<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM SUMMIT FUND, INC.
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
-------------------------------------
THE PIONEER CABIN OF THE YOSEMITE VALLEY
BY CURRIER AND IVES
THE LITHOGRAPHY FIRM OF CURRIER AND IVES IMMORTALIZED LIFE IN
19TH-CENTURY AMERICA THROUGH ITS SERIES OF POPULAR PRINTS.
THESE NATIONAL TREASURES SHAPED A WHOLE ERA'S UNDERSTANDING OF
WHAT IT MEANS TO BE "AMERICAN." THIS CLASSIC PIECE PAYS TRIBUTE
TO THE PERSEVERANCE AND DEDICATION OF PIONEERS IN THE AMERICAN
WEST--QUALITIES THAT CHARACTERIZE TODAY'S DISCIPLINED INVESTOR.
-------------------------------------
AIM Summit Fund is for shareholders who seek capital growth through systematic
investments.
AIM Summit Fund is available through AIM Summit Investors Plans I and II, unit
investment trusts that call for fixed monthly investments for 15 years.
Shareholders have the option to make additional monthly payments for up to 25
years. Sales charges vary based on monthly investment amounts. Dollar-cost
averaging does not ensure a profit and does not protect against loss in
declining markets. Since dollar-cost averaging involves continued investing
regardless of fluctuating securities prices, you should consider your ability to
continue purchasing through periods of low price levels.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o All performance figures are historical, and they reflect the reinvestment of
distributions and changes in net asset value.
o Investing in small and mid-sized companies may involve greater risks not
associated with investing in more established companies. Additionally, small
companies may have business risk, significant stock-price fluctuations and
illiquidity.
o Shares of AIM Summit Fund are sold to AIM Summit Investors Plans ("Plans I"
and "Plans II") without the imposition of any sales charges. When sales
charges are figured into the performance figures of a Plans I investment,
the maximum 8.50% sales charge is deducted. The 8.50% sales charge is what a
Plans I investor would pay over the life of a 15-year investment plan for
the smallest plan size, $50 per month. Larger plans carry lower sales
charges as outlined in the prospectus. (Plans I was closed to new investors
on August 16, 1999.) When sales charges are figured into the performance
figures of a Plans II investment, the maximum 3.33% sales charge is
deducted. The 3.33% sales charge is what a Plans II investor would pay over
the life of a 15-year investment plan for the smallest plan size, $50 per
month. Larger plans carry lower sales charges as outlined in the prospectus.
o The fund's investment return and principal value will fluctuate, so an
investor's beneficial 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 National Association of Securities Dealers Automated Quotation System
Composite Index (the Nasdaq) is a market-value-weighted index comprising all
domestic and non-U.S.-based common stocks listed on the Nasdaq system. It
includes more than 5,000 companies, and it is often considered
representative of the small and medium-sized company universe. While it
includes many small and mid-sized company stocks, large-capitalization
technology companies tend to dominate the index.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
represents the performance of the U.S. stock market.
o 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.
--------------------------------------------------------------------------------
In addition to the returns as of the close of the fiscal year found on page 4,
industry regulations require us to provide average annual total returns as of
9/30/00, the most recent calendar quarter-end, which were:
<TABLE>
<CAPTION>
=========================================================================================================
AIM Summit Investors Plans I AIM Summit Investors Plans II
Inception: 11/1/82 Inception: 7/19/99
Including Maximum Including Maximum AIM Summit Fund
8.50% Sales Charge 3.33% Sales Charge Inception: 11/1/82
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception 16.19% 28.13% 16.78%
10 Years 21.71 N/A 22.79
5 Years 24.33 N/A 26.56
1 Year 38.80 46.64 51.69
=========================================================================================================
</TABLE>
AIM SUMMIT FUND, INC.
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
It's an honor to address you as the AIM Funds' new chairman.
[PHOTO OF I feel privileged to succeed Ted Bauer, who recently retired
Robert H. from the funds' board and will soon retire as A I M
Graham, Management Group's chairman after a long, successful career
Chairman of in the investment industry. Ted has always shown the highest
the Board of degree of integrity and commitment to excellence, and I have
THE FUND always admired him. I'm also proud to be part of the team
APPEARS HERE] that launched AIM almost 25 years ago. From the beginning,
AIM has been a very people-oriented, service-minded company,
and I plan to carry on the tradition for our shareholders,
financial advisors and employees.
UNCERTAIN MARKETS
The markets this year have been particularly volatile and
confusing for many investors, especially for those who have
only experienced the bull market of the 1990s. After almost
a decade of double-digit returns, the S&P 500 was down 1.81% year-to-date as of
October 31, 2000. But market returns in the 20% to 30% range, such as we have
seen in recent years, are not typical. If you expect these kinds of returns
every year, you'll be disappointed. Historically, markets decline in one out of
every four years. What we're seeing now is a normal downturn.
This appears to be a worldwide trend. Throughout 2000, overseas markets
generally have been more turbulent than their U.S. counterpart.
REASONS FOR OPTIMISM
While investors may need to temper their expectations, there are plenty of
reasons to be optimistic. Economic fundamentals remain strong, and many believe
that the Federal Reserve Board may have succeeded in bringing the economy to a
"soft landing." Gross domestic product growth slowed to 2.4% in the third
quarter from the rapid pace of about 7% a year ago. With this slowdown, it seems
unlikely that the Fed will raise interest rates in the near future, and stable
interest rates provide a solid environment for both stocks and bonds.
In Europe, the region's economic and investment future continues to look
bright despite the weak euro. Restructuring, merger activity and tax reform bode
well for European economies. In Asia, most analysts think the continuing
strength of the U.S. economy will help boost Asian stock markets.
THE VALUE OF ADVICE
The current environment illustrates the value of professional money management.
Knowing when to buy and sell takes expertise and discipline even in the best of
markets. During downturns, many investors may be tempted to make decisions based
on emotions instead of strategy. The wisest choice is to rely on a professional
money manager to make these decisions for you.
In these uncertain times, it's important to keep market volatility in
perspective. Mutual fund investing should be a long-term endeavor. Remember why
you're investing, whether it's for your retirement or your child's education,
and think about your time frame. If you're unsure about whether your investments
can meet your goals, visit your financial advisor for help.
In the following pages, your fund's portfolio managers discuss market
activity, how they managed your fund during the fiscal year and their near-term
outlook. If you have any questions or comments, please call our Client Services
Department at 800-995-4246 during normal business hours.
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 SUMMIT FUND, INC.
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
AIM SUMMIT FUND UP STRONGLY DESPITE MARKET VOLATILITY
HOW DID AIM SUMMIT FUND PERFORM DURING THE FISCAL YEAR?
AIM Summit Fund overcame short-term market volatility to continue its record of
outstanding performance. For the fiscal year ended October 31, 2000, the fund
returned 31.12% while its benchmark index, the S&P 500, returned 6.08%.
