------------------------------------------------------
Transfer agent fees -- Class A 63,463 178,964
---------------------------------------------------------------
Transfer agent fees -- Class B 46,367 175,188
---------------------------------------------------------------
Transfer agent fees -- Class C 19,334 66,085
---------------------------------------------------------------
Trustees' fees 1,954 7,449
---------------------------------------------------------------
Dividends on short sales 92,936 297,343
---------------------------------------------------------------
Other 109,407 568,905
===============================================================
Total expenses 4,190,040 9,548,105
===============================================================
Less: Fees waived (81,823) (123,065)
---------------------------------------------------------------
Expenses paid indirectly (19,390) (27,311)
===============================================================
Net expenses 4,088,827 9,397,729
===============================================================
Net investment income (loss) (782,193) (4,118,880)
===============================================================
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES,
SECURITIES SOLD SHORT, FUTURES
CONTRACTS AND OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities (23,090,611) (59,472,683)
---------------------------------------------------------------
Foreign currency contracts 25,492 --
---------------------------------------------------------------
Futures contracts 682,577 (608,808)
---------------------------------------------------------------
Option contracts written 3,953,948 15,389,246
---------------------------------------------------------------
Securities sold short 15,358,296 8,185,246
===============================================================
(3,070,298) (36,506,999)
===============================================================
Change in net unrealized
appreciation (depreciation) of:
Investment securities 4,358,506 36,515,950
---------------------------------------------------------------
Option contracts written (2,439,784) 1,261,674
---------------------------------------------------------------
Securities sold short (9,264,465) 2,568,948
===============================================================
(7,345,743) 40,346,572
===============================================================
Net gain (loss) from investment
securities, securities sold
short, futures contracts and
option contracts (10,416,041) 3,839,573
===============================================================
Net increase (decrease) in net
assets resulting from operations $(11,198,234) $ (279,307)
_______________________________________________________________
===============================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
DECEMBER 30,
1998 (DATE
OPERATIONS
THREE MONTHS COMMENCED)
ENDED YEAR ENDED THROUGH
OCTOBER 31, JULY 31, JULY 31,
2000 2000 1999
------------ ------------ -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (782,193) $ (4,118,880) $ (12,670)
--------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
securities sold short, futures contracts and option
contracts (3,070,298) (36,506,999) 454,839
--------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, securities sold short and option
contracts (7,345,743) 40,346,572 818,178
========================================================================================================
Net increase (decrease) in net assets resulting from
operations (11,198,234) (279,307) 1,260,347
========================================================================================================
Distributions to shareholders from net investment income:
Class A -- (50,980) --
--------------------------------------------------------------------------------------------------------
Class B -- (21,216) --
--------------------------------------------------------------------------------------------------------
Class C -- (6,678) --
--------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (685,956) --
--------------------------------------------------------------------------------------------------------
Class B -- (9,194) --
--------------------------------------------------------------------------------------------------------
Class C -- (2,917) --
--------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (21,186,960) 329,734,266 3,529,528
--------------------------------------------------------------------------------------------------------
Class B (26,844,008) 255,671,637 --
--------------------------------------------------------------------------------------------------------
Class C (1,596,885) 102,954,627 --
========================================================================================================
Net increase (decrease) in net assets (60,826,087) 687,304,282 4,789,875
========================================================================================================
NET ASSETS:
Beginning of period 692,094,157 4,789,875 --
========================================================================================================
End of period $631,268,070 $692,094,157 $4,789,875
________________________________________________________________________________________________________
========================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $637,331,518 $687,714,752 $3,529,528
--------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (32,785) (31,466) --
--------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, securities sold short, futures contracts and
option contracts (39,849,670) (36,753,879) 442,169
--------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
securities sold short and option contracts 33,819,007 41,164,750 818,178
========================================================================================================
$631,268,070 $692,094,157 $4,789,875
________________________________________________________________________________________________________
========================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Mid 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 Board of Trustees of the Trust approved a change in the Fund's
fiscal year-end from July 31 to October 31. As a result, this report includes
financial information for the period ended October 31, 2000 (three months) and
the year ended July 31, 2000. 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 March 21, 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 -- Securities, including restricted securities, are
valued according to the following policy. 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 October 31, 2000, undistributed net investment income was increased by
$780,874, undistributed net realized gains were decreased by $25,493 and paid
in capital was decreased by $755,381 as a result of differing book/tax
treatment of foreign currency transactions and net operating loss
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund has a capital loss carryforward of $43,384,856 as of October 31,
2000 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2008.
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
10
<PAGE> 13
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.
