<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM SMALL CAP OPPORTUNITIES FUND
COVER IMAGE
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
-------------------------------------
THE INDEPENDENCE DAY PARADE BY JANE WOOSTER SCOTT
JUST AS SMALL BUSINESSES ARE A KEY COMPONENT OF THIS FESTIVE
PAINTING, SMALL COMPANIES ARE AN IMPORTANT PART OF THE U.S.
ECONOMIC LANDSCAPE. IN AIM SMALL CAP OPPORTUNITIES FUND, WE
ENDEAVOR TO OWN THE STOCKS OF SMALLER COMPANIES THAT WE
BELIEVE HAVE EXCITING POTENTIAL.
-------------------------------------
AIM Small Cap Opportunities Fund is for shareholders who seek long-term growth
of capital by investing in a portfolio consisting primarily of small-company
stocks which management believes involve "special opportunities."
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Small Cap Opportunities Fund's performance figures are historical, and
they reflect 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 Effective 11/4/99, the fund was closed to new investors.
o The fund's average annual total returns (including sales charges) for
periods ended 9/30/00 (the most recent calendar quarter-end) are as follows.
Class A shares, one year, 77.19%; inception (6/29/98), 57.34%. Class B
shares, one year, 81.04%; inception (7/13/98), 60.21%. Class C shares, one
year, 84.87%; inception (12/30/98), 70.00%.
o The fund participates in the initial public offering (IPO) market, and a
significant portion of the fund's return is attributable to its investment
in IPOs, which had a magnified impact when the fund's asset base was
relatively small. There is no guarantee that with a larger asset base the
fund will continue to experience substantially similar performance by
investing in IPOs.
o 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 Small-Cap Growth Fund Index represents an average of
the performance of the 30 largest small-capitalization growth funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o The 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 Russell 2000 Index represents the performance of the stocks of
small-capitalization companies.
o The unmanaged Russell 2000 Growth Index measures the performance of Russell
2000 companies with higher price/book ratios and higher forecasted growth
values.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
represents the performance of the U.S. stock market.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM SMALL 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 Graham, from the funds' board and will soon retire as A I M
Chairman of Management Group's chairman after a long, successful career
the Board of in the investment industry. Ted has always shown the highest
THE FUND degree of integrity and commitment to excellence, and I have
APPEARS HERE] always admired him. I'm also proud to be part of the team
that launched AIM almost 25 years ago. From the beginning,
AIM has been a very people-oriented, service-minded company,
and I plan to carry on the tradition for our shareholders,
financial advisors and employees.
UNCERTAIN MARKETS
The markets this year have been particularly volatile and
confusing for many investors, especially for those who have
only experienced the bull market of the 1990s. After almost
a decade of double-digit returns, the S&P 500 was down 1.81% year-to-date as of
October 31, 2000. But market returns in the 20% to 30% range, such as we have
seen in recent years, are not typical. If you expect these kinds of returns
every year, you'll be disappointed. Historically, markets decline in one out of
every four years. What we're seeing now is a normal downturn.
This appears to be a worldwide trend. Throughout 2000, overseas markets
generally have been more turbulent than their U.S. counterpart.
REASONS FOR OPTIMISM
While investors may need to temper their expectations, there are plenty of
reasons to be optimistic. Economic fundamentals remain strong, and many believe
that the Federal Reserve Board may have succeeded in bringing the economy to a
"soft landing." Gross domestic product growth slowed to 2.4% in the third
quarter from the rapid pace of about 7% a year ago. With this slowdown, it seems
unlikely that the Fed will raise interest rates in the near future, and stable
interest rates provide a solid environment for both stocks and bonds.
In Europe, the region's economic and investment future continues to look
bright despite the weak euro. Restructuring, merger activity and tax reform bode
well for European economies. In Asia, most analysts think the continuing
strength of the U.S. economy will help boost Asian stock markets.
THE VALUE OF ADVICE
The current environment illustrates the value of professional money management.
Knowing when to buy and sell takes expertise and discipline even in the best of
markets. During downturns, many investors may be tempted to make decisions based
on emotions instead of strategy. The wisest choice is to rely on a professional
money manager to make these decisions for you.
In these uncertain times, it's important to keep market volatility in
perspective. Mutual fund investing should be a long-term endeavor. Remember why
you're investing, whether it's for your retirement or your child's education,
and think about your time frame. If you're unsure about whether your investments
can meet your goals, visit your financial advisor for help.
In the following pages, your fund's portfolio managers discuss market
activity, how they managed your fund during the fiscal year and their near-term
outlook. If you have any questions or comments, please contact us through our
Web site, www.aimfunds.com, or call our Client Services Department at
800-959-4246 during normal business hours. Information about your account is
available at our Web site and on our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
--Registered Trademark--.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
-------------------------------------
THE CURRENT
ENVIRONMENT
ILLUSTRATES THE VALUE
OF PROFESSIONAL
MONEY MANAGEMENT.
KNOWING WHEN TO BUY
AND SELL TAKES
EXPERTISE AND
DISCIPLINE EVEN IN THE
BEST OF MARKETS.
-------------------------------------
AIM SMALL CAP OPPORTUNITIES FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND SOARS ABOVE DIFFICULT MARKET ENVIRONMENT
HOW DID AIM SMALL CAP OPPORTUNITIES FUND PERFORM THIS YEAR?
The fund posted outstanding results for the 12 months ended October 31, 2000.
Total return at net asset value (excluding sales charges) was 61.95% for Class A
shares, 60.72% for Class B shares and 60.65% for Class C shares. With these
highly impressive results, the fund returned nearly four times as much as its
benchmark, the Russell 2000 Index, which had a return of only 17.41% for the
same period. The fund ended the fiscal year with net assets of $814.9 million.
Your fund's performance includes gains made during late 1999 and early 2000,
when markets were more exuberant than they became later in the year. More
recently, performance has been affected by the sell-off in the technology sector
and other market difficulties.
WHAT KEY TRENDS AFFECTED THE MARKET?
A strong market rally in the first half of the year was followed by a choppy,
down-ward-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 rush of selling that
affected nearly every sector and left markets extremely volatile.
Investors were also concerned that the Federal Reserve Board (the Fed) might
continue raising interest rates to contain inflation by slowing torrid economic
growth. 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 concern about corporate earnings converged to produce another
steep market decline. A number of major corporations reported earnings
disappointments in September and October. The major market indexes such as the
S&P 500 and the Nasdaq ended the fiscal year below the peak levels they had
reached in the spring.
WHY DID THE FUND OUTPERFORM ITS INDEXES?
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 price decline 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 taking advantage of
market rallies. Both the long and the short positions contributed to the fund's
excellent risk-adjusted returns this year.
HOW WAS THE FUND POSITIONED AT THE END OF THE YEAR?
As of October 31, 2000, the fund had 98 long positions. Technology stocks made
up more than 38% of the portfolio. The focus in this sector was on optical
networking and data-storage equipment 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 about 14%
of the portfolio, while the stocks of consumer cyclicals made up 9%. The fund
closed the fiscal year holding a smaller position in financials and health care
than its benchmark 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 Tollgrade Communications designs and manufactures test-system and
status-monitoring products for the telecommunications and cable-TV
industries.
o Elantec Semiconductor designs and manufactures high-performance analog
integrated circuits for the video and optical-storage processing markets.
