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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file
number 811-1424
------------------------------------------------
AIM Equity Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert H. Graham 11 Greenway Plaza, Suite 100 Houston, Texas 77046
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (713) 626-1919
----------------------------
Date of fiscal year end: 10/31
--------------
Date of reporting period: 4/30/03
-------------
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM AGGRESSIVE GROWTH FUND
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
Your Goals. Our Solutions.
--Servicemark--
AIM Aggressive Growth Fund seeks long-term growth of capital.
The fund seeks to meet this objective by investing in a portfolio
consisting primarily of the stocks of small and mid-size
companies which management believes will have earnings
growth in excess of the general economy.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
MARKET CAPITALIZATION BREAKDOWN*
As of 4/30/03
[PIE CHART]
SMALL-CAP STOCKS 27%
LARGE-CAP STOCKS 13%
MID-CAP STOCKS 60%
Source: Lipper, Inc.
TOTAL NUMBER OF HOLDINGS* 83
TOTAL NET ASSETS $2.0 BILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (5/1/84) 10.80%
10 Years 9.28
5 Years -5.20
1 Year -25.48
CLASS B SHARES
Inception (3/1/99) -2.04%
1 Year -25.60
CLASS C SHARES
Inception (3/1/99) -1.73%
1 Year -22.58
CLASS R SHARES**
10 Years -9.62%
5 Years -4.37
1 Year -21.36
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without sales charges. Class R shares were
first offered on June 3, 2002. Returns prior to that date are hypothetical
results based on Class A share performance at net asset value, adjusted to
reflect Class R 12b-1 fees. (The inception date of Class A shares is 5/1/84).
Class R share returns do not include a 0.75% contingent deferred sales charge
that may be imposed on a total redemption of retirement plan assets within the
first year.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 1.92%
CLASS B SHARES 1.56
CLASS C SHARES 1.42
CLASS R SHARES 1.65
S&P 500 INDEX (Broad Market Index) 4.47
RUSSELL 2500 GROWTH INDEX 7.76
(Style-specific index)
LIPPER MID-CAP GROWTH FUND INDEX 4.94
(Peer group index)
Source: Lipper, Inc.
In addition to returns as of the close of the fiscal year period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (5/1/84), 10.55%; 10 years, 8.41%; five years, -5.91%; one
year, -30.17%. Class B shares, inception (3/1/99), -3.27%; one year, -30.24%.
Class C shares, inception (3/1/99), -2.93%; one year, -27.30%. Class R shares,
10 years, 8.76%; five years, -5.06%; one year, -26.21%.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
Source: Lipper, Inc.
================================================================================
<Table>
<Caption>
================================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ----------------------------------------------------------------------------------------------------------------
1. Affiliated Computer Services, Inc. - Class A 2.9% 1. Health Care Distributors & Services 10.6%
2. Express Scripts, Inc. 2.9 2. Data Processing Services 6.1
3. Medicis Pharmaceutical Corp. - Class A 2.8 3. IT Consulting & Services 5.6
4. CDW Computer Centers, Inc. 2.6 4. Oil & Gas Drilling 5.2
5. Caremark Rx, Inc. 2.5 5. Diversified Financial Services 4.9
6. Danaher Corp. 2.5 6. Specialty Stores 4.2
7. Jacobs Engineering Group Inc. 2.3 7. Apparel Retail 3.9
8. AmerisourceBergen Corp. 2.3 8. Health Care Equipment 3.7
9. Robert Half International Inc. 2.2 9. Health Care Facilities 3.7
10. SunGard Data Systems Inc. 2.1 10. Computer & Electronics Retail 3.2
* Excludes money market find holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
================================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Aggressive Growth Fund's performance figures are historical, and they
reflect fund expenses, the reinvestment of distributions and changes in the
net asset value.
o Effective May 1, 2003, after the close of the reporting period, the
portfolio management team of AIM Aggressive Growth Fund is as follows: Karl
F. Farmer, Robert M. Kippes and Jay K. Rushin.
o Had the advisor not waived fees and/or reimbursed expenses in the past,
Class A and Class R share returns would have been lower.
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 share classes will differ due to different
sales charge structures and class expenses.
o Investing in small and mid-size companies may involve greater risk and
potential reward than investing in more established companies. Also, small
companies may have business risk, significant stock price fluctuations and
illiquidity.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
o The fund's investment return and principal value will fluctuate so that 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 Lipper Mid-Cap Growth Fund Index represents an average of the
performance of the 30 largest mid-capitalization growth funds, tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 2500 Index measures the performance of the 2,500
smallest companies in the Russell 3000 Index, which measures the performance
of the 3,000 largest U.S. companies based on total market capitalization;
the Growth segment measures the performance of those Russell 2500 companies
with higher price-to-book ratios and higher forecasted growth values.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMinvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Aggressive Growth Fund for the six
ROBERT H. months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
POSTIVE PERFORMANCE opposite page. This letter will provide an overview of the
DURING MARCH AND markets and your fund during the six months covered by this
APRIL 2003 ENABLED report. As always, timely information about your fund and
MAJOR STOCK MARKET the markets in general is available at our Web site,
INDEXES TO POST aiminvestments.com.