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
11
<PAGE> 14
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 MidCap 400 Index, or
(ii) downward at the rate of 0.20%, on a pro rata basis, for each percentage
point the 12-month rolling investment record of the S&P MidCap 400 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 three-month period ended October 31,
2000 and the year ended July 31, 2000, AIM was paid $31,505 and $86,581,
respectively, 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 three-month period ended October 31,
2000 and the year ended July 31, 2000, AFS was paid $105,564 and $176,151,
respectively, 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. Upon the Fund closing to new
investors AIM Distributors agreed to waive 0.10% of the Fund's average daily net
assets of Class A distribution fees. For the three-month period ended October
31, 2000, the Class A, Class B and Class C shares paid AIM Distributors
$204,556, $608,018 and $253,533, respectively, as compensation under the Plans.
For the year ended July 31, 2000, the Class A, Class B and Class C shares paid
AIM Distributors $472,973, $1,287,873 and $485,856, respectively, as
compensation under the Plans. During the three-month period ended October 31,
2000 and the year ended July 31, 2000, AIM Distributors waived fees of $81,823
and $123,065, respectively, for Class A shares.
AIM Distributors received commissions of $15,990 and $894,229, respectively,
from sales of the Class A shares of the Fund during the three-month period ended
October 31, 2000 and the year 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 three-month period ended
October 31, 2000 and the year ended July 31, 2000, AIM Distributors received
$18,349 and $28,018, respectively, 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 three-month period ended October 31, 2000 and the year ended July
31, 2000, the Fund paid legal fees of $1,374 and $3,273, respectively, 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 three-month period ended October 31, 2000 and the year ended July 31,
2000, the Fund received reductions in transfer agency fees from AFS (an
affiliate of AIM) of $3,171 and $3,615, respectively, and reductions in
custodian fees of $16,219 and $23,696, respectively, under expense offset
arrangements which resulted in a reduction of the Fund's total expenses of
$19,390 and $27,311, respectively, for the three-month period ended October 31,
2000 and the year ended July 31, 2000, respectively.
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 three-month period ended October 31, 2000 and the year ended July
31, 2000, the average outstanding daily balance of bank loans for the Fund was
$5,869,565 and $7,131,148, respectively, with a weighted average interest rate
of 7.42% and 6.98%, respectively.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the three-month period ended October 31,
2000 was $296,984,789 and $334,736,675, respectively, and during the year ended
July 31, 2000 was $1,215,360,162 and $610,462,548, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes was as follows:
<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
2000 2000
------------ ------------
<S> <C> <C>
Aggregate unrealized appreciation
of:
Investment securities $95,637,751 $ 93,859,060
---------------------------------------------------------------
Securities sold short 4,761,589 12,641,968
---------------------------------------------------------------
Aggregate unrealized
(depreciation) of:
Investment securities (47,389,809) (57,823,117)
---------------------------------------------------------------
Securities sold short (14,012,362) (10,071,186)
===============================================================
Net unrealized appreciation of
investment securities $38,997,169 $ 38,606,725
_______________________________________________________________
===============================================================
Cost of investments for tax purposes is $576,271,022 and
$646,957,468 for the three months ended October 31, 2000 and
the year ended July 31, 2000, respectively.
Proceeds from securities sold short for tax purposes is
$133,413,758 and $133,456,563 for the three months ended
October 31, 2000 and the year ended July 31, 2000,
respectively.