The fund's performance for the entire fiscal year includes gains made in
late 1999 and early 2000 when the stock market performed quite strongly; during
the second half of the fiscal year, performance was affected by the sell-off in
the technology sector and other market difficulties. Nonetheless, as of October
31, the fund outperformed the S&P 500 year-to-date and for one, three, five and
10 years. The fund's total net assets stood at $3.41 billion on October 31--an
increase of $788 million over the year-ago level.
WHAT WERE THE MAJOR TRENDS IN THE FINANCIAL MARKETS?
U.S. stock markets were volatile for most of 2000, with significant sell-offs in
March through May and again in August through October. In the spring, investors
worried that the Federal Reserve Board (the Fed) would continue raising interest
rates to slow torrid economic growth and to forestall inflation. The Fed raised
the federal funds rate (the rate banks charge one another for overnight loans)
from 6.0% to 6.5% in May--the sixth increase since June 1999. But with data
showing that economic growth was slowing and that inflation was in check, the
Fed kept rates unchanged at its June, August and October meetings.
Early in 2000, investors became concerned that many technology stocks that
had propelled the markets higher in 1999 might have become overvalued. In late
summer and fall, rising oil prices and Middle East tensions made investors
skittish, sparking a second major stock-market sell-off. Investors also became
concerned about a string of corporate earnings warnings and disappointing
third-quarter earnings announcements by a number of major corporations. Higher
oil prices and a weak euro (the common currency adopted in 1999 by 11 European
nations) negatively affected corporate profits.
HOW DID YOU RESPOND TO THIS VOLATILITY?
Over the course of the fiscal year, we significantly reduced the number of fund
holdings from 138 to 88. Recent market volatility has transformed what was a
broad bull market into very much of a stock-picker's market, making it all the
more critical that fund managers constantly monitor developments affecting the
fund's holdings. A smaller, more concentrated--but still
well-diversified--portfolio allows us to do so.
Market volatility caused many investors to reassess their risk tolerance and
to move from growth stocks to value stocks. We did the same thing, increasing
our value holdings and eliminating or reducing several of our growth holdings.
Thus far in 2000, value stocks have outperformed growth stocks in every
market-capitalization category.
WHAT SPECIFIC CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE FISCAL
YEAR?
We continued to focus on technology stocks, with more than half of the fund's
portfolio focused on that sector. We believe that the technology revolution is a
long-term trend, not a short-term phenomenon. We reduced some of our wireless
holdings during the third quarter and virtually eliminated our
communications-services stocks, which performed poorly. We reduced our
consumer-cyclical holdings because we
-------------------------------------
MARKET VOLATILITY CAUSED MANY INVESTORS
TO REASSESS THEIR RISK TOLERANCE AND
TO MOVE FROM GROWTH STOCKS TO VALUE STOCKS.
WE DID THE SAME THING, INCREASING
OUR VALUE HOLDINGS...
-------------------------------------
FUND PERFORMANCE
FUND VS. INDEX
For the fiscal year ended 10/31/00,
excluding sales charges
================================================================================
AIM SUMMIT FUND 31.12%
S&P 500 6.08%
================================================================================
GROWTH OF NET ASSETS
in billions
================================================================================
10/31/99 $2.62
10/31/00 $3.41
================================================================================
See important fund and index disclosures inside front cover.
AIM SUMMIT FUND, INC.
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
================================================================================
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
============================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Corning Inc. 4.09% 1. Communications Equipment 11.05%
2. Brocade Communications 2. Computers (Software & Services) 10.94
Systems, Inc. 3.73
3. JDS Uniphase Corp. 3.70 3. Computers (Peripherals) 8.82
4. Juniper Networks, Inc. 3.43 4. Computers (Networking) 8.12
5. EMC Corp. 3.34 5. Electronics
(Semiconductors) 7.47
6. Applied Micro Circuits Corp. 3.14 6. Financial (Diversified) 4.91
7. Cisco Systems, Inc. 2.84 7. Oil & Gas (Drilling & Equipment) 3.72
8. VERITAS Software Corp. 2.48 8. Biotechnology 3.63
9. CIENA Corp. 2.12 9. Computers (Hardware) 3.26
10. Health Management Associates, 10. Services (Data Processing) 2.94
Inc. - Class A 2.07
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>
-------------------------------------
INTEREST RATES SEEM TO HAVE
STABILIZED AS THE FED HAS TAKEN A
RESPITE FROM ITS STRING OF INTEREST-
RATE INCREASES, WHICH HAVE ROILED
THE MARKETS FOR MORE THAN A YEAR.
-------------------------------------
worried that the economic slowdown would eat into retail sales. Already some
economic indicators are showing exactly that type of slowdown.
In the value component of the portfolio, we liked financials, utilities,
health care and energy--all of which performed well for the fund during the
third quarter. Short- and long-term prospects for utility stocks look very
positive as demand for electricity and natural gas shows no signs of abating.
Electricity prices remain at or close to all-time highs across the country, and
natural-gas and oil prices have remained very strong.
WHAT WERE SOME OF THE FUND'S MAJOR HOLDINGS AT THE CLOSE OF THE FISCAL YEAR?
The fund's major holdings included:
o Corning, the world's leading manufacturer of fiber-optic cable, which it
invented two decades ago. The company's Advanced Materials unit makes
industrial and scientific products, including semiconductor materials.
o EMC, which provides hardware and software that helps companies store their
ever-expanding oceans of digital information. EMC is the undisputed leader
in the data-storage industry.
o Health Management Associates, one of the fund's value holdings, which
operates more than 30 hospitals (including four psychiatric centers) in
rural areas of 12 states. It upgrades facilities and recruits medical
specialists to attract patients who previously would have had to travel to
major cities for medical care.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
At the close of the fiscal year, we remained cautiously optimistic about the
direction of the U.S. economy. While economic growth is slowing, the economy
continues to grow at a sustainable pace. Unemployment dropped to 3.9% in
September--matching a 30-year low. Consumer spending continues to grow, albeit
at a somewhat more subdued pace than last year, and except for the potential
threat of higher oil prices, inflation remains in check. Corporate profits,
while declining, remain impressive; indeed, fourth-quarter profits among S&P 500
companies are expected to be up over year-ago levels. And the federal
government's record $236 billion budget surplus for fiscal year 2000 will allow
it to continue to retire debt and to reduce its future borrowing costs.
Interest rates seem to have stabilized as the Fed has taken a respite from
its string of interest-rate increases, which have roiled the markets for more
than a year. However, because of a degree of uncertainty surrounding short-term
economic trends and international developments, markets may continue to be
volatile. In such an environment, investors would be well advised to remain
diversified and maintain a long-term investment perspective.