FUND PERFORMANCE
FUND OUTSHINES INDEXES
As of 10/31/00, one-year total return, excluding
sales charges
================================================================================
FUND CLASS A SHARES 61.95%
FUND CLASS B SHARES 60.72%
FUND CLASS C SHARES 60.65%
RUSSELL 2000 INDEX 17.41%
LIPPER SMALL-CAP GROWTH FUND INDEX 37.48%
================================================================================
See important fund and index disclosures inside front cover.
AIM SMALL CAP OPPORTUNITIES FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
o Exar designs, develops and markets analog and mixed-signal integrated
circuits for use in communications, video and imaging products.
o Rational Software helps other organizations develop and deploy software for
e-business and e-infrastructure.
o Newport is a global supplier of high-precision components and measurement
systems to the high-tech market.
o Anaren Microwave designs and manufactures radio-frequency and microwave
components for communications.
o Macrovision's video-security products provide copy protection and video
scrambling for video materials.
WHAT WERE A FEW OF ITS HOLDINGS OUTSIDE THE TECH SECTOR?
o Cal Dive is a leading provider of subsea construction maintenance and
abandonment services to the oil and gas industry.
o Lamar Advertising operates roughly 116,800 outdoor advertising displays in
42 states, plus transit advertising and logo signs near freeway exits
indicating services.
o Sonic operates and franchises drive-in restaurants, with 2,175 in the United
States as of August 2000.
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. Interest
rates had stabilized as the Fed had taken a respite from its monetary tightening
policy, and except for higher oil prices, inflation was moderate. 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.
-------------------------------------
READ THIS REPORT ONLINE!
Early in 2001, a new service will be
available--electronic delivery of fund
reports and prospectuses. Soon, you can
read the same AIM report you are read-
ing now--online. Once you sign up for
the service, we will send you a link to the
report via e-mail. If you choose to
receive your reports online, you will not
receive a paper copy by mail. You may
cancel the service at any time by visiting
our Web site.
Please visit our Web site at
www.aimfunds.com and go to "Your
AIM Account." Log into your account
and then click on the "View Other
Account Options" dropdown menu and
select "eDelivery."
-------------------------------------
Since our last report to you, AIM Small 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.
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
====================================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 SHORT POSITIONS
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Tollgrade Communications, Inc. 2.70% 1. Oil & Gas (Drilling & Equipment) 10.02% 1. Home Depot, Inc. (The) 0.84%
2. Elantec Semiconductor, Inc. 2.53 2. Electronics (Semiconductors) 8.81 2. 1-800CONTACTS, Inc. 0.83
3. Cal Dive International, Inc. 2.09 3. Computers (Software & Services) 8.58 3. Amazon.com, Inc. 0.81
4. Lamar Advertising Co. 2.03 4. Communications Equipment 5.81 4. King Pharmaceuticals, Inc. 0.79
5. Exar Corp. 1.90 5. Electronics (Instrumentation) 5.77 5. California Pizza Kitchen, Inc. 0.79
6. Newport Corp. 1.73 6. Oil & Gas (Exploration & Production) 3.05 6. Corvis Corp. 0.72
7. Anaren Microwave, Inc. 1.71 7. Retail (Specialty-Apparel) 2.98 7. Sunrise Assisted Living, Inc. 0.72
8. Macrovision Corp. 1.62 8. Health Care (Specialized Services) 2.89 8. Actrade Financial Technologies, Ltd. 0.64
9. Sonic Corp. 1.59 9. Retail (Computers & Electronics) 2.52 9. BroadVision, Inc. 0.59
10. Rational Software Corp. 1.55 10. Computers (Peripherals) 2.42 10. Whole Foods Market, Inc. 0.57
The fund's portfolio composition is subject to change, and there is no assurance that the fund
will continue to hold any particular security.
====================================================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM SMALL CAP OPPORTUNITIES FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM SMALL CAP OPPORTUNITIES FUND VS. BENCHMARK INDEXES
6/29/98-10/31/00
in thousands
===============================================================================
DATE AIM Small Cap
Opportunities Fund, Russell 2000 Russell 2000
Class A Shares Growth Index Index
-------------------------------------------------------------------------------
6/29/98 9452 10000 10000
7/98 9225 9165 9190
10/98 8781 8169 8311
1/99 11511 10031 9411
4/99 12088 10272 9571
7/99 14055 10495 9872
10/99 15966 10561 9547
1/00 20897 13608 11081
4/00 24600 13495 11334
7/00 25530 12712 11231
10/00 25857 12268 11208
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 6/29/98-10/31/00. (The data for the indexes are for the
period 6/30/98-10/31/00.) 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 Russell 2000 Index or the Russell 2000
Growth 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.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (6/29/98) 50.08%
1 Year 53.06*
*61.95%, excluding sales charges
CLASS B SHARES
Inception (7/13/98) 52.51%
1 Year 55.72*
*60.72%, excluding CDSC
CLASS C SHARES
Inception (12/30/98) 59.43%
1 Year 59.65*
*60.65%, 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 differing sales-charge structures and class
expenses. For fund performance calculations and descriptions of the indexes on
this page, please see the inside front cover.
AIM SMALL CAP OPPORTUNITIES FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-82.10%
AIRLINES-0.84%
SkyWest, Inc.(a) 135,700 $ 6,852,850
==============================================================
BROADCASTING (TELEVISION, RADIO &
CABLE)-1.03%
Pegasus Communications Corp.(b) 236,200 8,399,862
==============================================================
COMMUNICATIONS EQUIPMENT-4.57%
Allen Telecom Inc.(b) 271,400 5,071,787
--------------------------------------------------------------
Polycom, Inc.(b) 157,100 10,211,500
--------------------------------------------------------------
Tollgrade Communications, Inc.(b) 229,500 21,974,625
==============================================================
37,257,912
==============================================================
COMPUTERS (NETWORKING)-0.62%
Tellium, Inc.-Series E Conv. Pfd.
