N-30D 1 n-30d.txt AEF - AIM BLUE CHIP FUND - SEMIANNUAL REPORT 1 SEMIANNUAL REPORT / APRIL 30 2000 AIM BLUE CHIP FUND [COVER IMAGE] [AIM LOGO APPEARS HERE] --Registered Trademark-- 2 [ COVER IMAGE ] ------------------------------------ THE SWING BY PIERRE-AUGUSTE RENOIR RENOIR BEGAN HIS CAREER AS A PAINTER IN A PORCELAIN FACTORY, GAINING EXPERIENCE WITH THE COLORS THAT WOULD DISTINGUISH HIS IMPRESSIONIST WORK AND LEARNING THE IMPORTANCE OF GOOD CRAFTSMANSHIP. HIS PAINTINGS ARE AMONG THE BEST-KNOWN IN THE WORLD FOR THEIR SIGNIFICANCE AND VALUE--AS ARE MANY OF THE BLUE-CHIP COMPANIES IN WHICH THIS FUND INVESTS. ------------------------------------ AIM Blue Chip Fund is for shareholders who seek long-term growth of capital with a relatively conservative investment portfolio that contains the stocks of top-performing companies within designated business sectors. ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT: o AIM Blue Chip 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 In addition to the returns shown in the table above, industry regulations require us to provide average annual total returns (including sales charges) as of 3/31/00, the most recent calendar quarter-end, which were: Class A shares, one year, 20.76%; five years, 26.74%; 10 years, 18.68%. Class B shares, one year, 21.91%; inception (10/1/96), 27.65%. Class C shares, one year, 25.94%; inception (8/4/97), 23.71%. o The fund's investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT: o The unmanaged Dow Jones Industrial Average (the Dow) is a price-weighted average of 30 actively traded primarily industrial stocks. o The 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 1000 Index represents the performance of the stocks of large-capitalization companies. o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500) represents the performance of the 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. AVERAGE ANNUAL TOTAL RETURNS As of 4/30/00, including sales charges ================================================================================ CLASS A SHARES 10 Years 18.24% 5 Years 24.84% 1 Year 14.30%* *20.96% excluding sales charges CLASS B SHARES Inception (10/1/96) 25.34% 1 Year 15.14%* *20.14% excluding CDSC CLASS C SHARES Inception (8/4/97) 20.94% 1 Year 19.15%* *20.15% excluding CDSC ================================================================================ Past performance cannot guarantee comparable future results. MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN. 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. AIM BLUE CHIP FUND 3 SEMIANNUAL REPORT / CHAIRMAN'S LETTER Dear Fellow Shareholder: When we started AIM in 1976, we had only a table, two [PHOTO OF chairs and a telephone. At the time, Bob Graham, Gary Crum Charles T. and I had the idea of creating a mutual fund company that Bauer, put people first. Our slogan, "people are the product," Chairman of means that people--our employees and our investors--are our the Board of company. THE FUND Almost a quarter-century later, we've grown to more than APPEARS HERE] seven million investors, $176 billion in assets under management and 53 retail funds. Over that time, the industry [PHOTO OF as a whole has grown from $51 billion in assets to more than Robert H. $7 trillion today. I never dreamed we would see such Graham phenomenal growth. You are the main reason for our success, APPEARS HERE] and I want you to know how much I appreciate your loyalty and trust over the past 24 years. Usually in this letter I review market activity during the period covered by the report. This time, I'd just like to say thank you. I am retiring as chairman of the AIM Funds effective September 30, and as chairman of AIM effective December 31, 2000. Bob Graham, whose picture appears under mine, will succeed me as AIM's chairman and chairman of the AIM Funds. Gary Crum will remain president of A I M Capital Management, Inc., leading our investment division. I am enormously proud to leave AIM in such capable hands. I'm also very proud of our team of employees, now more than 2,300 strong. Because of their collective commitment to excellence and ethical business practices, AIM has earned the trust of investors and financial advisors alike. And every employee, from portfolio managers to client services representatives, is dedicated to serving our shareholders. Rest assured that nothing at AIM will change because of my retirement. You can still depend on this company to manage your money responsibly and provide you with top-notch service. As chairman of AIM and chairman of the AIM Funds, Bob is committed to preserving the things that have made AIM great in the past and positioning it to succeed in the future. And Gary is dedicated to maintaining the quality and long-term performance you've come to expect from AIM. In the pages that follow, the managers of your fund comment on recent market activity, how they have managed your fund over the past six months and their outlook for the coming months. We trust you will find their comments helpful. If you have any questions or comments, please contact us through our Web site, www.aimfunds.com, or call our Client Services department at 800-959-4246 during normal business hours. Information about your account is available at our Web site and on our automated AIM Investor Line, 800-246-5463. Thank you again for the support and trust you've shown us. I feel privileged to have helped you with your financial goals, and I wish you success in all your endeavors. Sincerely, /s/ CHARLES T. BAUER Charles T. Bauer Chairman, A I M Advisors, Inc. AIM BLUE CHIP FUND 4 SEMIANNUAL REPORT / MANAGERS' OVERVIEW AIM BLUE CHIP FUND PERFORMS WELL IN CHALLENGING MARKET ------------------------------------ ONCE AGAIN, THE FUND AND ITS SHAREHOLDERS BENEFITED FROM INCLUDING TOP-QUALITY COMPANIES IN THE FUND'S PORTFOLIO... ------------------------------------ HOW DID AIM BLUE CHIP FUND PERFORM OVER THE LAST SIX MONTHS? For the six months ended April 30, 2000, AIM Blue Chip Fund delivered impressive returns and outperformed the benchmark Russell 1000 Index. The fund's Class A shares returned 14.72%, and its Class B and Class C shares each returned 14.33% at net asset value, that is, without the effect of sales charges. Those returns exceeded the Russell 1000 Index's 9.72% return for the reporting period. The fund's assets continue to grow. Net assets stood at $5.90 billion on April 30, 2000, an increase of $1.36 billion over the six-month reporting period. WHAT WERE THE MAJOR TRENDS IN THE FINANCIAL MARKETS DURING THE REPORTING PERIOD? U.S. equity markets experienced significant volatility during the last six months. Many technology stocks that soared in 1999 came crashing back to earth in early 2000 as investors questioned those stocks' valuations. Many investors abandoned dot-com stocks, concerned that they were overvalued, lacked a clear business model and might never make a profit. But even the stocks of large, historically profitable old-economy companies were not immune to price declines if it appeared they might not meet earnings expectations. Investors increasingly focused on corporate profits, and many companies that failed to deliver profits to their shareholders were punished. There were many reasons for the markets' heightened volatility, including continued interest-rate hikes by the Federal Reserve Board (the Fed) and sometimes contradictory economic indicators. The Fed raised short-term interest rates five times during the last year for a total increase of 125 basis points (1.25%) in a preemptive effort to contain inflation. (On May 16, shortly after the close of the reporting period, the Fed raised short-term interest rates by an additional 50 basis points and signaled it may raise rates further.) For all the headline-making one-day dips and dives in one market benchmark or another, it is worth noting that the most widely followed market indexes all produced positive returns for the six months covered by this report. The S&P 500 rose 7.18%; the Dow eked out a 0.79% gain; and even the Nasdaq, which provoked the most hand-wringing, was up an impressive 30.14%. HAS MARKET VOLATILITY AFFECTED ALL STOCKS AND FUNDS EQUALLY? Much of the volatility has been concentrated among profitless Internet stocks with high valuations--precisely the kind of stocks in which the fund does not invest. The stocks of larger, more established companies have been comparatively stable. While the technology-laden Nasdaq was down 5.13% for the first four months of 2000, the S&P 500 was down only 0.79%. The fund's broad diversification across all sectors reduced its exposure to downside market volatility somewhat. Including stocks of industry-leading companies in all