</TABLE>
12
<PAGE> 15
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the period ended October 31, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of year 155 $ 82,690
------------------------------------------------------------------------------------
Written 9,577 9,028,703
------------------------------------------------------------------------------------
Closed (8,850) (7,057,650)
------------------------------------------------------------------------------------
Exercised (155) (82,690)
------------------------------------------------------------------------------------
Expired (150) (213,143)
====================================================================================
End of year 577 $1,757,910
____________________________________________________________________________________
====================================================================================
</TABLE>
Open call options written at October 31, 2000 were as follows:
<TABLE>
<CAPTION>
NUMBER OCTOBER 31,
CONTRACT STRIKE OF PREMIUMS 2000 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- -------- ------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NDX Nasdaq 100 Index Mar-01 $450 167 $1,185,159 $1,098,025 $ 87,134
---------------------------------------------------------------------------------------------------------------------------------
NDX Nasdaq 100 Index Dec-00 440 410 572,751 420,250 152,501
=================================================================================================================================
577 $1,757,910 $1,518,275 239,635
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</TABLE>
NOTE 8-PUT OPTION CONTRACTS
Transactions in put options contracts written during the period ended October
31, 2000 are summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of year 200 $ 1,613,846
-------------------------------------------------------------------------------------
Purchased 3,782 3,418,682
-------------------------------------------------------------------------------------
Closed (1,688) (2,193,542)
=====================================================================================
End of year 2,294 $ 2,838,986
_____________________________________________________________________________________
=====================================================================================
</TABLE>
Open put option contracts written at October 31, 2000 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
2000 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Russell 2000 Index Dec-00 $450 2,000 $1,018,966 $1,475,000 $ (456,034)
---------------------------------------------------------------------------------------------------------------------------------
NDX Nasdaq 100 Index Dec-00 290 294 1,820,020 2,785,650 (965,630)
---------------------------------------------------------------------------------------------------------------------------------
2,294 $2,838,986 4,260,650 (1,421,664)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</TABLE>
13
<PAGE> 16
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the three-month period ended October 31,
2000 and the years ended July 31, 2000 and the period December 30, 1998 (date
operations commenced) through July 31, 1999 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31, 2000 JULY 31, 2000 JULY 31, 1999
-------------------------- -------------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sold:
Class A 417,143 $ 9,934,754 15,903,016 $376,526,177 331,198 $3,867,041
------------------------------------------------------------------------------------------------------------------------------
Class B* 211,940 5,023,336 11,676,896 275,160,286 -- --
------------------------------------------------------------------------------------------------------------------------------
Class C* 103,476 2,494,786 4,564,213 109,937,385 -- --
==============================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 39,350 706,157 -- --
------------------------------------------------------------------------------------------------------------------------------
Class B* -- -- 1,107 21,560 -- --
------------------------------------------------------------------------------------------------------------------------------
Class C* -- -- 511 9,927 -- --
==============================================================================================================================
Reacquired:
Class A (1,297,544) (31,121,714) (2,011,095) (47,498,068) (27,717) (337,513)
------------------------------------------------------------------------------------------------------------------------------
Class B* (1,300,931) (31,867,344) (812,481) (19,510,209) -- --
------------------------------------------------------------------------------------------------------------------------------
Class C* (171,489) (4,091,671) (291,117) (6,992,685) -- --
==============================================================================================================================
(2,037,405) $(49,627,853) 29,070,400 $688,360,530 303,481 $3,529,528
______________________________________________________________________________________________________________________________
==============================================================================================================================
</TABLE>
* Class B and Class C shares commenced sales on November 12, 1999
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, 1998
THREE MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
OCTOBER 31, 2000 JULY 31, 2000(a) JULY 31, 1999
---------------- ---------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 23.62 $ 15.78 $10.00
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.18) (0.04)
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.44) 9.92 5.82
=====================================================================================================================
Total from investment operations (0.45) 9.74 5.78
=====================================================================================================================
Less distributions:
Dividends from net investment income -- (0.02) --
---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.88) --
=====================================================================================================================
Total distributions -- (1.90) --
=====================================================================================================================
Net asset value, end of period $ 23.17 $ 23.62 $15.78
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) (1.91)% 65.58% 57.80%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $309,391 $336,203 $4,790
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets (including interest
expense and dividends on short sales expense):
With fee waivers 2.06%(c) 2.33% 2.28%(d)
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.16%(c) 2.40% 7.55%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense and dividends on short sales expense):
With fee waivers 1.93%(c) 2.08% 2.19%(d)
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.03%(c) 2.15% 7.46%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (0.08)(c) (0.80)% (0.79)%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of interest expense and dividends on short sales
expense to average net assets 0.13(c) 0.25% 0.09%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 49% 196% 135%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average daily net assets of $324,622,135
for October 31, 2000.
(d) Annualized.
14
<PAGE> 17
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------ ------------------------------------
NOVEMBER 12, 1999 NOVEMBER 12, 1999
THREE MONTHS (DATE SALES THREE MONTHS (DATE SALES
ENDED COMMENCED) TO ENDED COMMENCED) TO
OCTOBER 31, 2000 JULY 31, 2000(a) OCTOBER 31, 2000 JULY 31, 2000(a)
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.51 $ 17.83 $ 23.51 $ 17.83
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.28) (0.05) (0.28)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.44) 5.97 (0.44) 5.97
=================================================================================================================================
Total from investment operations (0.49) 5.69 (0.49) 5.69
=================================================================================================================================
Less distributions:
Dividends from net investment income -- (0.01) -- (0.01)
=================================================================================================================================
Net asset value, end of period $ 23.02 $ 23.51 $ 23.02 $ 23.51
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (2.08)% 31.95% (2.08)% 31.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $225,060 $255,439 $96,817 $100,452
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including
interest expense and dividends on short sales
expense) 2.81%(c) 3.08%(d) 2.81%(c) 3.08%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (excluding
interest expense and dividends on short sales
expense) 2.68%(c) 2.83%(d) 2.68%(c) 2.83%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.83)(c) (1.55)%(d) (0.83)(c) (1.55)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of interest expense and dividends on short
sales expense to average net assets 0.13(c) 0.25%(d) 0.13(c) 0.25%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 49% 196% 49% 196%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $241,224,478
and $100,584,238 for Class B and Class C, respectively for October 31,
2000.