(Acquired 09/19/00; Cost
$5,048,880)(b)(c) 168,296 5,048,880
==============================================================
COMPUTERS (PERIPHERALS)-2.42%
InFocus Corp.(b) 162,900 7,198,144
--------------------------------------------------------------
SanDisk Corp.(b) 232,600 12,498,616
==============================================================
19,696,760
==============================================================
COMPUTERS (SOFTWARE &
SERVICES)-8.58%
IntraNet Solutions, Inc.(b) 108,600 5,049,900
--------------------------------------------------------------
Macrovision Corp.(b) 181,000 13,190,375
--------------------------------------------------------------
Mercury Interactive Corp.(b) 105,500 11,710,500
--------------------------------------------------------------
Natural MicroSystems Corp.(b) 190,200 8,594,662
--------------------------------------------------------------
Orbotech, Ltd. (Israel)(b) 137,650 7,286,847
--------------------------------------------------------------
Quest Software, Inc.(b) 190,000 8,300,625
--------------------------------------------------------------
Rational Software Corp.(b) 211,700 12,635,844
--------------------------------------------------------------
webMethods, Inc.(b) 35,800 3,181,725
==============================================================
69,950,478
==============================================================
DISTRIBUTORS (FOOD & HEALTH)-0.90%
Bindley Western Industries, Inc. 100,000 3,593,750
--------------------------------------------------------------
Priority Healthcare Corp.-Class B(b) 70,000 3,762,500
==============================================================
7,356,250
==============================================================
ELECTRICAL EQUIPMENT-1.88%
C & D Technologies, Inc. 146,400 8,655,900
--------------------------------------------------------------
Veeco Instruments Inc.(b) 100,000 6,620,312
==============================================================
15,276,212
==============================================================
ELECTRONICS (COMPONENT
DISTRIBUTORS)-1.20%
Kent Electronics Corp.(b) 302,200 5,628,475
--------------------------------------------------------------
Power-One, Inc.(b) 58,600 4,156,937
==============================================================
9,785,412
==============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (DEFENSE)-1.71%
Anaren Microwave, Inc.(b) 134,100 $ 13,946,400
==============================================================
ELECTRONICS (INSTRUMENTATION)-5.77%
Alpha Industries, Inc.(b) 186,500 7,436,687
--------------------------------------------------------------
Keithley Instruments, Inc. 129,700 6,938,950
--------------------------------------------------------------
Methode Electronics, Inc.-Class A 258,200 9,714,775
--------------------------------------------------------------
Newport Corp. 123,400 14,092,666
--------------------------------------------------------------
Varian Inc.(b) 286,800 8,837,025
==============================================================
47,020,103
==============================================================
ELECTRONICS (SEMICONDUCTORS)-8.81%
Elantec Semiconductor, Inc.(b) 185,000 20,581,250
--------------------------------------------------------------
Exar Corp.(b) 347,400 15,524,437
--------------------------------------------------------------
hi/fn, inc.(b) 75,000 4,631,250
--------------------------------------------------------------
MIPS Technologies, Inc.-Class A(b) 174,900 7,017,862
--------------------------------------------------------------
TranSwitch Corp.(b) 217,100 12,537,525
--------------------------------------------------------------
Zoran Corp.(b) 229,500 11,503,687
==============================================================
71,796,011
==============================================================
FINANCIAL (DIVERSIFIED)-1.49%
SEI Investments Co. 133,800 12,142,350
==============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-2.23%
Alpharma Inc.-Class A 71,700 2,782,856
--------------------------------------------------------------
First Horizon Pharmaceutical
Corp.(b) 400,000 8,350,000
--------------------------------------------------------------
Insmed Inc.(b) 400,000 4,875,000
--------------------------------------------------------------
Pain Therapeutics, Inc.(b) 100,000 2,143,750
==============================================================
18,151,606
==============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.85%
Cyberonics, Inc.(b) 296,400 6,891,300
==============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-2.89%
Advance Paradigm, Inc.(b) 162,900 7,961,737
--------------------------------------------------------------
Aksys, Ltd.(b) 191,700 2,995,313
--------------------------------------------------------------
Laboratory Corp. of America
Holdings(b) 93,600 12,624,300
==============================================================
23,581,350
==============================================================
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.46%
Martha Stewart Living Omnimedia,
Inc.(b) 150,000 3,759,375
==============================================================
INVESTMENT BANKING/BROKERAGE-1.35%
Raymond James Financial, Inc. 325,700 11,012,731
==============================================================
INVESTMENT MANAGEMENT-0.13%
Federated Investors, Inc.-Class B 37,250 1,084,906
==============================================================
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENTS-2.28%
iShares Russell 2000 Index Fund 62,000 $ 6,138,000
--------------------------------------------------------------
Nasdaq 100 Shares(b) 152,300 12,469,563
==============================================================
18,607,563
==============================================================
LEISURE TIME (PRODUCTS)-0.45%
Oakley, Inc.(b) 175,000 3,675,000
==============================================================
MANUFACTURING (SPECIALIZED)-0.57%
LightPath Technologies, Inc.-Class
A(b) 170,100 4,635,225
==============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-10.02%
Cal Dive International, Inc.(b) 342,000 17,014,500
--------------------------------------------------------------
Chiles Offshore, Inc.(b) 206,000 3,296,000
--------------------------------------------------------------
Dril-Quip, Inc.(b) 192,500 6,352,500
--------------------------------------------------------------
Grey Wolf, Inc.(b) 1,404,500 6,495,813
--------------------------------------------------------------
Key Energy Services, Inc.(b) 692,800 6,235,200
--------------------------------------------------------------
Marine Drilling Cos., Inc.(b) 252,000 6,016,500
--------------------------------------------------------------
National-Oilwell, Inc.(b) 274,400 8,026,200
--------------------------------------------------------------
Newpark Resources, Inc.(b) 545,700 4,911,300
--------------------------------------------------------------
Patterson Energy, Inc.(b) 323,500 9,098,438
--------------------------------------------------------------
Pride International, Inc.(b) 262,600 6,647,063
--------------------------------------------------------------
UTI Energy Corp.(b) 378,000 7,583,625
==============================================================
81,677,139
==============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-3.05%
Comstock Resources, Inc.(b) 325,700 3,379,138
--------------------------------------------------------------
Evergreen Resources, Inc.(b) 152,000 4,180,000
--------------------------------------------------------------
Spinnaker Exploration Co.(b) 261,300 7,904,325
--------------------------------------------------------------
Startech Energy, Inc. (Canada)(b) 671,600 3,232,075
--------------------------------------------------------------
Stone Energy Corp.(b) 120,000 6,144,000
==============================================================
24,839,538
==============================================================
OIL & GAS (REFINING &
MARKETING)-0.67%
Valero Energy Corp.-$1.94 Conv. Pfd. 195,000 5,460,000
==============================================================
RESTAURANTS-1.59%
Sonic Corp.(b) 355,300 12,968,450
==============================================================
RETAIL (COMPUTERS &
ELECTRONICS)-2.52%
Tweeter Home Entertainment Group,
Inc.(b) 413,700 9,954,656
--------------------------------------------------------------
Ultimate Electronics, Inc.(b) 292,400 10,562,950
==============================================================
20,517,606
==============================================================
RETAIL (DISCOUNTERS)-0.96%
Fred's, Inc. 369,900 7,814,138
==============================================================
RETAIL (SPECIALTY)-2.18%
Linens 'n Things, Inc.(b) 310,000 9,532,500
--------------------------------------------------------------
Sharper Image Corp.(b) 434,300 8,251,700
==============================================================
17,784,200
==============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-2.98%
Abercrombie & Fitch Co.-Class A(b) 250,000 $ 5,890,625
--------------------------------------------------------------
AnnTaylor Stores Corp.(b) 163,300 4,899,000
--------------------------------------------------------------
Chico's FAS, Inc.(b) 106,300 3,441,463
--------------------------------------------------------------
Christopher & Banks Corp.(b) 190,000 6,293,750
--------------------------------------------------------------
Too Inc.(b) 162,900 3,736,519
==============================================================
24,261,357
==============================================================
SERVICES
(ADVERTISING/MARKETING)-2.03%
Lamar Advertising Co.(b) 344,200 16,521,600
==============================================================
SERVICES (COMMERCIAL &
CONSUMER)-0.77%
Career Education Corp.(b) 162,900 6,302,194
==============================================================
SERVICES (COMPUTER SYSTEMS)-1.95%
Insight Enterprises, Inc.(b) 277,650 9,023,625
--------------------------------------------------------------
Investment Technology Group, Inc.(b) 190,000 6,840,000
==============================================================
15,863,625
==============================================================
SERVICES (DATA PROCESSING)-0.81%
Learning Tree International, Inc.(b) 145,300 6,574,825
==============================================================
SERVICES (EMPLOYMENT)-0.82%
Heidrick & Struggles International,
Inc.(b) 108,600 6,712,838
==============================================================
SHIPPING-0.72%
Nordic American Tanker Shipping Ltd.