-------------------------------------
HOW AIM SUMMIT FUND DEALS WITH VOLATILE TIMES
We viewed this year's market volatility as
a series of buying opportunities. In
managing the fund, we take a long-term
investment perspective that looks beyond
short-term market fluctuations. Because
shareholders make regular monthly
contributions through Plans I and Plans II,
we have a relatively stable cash flow that
allows us, on a regular basis, to buy
quality stocks that we believe have
above-average appreciation potential.
Momentary market weakness provides us
the opportunity to add quality stocks to
our portfolio at bargain prices. The
fund's steady cash flow also prevents us
from having to sell stocks we continue to
favor to meet shareholder redemptions.
And the portfolio's combination of growth
stocks and value stocks can be
advantageous when investor sentiment shifts
from one of those styles to the other.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM SUMMIT FUND, INC.
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM SUMMIT FUND VS. BENCHMARK INDEX
10/31/90-10/31/00
in thousands
================================================================================
AIM Summit Fund S&P 500
10/90 $10,000 $10,000
10/91 14,175 13,342
10/92 15,379 14,669
10/93 17,880 16,856
10/94 17,986 17,506
10/95 23,570 22,129
10/96 27,248 27,458
10/97 35,022 36,272
10/98 38,343 44,256
10/99 54,747 55,613
10/00 71,820 58,993
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. MARKET VOLATILITY
CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. THE RESULTS OF AN INVESTMENT
MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN.
================================================================================
ABOUT THIS CHART
The chart compares the fund to a benchmark index. It is intended to give you an
idea of how the fund performed compared to this index over the period
10/31/90-10/31/00.
It is important to understand the differences between the fund and this
index. An index measures the performance of a hypothetical portfolio. A market
index such as the S&P 500 is not managed, incurring no sales charges, expenses
or fees. If you could buy all the securities that make up a market index, you
would incur expenses that would affect your investment's return.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00
================================================================================
AIM SUMMIT FUND
10 Years 21.79%
5 Years 24.95
1 Year 31.12
PLANS I (INCLUDING MAXIMUM 8.5% SALES CHARGE)
Inception (11/1/82) 15.55%
10 Years 20.72
5 Years 22.75
1 Year 19.97
PLANS II (INCLUDING MAXIMUM 3.33% SALES CHARGE)
Inception (7/19/99) 17.90%
1 Year 26.75
================================================================================
BECAUSE SHARES OF AIM SUMMIT FUND ARE SOLD TO SUMMIT INVESTORS PLANS ("PLANS I"
AND "PLANS II") WITHOUT THE IMPOSITION OF SALES CHARGES, FUND PERFORMANCE IN
THE CHART AT LEFT INCLUDES FUND EXPENSES AND MANAGEMENT FEES BUT EXCLUDES SALES
CHARGES. PERFORMANCE OF PLANS I AND PLANS II WILL DIFFER FROM FUND PERFORMANCE
DUE TO THE IMPOSITION OF SALES CHARGES. FOR A COMPLETE EXPLANATION OF PLANS I
AND PLANS II SALES CHARGES, PLEASE SEE THE INSIDE FRONT COVER.
AIM SUMMIT FUND, INC.
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
WHY GOOD ECONOMIC NEWS SOMETIMES RATTLES MARKETS
You turn on your television and learn the nation's unemployment rate has dropped
to its lowest level in decades. This latest tidbit of information enhances an
already rosy economic picture. The economy is growing at a brisk pace, wages are
rising and consumer spending is on the upswing.
Later in the day, you hear that financial markets plummeted in reaction to
the positive report on unemployment. Why in the world, you wonder, do markets
act that way?
Market observers often comment that "good news on Main Street is bad news on
Wall Street." And on the surface, it would appear to be that way at times.
RAPID GROWTH CAN SPUR INFLATION
It's not because the markets are opposed to good economic news. It's because a
major school of economic theory holds that when the economy grows too rapidly,
it can lead to runaway inflation. For example, if unemployment is extremely low
and wages are rising, companies have to pay more to hire and retain employees.
To cover increases in labor costs, companies may have to raise prices of
their goods and services. If prices are rising faster than wages, consumers are
actually losing ground, even if their salaries are increasing.
FED MORE LIKELY TO RAISE INTEREST RATES
Moreover, when inflation looms as a threat, the Federal Reserve Board (the Fed)
is more likely to raise interest rates to keep it in check. And when rumors
abound that the central bank is about to tighten monetary policy, it can have a
disquieting effect on financial markets.
But if the Fed does raise interest rates slightly as a pre-emptive move
against inflation, it's not necessarily a bad thing, even if it causes a
short-term drop in markets. One well-known market analyst likened a modest
interest-rate hike to a flu shot: while it can cause some temporary discomfort,
it can prevent more serious malaise later. As Fed Chairman Alan Greenspan
observed recently, "Modest pre-emptive actions can obviate the need for more
drastic actions at a later date."
In six separate moves during the year ended May 31, 2000, the central bank
raised the federal funds rate--the rate banks charge each other for borrowing
surplus reserves--from 4.75% to 6.50%. These moves were a bid to head off
inflation, which has been very low in recent years, but threatened to re-emerge
because of torrid economic growth.
Stocks generally react negatively to a Fed interest-rate hike because it
means higher borrowing costs for corporations, which can affect their
profitability. Bonds also tend to decline in value when their coupons fall below
prevailing interest rates.
[ART WORK]
RESPONSES OF MARKETS CAN BE A LITTLE SURPRISING
Sometimes the markets will greet a Fed rate increase with a collective yawn-
that is, the actual announcement of a tightening in monetary policy has very
little impact on stocks and bonds. Generally, in such cases, the markets have
anticipated a Fed move in the preceding weeks and have adjusted stock and bond
prices accordingly.
Other times markets will actually rally after the Fed announces a rate
increase, especially if it is more modest than expected. Such a phenomenon is
often referred to as a "relief rally." The Standard & Poor's Composite Index of
500 Stocks (S&P 500) rose 1.57% on June 30 when the Fed raised rates.
While past performance cannot guarantee comparable future results, in recent
years, Fed rate hikes have only had a transitory impact on the markets. In such
scenarios, it is advisable to remain focused on your long-term financial goals
AIM SUMMIT FUND, INC.
5
<PAGE> 8
ANNUAL REPORT / FOR CONSIDERATION
and not get too concerned about temporary dips in stock and bond prices.
FED LOOKS AT A VARIETY OF ECONOMIC INDICATORS
In making decisions about interest rates, the Fed considers key economic data.