GAINS FOR THE
REPORTING PERIOD. MARKET CONDITIONS
ROBERT H. GRAHAM
Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003. Year to date as of April 30,
consumer discretionary, information technology and financials were among the
better-performing sectors of the S&P 500, while telecommunications services was
the worst. Generally, mid- and small-cap stocks outperformed large-cap stocks,
and the value investment style outperformed the growth investment style during
the six-month reporting period. For example, the unmanaged Russell 1000 Index,
which represents the performance of the stocks of large-capitalization
companies, returned 4.75% while the unmanaged Russell Midcap Index, which
represents the performance of the stocks of domestic mid-capitalization
companies, returned 7.58% and the unmanaged Russell 2000 Index, which represents
the performance of the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%
YOUR FUND
Like the broad U.S. stock market, AIM Aggressive Growth Fund, at net asset
value, posted positive returns for the six months ended April 30, 2003.
Throughout the reporting period, fund managers Robert M. Kippes, Ryan E. Crane
and Jay K. Rushin sought to identify the stocks of companies that they believe
have the potential for above-average growth in earnings.
At the close of the reporting period, the three largest sector weightings in
the fund's portfolio were health care, industrials and consumer discretionary.
Keep in mind that fund managers focus on individual companies rather than
particular industries or sectors. The fund had 83 equity holdings at the end of
the reporting period.
We encourage you to visit our Web site, aiminvestments.com, for a wealth of
information about your fund, including regular performance updates, quarterly
details of portfolio composition, and much more. From our home page, click on
Products & Performance, then Mutual Funds, and then select the type of
information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Aggressive Growth Fund, and
I look forward to reporting to you again in six months. If you have any
questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
SUPPLEMENT TO SEMIANNUAL REPORT DATED 4/30/03
AIM AGGRESSIVE GROWTH FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class
shareholders with a performance overview specific to their holdings.
Institutional Class shares are offered exclusively to institutional investors,
including defined contribution plans that meet certain criteria. Performance of
Institutional Class shares will differ from performance of Class A shares due
to differing sales charges and class expenses.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 4/30/03
================================================================================
Inception (3/15/02) -19.35%
1 year -20.68
6 months 2.19*
*NOT ANNUALIZED
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 3/31/03 (most recent calendar quarter-end)
================================================================================
Inception (3/15/02) -24.57%
1 year -25.65
================================================================================
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. All returns assume
reinvestment of distributions at net asset value. Investment return and
principal value will fluctuate so your shares, when redeemed, may be worth more
or less than their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or call
AIM toll free at 800-451-4246.
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
A I M DISTRIBUTORS, INC. AGRO-INS-2
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------------
COMMON STOCKS-95.61%
AEROSPACE & DEFENSE-2.40%
Alliant Techsystems Inc.(a) 500,000 $ 26,860,000
- ----------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 500,000 22,200,000
============================================================================
49,060,000
============================================================================
AIR FREIGHT & LOGISTICS-1.26%
C.H. Robinson Worldwide, Inc. 400,000 14,716,000
- ----------------------------------------------------------------------------
Expeditors International of Washington, Inc. 300,000 10,907,700
============================================================================
25,623,700
============================================================================
APPAREL RETAIL-3.87%
Abercrombie & Fitch Co.-Class A(a) 525,000 17,262,000
- ----------------------------------------------------------------------------
Pacific Sunwear of California, Inc.(a) 1,650,000 37,669,500
- ----------------------------------------------------------------------------
TJX Cos., Inc. (The) 1,250,000 24,062,500
============================================================================
78,994,000
============================================================================
APPLICATION SOFTWARE-1.10%
Intuit Inc.(a) 300,000 11,634,000
- ----------------------------------------------------------------------------
Reynolds & Reynolds Co. (The)-Class A 375,000 10,803,750
============================================================================
22,437,750
============================================================================
AUTO PARTS & EQUIPMENT-2.79%
Gentex Corp.(a) 1,000,000 30,200,000
- ----------------------------------------------------------------------------
Lear Corp.(a) 275,000 10,928,500
- ----------------------------------------------------------------------------
Superior Industries International, Inc. 400,000 15,824,000
============================================================================
56,952,500
============================================================================
BANKS-1.18%
Southwest Bancorp. of Texas, Inc.(a) 300,000 10,194,000
- ----------------------------------------------------------------------------
TCF Financial Corp. 350,000 13,860,000
============================================================================
24,054,000
============================================================================
BROADCASTING & CABLE TV-1.10%
Hispanic Broadcasting Corp.(a) 500,000 12,825,000