(d) Annualized.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Mid Cap Opportunities Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Mid Cap Opportunities Fund (a series
of AIM Special Opportunities Funds) including the
schedule of investments, as of October 31, 2000, and the
related statement of operations for the three months
ended October 31, 2000 and the year ended July 31, 2000
and the statement of changes in net assets and financial
highlights for the three months ended October 31, 2000,
the year ended July 31, 2000 and the period December 30,
1998 (date operations commenced) through July 31, 1999.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States of
America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as
of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Mid Cap
Opportunities Fund as of October 31, 2000, the results of
its operations for the three months then ended, the
changes in its net assets and financial highlights for
the period then ended and for the year end July 31, 2000
and the period December 30, 1998 (date operations
commenced) through July 31, 1999, in conformity with
accounting principles generally accepted in the United
States of America.
KPMG LLP
December 6, 2000
Houston, Texas
16
<PAGE> 19
ABOUT YOUR FUND'S BOARD
The board of trustees is elected by you to look after your interests as a
mutual-fund shareholder. Trustees' responsibilities include choosing investment
advisors for your fund; keeping an eye on performance, operations and expenses;
making decisions regarding dividends and other duties.
Nine of your fund's 10 trustees are independent. In other words, they have no
affiliation with AIM except as independent fund trustees charged with
representing the interest of fund investors. Representing a cross section of
businesses and industries, they have achieved success and recognition in their
respective fields. They bring their considerable expertise and experience to
their positions as trustees.
Listed below are the members of the board of trustees of your mutual fund and
their respective titles.
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman, President and Chairman and President Suite 100
Chief Executive Officer Houston, TX 77046
A I M Management Group Inc. Carol F. Relihan
Senior Vice President and Secretary INVESTMENT ADVISOR
Bruce L. Crockett
Director Gary T. Crum A I M Advisors, Inc.
ACE Limited; Senior Vice President 11 Greenway Plaza
Formerly Director, President, and Suite 100
Chief Executive Officer Edgar M. Larsen Houston, TX 77046
COMSAT Corporation Senior Vice President
TRANSFER AGENT
Owen Daly II Dana R. Sutton
Formerly Director Vice President and Treasurer A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Melville B. Cox Houston, TX 77210-4739
Albert R. Dowden Vice President
Chairman of the Board of Directors, CUSTODIAN
The Cortland Trust and DHJ Media, Inc.; and Mary J. Benson
Director, Magellan Insurance Company, Assistant Vice President and State Street Bank and Trust Company
Formerly Director, President and Assistant Treasurer 225 Franklin Street
Chief Executive Officer, Boston, MA 02110
Volvo Group North America, Inc.; and Sheri Morris
Senior Vice President, AB Volvo Assistant Vice President and COUNSEL TO THE FUND
Assistant Treasurer
Edward K. Dunn Jr. Ballard Spahr
Chairman, Mercantile Mortgage Corp.; Jim A. Coppedge Andrews & Ingersoll, LLP
Formerly Vice Chairman, President and Assistant Secretary 1735 Market Street
Chief Operating Officer, Philadelphia, PA 19103
Mercantile-Safe Deposit & Trust Co.; and Renee A. Friedli
President, Mercantile Bankshares Assistant Secretary COUNSEL TO THE TRUSTEES
Jack Fields P. Michelle Grace Kramer Levin Naftalis & Frankel LLP
Chief Executive Officer Assistant Secretary 919 Third Avenue
Twenty First Century Inc.; New York, NY 10022
Formerly Member Nancy L. Martin
of the U.S. House of Representatives Assistant Secretary DISTRIBUTOR
Carl Frischling Ofelia M. Mayo A I M Distributors, Inc.