sectors in the portfolio can enhance the fund's overall performance regardless of which sectors may be in or out of favor at any given time. HOW WAS THE FUND'S PORTFOLIO POSITIONED AT THE CLOSE OF THE REPORTING PERIOD? Once again, the fund and its shareholders benefited from including top-quality companies in the fund's portfolio--in sectors that both outperformed and underperformed the market. For example, while the capital-goods sector as a whole was up only 0.01% for the first quarter of 2000, one of AIM Blue Chip Fund's capital-goods holdings, Tyco International, was up 25%, outperforming the sector average as well as the S&P 500. And while technology was up overall, fund holdings ================================================================================ FUND VS. INDEX -------------------------------------------------------------------------------- For the six months ended 4/30/00, excluding sales charges FUND CLASS A SHARES 14.72% FUND CLASS B SHARES 14.33% FUND CLASS C SHARES 14.33% RUSSELL 1000 INDEX 9.72% ================================================================================ ================================================================================ GROWTH OF NET ASSETS -------------------------------------------------------------------------------- 10/31/99 $4.54 BILLION 4/30/00 $5.90 BILLION ================================================================================ See important fund and index disclosures inside front cover. AIM BLUE CHIP FUND 2 5 SEMIANNUAL REPORT / MANAGERS' OVERVIEW such as Oracle, Cisco and Nortel Networks all outperformed the S&P tech sector during the first quarter of 2000. The fund held a widely diversified portfolio of 87 stocks from all 11 market sectors at the close of the reporting period--down slightly from 95 stocks six months earlier. While stocks from all sectors were included in the fund's holdings, the largest sector weightings included technology (37.0%), financials (12.3%), health care (11.4%), capital goods (8.9%), consumer cyclicals (8.8%) and consumer staples (8.2%). Within the technology sector, the fund held stocks in a variety of market-leading companies in the computer software and services, communications equipment, semiconductor, computer hardware and computer networking industries. The fund's overweighting in technology aided overall performance during the reporting period. But the fund was also overweighted in health care and consumer cyclicals. Shareholders benefited from the excellent performance of many technology holdings, as well as from the fund's broadly diversified holdings in other sectors. WHAT WERE SOME OF THE FUND'S MARKET LEADERS THAT HELPED PERFORMANCE? In the technology sector, we owned a number of well-established, profitable companies that are leaders in their fields. One of our largest holdings was Sun Microsystems, which reported extremely strong quarterly earnings shortly before the close of the reporting period. Sun is a leading maker of number-crunching workstation computers, storage devices and servers for powering corporate computer networks and Web sites. In the consumer-cyclical sector, Home Depot and Target have been among the fund's better-performing stocks. Home Depot operates more than 950 stores coast to coast serving professional builders as well as "do-it-yourselfers." Target, the former Dayton Hudson, operates more than 1,200 stores nationwide and is a dominant force in the discount, mid-range and upscale formats. In the financial sector, Morgan Stanley Dean Witter and Citigroup were two of our larger holdings that performed well. Morgan Stanley is the second-largest U.S. retail broker and a leading credit card issuer and online broker. Citigroup, the world's largest credit card issuer, provides credit card, banking, insurance and investment services in almost 100 countries. In the health-care sector, Warner-Lambert makes some of the best-known consumer products on the market. But 60% of its sales come from its pharmaceutical products, including Lipitor, a market-leading cholesterol treatment. Another holding, Medtronic, manufactures devices to regulate erratic heartbeats as well as catheters, stents and guidewires used in angioplasties. With an aging population, its growth prospects appear solid. WHAT IS YOUR OUTLOOK FOR THE FUTURE? U.S. and foreign markets may remain volatile for some time because of rising interest rates and because some investors have yet to figure the proper way to value high-growth technology companies. While the Fed traditionally refrains from raising interest rates during presidential elections, it has made clear its intention to continue raising rates as necessary to ensure inflation remains in check. We believe, however, that the fund's wide diversification and its focus on selecting stocks that are leaders in their industries position the fund to take advantage of market trends in the future. PORTFOLIO COMPOSITION As of 4/30/00, based on total net assets
======================================================================================= TOP 10 HOLDINGS TOP 10 INDUSTRIES --------------------------------------------------------------------------------------- 1. General Electric Co. 4.26% 1. Computers 9.63% (Software & Services) 2. Cisco Systems, Inc. 4.23 2. Communications Equipment 7.02 3. Oracle Corp. 2.91 3. Electronics (Semiconductors) 5.66 4. Intel Corp. 2.90 4. Electrical Equipment 5.14 5. Nortel Networks Corp. 2.59 5. Health Care (Diversified) 4.69 (Canada) 6. Microsoft Corp. 2.42 6. Broadcasting 4.54 (Television, Radio & Cable) 7. Sun Microsystems, Inc. 2.41 7. Financial (Diversified) 4.45 8. Warner-Lambert Co. 2.41 8. Computers (Hardware) 4.44 9. Tyco International Ltd. 2.33 9. Retail (General Merchandise) 4.30 10. American International 2.09 10. Computers (Networking) 4.23 Group, Inc. The fund's portfolio is subject to change, and there is no assurance that the fund will continue to hold any particular security. =======================================================================================
See important fund and index disclosures inside front cover. AIM BLUE CHIP FUND 3 6 SEMIANNUAL REPORT / FOR CONSIDERATION A PROSPEROUS RETIREMENT: IT'S UP TO YOU, AND IT CAN BE DONE Many experts predict that Social Security could go broke sometime between 2020 and 2030 as the number of retirees outpaces the ability of the workforce to pay for their benefits through taxes. Lawmakers are sharply divided on ways to remedy this impending problem. Meanwhile, the Social Security Administration is sending Americans a wake-up call. The agency now mails annual contributions and benefit statements to all workers covered by Social Security. You should receive your statement three months before your birthday. The most important information in the statement is an estimate of the monthly retirement benefit you will receive at age 62, at full retirement and at age 70. Many people may be shocked to learn how small that amount will be. RETIREMENT IS EXPENSIVE Social Security and pensions account for only 43% of the retirement income needed by affluent retirees, according to the Social Security Administration and the U.S. Bureau of Labor Statistics. The other 57% may need to come from personal savings. Financial experts estimate that most people will need about 75% of their current annual income to maintain their lifestyle in retirement. If you're depending on Social Security alone, you may have to scale back your lifestyle considerably upon retirement. WOULD YOU RATHER BE A MILLIONAIRE? Of course you would. What to do? You could try to become a guest on the hit television quiz show. A more practical way is to save and invest now for a comfortable retirement later. But remember: when planning for retirement, time can be your best friend--or your worst enemy. Time can affect your retirement plans in three ways. o The longer you wait to begin saving for retirement, the more you'll have to save to accumulate the nest egg you'll need, as the table nearby shows. o Even modest inflation means that each dollar you save today will be less valuable 20 or 30 or 40 years from now. Over a 25-year period, a 2% annual rate of inflation reduces the value (the "buying power") of $1,000 to just $610. o As Americans live longer, they need their retirement savings to last longer. More and more Americans each year outlive their savings. Let's estimate you'll need $1 million to live comfortably in retirement. How much will you need to save each month to reach your goal--if you start early, or if you wait to begin saving? THE LESSON? START SAVING EARLY Procrastination can be expensive. The longer you wait to begin your retirement saving plan, the more you'll have to save WILL YOU HAVE