(Norway) 275,000 5,878,125
==============================================================
Total Common Stocks & Other
Equity Interests (Cost
$489,599,337) 669,104,171
==============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE NOTES-1.24%
COMMUNICATIONS EQUIPMENT-1.24%
Cyras Systems, Inc., Conv. Sub.
Notes, 4.50%, 08/15/05
(Acquired 08/15/00; Cost
$3,000,000)(c) $3,000,000 3,480,000
--------------------------------------------------------------
Kestrel Solutions, Conv. Sub.
Notes, 5.50%, 07/15/05 (Acquired
07/20/00-10/20/00; Cost
$6,300,000)(c) 6,250,000 6,625,000
==============================================================
Total Convertible Corporate
Notes (Cost $9,300,000) 10,105,000
==============================================================
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
<S> <C> <C> <C> <C>
OPTIONS
PURCHASED-2.94%
CALLS-1.12%
Activision, Inc.
(Computers-Software
& Services) 2,500 $ 15 Nov-00 101,562
-----------------------------------------------------------------------
AMEX Biotechnology
Index
(Biotechnology) 430 600 Jan-01 7,218,625
-----------------------------------------------------------------------
Philadelphia Oil
Service Sector
Index (Oil &
Gas-Exploration &
Production) 2,578 125 Dec-00 1,417,900
-----------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION MARKET
CONTRACTS PRICE DATE VALUE
<S> <C> <C> <C> <C>
CALLS-(CONTINUED)
Read-Rite Corp.
(Computers-
Peripherals) 8,000 $ 15 Jan-01 $ 400,000
=======================================================================
9,138,087
=======================================================================
PUTS-1.82%
Nasdaq 100 Index
(Investments) 95 3,100 Dec-00 1,471,313
-----------------------------------------------------------------------
370 3,025 Dec-00 4,800,750
-----------------------------------------------------------------------
Russell 2000 Index
(Investments) 2,157 460 Dec-00 1,941,300
-----------------------------------------------------------------------
3,245 480 Dec-00 4,461,875
-----------------------------------------------------------------------
S&P 500 Index
(Investments) 774 1,350 Nov-00 445,050
-----------------------------------------------------------------------
560 1,375 Nov-00 525,000
-----------------------------------------------------------------------
1,350 1,300 Dec-00 1,181,250
=======================================================================
14,826,538
=======================================================================
Total Options
Purchased (Cost
$42,043,680) 23,964,625
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-12.10%
STIC Liquid Assets Portfolio(d) 49,297,371 49,297,371
-----------------------------------------------------------------------
STIC Prime Portfolio(d) 49,297,371 49,297,371
=======================================================================
Total Money Market Funds
(Cost $98,594,742) 98,594,742
=======================================================================
TOTAL INVESTMENTS-98.38%
(Cost $639,537,759) 801,768,538
=======================================================================
OTHER ASSETS LESS LIABILITIES-1.62% 13,212,606
=======================================================================
NET ASSETS-100.00% $814,981,144
_______________________________________________________________________
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(e)
Actrade Financial Technologies, Ltd. 224,000 $ 5,236,000
-------------------------------------------------------------
Advanced Micro Devices, Inc. 97,700 2,210,463
-------------------------------------------------------------
Allergan, Inc. 53,600 4,505,750
-------------------------------------------------------------
Amazon.com, Inc. 179,900 6,588,837
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SHORT VALUE
<S> <C> <C>
SECURITIES SOLD SHORT(e)-(CONTINUED)
Andrx Group 59,700 $ 4,298,400
-------------------------------------------------------------
Autodesk, Inc. 137,100 3,024,769
-------------------------------------------------------------
BroadVision, Inc. 160,400 4,771,900
-------------------------------------------------------------
California Pizza Kitchen, Inc. 183,900 6,436,500
-------------------------------------------------------------
CompuCredit Corp. 82,000 2,531,750
-------------------------------------------------------------
Computer Sciences Corp. 43,000 2,709,000
-------------------------------------------------------------
Corvis Corp. 90,000 5,906,250
-------------------------------------------------------------
Costco Wholesale Corp. 125,000 4,578,125
-------------------------------------------------------------
Cytyc Corp. 49,900 2,962,812
-------------------------------------------------------------
Digital Island, Inc. 126,900 1,602,113
-------------------------------------------------------------
Fluor Corp. 100,000 3,500,000
-------------------------------------------------------------
Guidant Corp. 63,000 3,335,062
-------------------------------------------------------------
Home Depot, Inc. (The) 158,400 6,811,200
-------------------------------------------------------------
Inrange Technologies Corp.-Class B 100,000 3,662,500
-------------------------------------------------------------
King Pharmaceuticals, Inc. 144,100 6,457,481
-------------------------------------------------------------
Network Appliance, Inc. 26,700 3,177,300
-------------------------------------------------------------
NIKE, Inc.-Class B 113,500 4,532,906
-------------------------------------------------------------
1-800 CONTACTS, INC. 175,000 6,737,500
-------------------------------------------------------------
PolyMedica Corp. 54,200 3,116,500
-------------------------------------------------------------
QLT Inc. (Canada) 80,200 3,988,697
-------------------------------------------------------------
SCI Systems, Inc. 99,400 4,274,200
-------------------------------------------------------------
Scient Corp. 9,600 172,800
-------------------------------------------------------------
724 Solutions Inc. (Canada) 122,500 3,330,469
-------------------------------------------------------------
Silicon Storage Technology, Inc. 120,100 2,732,275
-------------------------------------------------------------
Solectron Corp. 85,000 3,740,000
-------------------------------------------------------------
Stryker Corp. 89,700 4,227,113
-------------------------------------------------------------
Sunrise Assisted Living, Inc. 250,000 5,843,750
-------------------------------------------------------------
Syntroleum Corp. 18,100 352,950
-------------------------------------------------------------
United Rentals, Inc. 134,100 2,883,150
-------------------------------------------------------------
VA Linux Systems, Inc. 88,800 2,597,400
-------------------------------------------------------------
Whole Foods Market, Inc. 100,000 4,625,000
=============================================================
Total Securities Sold Short $137,460,922
_____________________________________________________________
=============================================================
</TABLE>
Investment Abbreviations:
Conv. - Convertible
Pfd. - Preferred
Sub. - Subordinated
Notes to Schedule of Investments:
(a) A portion of this security is subject to call options written. See Note 7.
(b) Non-income producing security.
(c) 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 $15,153,880, which represented 1.86% of the Fund's net assets.