- ----------------------------------------------------------------------------
Westwood One, Inc.(a) 275,000 9,597,500
============================================================================
22,422,500
============================================================================
COMPUTER & ELECTRONICS RETAIL-3.20%
Best Buy Co., Inc.(a) 350,000 12,103,000
- ----------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 1,250,000 53,300,000
============================================================================
65,403,000
============================================================================
CONSTRUCTION & ENGINEERING-2.32%
Jacobs Engineering Group Inc.(a) 1,150,000 47,322,500
============================================================================
CONSUMER FINANCE-0.69%
Doral Financial Corp. (Puerto Rico) 350,000 14,003,500
============================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------------
DATA PROCESSING SERVICES-6.07%
CheckFree Corp.(a) 500,000 $ 13,785,000
- ----------------------------------------------------------------------------
DST Systems, Inc.(a) 775,000 23,792,500
- ----------------------------------------------------------------------------
Fiserv, Inc.(a) 1,315,000 38,713,600
- ----------------------------------------------------------------------------
Iron Mountain Inc.(a) 300,000 11,955,000
- ----------------------------------------------------------------------------
Paychex, Inc. 1,150,000 35,811,000
============================================================================
124,057,100
============================================================================
DEPARTMENT STORES-0.84%
Kohl's Corp.(a) 300,000 17,040,000
============================================================================
DIVERSIFIED COMMERCIAL SERVICES-2.09%
Apollo Group, Inc.-Class A(a) 250,000 13,549,750
- ----------------------------------------------------------------------------
Cintas Corp. 500,000 17,950,000
- ----------------------------------------------------------------------------
Corporate Executive Board Co. (The)(a) 275,000 11,272,250
============================================================================
42,772,000
============================================================================
DIVERSIFIED FINANCIAL SERVICES-4.89%
Investors Financial Services Corp. 1,750,000 38,167,500
- ----------------------------------------------------------------------------
Legg Mason, Inc. 500,000 27,150,000
- ----------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 550,000 34,633,500
============================================================================
99,951,000
============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.96%
Molex Inc.-Class A 250,000 5,075,000
- ----------------------------------------------------------------------------
National Instruments Corp.(a) 450,000 14,436,000
============================================================================
19,511,000
============================================================================
EMPLOYMENT SERVICES-2.15%
Robert Half International Inc.(a) 2,700,000 43,956,000
============================================================================
GENERAL MERCHANDISE STORES-0.62%
Dollar Tree Stores, Inc.(a) 500,000 12,725,000
============================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-10.59%
AmerisourceBergen Corp. 800,000 46,280,000
- ----------------------------------------------------------------------------
Caremark Rx, Inc.(a) 2,600,000 51,766,000
- ----------------------------------------------------------------------------
Express Scripts, Inc.(a) 1,000,000 58,960,000
- ----------------------------------------------------------------------------
Lincare Holdings Inc.(a) 750,000 22,777,500
- ----------------------------------------------------------------------------
Omnicare, Inc. 1,000,000 26,520,000
- ----------------------------------------------------------------------------
Patterson Dental Co.(a) 250,000 10,042,500
============================================================================
216,346,000
============================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------------
HEALTH CARE EQUIPMENT-3.70%
Biomet, Inc. 400,000 $ 12,184,000
- ----------------------------------------------------------------------------
Cytyc Corp.(a) 1,000,000 13,200,000
- ----------------------------------------------------------------------------
ResMed Inc. 1,000,000 36,680,000
- ----------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 250,000 13,465,000
============================================================================
75,529,000
============================================================================
HEALTH CARE FACILITIES-3.66%
Community Health Systems Inc.(a) 1,679,000 31,901,000
- ----------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 2,508,300 42,791,598
============================================================================
74,692,598
============================================================================
HEALTH CARE SUPPLIES-2.03%
Coopers Cos., Inc. (The) 197,500 5,510,250
- ----------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 1,250,000 36,012,500
============================================================================
41,522,750
============================================================================
INDUSTRIAL MACHINERY-2.53%
Danaher Corp. 750,000 51,735,000
============================================================================
INSURANCE BROKERS-1.31%
Brown & Brown, Inc. 750,000 26,827,500
============================================================================
INTERNET RETAIL-0.45%
eBay Inc.(a) 100,000 9,277,000
============================================================================
IT CONSULTING & SERVICES-5.58%
Affiliated Computer Services, Inc.-Class A(a) 1,250,000 59,625,000
- ----------------------------------------------------------------------------
CACI International Inc.-Class A(a) 325,000 11,352,250
- ----------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 2,000,000 43,000,000
============================================================================