ENOUGH FOR RETIREMENT? Social Security and pensions account for 43% of the retirement income needed by affluent retirees. The rest must come from personal savings. [PIE CHART] ================================================================================ SOCIAL SECURITY AND PENSIONS 43% PERSONAL SAVINGS 57% Source: Social Security Administration and U.S. Bureau of Labor Statistics ================================================================================ STARTING EARLY MAKES IT EASIER TO SAVE FOR RETIREMENT YEARS TO MONTHLY SAVINGS CURRENT SAVE UNTIL RETIREMENT NEEDED TO AGE RETIREMENT SAVINGS GOAL REACH GOAL ------------------------------------------------------------------------------- 25 40 $1,000,000 $ 85 ------------------------------------------------------------------------------- 35 30 $1,000,000 $ 284 ------------------------------------------------------------------------------- 45 20 $1,000,000 $1,001 ------------------------------------------------------------------------------- 55 10 $1,000,000 $4,305 ------------------------------------------------------------------------------- All figures assume a 12% annual return on investments. This hypothetical example is for illustrative purposes only and is not intended to represent the performance of any particular fund, IRA or investor. Your actual return isn't likely to be consistent from year to year and there is no guarantee that a specific rate of return will be achieved. AIM BLUE CHIP FUND 4 7 SEMIANNUAL REPORT / FOR CONSIDERATION each month to build an adequate retirement nest egg. The person who starts saving at age 25 may be able to accumulate $1 million by saving just $85 a month. Someone who waits to age 35 before beginning to save for retirement will have to contribute more than three times as much each month to make up for lost time! START WITH A PRACTICAL INVESTMENT PLAN A comfortable retirement is within your reach. But you will need a practical investment plan to get there. So consider the four steps described here and talk them over with your financial advisor. He or she can help you devise a plan and choose investments suited to your unique circumstances. 1. IF YOU HAVE A 401(k) PLAN, CONTRIBUTE TO IT--AND MAKE THE MOST OF EMPLOYER MATCHING. If your employer matches 401(k) contributions, contribute at least enough to maximize the company's contribution. If the company match is 5% of your salary, contribute at least 5% of your pay yourself. From your stand-point, the employer contribution is "free" money. 2. CONTRIBUTE TO AN IRA TOO. Even if you cannot deduct an IRA contribution, you can enjoy an IRA's tax-deferred compounding. And don't forget the added advantage of the spousal IRA. 3. DIVERSIFY! Asset diversification helps manage risk because different types of assets behave differently. If you put your retirement assets into mutual funds, consider buying more than one type of fund. 4. IF YOU HAVE TIME, INVEST AGGRESSIVELY. Historically, small-company stocks have provided the highest returns. They can be volatile in the short term, but if you can be patient, consider including aggressive small-company growth funds in your portfolio. DOLLAR-COST AVERAGING TYPICALLY LOWERS THE COST OF INVESTING One simple way to save for retirement is to use an installment plan. With a strategy called dollar-cost averaging, you can commit a fixed amount of money to an investment at regular intervals. There are several advantages to this plan: o Regular investing of equal amounts helps you make the most of market highs and lows. You automatically buy more shares when prices are low and fewer shares when prices are high. o Your average cost per share is less than your average price per share. The only time this would not occur is if the share price remained constant. o This strategy is especially appropriate for long-term investments, such as retirement plans, because the longer you maintain a regular investment program, the more likely you will be to buy shares at a wide variety of prices. o By systematically investing, you will be less tempted to make decisions on the basis of short-term events and your emotions. Your fortunes as an investor won't depend on your ability to make the right call about future trends. Of course, no investment strategy--even dollar-cost averaging--is guaranteed to result in profits or protect against losses in declining markets. Since dollar-cost averaging involves continuous investing regardless of fluctuating securities prices, you should consider your ability to continue purchases through periods of low price levels. WHAT SHOULD YOU DO? Visit your financial advisor. He or she can help you determine how much money you'll actually need in retirement and how to earn that money through careful investments. DOLLAR-COST AVERAGING LOWERS COST OF INVESTING AMOUNT SHARE SHARES MONTH INVESTED PRICE PURCHASED -------------------------------------------------------------------------------- JANUARY $ 200.00 $ 24.00 8.333 -------------------------------------------------------------------------------- FEBRUARY $ 200.00 $ 20.00 10.000 -------------------------------------------------------------------------------- MARCH $ 200.00 $ 14.00 14.286 -------------------------------------------------------------------------------- APRIL $ 200.00 $ 18.00 11.111 -------------------------------------------------------------------------------- MAY $ 200.00 $ 22.00 9.091 -------------------------------------------------------------------------------- JUNE $ 200.00 $ 24.00 8.333 -------------------------------------------------------------------------------- SIX-MONTH TOTAL $1,200.00 $122.00 61.154 -------------------------------------------------------------------------------- Average price per share: $122.00 divided by 6 equals $20.33 Average cost to you per share: $1,200.00 divided by 61.154 equals $19.62 AIM BLUE CHIP FUND 5 8 SCHEDULE OF INVESTMENTS April 30, 2000 (Unaudited)
MARKET SHARES VALUE COMMON STOCKS & OTHER EQUITY INTERESTS-96.38% AIRLINES-0.20% Delta Air Lines, Inc. 225,000 $ 11,868,750 --------------------------------------------------------------- AUTO PARTS & EQUIPMENT-0.43% Lear Corp.(a) 850,000 25,446,875 --------------------------------------------------------------- BANKS (MAJOR REGIONAL)-1.20% Fifth Third Bancorp 550,000 34,718,750 --------------------------------------------------------------- State Street Corp. 375,000 36,328,125 --------------------------------------------------------------- 71,046,875 --------------------------------------------------------------- BANKS (MONEY CENTER)-1.37% Chase Manhattan Corp. (The) 1,125,000 81,070,312 --------------------------------------------------------------- BEVERAGES (NON-ALCOHOLIC)-0.36% Coca-Cola Co. (The) 450,000 21,178,125 --------------------------------------------------------------- BIOTECHNOLOGY-0.85% Amgen Inc.(a) 900,000 50,400,000 --------------------------------------------------------------- BROADCASTING (TELEVISION, RADIO & CABLE)-4.54% AT&T Corp.-Liberty Media Group-Class A(a) 1,300,000 64,918,750 --------------------------------------------------------------- CBS Corp.(a) 1,150,000 67,562,500 --------------------------------------------------------------- Clear Channel Communications, Inc.(a) 475,000 34,200,000 --------------------------------------------------------------- Comcast Corp.-Class A(a) 1,400,000 56,087,500 --------------------------------------------------------------- MediaOne Group, Inc.(a) 600,000 45,375,000 --------------------------------------------------------------- 268,143,750 --------------------------------------------------------------- CHEMICALS-0.52% Du Pont (E.I.) de Nemours & Co. 650,000 30,834,375 --------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-7.02% Comverse Technology, Inc.(a) 470,000 41,918,125 --------------------------------------------------------------- JDS Uniphase Corp.(a) 650,000 67,396,875 --------------------------------------------------------------- Lucent Technologies Inc. 675,000 41,976,562 --------------------------------------------------------------- Nokia Oyj (Finland) 100,000 5,740,838 --------------------------------------------------------------- Nokia Oyj-ADR (Finland) 1,840,000 104,650,000 --------------------------------------------------------------- Nortel Networks Corp. (Canada) 1,350,000 152,887,500 --------------------------------------------------------------- 414,569,900 --------------------------------------------------------------- COMPUTERS (HARDWARE)-4.44% Dell Computer Corp.(a) 1,000,000 50,125,000 --------------------------------------------------------------- Gateway Inc.(a) 400,000 22,100,000 --------------------------------------------------------------- International Business Machines Corp. 425,000 47,440,625 ---------------------------------------------------------------