Just as a dip in barometric pressure can signal a squall, changes in economic
indicators can point to a shift in the economy and the markets. Here are some of
the top indicators used by the Fed, economists, financial analysts and
professional money managers to identify economic trends:
GROSS DOMESTIC PRODUCT (GDP)
GDP is the total value of all products and services produced in the country in a
year. It's compiled quarterly by the U.S. Department of Commerce. GDP measures
the pace of U.S. economic growth, and changes in this indicator can signal the
direction of the economy. For example, a decline in the GDP for two consecutive
quarters constitutes a recession. Drops in the GDP can cause equity and bond
prices to fall, as investors become concerned about an economic slowdown. On the
other hand, a steep spike in the GDP can signal that the economy is growing too
fast, and higher inflation could ensue. Inflation, also known as rising prices,
creates problems for consumers and the markets. In an inflationary environment,
consumers must spend more money to buy the same amount of goods and services.
When consumers buy less, the economy slows and markets decline. The markets
usually react favorably to slight increases in the GDP, which indicate moderate,
controlled growth.
HOUSING STARTS
Housing starts measures the construction of new single-family houses, townhouses
and apartment buildings. Compiled monthly by the U.S. Department of Commerce,
this figure is based on the number of new foundations dug. This indicator
signals consumer confidence. If consumers feel financially secure, they're more
likely to take on a mortgage. Home purchases also trigger other consumer
spending (for sofas, lawnmowers, curtains, etc.). A moderate increase in housing
starts usually bodes well for the markets. As with GDP, a sharp increase in
housing starts can signal inflation.
CONSUMER PRICE INDEX (CPI)
Also called the cost-of-living index, the CPI measures the prices of products
and services bought by typical consumers. Each month, the U.S. Bureau of Labor
Statistics checks the prices of a specific basket of items, including food,
clothing, transportation, shelter, utilities, healthcare and entertainment. The
CPI is one of the government's main ways to gauge inflation, and changes in this
indicator usually affect the markets. A sharp increase in the CPI can indicate
inflation, while a moderate rise in CPI shows that inflation is under control.
The core inflation rate is a separate indicator from CPI. The core rate excludes
energy and food, which fluctuate seasonally and more sharply than other
elements.
PRODUCER PRICE INDEX (PPI)
The Producer Price Index measures the price changes of manufactured goods that
are ready to be distributed. Hikes in the PPI signal that retailers may soon
raise prices to pass the increase to consumers. Rising prices signal inflation.
Unlike the CPI, this index doesn't measure services.
CONSUMER CONFIDENCE INDEX (CCI)
The CCI measures how consumers feel about the economy, their job status and
their finances. Consumer attitudes are important because consumer spending
accounts for about two-thirds of the economy. To compile the index, The
Conference Board conducts a monthly survey of 5,000 U.S. households. The survey
asks questions about consumer attitudes, buying plans, present conditions and
expectations for the future. A declining CCI usually means that Americans are
tightening their purse strings. Decreased spending may mean slower economic
growth.
THINKING LONG TERM
As an investor, you can better understand broad economic trends by watching
these indicators. A word of caution: You shouldn't overhaul your portfolio every
time there is a blip in consumer confidence. Indicators signal potential market
fluctuations, and they can help you adjust your long-term strategy. As always,
we suggest that you visit your financial adviser to determine whether any
changes to your investment plan are necessary.
AIM SUMMIT FUND, INC.
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-96.59%
BANKS (MAJOR REGIONAL)-0.45%
FleetBoston Financial Corp. 400,000 $ 15,200,000
===============================================================
BANKS (MONEY CENTER)-1.44%
Bank of America Corp. 590,000 28,356,875
---------------------------------------------------------------
Chase Manhattan Corp. (The) 460,000 20,930,000
===============================================================
49,286,875
===============================================================
BIOTECHNOLOGY-3.63%
Amgen Inc.(a) 440,000 25,492,500
---------------------------------------------------------------
Celera Genomics(a) 100,000 6,750,000
---------------------------------------------------------------
Genzyme Corp.(a) 600,000 42,600,000
---------------------------------------------------------------
Human Genome Sciences, Inc.(a) 225,000 19,887,891
---------------------------------------------------------------
Incyte Genomics, Inc.(a) 300,000 10,987,500
---------------------------------------------------------------
Millennium Pharmaceuticals,
Inc.(a) 250,000 18,140,625
===============================================================
123,858,516
===============================================================
COMMUNICATIONS EQUIPMENT-11.05%
CIENA Corp.(a) 688,000 72,326,000
---------------------------------------------------------------
Corning Inc. 1,825,000 139,612,500
---------------------------------------------------------------
Finisar Corp.(a) 990,000 28,524,375
---------------------------------------------------------------
JDS Uniphase Corp.(a) 1,550,000 126,131,250
---------------------------------------------------------------
Turnstone Systems, Inc.(a) 495,000 10,518,750
===============================================================
377,112,875
===============================================================
COMPUTERS (HARDWARE)-3.26%
Compaq Computer Corp. 800,000 24,328,000
---------------------------------------------------------------
Handspring, Inc.(a) 300,000 21,693,750
---------------------------------------------------------------
Palm, Inc.(a) 716,000 38,350,750
---------------------------------------------------------------
Sun Microsystems, Inc.(a) 243,000 26,942,625
===============================================================
111,315,125
===============================================================
COMPUTERS (NETWORKING)-8.12%
Cisco Systems, Inc.(a) 1,800,000 96,975,000
---------------------------------------------------------------
Exodus Communications, Inc.(a) 900,000 30,206,250
---------------------------------------------------------------
Juniper Networks, Inc.(a) 600,000 117,000,000
---------------------------------------------------------------
VeriSign, Inc.(a) 250,000 33,000,000
===============================================================
277,181,250
===============================================================
COMPUTERS (PERIPHERALS)-8.82%
Brocade Communications Systems,
Inc.(a) 560,000 127,330,000
---------------------------------------------------------------
EMC Corp.(a) 1,280,000 114,000,000
---------------------------------------------------------------
Network Appliance, Inc.(a) 500,000 59,500,000
===============================================================
300,830,000
===============================================================
COMPUTERS (SOFTWARE & SERVICES)-10.94%
Adobe Systems Inc. 400,000 30,425,000
---------------------------------------------------------------
Ariba, Inc.(a) 200,000 25,275,000
---------------------------------------------------------------
BEA Systems, Inc.(a) 500,000 35,875,000
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
BMC Software, Inc.(a) 1,041,000 $ 21,145,312
---------------------------------------------------------------
Computer Associates International,
Inc. 945,000 30,121,875
---------------------------------------------------------------
Inktomi Corp.(a) 300,000 19,031,250
---------------------------------------------------------------
Microsoft Corp.(a) 400,000 27,550,000
---------------------------------------------------------------
Oracle Corp.(a) 2,000,000 66,000,000
---------------------------------------------------------------
Siebel Systems, Inc.(a) 270,000 28,333,125
---------------------------------------------------------------
VERITAS Software Corp.(a) 600,000 84,609,375
---------------------------------------------------------------
WatchGuard Technologies, Inc.(a) 100,000 5,000,000
===============================================================
373,365,937
===============================================================
DISTRIBUTORS (FOOD & HEALTH)-1.41%
McKesson HBOC, Inc. 1,710,000 47,986,875
===============================================================
ELECTRIC COMPANIES-1.38%
PG&E Corp. 1,210,000 32,594,375
---------------------------------------------------------------
Southern Energy, Inc.(a) 529,800 14,437,050
===============================================================
47,031,425
===============================================================
ELECTRICAL EQUIPMENT-1.33%
General Electric Co. 450,000 24,665,625
---------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V.-ADR
(Netherlands) 514,880 20,563,020
===============================================================
45,228,645
===============================================================