(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
$169,366,891 which represents 123% of market value.
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 $639,537,759) $801,768,538
-----------------------------------------------------------------
Cash 18,541,717
-----------------------------------------------------------------
Receivables for:
Investments sold 29,183,526
-----------------------------------------------------------------
Fund shares sold 478,282
-----------------------------------------------------------------
Dividends and interest 912,481
-----------------------------------------------------------------
Investments sold short 124,940,961
-----------------------------------------------------------------
Short stock rebates 738,222
-----------------------------------------------------------------
Investment for deferred compensation plan 14,493
=================================================================
Total assets 976,578,220
=================================================================
LIABILITIES:
Payables for:
Investments purchased 10,797,225
-----------------------------------------------------------------
Fund shares reacquired 1,224,001
-----------------------------------------------------------------
Short stock account dividends 5,244
-----------------------------------------------------------------
Options written (premiums received $5,534,260) 6,686,200
-----------------------------------------------------------------
Short stock account interest 11,348
-----------------------------------------------------------------
Short positions covered 3,963,647
-----------------------------------------------------------------
Deferred compensation plan 14,493
-----------------------------------------------------------------
Market value of securities sold short (proceeds
from short sales $124,940,961) 137,460,922
-----------------------------------------------------------------
Accrued advisory fees 709,983
-----------------------------------------------------------------
Accrued administrative services fees 11,048
-----------------------------------------------------------------
Accrued distribution fees 490,473
-----------------------------------------------------------------
Accrued transfer agent fees 65,692
-----------------------------------------------------------------
Accrued operating expenses 156,800
=================================================================
Total liabilities 161,597,076
=================================================================
Net assets applicable to shares outstanding $814,981,144
_________________________________________________________________
=================================================================
NET ASSETS:
Class A $442,912,961
_________________________________________________________________
=================================================================
Class B $325,956,698
_________________________________________________________________
=================================================================
Class C $ 46,111,485
_________________________________________________________________
=================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 17,004,350
_________________________________________________________________
=================================================================
Class B 12,728,473
_________________________________________________________________
=================================================================
Class C 1,799,068
_________________________________________________________________
=================================================================
Class A:
Net asset value and redemption price per share $ 26.05
-----------------------------------------------------------------
Offering price per share:
(Net asset value of $26.05 divided by 94.50%) $ 27.57
_________________________________________________________________
=================================================================
Class B:
Net asset value and offering price per share $ 25.61
_________________________________________________________________
=================================================================
Class C:
Net asset value and offering price per share $ 25.63
_________________________________________________________________
=================================================================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE
MONTHS ENDED YEAR ENDED
OCTOBER 31, JULY 31,
2000 2000
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Short stock rebates $ 2,327,143 $ 5,100,917
------------------------------------------------------------------
Dividends from affiliated money
market funds 1,066,154 1,778,327
------------------------------------------------------------------
Dividends 446,052 395,709
------------------------------------------------------------------
Interest 177,262 291,637
==================================================================
Total investment income 4,016,611 7,566,590
==================================================================
EXPENSES:
Advisory fees 2,144,302 6,847,355
------------------------------------------------------------------
Administrative services fees 32,899 126,377
------------------------------------------------------------------
Custodian fees 56,529 99,433
------------------------------------------------------------------
Distribution fees -- Class A 408,951 1,322,447
------------------------------------------------------------------
Distribution fees -- Class B 856,514 2,762,425
------------------------------------------------------------------
Distribution fees -- Class C 119,356 306,511
------------------------------------------------------------------
Interest 105,541 1,399,665
------------------------------------------------------------------
Transfer agent fees -- Class A 60,342 247,830
------------------------------------------------------------------
Transfer agent fees -- Class B 54,436 232,766
------------------------------------------------------------------
Transfer agent fees -- Class C 7,586 25,821
------------------------------------------------------------------
Trustees' fees 1,983 8,629
------------------------------------------------------------------
Dividends on short sales 95,824 401,666
------------------------------------------------------------------
Other 141,992 714,423
==================================================================
Total expenses 4,086,255 14,495,348
==================================================================
Less: Fees waived (116,843) (314,784)
------------------------------------------------------------------
Expenses paid indirectly (50,669) (16,795)
==================================================================
Net expenses 3,918,743 14,163,769
==================================================================
Net investment income (loss) 97,868 (6,597,179)
==================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES,
SECURITIES SOLD SHORT, FUTURES
CONTRACTS AND OPTION CONTRACTS
WRITTEN
Net realized gain (loss) from:
Investment securities 43,225,326 281,397,793
------------------------------------------------------------------
Futures contracts 798,317 (897,367)
------------------------------------------------------------------
Option contracts written 4,577,540 18,473,981
------------------------------------------------------------------
Securities sold short 7,225,299 (12,793,600)
==================================================================
55,826,482 286,180,807
==================================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (35,150,948) 92,319,494
------------------------------------------------------------------
Option contracts written (2,546,495) 1,652,600
------------------------------------------------------------------
Securities sold short (10,377,929) (3,440,914)
==================================================================
(48,075,372) 90,531,180
==================================================================
Net gain on investment securities,
securities sold short, futures
contracts and option contracts
written 7,751,110 376,711,987
==================================================================
Net increase in net assets resulting
from operations $ 7,848,978 $370,114,808
__________________________________________________________________
==================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, JULY 31, JULY 31,
2000 2000 1999
------------ ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 97,868 $ (6,597,179) $ (4,494,793)
--------------------------------------------------------------------------------------------------------
Net realized gain from investment securities, securities
sold short, futures contracts and option contracts
written 55,826,482 286,180,807 8,988,418
--------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, securities sold short, futures
contracts and option contracts written (48,075,372) 90,531,180 113,395,076
========================================================================================================
Net increase in net assets resulting from operations 7,848,978 370,114,808 117,888,701
========================================================================================================
Distributions to shareholders from net realized gains:
Class A -- (15,796,321) (102,881)
--------------------------------------------------------------------------------------------------------
Class B -- (11,509,981) (48,732)
--------------------------------------------------------------------------------------------------------
Class C -- (1,189,843) --
--------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (10,920,967) 52,117,173 30,818,297
--------------------------------------------------------------------------------------------------------
Class B (3,363,049) 35,576,046 19,845,339
--------------------------------------------------------------------------------------------------------
Class C 1,244,247 25,368,723 5,266,423
========================================================================================================
Net increase (decrease) in net assets (5,190,791) 454,680,605 173,667,147
========================================================================================================
NET ASSETS:
Beginning of period 820,171,935 365,491,330 191,824,183
========================================================================================================
End of period $814,981,144 $820,171,935 $365,491,330
________________________________________________________________________________________________________
========================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $354,467,244 $366,807,012 $253,662,739
--------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) 14,830 (83,038) (97,371)
--------------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, securities sold short, futures contracts and
option contracts written 311,940,191 256,813,710 5,822,891
--------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
securities sold short, futures contracts and option
contracts written 148,558,879 196,634,251 106,103,071
========================================================================================================
$814,981,144 $820,171,935 $365,491,330
________________________________________________________________________________________________________
========================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Small Cap Opportunities Fund (the "Fund") is a series portfolio of AIM
Special Opportunities Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of three
separate portfolios, each having an unlimited number of shares of beneficial
interest. The 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 was closed to new investors as
of November 4, 1999. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term 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 realized gains were decreased by
$700,001 and paid in capital was increased by $700,001 as a result of
differences due to utilization of a portion of the proceeds from redemptions
as distributions for federal income tax purposes. Net assets of the Fund
were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Securities Sold Short -- The Fund may enter into short sales of securities
which it concurrently holds (against the box) or for which it holds no
corresponding position (naked). Securities sold short represent a liability
of the Fund to acquire specific securities at prevailing market prices at a
future date in order to satisfy the obligation to deliver the securities
sold. The liability is recorded on the books of the Fund at the market value
of the common stock determined each day in accordance with the procedures
for security valuations disclosed in "A" above. The Fund will incur a loss
if the price of the security increases between the date of the short sale
and the date on which the Fund replaces the borrowed security. The Fund
10
<PAGE> 13
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
1.00% of the Fund's average daily net assets. The base management fee will be
adjusted, on a monthly basis starting January 1, 2001, (i) upward at the rate of
0.15%, on a pro rata basis, for each percentage point the 12-month rolling
investment performance of the Class A shares
11
<PAGE> 14
exceeds the sum of 2.00% and the 12-month rolling investment record of the
Russell 2000 Index, or (ii) downward at the rate of 0.15%, on a pro rata basis,
for each percentage point the 12-month rolling investment record of the Russell
2000 Index less 2.00% exceeds the 12-month rolling investment performance of the
Class A shares.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the three-month period ended October 31,
2000 and the year ended July 31, 2000, AIM was paid $32,899 and $126,377,
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 $70,501 and $206,416,
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
$292,108, $856,514 and $119,356, 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 $1,007,663, $2,762,425 and $306,511, respectively, as
compensation under the Plans. For the three-month period ended October 31, 2000
and the year ended July 31, 2000, AIM Distributors waived fees of $116,843 and
$314,784, respectively, for Class A shares.