MARKET SHARES VALUE COMPUTERS (HARDWARE)-(CONTINUED) Sun Microsystems, Inc.(a) 1,550,000 $ 142,503,125 --------------------------------------------------------------- 262,168,750 --------------------------------------------------------------- COMPUTERS (NETWORKING)-4.23% Cisco Systems, Inc.(a) 3,600,000 249,581,250 --------------------------------------------------------------- COMPUTERS (PERIPHERALS)-1.94% EMC Corp.(a) 825,000 114,623,437 --------------------------------------------------------------- COMPUTERS (SOFTWARE & SERVICES)-9.63% America Online, Inc.(a) 985,800 58,963,162 --------------------------------------------------------------- Intuit Inc.(a) 650,000 23,359,375 --------------------------------------------------------------- Microsoft Corp.(a) 2,050,000 142,987,500 --------------------------------------------------------------- Oracle Corp.(a) 2,150,000 171,865,625 --------------------------------------------------------------- VERITAS Software Corp.(a) 1,050,000 112,628,906 --------------------------------------------------------------- Yahoo! Inc.(a) 450,000 58,612,500 --------------------------------------------------------------- 568,417,068 --------------------------------------------------------------- ELECTRIC COMPANIES-0.45% Edison International 1,400,000 26,687,500 --------------------------------------------------------------- ELECTRICAL EQUIPMENT-5.14% General Electric Co. 1,600,000 251,600,000 --------------------------------------------------------------- Sanmina Corp.(a) 865,000 51,954,063 --------------------------------------------------------------- 303,554,063 --------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-5.66% Intel Corp. 1,350,000 171,196,875 --------------------------------------------------------------- Texas Instruments Inc. 575,000 93,653,125 --------------------------------------------------------------- Xilinx, Inc.(a) 950,000 69,587,500 --------------------------------------------------------------- 334,437,500 --------------------------------------------------------------- ENTERTAINMENT-1.68% Time Warner Inc. 1,100,000 98,931,250 --------------------------------------------------------------- EQUIPMENT (SEMICONDUCTOR)-1.21% Applied Materials, Inc.(a) 700,000 71,268,750 --------------------------------------------------------------- FINANCIAL (DIVERSIFIED)-4.45% American Express Co. 400,000 60,025,000 --------------------------------------------------------------- Citigroup Inc. 1,700,000 101,043,750 --------------------------------------------------------------- Fannie Mae 1,000,000 60,312,500 --------------------------------------------------------------- Freddie Mac 900,000 41,343,750 --------------------------------------------------------------- 262,725,000 --------------------------------------------------------------- HEALTH CARE (DIVERSIFIED)-4.69% Allergan, Inc. 625,000 36,796,875 ---------------------------------------------------------------
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MARKET SHARES VALUE HEALTH CARE (DIVERSIFIED)-(CONTINUED) American Home Products Corp. 600,000 $ 33,712,500 --------------------------------------------------------------- Bristol-Myers Squibb Co. 600,000 31,462,500 --------------------------------------------------------------- Johnson & Johnson 400,000 33,000,000 --------------------------------------------------------------- Warner-Lambert Co. 1,250,000 142,265,625 --------------------------------------------------------------- 277,237,500 --------------------------------------------------------------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-3.02% Merck & Co., Inc. 475,000 33,012,500 --------------------------------------------------------------- Pfizer Inc. 1,300,000 54,762,500 --------------------------------------------------------------- Pharmacia Corp. 600,000 29,962,500 --------------------------------------------------------------- Schering-Plough Corp. 1,500,000 60,468,750 --------------------------------------------------------------- 178,206,250 --------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.44% Guidant Corp.(a) 950,000 54,506,250 --------------------------------------------------------------- Medtronic, Inc. 1,725,000 89,592,188 --------------------------------------------------------------- 144,098,438 --------------------------------------------------------------- HOUSEHOLD PRODUCTS (NON-DURABLES)-0.63% Colgate-Palmolive Co. 650,000 37,131,250 --------------------------------------------------------------- INSURANCE (MULTI-LINE)-2.09% American International Group, Inc. 1,125,000 123,398,438 --------------------------------------------------------------- INVESTMENT BANKING/BROKERAGE-2.73% Merrill Lynch & Co., Inc. 450,000 45,871,875 --------------------------------------------------------------- Morgan Stanley Dean Witter & Co. 1,500,000 115,125,000 --------------------------------------------------------------- 160,996,875 --------------------------------------------------------------- LODGING-HOTELS-0.63% Carnival Corp. 1,500,000 37,312,500 --------------------------------------------------------------- MACHINERY (DIVERSIFIED)-0.48% Ingersoll-Rand Co. 600,000 28,162,500 --------------------------------------------------------------- MANUFACTURING (DIVERSIFIED)-2.99% Tyco International Ltd. 3,000,000 137,812,500 --------------------------------------------------------------- United Technologies Corp. 625,000 38,867,188 --------------------------------------------------------------- 176,679,688 --------------------------------------------------------------- NATURAL GAS-1.41% El Paso Energy Corp. 650,000 27,625,000 --------------------------------------------------------------- Enron Corp. 800,000 55,750,000 --------------------------------------------------------------- 83,375,000 --------------------------------------------------------------- OIL & GAS (DRILLING & EQUIPMENT)-1.22% Halliburton Co. 850,000 37,559,375 ---------------------------------------------------------------
MARKET SHARES VALUE OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED) Schlumberger Ltd. 450,000 $ 34,453,125 --------------------------------------------------------------- 72,012,500 --------------------------------------------------------------- OIL (INTERNATIONAL INTEGRATED)-2.38% Exxon Mobil Corp. 1,400,000 108,762,500 --------------------------------------------------------------- Royal Dutch Petroleum Co.-New York Shares-ADR (Netherlands) 550,000 31,556,250 --------------------------------------------------------------- 140,318,750 --------------------------------------------------------------- PAPER & FOREST PRODUCTS-0.68% Bowater, Inc. 350,000 19,250,000 --------------------------------------------------------------- International Paper Co. 575,000 21,131,250 --------------------------------------------------------------- 40,381,250 --------------------------------------------------------------- RAILROADS-0.29% Canadian National Railway Co. (Canada) 600,000 16,837,500 --------------------------------------------------------------- RETAIL (BUILDING SUPPLIES)-2.04% Home Depot, Inc. (The) 2,150,000 120,534,375 --------------------------------------------------------------- RETAIL (FOOD CHAINS)-0.71% Safeway Inc.(a) 950,000 41,918,750 --------------------------------------------------------------- RETAIL (GENERAL MERCHANDISE)-4.30% Costco Wholesale Corp.(a) 1,350,000 72,984,375 --------------------------------------------------------------- Target Corp. 1,050,000 69,890,625 --------------------------------------------------------------- Wal-Mart Stores, Inc. 2,000,000 110,750,000 --------------------------------------------------------------- 253,625,000 --------------------------------------------------------------- RETAIL (SPECIALTY-APPAREL)-0.50% Gap, Inc. (The) 800,000 29,400,000 --------------------------------------------------------------- SERVICES (ADVERTISING/MARKETING)-0.59% Interpublic Group of Companies, Inc. 850,000 34,850,000 --------------------------------------------------------------- SERVICES (DATA PROCESSING)-1.55% First Data Corp. 1,035,000 50,391,563 --------------------------------------------------------------- Fiserv, Inc.(a) 900,000 41,343,750 --------------------------------------------------------------- 91,735,313 --------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/ WIRELESS)-1.84% Nextel Communications, Inc.-Class A(a) 400,000 43,775,000 --------------------------------------------------------------- Vodafone AirTouch PLC-ADR (United Kingdom) 1,375,000 64,625,000 --------------------------------------------------------------- 108,400,000 --------------------------------------------------------------- TELECOMMUNICATIONS (LONG DISTANCE)-1.89% AT&T Corp. 350,000 16,340,625 ---------------------------------------------------------------