ELECTRONICS
(INSTRUMENTATION)-0.61%
Alpha Industries, Inc.(a) 233,000 9,290,875
---------------------------------------------------------------
Newport Corp. 100,000 11,420,312
===============================================================
20,711,187
===============================================================
ELECTRONICS (SEMICONDUCTORS)-7.47%
Applied Micro Circuits Corp.(a) 1,400,000 107,012,500
---------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 200,000 13,262,500
---------------------------------------------------------------
Microchip Technology Inc.(a) 270,000 8,538,750
---------------------------------------------------------------
PMC-Sierra, Inc. (Canada)(a) 400,000 67,800,000
---------------------------------------------------------------
SDL, Inc.(a) 225,000 58,331,250
===============================================================
254,945,000
===============================================================
EQUIPMENT (SEMICONDUCTOR)-1.63%
Broadcom Corp.-Class A(a) 250,000 55,593,750
===============================================================
FINANCIAL (DIVERSIFIED)-4.91%
American Express Co. 132,000 7,920,000
---------------------------------------------------------------
AXA Financial, Inc. 428,000 23,138,750
---------------------------------------------------------------
Citigroup Inc. 516,666 27,189,548
---------------------------------------------------------------
Freddie Mac 987,000 59,220,000
---------------------------------------------------------------
MGIC Investment Corp. 735,000 50,071,875
===============================================================
167,540,173
===============================================================
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.59%
Genentech, Inc.(a) 246,000 20,295,000
===============================================================
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-0.44%
Pfizer Inc. 343,750 $ 14,845,703
===============================================================
HEALTH CARE (HOSPITAL
MANAGEMENT)-2.07%
Health Management Associates,
Inc.-Class A(a) 3,564,000 70,611,750
===============================================================
HEALTH CARE (MANAGED CARE)-2.49%
Oxford Health Plans, Inc.(a) 800,000 27,000,000
---------------------------------------------------------------
UnitedHealth Group Inc. 530,000 57,968,750
===============================================================
84,968,750
===============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-2.48%
Beckman Coulter, Inc. 290,000 20,318,125
---------------------------------------------------------------
PE Corp-PE Biosystems Group 550,000 64,350,000
===============================================================
84,668,125
===============================================================
INSURANCE (LIFE/HEALTH)-0.89%
UnumProvident Corp. 1,075,000 30,368,750
===============================================================
INSURANCE (MULTI-LINE)-0.95%
American International Group, Inc. 330,905 32,428,690
===============================================================
INSURANCE
(PROPERTY-CASUALTY)-1.02%
XL Capital Ltd.-Class A (Bermuda) 455,000 34,978,125
===============================================================
INSURANCE BROKERS-1.56%
Aon Corp. 1,285,000 53,247,187
===============================================================
INVESTMENT BANKING/BROKERAGE-0.61%
Morgan Stanley Dean Witter & Co. 259,000 20,800,938
===============================================================
INVESTMENT MANAGEMENT-1.18%
Stilwell Financial, Inc. 900,000 40,331,250
===============================================================
LEISURE TIME (PRODUCTS)-0.98%
Mattel, Inc. 2,590,000 33,508,125
===============================================================
MANUFACTURING (SPECIALIZED)-0.82%
Parker-Hannifin Corp. 678,000 28,052,250
===============================================================
NATURAL GAS-0.58%
Dynegy Inc.-Class A 430,000 19,914,375
===============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-3.72%
BJ Services Co.(a) 400,000 20,975,000
---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 570,000 19,700,625
---------------------------------------------------------------
ENSCO International Inc. 730,000 24,272,500
---------------------------------------------------------------
Schlumberger Ltd. 319,000 24,283,875
---------------------------------------------------------------
Transocean Sedco Forex Inc. 711,536 37,711,408
===============================================================
126,943,408
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (FOOD CHAINS)-1.33%
Kroger Co. (The)(a) 2,006,000 $ 45,260,375
===============================================================
RETAIL (GENERAL MERCHANDISE)-0.80%
Target Corp. 500,000 13,812,500
---------------------------------------------------------------
Wal-Mart Stores, Inc. 300,000 13,612,500
===============================================================
27,425,000
===============================================================
RETAIL (SPECIALTY-APPAREL)-0.21%
Gap, Inc. (The) 280,000 7,227,500
===============================================================
SERVICES
(ADVERTISING/MARKETING)-0.41%
Omnicom Group Inc. 150,000 13,837,500
===============================================================
SERVICES (COMMERCIAL &
CONSUMER)-1.61%
H&R Block, Inc. 725,000 25,873,438
---------------------------------------------------------------
IMS Health Inc. 1,225,000 28,940,625
===============================================================
54,814,063
===============================================================
SERVICES (COMPUTER SYSTEMS)-0.97%
SunGard Data Systems Inc.(a) 650,000 33,231,250
===============================================================
SERVICES (DATA PROCESSING)-2.94%
Ceridian Corp.(a) 1,397,000 34,925,000
---------------------------------------------------------------
Equifax Inc. 675,000 23,287,500
---------------------------------------------------------------
First Data Corp. 837,000 41,954,625
===============================================================
100,167,125
===============================================================
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.20%
Phone.com, Inc.(a) 75,000 6,942,188
===============================================================
WASTE MANAGEMENT-1.29%
Waste Management, Inc. 2,206,000 44,120,000
===============================================================
Total Common Stocks & Other
Equity Interests (Cost
$2,151,363,843) 3,296,175,060
===============================================================
MONEY MARKET FUNDS-3.52%
STIC Liquid Assets Portfolio(b) 60,157,980 60,157,980
---------------------------------------------------------------
STIC Prime Portfolio(b) 60,157,980 60,157,980
===============================================================
Total Money Market Funds (Cost
$120,315,960) 120,315,960
===============================================================
TOTAL INVESTMENTS-100.11% (Cost
$2,271,679,803) 3,416,491,020
===============================================================
LIABILITIES LESS OTHER
ASSETS-(0.11%) (3,882,363)
===============================================================
NET ASSETS-100.00% $3,412,608,657
_______________________________________________________________
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$2,271,679,803) $3,416,491,020
-------------------------------------------------------------
Receivables for:
Investments sold 17,693,938
-------------------------------------------------------------
Fund shares sold 96,154
-------------------------------------------------------------
Dividends 1,243,270
-------------------------------------------------------------
Investment for deferred compensation plan 63,151
=============================================================
Total assets 3,435,587,533
=============================================================
LIABILITIES:
Payables for:
Investments purchased 19,097,686
-------------------------------------------------------------
Fund shares reacquired 346,844
-------------------------------------------------------------
Deferred compensation plan 63,151
-------------------------------------------------------------
Accrued advisory fees 1,836,834
-------------------------------------------------------------
Accrued administrative services fees 17,292
-------------------------------------------------------------
Accrued distribution fees 896,588
-------------------------------------------------------------
Accrued transfer agent fees 457,073
-------------------------------------------------------------
Accrued operating expenses 263,408
=============================================================
Total liabilities 22,978,876
=============================================================
Net assets applicable to shares outstanding $3,412,608,657
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Outstanding 149,573,401
_____________________________________________________________
=============================================================
Net asset value and redemption price per
share $ 22.82
_____________________________________________________________
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$115,665) $ 13,887,280
------------------------------------------------------------