AIM Distributors received commissions of $18,004 and $280,701, 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, respectively. 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 $3,639 and $38,002, 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 $1,431 and $3,722, respectively, for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Company's directors. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
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 $4,049 and $7,599, respectively, and reductions in
custodian fees of $46,620 and $9,196, respectively, under expense offset
arrangements which resulted in a reduction of the Fund's total expenses of
$50,669 and $16,795 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.
For the three-month period ended October 31, 2000, the average outstanding
daily balance of bank loans for the Fund was $5,860,918 with a weighted average
interest rate of 7.16%.
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 $455,104,353 and $390,194,430, respectively, and during the year ended
July 31, 2000 was $1,260,650,596 and $1,402,401,764, 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 $199,191,079 $232,723,060
-------------------------------------------------------------------
Securities sold short 4,031,223 14,314,078
-------------------------------------------------------------------
Aggregate unrealized (depreciation)
of:
Investment securities (24,983,581) (35,640,214)
-------------------------------------------------------------------
Securities sold short (13,123,598) (16,456,111)
===================================================================
Net unrealized appreciation of
investment securities $165,115,123 $194,940,813
___________________________________________________________________
===================================================================
Cost of investments for tax purposes for the three-month period
ended October 31, 2000 and the year ended July 31 are
$627,561,040 and $605,437,429, respectively.
Proceeds from securities sold short for tax purposes for the
three-month period ended October 31, 2000 and the year ended July
31 are $128,368,547 and $164,181,124, respectively.
</TABLE>
12
<PAGE> 15
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the three-month 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 -- $ --
-------------------------------------------------------------
Written 12,324 11,333,314
-------------------------------------------------------------
Closed (10,138) (8,590,114)
-------------------------------------------------------------
Expired (750) (230,242)
=============================================================
End of year 1,436 $ 2,512,958
_____________________________________________________________
=============================================================
</TABLE>
Open call option contracts written at October 31, 2000 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
NUMBER 2000
CONTRACT STRIKE OF PREMIUMS MARKET UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE APPRECIATION
----- -------- ------ --------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq 100 Dec-00 $4,400 585 $ 817,218 $ 599,625 $ 217,593
------------------------------------------------------------------------------------------------
Nasdaq 100 Mar-01 4,500 226 1,603,868 1,485,950 117,918
------------------------------------------------------------------------------------------------
Skywest Nov-00 55 625 91,872 39,063 52,809
================================================================================================
1,436 $2,512,958 $2,124,638 $ 388,320
________________________________________________________________________________________________
================================================================================================
</TABLE>
NOTE 8-PUT OPTION CONTRACTS
Transactions in put options contracts written during the three-month 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 228 $ 1,816,355
-------------------------------------------------------------
Written 3,797 3,783,426
-------------------------------------------------------------
Closed (2,176) (2,578,479)
=============================================================
End of year 1,849 $ 3,021,302
_____________________________________________________________
=============================================================
</TABLE>
Open put option contracts written at October 31, 2000 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
NUMBER 2000 UNREALIZED
CONTRACT STRIKE OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq 100 Dec-00 $2,900 366 $2,265,739 $3,467,850 $(1,202,111)
------------------------------------------------------------------------------------------------
Russell
2000 Index Dec-00 450 1,483 755,563 1,093,713 (338,150)
================================================================================================
1,849 $3,021,302 $4,561,563 $(1,540,261)
________________________________________________________________________________________________
================================================================================================
</TABLE>
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the three-month period ended October 31,
2000 and years ended July 31, 2000 and 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 347,483 $ 9,371,278 6,753,064 $125,825,634 9,086,718 $ 99,751,555
-------------------------------------------------------------------------------------------------------------------------------
Class B 204,534 5,413,560 4,029,763 72,063,849 4,403,590 48,831,913
-------------------------------------------------------------------------------------------------------------------------------
Class C 86,484 2,288,148 1,535,334 29,503,687 463,451 5,940,023
===============================================================================================================================
Issued as reinvestment of dividends:
Class A -- -- 778,251 14,945,789 8,677 96,302
-------------------------------------------------------------------------------------------------------------------------------
Class B -- -- 531,984 10,113,306 3,755 41,572
-------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 57,775 1,099,467 -- --
===============================================================================================================================
Reacquired:
Class A (754,034) (20,292,245) (3,968,990) (88,654,250) (6,264,993) (69,029,559)
-------------------------------------------------------------------------------------------------------------------------------
Class B (329,580) (8,776,609) (2,136,331) (46,601,109) (2,617,703) (29,028,148)
-------------------------------------------------------------------------------------------------------------------------------
Class C (39,595) (1,043,901) (245,494) (5,234,431) (58,887) (673,599)
===============================================================================================================================
(484,708) $(13,039,769) 7,335,356 $113,061,942 5,024,608 $ 55,930,059
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</TABLE>
13
<PAGE> 16
NOTE 10-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
JUNE 29, 1998
THREE MONTHS (DATE OPERATIONS
ENDED YEAR ENDED JULY 31, COMMENCED) TO
OCTOBER 31, ---------------------- JULY 31,
2000 2000(a) 1999(a) 1998(a)
------------ --------- --------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.79 $ 14.86 $ 9.76 $ 10.00
----------------------------------------------------------- ---------- -------- -------- --------
Income from investment operations:
Net investment income (loss) 0.03 (0.14) (0.09) 0.02
----------------------------------------------------------- ---------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 0.23 11.97 5.20 (0.26)
=========================================================== ========== ======== ======== ========
Total from investment operations 0.26 11.83 5.11 (0.24)
=========================================================== ========== ======== ======== ========
Less distributions:
Dividends from net investment income -- -- (0.01) --
----------------------------------------------------------- ---------- -------- -------- --------
Distributions from net realized gains -- (0.90) -- --
=========================================================== ========== ======== ======== ========
Net asset value, end of period $ 26.05 $ 25.79 $ 14.86 $ 9.76