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MARKET SHARES VALUE TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED) MCI WorldCom, Inc.(a) 2,100,000 $ 95,418,750 --------------------------------------------------------------- 111,759,375 --------------------------------------------------------------- TELEPHONE-1.96% BellSouth Corp. 900,000 43,818,750 --------------------------------------------------------------- GTE Corp. 450,000 30,487,500 --------------------------------------------------------------- SBC Communications Inc. 950,000 41,621,875 --------------------------------------------------------------- 115,928,125 --------------------------------------------------------------- Total Common Stocks & Other Equity Interests (Cost $3,875,259,445) 5,691,252,907 ---------------------------------------------------------------
MARKET SHARES VALUE MONEY MARKET FUNDS-4.12% STIC Liquid Assets Portfolio(b) 121,509,919 $ 121,509,919 --------------------------------------------------------------- STIC Prime Portfolio(b) 121,509,919 121,509,919 --------------------------------------------------------------- Total Money Market Funds (Cost $243,019,838) 243,019,838 --------------------------------------------------------------- TOTAL INVESTMENTS-100.50% (Cost $4,118,279,283) 5,934,272,745 --------------------------------------------------------------- LIABILITIES LESS OTHER ASSETS-(0.50%) (29,340,389) --------------------------------------------------------------- NET ASSETS-100.00% $5,904,932,356 ===============================================================
Investment Abbreviations: ADR - American Depositary Receipt Notes to Schedule of Investments: (a) Non-income producing security. (b) The money market fund has the same investment advisor as the Fund. See Notes to Financial Statements. 8 11 STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 (Unaudited) ASSETS: Investments, at market value (Cost $4,118,279,283) $5,934,272,745 ------------------------------------------------------------- Foreign currencies, at market value (Cost $2,972,778) 2,922,032 ------------------------------------------------------------- Receivables for: Capital stock sold 26,582,933 ------------------------------------------------------------- Dividends and Interest 3,776,269 ------------------------------------------------------------- Investment for deferred compensation plan 35,543 ------------------------------------------------------------- Other assets 429,642 ------------------------------------------------------------- Total assets 5,968,019,164 ------------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 49,066,895 ------------------------------------------------------------- Capital stock reacquired 6,353,900 ------------------------------------------------------------- Deferred compensation plan 35,543 ------------------------------------------------------------- Accrued advisory fees 3,027,227 ------------------------------------------------------------- Accrued administrative services fees 22,925 ------------------------------------------------------------- Accrued distribution fees 3,634,966 ------------------------------------------------------------- Accrued directors' fees 1,644 ------------------------------------------------------------- Accrued transfer agent fees 740,831 ------------------------------------------------------------- Accrued operating expenses 202,877 ------------------------------------------------------------- Total liabilities 63,086,808 ------------------------------------------------------------- Net assets applicable to shares outstanding $5,904,932,356 -------------------------------------------------------------
NET ASSETS: Class A $2,887,369,121 ============================================================= Class B $2,453,432,169 ============================================================= Class C $ 564,131,066 ============================================================= CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 750,000,000 ------------------------------------------------------------- Outstanding 54,153,023 ============================================================= Class B: Authorized 750,000,000 ------------------------------------------------------------- Outstanding 47,014,126 ============================================================= Class C: Authorized 750,000,000 ------------------------------------------------------------- Outstanding 10,812,287 ============================================================= Class A: Net asset value and redemption price per share $ 53.32 ------------------------------------------------------------- Offering price per share: (Net asset value of $53.32 divided by 94.50%) $ 56.42 ============================================================= Class B: Net asset value and offering price per share $ 52.19 ============================================================= Class C: Net asset value and offering price per share $ 52.17 =============================================================
STATEMENT OF OPERATIONS For the six months ended April 30, 2000 (Unaudited) INVESTMENT INCOME: Dividends (net of foreign withholding tax $84,838) $ 24,276,599 ------------------------------------------------------------ Interest 77,946 ------------------------------------------------------------ Total investment income 24,354,545 ------------------------------------------------------------ EXPENSES: Advisory fees 16,819,894 ------------------------------------------------------------ Administrative services fee 132,134 ------------------------------------------------------------ Custodian fees 197,707 ------------------------------------------------------------ Distribution fees-Class A 4,595,600 ------------------------------------------------------------ Distribution fees-Class B 11,084,085 ------------------------------------------------------------ Distribution fees-Class C 2,310,340 ------------------------------------------------------------ Transfer agent fees-Class A 1,963,097 ------------------------------------------------------------ Transfer agent fees-Class B 2,379,829 ------------------------------------------------------------ Transfer agent fees-Class C 496,046 ------------------------------------------------------------ Directors' fees 4,073 ------------------------------------------------------------ Other 832,489 ------------------------------------------------------------ Total expenses 40,815,294 ------------------------------------------------------------ Less: Expenses paid indirectly (39,412) ------------------------------------------------------------ Net expenses 40,775,882 ------------------------------------------------------------ Net investment income (loss) (16,421,337) ------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTION CONTRACTS Net realized gain (loss) from: Investment securities (63,806,998) ------------------------------------------------------------ Foreign currencies (71,265) ------------------------------------------------------------ Futures contracts (959,165) ------------------------------------------------------------ Option contracts written (10,334,450) ------------------------------------------------------------ (75,171,878) ------------------------------------------------------------ Change in net unrealized appreciation (depreciation) of: Investment securities 772,317,574 ------------------------------------------------------------ Foreign currencies (59,548) ------------------------------------------------------------ Futures contracts (1,817,529) ------------------------------------------------------------ Option contracts written 3,165,156 ------------------------------------------------------------ 773,605,653 ------------------------------------------------------------ Net gain on investment securities, foreign currencies, futures and option contracts 698,433,775 ------------------------------------------------------------ Net increase in net assets resulting from operations $682,012,438 ============================================================
See Notes to Financial Statements. 9 12 STATEMENT OF CHANGES IN NET ASSETS For the six months ended April 30, 2000 and the year ended October 31, 1999 (Unaudited)