Dividends from affiliated money market funds 6,744,293
------------------------------------------------------------
Interest 46,600
============================================================
Total investment income 20,678,173
============================================================
EXPENSES:
Advisory fees 21,588,582
------------------------------------------------------------
Administrative services fees 202,032
------------------------------------------------------------
Custodian fees 238,096
------------------------------------------------------------
Distribution fees 2,984,633
------------------------------------------------------------
Transfer agent fees 1,021,646
------------------------------------------------------------
Trustees' fees 17,807
------------------------------------------------------------
Other 728,931
============================================================
Total expenses 26,781,727
============================================================
Less: Fees waived and expenses reimbursed (2,073,825)
------------------------------------------------------------
Expenses paid indirectly (71,536)
============================================================
Net expenses 24,636,366
============================================================
Net investment income (loss) (3,958,193)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 591,407,614
------------------------------------------------------------
Foreign currencies 167,086
------------------------------------------------------------
Option contracts written 262,377
============================================================
591,837,077
============================================================
Change in net unrealized appreciation of:
Investment securities 227,496,072
============================================================
Net gain from investment securities, foreign
currencies and option contracts 819,333,149
============================================================
Net increase in net assets resulting from
operations $815,374,956
____________________________________________________________
============================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (3,958,193) $ (139,035)
----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 591,837,077 418,534,180
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 227,496,072 367,176,021
==============================================================================================
Net increase in net assets resulting from operations 815,374,956 785,571,166
==============================================================================================
Distributions to shareholders from net investment income:
Fund Shares -- (4,242,441)
----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Fund Shares (413,693,117) (112,082,098)
----------------------------------------------------------------------------------------------
Class II (242,393) --
----------------------------------------------------------------------------------------------
Share transactions-net
Fund Shares* 388,268,681 124,655,784
----------------------------------------------------------------------------------------------
Class II* (1,714,479) 680,370
==============================================================================================
Net increase in net assets 787,993,648 794,582,781
==============================================================================================
NET ASSETS:
Beginning of year 2,624,615,009 1,830,032,228
==============================================================================================
End of year $3,412,608,657 $2,624,615,009
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,700,090,037 $1,290,320,756
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (117,104) (94,294)
----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 567,824,507 417,073,402
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,144,811,217 917,315,145
==============================================================================================
$3,412,608,657 $2,624,615,009
______________________________________________________________________________________________
==============================================================================================
</TABLE>
* Effective as of the open of business July 24, 2000, pursuant to a Plan of
Recapitalization as approved by the shareholders on May 3, 2000, all
outstanding shares of Class II shares were converted to Class I shares of the
Fund which were renamed to common stock ("Fund Shares").
See Notes to Financial Statements.
10
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Summit Fund (the "Fund") is organized as a Delaware business trust ("Trust")
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified, open-end management investment company. The Fund was
previously organized as AIM Summit Fund, Inc. ("ASF"), a Maryland corporation.
Pursuant to an Agreement and Plan of Reorganization (the "Reorganization"),
approved by the Board of Directors of ASF on February 3, 2000 and by the
shareholders of ASF at a Special Meeting held on May 3, 2000, ASF was
reorganized as the Fund on July 24, 2000. Prior to the Reorganization and
pursuant to a Plan of Recapitalization, the Class II shares of the Fund were
converted into Class I shares and the name of Class I shares was changed to
common stock ("Fund Shares"). The Fund's investment objective is growth of
capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- 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 is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On October 31, 2000, undistributed net investment income was increased by
$3,935,383, undistributed net realized gains decreased by $27,150,462 and
paid in capital increased by $23,215,079 as a result of differences due to
utilization of a portion of the proceeds from redemptions as distributions
for federal income tax purposes, foreign currency transactions and net
operating loss reclassifications. Net assets of the Fund were unaffected by
the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for the portion of the results of operations resulting
from changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an
11
<PAGE> 14
agreed-upon price at a future date. The Fund may enter into a foreign
currency contract to attempt to minimize the risk to the Fund from adverse
changes in the relationship between currencies. The Fund may also enter into
a foreign currency contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S. dollar price
of that security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value of
the foreign currency changes unfavorably.
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund 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 an advisory fee to AIM at the annual rate of 1.00% of
the first $10 million of the Fund's average daily net assets, plus 0.75% of the
next $140 million of the Fund's average daily net assets and 0.625% of the
Fund's average daily net assets in excess of $150 million. During the year ended
October 31, 2000, AIM reimbursed expenses of $104,602.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended October 31, 2000, AIM was
paid $202,032 for such services.
Effective March 13, 2000, 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. During the
period, March 13, 2000 through October 31, 2000, AFS was paid $3,330 for such
services.
The Fund has entered into a Distribution Agreement with A I M Distributors,
Inc. ("AIM Distributors") to serve as the distributor for the Fund as amended,
effective July 24, 2000. The Fund has adopted a plan pursuant to Rule 12b-1
under the 1940 Act with respect to the Fund's shares (the "Distribution Plan").
The Fund, pursuant to the Distribution Plan, pays AIM Distributors compensation
at the annual rate of 0.30% of the Fund's average daily net assets of Fund
Shares. Of this amount, the Fund may pay a service fee of 0.25% of the average
daily net assets of Fund Shares to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own Fund Shares of the Fund. Any amounts not paid as a service fee
under the Distribution Plan would constitute an asset-based sales charge. The
Distribution Plan also imposes a cap on the total sales charges, including
asset-based sales charges that may be paid by fund shares. Pursuant to a Plan of
Recapitalization, effective July 24, 2000, the distribution plan fees are
accrued at the annual rate of 0.10% of the average daily net assets of the Fund
attributable to shares held by AIM Summit Investors Plans I, and the
distribution fees are accrued at the annual rate of 0.30% of the average daily
net assets of the Fund attributable to all other assets of the Fund. Currently,
substantially all of the assets of the Fund are attributable to shares held by
AIM Summit Investors Plans I. As a result, the blended distribution rate
currently is at the annual rate of 0.10% of the average daily net assets of the
Fund. During the year ended October 31, 2000, the Fund Shares paid AIM
Distributors $1,015,410 as compensation under the Plan. AIM Distributors has
contractually agreed to limit payment of Rule 12b-1 plan fees on shares held
through AIM Summit Investors Plans II. As a result, during the period July 24,
2000 through October 31, 2000, AIM Distributors waived distribution fees of
$1,969,223.