___________________________________________________________ __________ ________ ________ ________
=========================================================== ========== ======== ======== ========
Total return(b) 1.01% 81.64% 52.36% (2.40)%
___________________________________________________________ __________ ________ ________ ________
=========================================================== ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $442,913 $449,044 $205,721 $107,540
___________________________________________________________ __________ ________ ________ ________
=========================================================== ========== ======== ======== ========
Ratio of expenses to average net assets (including interest
expense and dividends on short sales expense):
With fee waivers 1.50%(c) 1.73% 2.35% 1.59%(d)
----------------------------------------------------------- ---------- -------- -------- --------
Without fee waivers 1.60%(c) 1.81% 2.35% 1.59%(d)
=========================================================== ========== ======== ======== ========
Ratio of expenses to average net assets (excluding interest
expense and dividends on short sales expense):
With fee waivers 1.41%(c) 1.47% 1.74% 1.59%(d)
----------------------------------------------------------- ---------- -------- -------- --------
Without fee waivers 1.51%(c) 1.55% 1.74% 1.59%(d)
=========================================================== ========== ======== ======== ========
Ratio of net investment income (loss) to average net assets 0.39%(c) (0.63)% (1.44)% 2.00%(d)
=========================================================== ========== ======== ======== ========
Ratio of interest expense and dividends on short sales
expense to average net assets 0.09%(c) 0.26% 0.61% --
___________________________________________________________ __________ ________ ________ ________
=========================================================== ========== ======== ======== ========
Portfolio turnover rate 52% 198% 220% 13%
___________________________________________________________ __________ ________ ________ ________
=========================================================== ========== ======== ======== ========
</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 $463,563,165
for the three months ended October 31, 2000.
(d) Annualized.
14
<PAGE> 17
NOTE 10-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------
THREE JULY 13, 1998
MONTHS (DATE SALES
ENDED YEAR ENDED JULY 31, COMMENCED) TO
OCTOBER 31, -------------------- JULY 31,
2000 2000(a) 1999(a) 1998(a)
------------- -------- -------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.41 $ 14.75 $ 9.76 $ 10.07
----------------------------------------------------------- -------- -------- -------- -------
Income from investment operations:
Net investment income (loss) (0.02) (0.30) (0.17) 0.01
----------------------------------------------------------- -------- -------- -------- -------
Net gains (losses) on securities (both realized and
unrealized) 0.22 11.86 5.17 (0.32)
=========================================================== ======== ======== ======== =======
Total from investment operations 0.20 11.56 5.00 (0.31)
=========================================================== ======== ======== ======== =======
Less distributions:
Dividends from net investment income -- -- (0.01) --
----------------------------------------------------------- -------- -------- -------- -------
Distributions from net realized gains -- (0.90) -- --
=========================================================== ======== ======== ======== =======
Net asset value, end of period $ 25.61 $ 25.41 $ 14.75 $ 9.76
___________________________________________________________ ________ ________ ________ _______
=========================================================== ======== ======== ======== =======
Total return(b) 0.79% 80.38% 51.30% (3.08)%
___________________________________________________________ ________ ________ ________ _______
=========================================================== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $325,957 $326,571 $153,793 $84,285
___________________________________________________________ ________ ________ ________ _______
=========================================================== ======== ======== ======== =======
Ratio of expenses to average net assets (including interest
expense and dividends on short sales expense) 2.27%(c) 2.48% 3.03% 2.30%(d)
=========================================================== ======== ======== ======== =======
Ratio of expenses to average net assets (excluding interest
expense and dividends on short sales expense) 2.18%(c) 2.22% 2.42% 2.30%(d)
=========================================================== ======== ======== ======== =======
Ratio of net investment income (loss) to average net assets (0.37)%(c) (1.38)% (2.12)% 1.29%(d)
=========================================================== ======== ======== ======== =======
Ratio of interest expense and dividends on short sales
expense to average net assets 0.09%(c) 0.26% 0.61% --
___________________________________________________________ ________ ________ ________ _______
=========================================================== ======== ======== ======== =======
Portfolio turnover rate 52% 198% 220% 13%
___________________________________________________________ ________ ________ ________ _______
=========================================================== ======== ======== ======== =======
</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 $339,812,491
for the three months ended October 31, 2000.
(d) Annualized.
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------
THREE DECEMBER 30, 1999
MONTHS (DATE SALES
ENDED YEAR ENDED COMMENCED) TO
OCTOBER 31, JULY 31, JULY 31,
2000 2000(a) 1999(a)
------------- ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 25.43 $ 14.78 $11.70
------------------------------------------------------------ ------- ------- ------
Income from investment operations:
Net investment income (loss) (0.02) (0.32) (0.11)
------------------------------------------------------------ ------- ------- ------
Net gains on securities (both realized and unrealized) 0.22 11.87 3.19
============================================================ ======= ======= ======
Total from investment operations 0.20 11.55 3.08
============================================================ ======= ======= ======
Less distributions from net realized gains -- (0.90) --
============================================================ ======= ======= ======
Net asset value, end of period $ 25.63 $ 25.43 $14.78
____________________________________________________________ _______ _______ ______
============================================================ ======= ======= ======
Total return(b) 0.79% 80.15% 29.31%
____________________________________________________________ _______ _______ ______
============================================================ ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $46,111 $44,557 $5,977
____________________________________________________________ _______ _______ ______
============================================================ ======= ======= ======
Ratio of expenses to average net assets (including interest
expense and dividends on short sales expense) 2.27%(c) 2.48% 3.03%(d)
============================================================ ======= ======= ======
Ratio of expenses to average net assets (excluding interest
expense and dividends on short sales expense) 2.18%(c) 2.22% 2.42%(d)
============================================================ ======= ======= ======
Ratio of net investment income (loss) to average net assets (0.37)%(c) (1.38)% (2.12)%(d)
============================================================ ======= ======= ======
Ratio of interest expense and dividends on short sales
expense to average net assets 0.09%(c) 0.26% 0.61%(d)
____________________________________________________________ _______ _______ ______
============================================================ ======= ======= ======
Portfolio turnover rate 52% 198% 220%
____________________________________________________________ _______ _______ ______
============================================================ ======= ======= ======
</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 $47,353,060
for the three months ended October 31, 2000.