APRIL 30, OCTOBER 31, 2000 1999 -------------- -------------- OPERATIONS: Net investment income (loss) $ (16,421,337) $ (10,379,871) ---------------------------------------------------------------------------------------------- Net realized gain (loss) from investment securities, foreign currencies, futures and option contracts (75,171,878) (35,834,384) ---------------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities, foreign currencies, futures and option contracts 773,605,653 756,524,720 ---------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 682,012,438 710,310,465 ---------------------------------------------------------------------------------------------- Distributions to shareholders from net investment income: Class A -- (776,772) ---------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A -- (3,128,249) ---------------------------------------------------------------------------------------------- Class B -- (2,256,383) ---------------------------------------------------------------------------------------------- Class C -- (293,473) ---------------------------------------------------------------------------------------------- Share transactions-net: Class A 243,143,924 830,315,460 ---------------------------------------------------------------------------------------------- Class B 280,638,907 866,521,395 ---------------------------------------------------------------------------------------------- Class C 158,463,908 220,917,321 ---------------------------------------------------------------------------------------------- Net increase in net assets 1,364,259,177 2,621,609,764 ---------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 4,540,673,179 1,919,063,415 ---------------------------------------------------------------------------------------------- End of period $5,904,932,356 $4,540,673,179 ============================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $4,222,367,023 $3,540,120,284 ---------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (16,518,506) (97,169) ---------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) from investment securities, foreign currencies, futures and option contracts (116,847,999) (41,676,121) ---------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities, foreign currencies, futures and option contracts 1,815,931,838 1,042,326,185 ---------------------------------------------------------------------------------------------- $5,904,932,356 $4,540,673,179 ==============================================================================================
See Notes to Financial Statements. 10 13 NOTES TO FINANCIAL STATEMENTS April 30, 2000 (Unaudited) NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Blue Chip Fund (the "Fund") is a series portfolio of AIM Equity Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eleven separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. 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 with a secondary objective of current income. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations--A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price 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 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 Company's officers in a manner specifically authorized by the Board of Directors of the Company. 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 Directors. B. Securities Transactions and Investment Income--Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. C. Distributions--Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. Federal Income Taxes--The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund has a capital loss carryforward of $38,614,682 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2007. 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 that 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 agreed-upon price at a future date. The Fund may enter into a 11 14 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. 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 Company 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 0.75% of the first $350 million of the Fund's average daily net assets, plus 0.625% of the Fund's average daily net assets in excess of $350 million. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended April 30, 2000, AIM was paid $132,134 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. For the six months ended April 30, 2000, AFS was paid $2,633,848 for such services. The Company 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 Company 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. During the six months ended April 30, 2000, the Class A, Class B and Class C shares paid AIM Distributors $4,595,600, $11,084,085 and $2,310,340, respectively, as compensation under the Plans. 12 15 AIM Distributors received commissions of $1,357,346 from sales of the Class A shares of the Fund during the six months ended April 30, 2000. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the six months ended April 30, 2000, AIM Distributors received $98,707 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the six months ended April 30, 2000, the Fund paid legal fees of $4,125 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the six months ended April 30, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $31,966 and $7,446, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $39,412 during the six months ended April 30, 2000. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, 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) $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 six months ended April 30, 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 six months ended April 30, 2000 was $1,347,464,120 and $504,577,394, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of April 30, 2000 is as follows: Aggregate unrealized appreciation of investment securities $1,910,680,492 ---------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (95,897,493) ---------------------------------------------------------- Net unrealized appreciation of investment securities $1,814,782,999 ========================================================== Cost of investments for tax purposes is $4,119,489,746.
NOTE 7-CALL OPTION CONTRACTS Transactions in call options written during the six months ended April 30, 2000 are summarized as follows:
CALL OPTION CONTRACTS ----------------------- NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- ----------- Beginning of period 2,429 $ 5,063,081 -------------------------- --------- ----------- Closed (2,429) (5,063,081) -------------------------- --------- ----------- End of period -- -- ========================== ========= ===========
13 16 NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the six months ended April 30, 2000 and the year ended October 31, 1999 were as follows:
APRIL 30, 2000 OCTOBER 31, 1999 --------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------- ----------- -------------- Sold: Class A 12,311,120 $ 635,139,581 31,555,257 $1,348,329,456 -------------------------------------------------------------------------------------------------------------------------- Class B 9,672,962 486,502,128 24,939,694 1,053,306,393 -------------------------------------------------------------------------------------------------------------------------- Class C 4,174,659 210,303,703 6,902,119 292,602,692 -------------------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A -- -- 93,903 3,711,997 -------------------------------------------------------------------------------------------------------------------------- Class B -- -- 54,813 2,141,056 -------------------------------------------------------------------------------------------------------------------------- Class C -- -- 7,197 281,069 -------------------------------------------------------------------------------------------------------------------------- Reacquired: Class A (7,631,656) (391,995,657) (12,216,671) (521,725,993) -------------------------------------------------------------------------------------------------------------------------- Class B (4,085,752) (205,863,221) (4,443,246) (188,926,054) -------------------------------------------------------------------------------------------------------------------------- Class C (1,030,611) (51,839,795) (1,692,129) (71,966,440) -------------------------------------------------------------------------------------------------------------------------- 13,410,722 $ 682,246,739 45,200,937 $1,917,754,176 ==========================================================================================================================
NOTE 9-FINANCIAL HIGHLIGHTS Contained below is per share operating performance data for a share outstanding throughout each period, total investment return, ratios and supplemental data. This information has been derived from information provided in the financial statements.