During the year ended October 31, 2000, the Fund paid legal fees of $9,232 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
Substantially all shares of the Fund are held of record by State Street Bank
and Trust Company as custodian for AIM Summit Investors Plans I and II, unit
investments trusts that are sponsored by AIM Distributors.
Certain officers and directors of the Fund are officers of AIM and AIM
Distributors.
12
<PAGE> 15
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in custodian
and transfer agent fees of $61,963 and $9,573, respectively, under an expense
offset arrangement which resulted in a reduction of the Fund's total expenses of
$71,536.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended October 31,
2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 2000 was
$3,201,764,969 and $3,269,895,059, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,221,972,078
----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (91,568,431)
==========================================================
Net unrealized appreciation of investment
securities $1,130,403,647
__________________________________________________________
==========================================================
Cost of investments for tax purposes is $2,286,087,373.
</TABLE>
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2000 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Beginning of year -- $ --
---------------------------------------------------------
Written 1,300 577,573
---------------------------------------------------------
Closed (1,300) (577,573)
=========================================================
End of year -- $ --
_________________________________________________________
=========================================================
</TABLE>
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999
were as follows:
<TABLE>
<CAPTION>
2000 1999
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Fund Shares* 16,280,314 $ 359,627,148 13,483,892 $ 237,827,156
-------------------------------------------------------------------------------------------------------------------------
Class II** 444,340 10,007,347 36,977 708,414
=========================================================================================================================
Issued as reinvestment of dividends:
Fund Shares* 19,233,048 383,508,426 7,006,133 112,308,495
-------------------------------------------------------------------------------------------------------------------------
Class II** 12,204 242,393 -- --
=========================================================================================================================
Conversion of Class II shares to Class I shares*:
Fund Shares* 458,716 11,311,931 -- --
-------------------------------------------------------------------------------------------------------------------------
Class II** (462,288) (11,311,931) -- --
=========================================================================================================================
Reacquired:
Fund Shares* (16,517,177) (366,178,824) (12,707,834) (225,479,867)
-------------------------------------------------------------------------------------------------------------------------
Class II** (29,760) (652,288) (1,473) (28,044)
=========================================================================================================================
19,419,397 $ 386,554,202 7,817,695 $ 125,336,154
_________________________________________________________________________________________________________________________
=========================================================================================================================
</TABLE>
* Effective as of the open of business July 24, 2000, pursuant to a Plan of
Recapitalization as approved by the shareholders on May 3, 2000, all
outstanding shares of Class II shares were converted to Class I shares of the
Fund which were renamed to common stock ("Fund Shares").
** Class II shares commenced sales on July 19, 1999. Class II share activity for
the period November 1, 1999 through July 23, 2000.
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.17 $ 14.96 $ 15.15 $ 12.99 $ 12.14
-----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) -- 0.03 0.02 0.04
-----------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 5.85 6.16 1.23 3.34 1.69
===================================================================================================================================
Total from investment operations 5.82 6.16 1.26 3.36 1.73
===================================================================================================================================
Less distributions:
Dividends from net investment income -- (0.04) (0.02) (0.03) (0.03)
-----------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.17) (0.91) (1.43) (1.17) (0.85)
===================================================================================================================================
Total distributions (3.17) (0.95) (1.45) (1.20) (0.88)
===================================================================================================================================
Net asset value, end of period $ 22.82 $ 20.17 $ 14.96 $ 15.15 $ 12.99
___________________________________________________________________________________________________________________________________
===================================================================================================================================
Total return(a) 31.12% 42.79% 9.49% 28.53% 15.61%
___________________________________________________________________________________________________________________________________
===================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,412,609 $2,624,615 $1,830,032 $1,650,234 $1,261,008
___________________________________________________________________________________________________________________________________
===================================================================================================================================
Ratio of expenses to average net assets 0.72%(b)(c) 0.67% 0.67% 0.68% 0.70%
___________________________________________________________________________________________________________________________________
===================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.11)%(c) (0.01)% 0.23% 0.11% 0.29%
___________________________________________________________________________________________________________________________________
===================================================================================================================================
Portfolio turnover rate 98% 92% 83% 88% 118%
___________________________________________________________________________________________________________________________________
===================================================================================================================================
</TABLE>
(a) Does not include sales charges.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average daily net assets prior to fee waivers and/or expense reimbursements
was 0.78%.
(c) Ratios are based on average daily net assets of $3,416,529,078.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees
AIM Summit Fund:
We have audited the accompanying statement of assets and
liabilities of the AIM Summit Fund, including the
schedule of investments, as of October 31, 2000, the
related statement of operations for the year then ended,
the statement of changes in net assets for each of the
years in the two-year period then ended, and financial
highlights for each of the periods in the five-year
period then ended. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States of
America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as
of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Summit
Fund, Inc. as of October 31, 2000, and the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity
with accounting principles generally accepted in the
United States of America.
KPMG LLP
December 6, 2000
Houston, Texas
15
<PAGE> 18
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM Summit Fund, Inc., a Maryland
corporation (the "Fund"), reorganized as AIM Summit Fund, a Delaware business
trust (the "Trust"), was held on May 3, 2000. The meeting was held for the
following purposes:
(1)* To elect the following Directors: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H.
Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2) To approve the adoption of a Distribution Plan for the Class I Shares of
the fund pursuant to Rule 12b-1 under the Investment Company Act of 1940.
(3) To approve a Plan of Recapitalization pursuant to which the Charter of the
fund would be amended to reclassify the Class II Shares of the fund as
Class I shares of the fund.
(4)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the fund as a Delaware business trust.
(5) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(6) To approve changing the fundamental investment restrictions of the fund.
(7) To ratify the selection of KPMG LLP as independent accountants of the Fund
for the fiscal year ending in 2000.