(d) Annualized.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Small Cap Opportunities Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Small 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,
the statements of changes in net assets for the three
months ended October 31, 2000 and the years ended July
31, 2000 and July 31, 1999 and the financial highlights
for the three months ended October 31, 2000, the years
ended July 31, 2000 and July 31, 1999, and the period
June 29, 1998 (date operations commenced) to July 31,
1998. 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 Small
Cap Opportunities Fund as of October 31, 2000, the
results of its operations for the three months then ended
and the year ended July 31, 2000, the statements of
changes in its net assets for the three months ended
October 31, 2000 and the years ended July 31, 2000 and
July 31, 1999 and the financial highlights for the three
months ended October 31, 2000, the years ended July 31,
2000 and July 31, 1999, and the period June 29, 1998
(date operations commenced) to July 31, 1998, 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 Chief Executive Officer Chairman and President Suite 100
A I M Management Group Inc. Houston, TX 77046
Carol F. Relihan
Bruce L. Crockett Senior Vice President and Secretary INVESTMENT ADVISOR
Director
ACE Limited; Gary T. Crum A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Edgar M. Larsen Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Formerly Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Albert R. Dowden Melville B. Cox Houston, TX 77210-4739
Chairman of the Board of Directors, Vice President
The Cortland Trust and DHJ Media, Inc.; and CUSTODIAN
Director, Magellan Insurance Company, Mary J. Benson
Formerly Director, President and Assistant Vice President and State Street Bank and Trust Company
Chief Executive Officer, Assistant Treasurer 225 Franklin Street
Volvo Group North America, Inc.; and Boston, MA 02110
Senior Vice President, AB Volvo Sheri Morris
Assistant Vice President and COUNSEL TO THE FUND
Edward K. Dunn Jr. Assistant Treasurer
Chairman, Mercantile Mortgage Corp.; Ballard Spahr
Formerly Vice Chairman and President, Jim A. Coppedge Andrews & Ingersoll, LLP
Mercantile-Safe Deposit & Trust Co.; and Assistant Secretary 1735 Market Street
President, Mercantile Bankshares Philadelphia, PA 19103
Renee A. Friedli
Jack Fields Assistant Secretary COUNSEL TO THE TRUSTEES
Chief Executive Officer
Twenty First Century, Inc.; P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
Formerly Member Assistant Secretary 919 Third Avenue
of the U.S. House of Representatives New York, NY 10022
Nancy L. Martin
Carl Frischling Assistant Secretary DISTRIBUTOR
Partner
Kramer, Levin, Naftalis & Frankel LLP Ofelia M. Mayo A I M Distributors, Inc.
Assistant Secretary 11 Greenway Plaza
Prema Mathai-Davis Suite 100
Formerly Chief Executive Officer, Lisa A. Moss Houston, TX 77046
YWCA of the U.S.A. Assistant Secretary
AUDITORS
Lewis F. Pennock Kathleen J. Pflueger
Partner Assistant Secretary KPMG LLP
Pennock & Cooper 700 Louisiana
Houston, TX 77002
Louis S. Sklar
Executive Vice President
Hines Interests
Limited Partnership
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended
October 31, 2000, 0% is eligible for the dividends received deduction for
corporations. The Fund distributed long-term capital gains of $781,872 for the
Fund's tax year ended October 31, 2000 of which 100% is 20% rate gain.
17
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
EQUITY FUNDS
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS A I M Management Group Inc. has provided
leadership in the mutual fund industry
MORE AGGRESSIVE MORE AGGRESSIVE since 1976 and managed approximately
$183 billion in assets for more than
AIM Small Cap Opportunities(1) AIM Latin American Growth eight million shareholders, including
AIM Mid Cap Opportunities(2) AIM Developing Markets individual investors, corporate clients
AIM Large Cap Opportunities(3) AIM European Small Company and financial institutions, as of
AIM Emerging Growth AIM Asian Growth September 30, 2000.
AIM Small Cap Growth(4) AIM Japan Growth The AIM Family of Funds--Registered
AIM Aggressive Growth AIM International Emerging Growth Trademark-- is distributed nationwide,
AIM Mid Cap Growth AIM European Development and AIM today is the eighth-largest
AIM Small Cap Equity AIM Euroland Growth mutual fund complex in the United States
AIM Capital Development AIM Global Aggressive Growth in assets under management, according to
AIM Constellation AIM International Equity Strategic Insight, an independent mutual
AIM Dent Demographic Trends AIM Advisor International Value fund monitor.
AIM Select Growth AIM Global Trends AIM is a subsidiary of AMVESCAP PLC,
AIM Large Cap Growth one of the world's largest independent
AIM Weingarten AIM Global Growth financial services companies with $414
AIM Mid Cap Equity billion in assets under management as of
AIM Value II September 30, 2000.
AIM Charter MORE CONSERVATIVE
AIM Value
AIM Blue Chip SECTOR EQUITY FUNDS
AIM Basic Value
AIM Large Cap Basic Value MORE AGGRESSIVE
AIM Balanced
AIM Advisor Flex AIM New Technology
AIM Global Telecommunications and Technology
MORE CONSERVATIVE AIM Global Resources
AIM Global Financial Services
AIM Global Health Care
AIM Global Consumer Products and Services
AIM Global Infrastructure
AIM Advisor Real Estate
AIM Global Utilities
MORE CONSERVATIVE
FIXED-INCOME FUNDS
TAXABLE FIXED-INCOME FUNDS TAX-FREE FIXED-INCOME FUNDS
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Strategic Income AIM High Income Municipal
AIM High Yield II AIM Tax-Exempt Bond of Connecticut
AIM High Yield AIM Municipal Bond
AIM Income AIM Tax-Free Intermediate
AIM Global Income AIM Tax-Exempt Cash
AIM Floating Rate(5)
AIM Intermediate Government MORE CONSERVATIVE
AIM Limited Maturity Treasury
AIM Money Market
MORE CONSERVATIVE
</TABLE>
The AIM Risk Spectrum illustrates equity and fixed-income funds from more
aggressive to more conservative. When assessing the degree of risk, three
factors were considered: the funds' portfolio holdings, volatility patterns over
time and diversification permitted within the fund. Fund rankings are relative
to one another within The AIM Family of Funds--Registered Trademark-- and should
not be compared with other investments. There is no guarantee that any one AIM
fund will be less volatile than any other. (1) AIM Small Cap Opportunities Fund
closed to new investors Nov. 4, 1999. (2) AIM Mid Cap Opportunities Fund closed
to new investors March 21, 2000. (3) AIM Large Cap Opportunities Fund closed to
new investors Sept. 29, 2000. (4) AIM Small Cap Growth Fund closed to new
investors Nov. 8, 1999. (5) AIM Floating Rate Fund was restructured to offer
multiple share classes April 3, 2000. Existing shares were converted to Class B
shares, and Class C shares commenced offering.
FOR MORE COMPLETE INFORMATION ABOUT ANY AIM FUND, INCLUDING SALES CHARGES
AND EXPENSES, OBTAIN THE APPROPRIATE PROSPECTUS(ES) FROM YOUR FINANCIAL ADVISOR.
PLEASE READ THE PROSPECTUS(ES) CAREFULLY BEFORE YOU INVEST OR SEND MONEY. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective fund prospectus. If used as
sales material after Jan. 20, 2001, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
[SERVICE AWARD LOGO] [AIM LOGO APPEARS HERE]
--Registered Trademark--
INVEST WITH DISCIPLINE
--Registered Trademark--
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