CLASS A --------------------------------------------------------------------------------------------------- YEAR ENDED SIX MONTHS ENDED YEAR ENDED OCTOBER 31, OCTOBER 1, 1996 SEPTEMBER 30, APRIL 30, ------------------------------------ TO ------------------- 2000(a) 1999 1998(a) 1997(a) OCTOBER 31, 1996 1996 1995 ---------------- ---------- ---------- -------- ---------------- -------- ------- Net asset value, beginning of period $ 46.48 $ 36.14 $ 30.96 $ 26.08 $ 25.56 $ 23.83 $ 19.22 --------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.07) 0.02 0.13 0.17 -- 0.33 0.14 --------------------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 6.91 10.44 5.75 6.93 0.52 4.61 5.05 --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 6.84 10.46 5.88 7.10 0.52 4.94 5.19 --------------------------------------------------------------------------------------------------------------------------------- Less distributions: Dividends from net investment income -- (0.02) (0.07) (0.05) -- (0.21) (0.12) --------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.10) (0.63) (2.17) -- (3.00) (0.46) --------------------------------------------------------------------------------------------------------------------------------- Total distributions -- (0.12) (0.70) (2.22) -- (3.21) (0.58) --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 53.32 $ 46.48 $ 36.14 $ 30.96 $ 26.08 $ 25.56 $ 23.83 ================================================================================================================================= Total return(b) 14.72% 29.01% 19.36% 29.68% 2.04% 22.39% 27.84% ================================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $2,887,369 $2,299,551 $1,085,648 $498,178 $120,448 $106,415 $71,324 ================================================================================================================================= Ratio of expenses to average net assets 1.18%(c) 1.19% 1.22% 1.31%(d) 1.30%(d)(e) 1.26% 1.30% ================================================================================================================================= Ratio of net investment income (loss) to average net assets (0.26)%(c) 0.03% 0.33% 0.50% 0.12%(e) 0.53% 0.70% ================================================================================================================================= Portfolio turnover rate 10% 22% 27% 43% 10% 58% 17% =================================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average net assets of $2,640,485,842. (d) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets was 1.32% and 1.37% for 1997 and 1996, respectively. (e) Annualized. 14 17 NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B ----------------------------------------------------------------- OCTOBER 1, 1996 (DATE SALES SIX MONTHS COMMENCED) ENDED YEAR ENDED OCTOBER 31, TO APRIL 30, ---------------------------------- OCTOBER 31, 2000(a) 1999(a) 1998 1997(a) 1996 ---------- ---------- -------- -------- ------------- Net asset value, beginning of period $ 45.65 $ 35.73 $ 30.76 $ 26.07 $ 25.56 ------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.24) (0.29) (0.12) (0.03) (0.01) ------------------------------------------------------------------------------------------------------------------------------- Net gains on securities (both realized and unrealized) 6.78 10.31 5.72 6.92 0.52 ------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 6.54 10.02 5.60 6.89 0.51 ------------------------------------------------------------------------------------------------------------------------------- Less distributions: Dividends from net investment income -- -- -- (0.03) -- ------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.10) (0.63) (2.17) -- ------------------------------------------------------------------------------------------------------------------------------- Total distributions -- (0.10) (0.63) (2.20) -- ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 52.19 $ 45.65 $ 35.73 $ 30.76 $ 26.07 =============================================================================================================================== Total return(b) 14.33% 28.08% 18.52% 28.81% 2.00% =============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $2,453,432 $1,891,171 $745,862 $264,337 $ 8,101 =============================================================================================================================== Ratio of expenses to average net assets 1.89%(c) 1.91% 1.94% 2.10%(d) 2.01%(d)(e) =============================================================================================================================== Ratio of net investment income (loss) to average net assets (0.97)%(c) (0.68)% (0.38)% (0.28)% (0.58)%(e) =============================================================================================================================== Portfolio turnover rate 10% 22% 27% 43% 10% ===============================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average net assets of $2,228,997,350. (d) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets was 2.12% and 2.08% for 1997 and 1996, respectively. (e) Annualized.
CLASS C -------------------------------------------------- AUGUST 4, 1997 (DATE SALES SIX MONTHS YEAR ENDED COMMENCED) ENDED OCTOBER 31, TO APRIL 30, ------------------- OCTOBER 31, 2000(a) 1999(a) 1998(a) 1997(a) ---------- -------- ------- ------------- Net asset value, beginning of period $ 45.64 $ 35.72 $ 30.75 $31.72 ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.24) (0.29) (0.12) (0.01) ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 6.77 10.31 5.72 (0.96) ---------------------------------------------------------------------------------------------------------------- Total from investment operations 6.53 10.02 5.60 (0.97) ---------------------------------------------------------------------------------------------------------------- Less distributions: Distributions from net realized gains -- (0.10) (0.63) -- ---------------------------------------------------------------------------------------------------------------- Total distributions -- (0.10) (0.63) -- ---------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 52.17 $ 45.64 $ 35.72 $30.75 ================================================================================================================ Total return(b) 14.31% 28.09% 18.52% (3.06)% ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $564,131 $349,951 $87,554 $3,947 ================================================================================================================ Ratio of expenses to average net assets 1.89%(c) 1.90% 1.94% 2.10%(d)(e) ================================================================================================================ Ratio of net investment income (loss) to average net assets (0.97)%(c) (0.68)% (0.38)% (0.28)%(e) ================================================================================================================ Portfolio turnover rate 10% 22% 27% 43% ================================================================================================================
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average net assets of $464,606,826. (d) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets was 2.12% for 1997. (e) Annualized. 15 18