The results of the voting on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES WITHHELD/
DIRECTORS/MATTER VOTES FOR AGAINST ABSTENTIONS
---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
(1)* Charles T. Bauer............................................ 146,574,147 N/A 2,676,916
Bruce L. Crockett........................................... 147,131,068 N/A 2,119,995
Owen Daly II................................................ 146,801,443 N/A 2,449,620
Edward K. Dunn, Jr. ........................................ 147,011,830 N/A 2,239,233
Jack M. Fields.............................................. 147,057,267 N/A 2,193,796
Carl Frischling............................................. 146,635,563 N/A 2,615,500
Robert H. Graham............................................ 147,020,276 N/A 2,230,787
Prema Mathai-Davis.......................................... 146,243,579 N/A 3,007,484
Lewis F. Pennock............................................ 146,950,184 N/A 2,300,879
Louis S. Sklar.............................................. 147,018,376 N/A 2,232,687
(2) Approval of a Distribution Plan for the Class I shares of
the fund.................................................... 130,035,712 14,983,249 4,232,102
(3) Approval of a Plan of Recapitalization to reclassify the
Class II shares of the Fund's common stock as Class I
shares...................................................... 134,034,371 10,739,321 4,477,371
(4)* Approval of an Agreement and Plan of Reorganization to
reorganize the Fund as a Delaware business trust............ 136,679,911 7,741,246 4,829,906
(5) Approval of a new Master Investment Advisory Agreement with
A I M Advisors, Inc......................................... 140,044,721 4,898,247 4,308,095
(6)(a) Approval of changing the Fundamental Restriction on Issuer
Diversification............................................. 136,191,921 6,870,612 6,188,530
(6)(b) Approval of changing the Fundamental Restriction on
Borrowing Money and Issuing Senior Securities............... 132,136,737 11,129,241 5,985,085
(6)(c) Approval of changing the Fundamental Restriction on
Underwriting Securities..................................... 135,094,806 8,060,658 6,095,599
(6)(d) Approval of changing the Fundamental Restriction on Industry
Concentration............................................... 135,191,741 8,142,181 5,917,141
(6)(e) Approval of changing the Fundamental Restriction on
Purchasing or Selling Real Estate and Elimination of
Fundamental Restriction on Investments in Oil, Gas or other
Mineral Exploration or Development Programs................. 133,081,455 10,102,811 6,066,797
(6)(f) Approval of changing the Fundamental Restriction on
Purchasing or Selling Commodities and Elimination of
Fundamental Restriction on Puts and Calls................... 129,995,433 13,083,037 6,172,593
(6)(g) Approval of changing the Fundamental Restriction on Making
Loans....................................................... 129,040,016 13,802,145 6,408,902
(6)(h) Approval of the Elimination of Fundamental Restriction on
Margin Transactions......................................... 126,510,608 16,379,913 6,360,542
(6)(i) Approval of the Elimination of Fundamental Restriction on
Short Sales of Securities................................... 129,839,341 13,248,648 6,163,074
(6)(j) Approval of the Elimination of Fundamental Restriction on
Investing for the Purpose of Control........................ 132,956,245 9,873,152 6,421,666
(6)(k) Approval of the Elimination of Fundamental Restriction on
Purchasing Securities of Issuers in which Officers and
Directors of the Fund and its Affiliates Own Securities..... 129,044,382 14,023,567 6,183,114
(7) Ratification of the selection of KPMG LLP as Independent
Accountants of the Fund..................................... 143,414,772 1,805,678 4,030,613
</TABLE>
---------------
* Proposals 1 and 4 required approval by a combined vote of all the portfolios
of AIM Summit Fund, Inc.
Effective September 30, 2000, Charles T. Bauer retired from his positions as an
officer and trustee of the Fund and Robert H. Graham succeeded Mr. Bauer as
Chairman of the Board.
16
<PAGE> 19
ABOUT YOUR FUND'S BOARD
The board of trustees is elected by you to look after your interests as a
mutual-fund shareholder. Trustees' responsibilities include choosing investment
advisors for your fund; keeping an eye on performance, operations and expenses;
making decisions regarding dividends and other duties.
Nine of your fund's 10 trustees are independent. In other words, they have no
affiliation with AIM except as independent fund trustees charged with
representing the interest of fund investors. Representing a cross section of
businesses and industries, they have achieved success and recognition in their
respective fields. They bring their considerable expertise and experience to
their positions as trustees.
Listed below are the members of the board of trustees of your mutual fund and
their respective titles.
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman, President and Chairman and President Suite 100
Chief Executive Officer Houston, TX 77046
A I M Management Group Inc. Carol F. Relihan
Senior Vice President and Secretary INVESTMENT ADVISOR
Bruce L. Crockett
Director Gary T. Crum A I M Advisors, Inc.
ACE Limited; Senior Vice President 11 Greenway Plaza
Formerly Director, President, and Suite 100
Chief Executive Officer Edgar M. Larsen Houston, TX 77046
COMSAT Corporation Vice President
TRANSFER AGENT
Owen Daly II Dana R. Sutton
Formerly Director Vice President and Treasurer AIM Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Melville B. Cox Houston, Tx 77210-4739
Albert R. Dowden Vice President
Chairman of the Board of Directors, CUSTODIAN
The Cortland Trust and DHJ Media, Inc.; and Mary J. Benson
Director, Magellan Insurance Company, Assistant Vice President and State Street Bank and Trust Company
Formerly Director, President and Assistant Treasurer 225 Franklin Street
Chief Executive Officer, Boston, MA 02110
Volvo Group North America, Inc.; and Sheri Morris
Senior Vice President, AB Volvo Assistant Vice President and COUNSEL TO THE FUND
Assistant Treasurer
Edward K. Dunn Jr. Ballard Spahr
Chairman, Mercantile Mortgage Corp.; Jim A. Coppedge Andrews & Ingersoll, LLP
Formerly Vice Chairman and President, Assistant Secretary 1735 Market Street
Mercantile-Safe Deposit & Trust Co.; and Philadelphia, PA 19103
President, Mercantile Bankshares Renee A. Friedli
Assistant Secretary COUNSEL TO THE TRUSTEES
Jack Fields
Chief Executive Officer P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
Twenty First Century, Inc.; Assistant Secretary 919 Third Avenue
Formerly Member New York, NY 10022
of the U.S. House of Representatives Nancy L. Martin
Assistant Secretary DISTRIBUTOR
Carl Frischling
Partner Ofelia M. Mayo A I M Distributors, Inc.
Kramer, Levin, Naftalis & Frankel LLP Assistant Secretary 11 Greenway Plaza
Suite 100
Prema Mathai-Davis Lisa A. Moss Houston, TX 77046
Formerly Chief Executive Assistant Secretary
Officer, YWCA of the U.S.A. AUDITORS
Kathleen J. Pflueger
Lewis F. Pennock Assistant Secretary KPMG LLP
Partner 700 Louisiana
Pennock & Cooper 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, 16.06% is eligible for the dividends received deduction for
corporations. The Fund distributed long-term capital gains of $377,089,800 for
the Fund's tax year ended October 31, 2000 of which 100% is 20% rate gain.
-------------------------
BULK RATE
U.S. POSTAGE
PAID
HOUSTON, TX
PERMIT NO. 1919
-------------------------
SUM-AR-1