Partner Assistant Secretary 11 Greenway Plaza
Kramer, Levin, Naftalis & Frankel LLP Suite 100
Lisa A. Moss Houston, TX 77046
Prema Mathai-Davis Assistant Secretary
Formerly, Chief Executive Officer, AUDITORS
YWCA of the U.S.A. Kathleen J. Pflueger
Assistant Secretary KPMG LLP
Lewis F. Pennock 700 Louisiana
Partner Houston, TX 77002
Pennock & Cooper
Louis S. Sklar
Executive Vice President,
Development and Operations,
Hines Interests
Limited Partnership
</TABLE>
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<CAPTION>
EQUITY FUNDS
<S> <C> <C>
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc. has provided
leadership in the mutual fund industry since
MORE AGGRESSIVE MORE AGGRESSIVE 1976 and managed approximately $183 billion
in assets for more than eight million
AIM Small Cap Opportunities(1) AIM Latin American Growth shareholders, including individual investors,
AIM Mid Cap Opportunities(2) AIM Developing Markets corporate clients and financial institutions,
AIM Large Cap Opportunities(3) AIM European Small Company as of September 30, 2000.
AIM Emerging Growth AIM Asian Growth The AIM Family of Funds--Registered
AIM Small Cap Growth(4) AIM Japan Growth Trademark-- is distributed nationwide, and
AIM Aggressive Growth AIM International Emerging Growth AIM today is the eighth-largest mutual fund
AIM Mid Cap Growth AIM European Development complex in the United States in assets under
AIM Small Cap Equity AIM Euroland Growth management, according to Strategic Insight,
AIM Capital Development AIM Global Aggressive Growth an independent mutual fund monitor.
AIM Constellation AIM International Equity AIM is a subsidiary of AMVESCAP PLC, one
AIM Dent Demographic Trends AIM Advisor International Value of the world's largest independent financial
AIM Select Growth AIM Global Trends services companies with $414 billion in
AIM Large Cap Growth AIM Global Growth assets under management as of September 30,
AIM Weingarten 2000.
AIM Mid Cap Equity MORE CONSERVATIVE
AIM Value II
AIM Charter SECTOR EQUITY FUNDS
AIM Value
AIM Blue Chip MORE AGGRESSIVE
AIM Basic Value
AIM Large Cap Basic Value AIM New Technology
AIM Balanced AIM Global Telecommunications and Technology
AIM Advisor Flex AIM Global Resources
AIM Global Financial Services
MORE CONSERVATIVE AIM Global Health Care
AIM Global Consumer Products and Services
AIM Global Infrastructure
AIM Advisor Real Estate
AIM Global Utilities
MORE CONSERVATIVE
</TABLE>
<TABLE>
<CAPTION>
FIXED-INCOME FUNDS
<S> <C>
TAXABLE FIXED-INCOME FUNDS TAX-FREE FIXED-INCOME FUNDS
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Strategic Income AIM High Income Municipal
AIM High Yield II AIM Tax-Exempt Bond of Connecticut
AIM High Yield AIM Municipal Bond
AIM Income AIM Tax-Free Intermediate
AIM Global Income AIM Tax-Exempt Cash
AIM Floating Rate(5)
AIM Intermediate Government MORE CONSERVATIVE
AIM Limited Maturity Treasury
AIM Money Market
MORE CONSERVATIVE
</TABLE>
The AIM Risk Spectrum illustrates equity and fixed-income funds from more
aggressive to more conservative. When assessing the degree of risk, three
factors were considered: the funds' portfolio holdings, volatility patterns over
time and diversification permitted within the fund. Fund rankings are relative
to one another within The AIM Family of Funds--Registered Trademark-- and should
not be compared with other investments. There is no guarantee that any one AIM
fund will be less volatile than any other. (1) AIM Small Cap Opportunities Fund
closed to new investors Nov. 4, 1999. (2) AIM Mid Cap Opportunities Fund closed
to new investors March 21, 2000. (3) AIM Large Cap Opportunities Fund closed to
new investors Sept. 29, 2000. (4) AIM Small Cap Growth Fund closed to new
investors Nov. 8, 1999. (5) AIM Floating Rate Fund was restructured to offer
multiple share classes April 3, 2000. Existing shares were converted to Class B
shares, and Class C shares commenced offering.
FOR MORE COMPLETE INFORMATION ABOUT ANY AIM FUND, INCLUDING SALES CHARGES
AND EXPENSES, OBTAIN THE APPROPRIATE PROSPECTUS(ES) FROM YOUR FINANCIAL ADVISOR.
PLEASE READ THE PROSPECTUS(ES) CAREFULLY BEFORE YOU INVEST OR SEND MONEY. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective fund prospectus. If used as
sales material after Jan. 20, 2001, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
[DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE]
--Registered Trademark--
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. MCO-AR-1