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND Charles T. Bauer Charles T. Bauer 11 Greenway Plaza Chairman Chairman Suite 100 A I M Management Group Inc. Houston, TX 77046 Robert H. Graham Bruce L. Crockett President INVESTMENT ADVISOR Director ACE Limited; Carol F. Relihan A I M Advisors, Inc. Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza Chief Executive Officer Suite 100 COMSAT Corporation Gary T. Crum Houston, TX 77046 Senior Vice President Owen Daly II TRANSFER AGENT Director Edgar M. Larsen Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc. P.O. Box 4739 Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739 Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer Formerly Vice Chairman and President, CUSTODIAN Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox President, Mercantile Bankshares Vice President State Street Bank and Trust Company 225 Franklin Street Jack Fields Mary J. Benson Boston, MA 02110 Chief Executive Officer Assistant Vice President and Texana Global, Inc.; Assistant Treasurer COUNSEL TO THE FUND Formerly Member of the U.S. House of Representatives Sheri Morris Ballard Spahr Assistant Vice President and Andrews & Ingersoll, LLP Carl Frischling Assistant Treasurer 1735 Market Street Partner Philadelphia, PA 19103 Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli Assistant Secretary COUNSEL TO THE DIRECTORS Robert H. Graham President and Chief Executive Officer P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP A I M Management Group Inc. Assistant Secretary 919 Third Avenue New York, NY 10022 Prema Mathai-Davis Nancy L. Martin Chief Executive Officer, YWCA of the U.S.A. Assistant Secretary DISTRIBUTOR Lewis F. Pennock Ofelia M. Mayo A I M Distributors, Inc. Attorney Assistant Secretary 11 Greenway Plaza Suite 100 Louis S. Sklar Lisa A. Moss Houston, TX 77046 Executive Vice President Assistant Secretary Hines Interests Limited Partnership Kathleen J. Pflueger Assistant Secretary Samuel D. Sirko Assistant Secretary
16 19 ------------------------------------ OUR AUTOMATED AIM INVESTOR LINE, 800-246-5463, PROVIDES CURRENT ACCOUNT INFORMATION AND THE PRICE, YIELD AND TOTAL RETURN ON ALL AIM FUNDS 24 HOURS A DAY. YOU CAN ALSO ORDER A YEAR-TO-DATE STATEMENT OF YOUR ACCOUNT. ------------------------------------ AIM FUNDS--REGISTERED TRADEMARK-- MAKES INVESTING EASY o AIM BANK CONNECTION(SM). You can make investments in your AIM account in amounts from $50 to $100,000 without writing a check. Once you set up this convenient feature, AIM will draw the funds from your pre-authorized checking account at your request. o AIM INTERNET CONNECT(SM). Sign up for this service and you can purchase, redeem or exchange shares of AIM funds in your current AIM account simply by accessing our Web site at www.aimfunds.com. For a retirement account, such as an IRA or 403(b), only exchanges are allowed over the Internet because of the tax-reporting and record-keeping requirements these accounts involve. o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. You can receive distributions in cash, or you can reinvest them in your account without paying a sales charge. Over time, the power of compounding can significantly increase the value of your account. o AUTOMATIC INVESTMENT PLAN. You can add to your account by authorizing your AIM fund to withdraw a specified amount, minimum $50, from your bank account on a regular schedule. o EASY ACCESS TO YOUR MONEY. You can redeem shares of your AIM fund any day the New York Stock Exchange is open. The value of the shares may be more or less than their original cost depending on market conditions. o EXCHANGE PRIVILEGE. As your investment goals change, you may exchange part or all of your shares of one fund for shares of a different AIM fund within the same share class. You may make up to 10 such exchanges per calendar year. o TAX-ADVANTAGED RETIREMENT PLANS. You can enjoy the tax advantages offered by a variety of investment plans, including Traditional IRAs, Roth IRAs and education IRAs, among others. o E-MAIL ACCESS. You can contact us at general@aimfunds.com for general information. For account information, contact us at youraccount@aimfunds.com. o www.aimfunds.com. Our award-winning Web site provides account information, shareholder education and fund performance information. 20 THE AIM FAMILY OF FUNDS--Registered Trademark-- GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. AIM Aggressive Growth Fund AIM Money Market Fund has provided leadership in the AIM Blue Chip Fund AIM Tax-Exempt Cash Fund mutual fund industry since AIM Capital Development Fund 1976 and managed approximately AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS $176 billion in assets for AIM Dent Demographic Trends Fund AIM Advisor International Value Fund more than 7.4 million AIM Emerging Growth Fund AIM Asian Growth Fund shareholders, including AIM Large Cap Growth Fund AIM Developing Markets Fund individual investors, AIM Large Cap Opportunities Fund AIM Euroland Growth Fund(5) corporate clients and AIM Mid Cap Equity Fund AIM European Development Fund financial institutions, as of AIM Mid Cap Growth Fund AIM International Equity Fund March 31, 2000. AIM Mid Cap Opportunities Fund(2) AIM Japan Growth Fund The AIM Family of AIM Select Growth Fund AIM Latin American Growth Fund Funds--Registered Trademark-- AIM Small Cap Growth Fund(3) is distributed nationwide, and AIM Small Cap Opportunities Fund(4) GLOBAL GROWTH FUNDS AIM today is the AIM Value Fund AIM Global Aggressive Growth Fund eighth-largest mutual fund AIM Weingarten Fund AIM Global Growth Fund complex in the United States AIM Global Trends Fund(6) in assets under management, GROWTH & INCOME FUNDS according to Strategic AIM Advisor Flex Fund GLOBAL GROWTH & INCOME FUNDS Insight, an independent mutual AIM Advisor Real Estate Fund AIM Global Utilities Fund fund monitor. AIM Balanced Fund AIM Basic Value Fund GLOBAL INCOME FUNDS AIM Charter Fund AIM Global Income Fund AIM Strategic Income Fund INCOME FUNDS AIM Floating Rate Fund THEME FUNDS AIM High Yield Fund AIM Global Consumer Products and Services Fund AIM High Yield Fund II AIM Global Financial Services Fund AIM Income Fund AIM Global Health Care Fund AIM Intermediate Government Fund AIM Global Infrastructure Fund AIM Limited Maturity Treasury Fund AIM Global Resources Fund AIM Global Telecommunications and Technology Fund TAX-FREE INCOME FUNDS AIM High Income Municipal Fund AIM Municipal Bond Fund AIM Tax-Exempt Bond Fund of Connecticut AIM Tax-Free Intermediate Fund
(1) Effective December 1, 1999, AIM Constellation Fund's investment strategy broadened to allow investments across all market capitalizations. (2) AIM Mid Cap Opportunities Fund closed to new investors on March 21, 2000. (3) AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (4) AIM Small Cap Opportunities Fund closed to new investors on November 4, 1999. (5) On September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund. Previously the fund invested in all size companies in most areas of Europe. The fund now seeks to invest at least 65% of its assets in large-cap companies within countries using the euro as their currency (EMU-member countries). (6) Effective August 27, 1999, AIM Global Trends Fund was restructured to operate as a traditional mutual fund. Before that date, the fund operated as a fund of funds. For more complete information about any AIM fund(s), including sales charges and expenses, ask your financial advisor or securities dealer for a free prospectus(es). Please read the prospectus(es) carefully before you invest or send money. If used as sales material after July 20, 2000, this report must be accompanied by a current Quarterly Review of Performance for AIM Funds. [DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE] --Registered Trademark-- INVEST WITH DISCIPLINE --Registered Trademark-- AIM Distributors, Inc. BCH-SAR-1