113,977,250
============================================================================
MANAGED HEALTH CARE-1.53%
First Health Group Corp.(a) 1,250,000 31,312,500
============================================================================
MULTI-LINE INSURANCE-1.01%
HCC Insurance Holdings, Inc. 750,000 20,625,000
============================================================================
OIL & GAS DRILLING-5.16%
ENSCO International Inc. 1,250,000 31,750,000
- ----------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 500,000 19,600,000
- ----------------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 1,163,200 38,490,288
- ----------------------------------------------------------------------------
Pride International, Inc.(a) 1,000,000 15,520,000
============================================================================
105,360,288
============================================================================
OIL & GAS EQUIPMENT & SERVICES-2.76%
National-Oilwell, Inc.(a) 1,000,000 20,990,000
- ----------------------------------------------------------------------------
Smith International, Inc.(a) 500,000 17,780,000
- ----------------------------------------------------------------------------
Varco International, Inc.(a) 1,000,000 17,590,000
============================================================================
56,360,000
============================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ----------------------------------------------------------------------------
OIL & GAS EXPLORATION & PRODUCTION-0.84%
Newfield Exploration Co.(a) 500,000 $ 17,195,000
============================================================================
PHARMACEUTICALS-2.82%
Medicis Pharmaceutical Corp.-Class A(a) 1,000,000 57,640,000
============================================================================
RESTAURANTS-3.02%
Brinker International, Inc.(a) 350,000 11,112,500
- ----------------------------------------------------------------------------
CBRL Group, Inc. 500,000 15,940,000
- ----------------------------------------------------------------------------
Cheesecake Factory Inc. (The)(a) 300,000 9,477,000
- ----------------------------------------------------------------------------
Sonic Corp.(a) 624,950 16,879,900
- ----------------------------------------------------------------------------
Starbucks Corp.(a) 350,000 8,221,500
============================================================================
61,630,900
============================================================================
SEMICONDUCTORS-1.48%
Linear Technology Corp. 425,000 14,649,750
- ----------------------------------------------------------------------------
Microchip Technology Inc. 750,000 15,592,500
============================================================================
30,242,250
============================================================================
SPECIALTY CHEMICALS-0.74%
Valspar Corp. (The) 350,000 15,116,500
============================================================================
SPECIALTY STORES-4.24%
Bed Bath & Beyond Inc.(a) 1,000,000 39,510,000
- ----------------------------------------------------------------------------
Regis Corp. 750,000 21,247,500
- ----------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 1,000,000 25,880,000
============================================================================
86,637,500
============================================================================
SYSTEMS SOFTWARE-0.54%
Symantec Corp.(a) 250,000 10,987,500
============================================================================
TELECOMMUNICATIONS EQUIPMENT-2.11%
Avocent Corp.(a) 350,000 10,367,000
- ----------------------------------------------------------------------------
UTStarcom, Inc.(a) 1,500,000 32,656,500
============================================================================
43,023,500
============================================================================
TRADING COMPANIES & DISTRIBUTORS-1.98%
Fastenal Co. 1,170,000 40,470,300
============================================================================
Total Common Stocks (Cost $1,729,109,929) 1,952,793,886
============================================================================
<Caption>
PRINCIPAL
AMOUNT
CONVERTIBLE NOTES-0.00%
AIRPORT SERVICES--0.00%
TIMCO Aviation Services, Inc., Jr. Unsec.
Sub. PIK Notes, 8.00%, 01/02/07 (Cost $217) $ 2,174 12
============================================================================
</Table>
F-2
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------
MONEY MARKET FUNDS-4.83%
STIC Liquid Assets Portfolio(b) 49,284,758 $ 49,284,758
- ----------------------------------------------------------------------------
STIC Prime Portfolio(b) 49,284,758 49,284,758
============================================================================
Total Money Market Funds (Cost
$98,569,516) 98,569,516
============================================================================
TOTAL INVESTMENTS-100.44% (excluding
investments purchased with cash collateral
from securities loaned) (Cost
$1,827,679,662) 2,051,363,414
============================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-26.57%
STIC Liquid Assets Portfolio(b)(c) 271,325,582 271,325,582
- ----------------------------------------------------------------------------
STIC Prime Portfolio(b)(c) 271,325,582 271,325,582
============================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $542,651,164) 542,651,164
============================================================================
TOTAL INVESTMENTS--127.01% (Cost
$2,370,330,826) 2,594,014,578
============================================================================
OTHER ASSETS LESS LIABILITIES-(27.01%) (551,626,407)
============================================================================
NET ASSETS-100.00% $2,042,388,171
____________________________________________________________________________
============================================================================
</Table>
Investment Abbreviations:
<Table>
Jr. - Junior
PIK - Payment in Kind
Sub. - Subordinated
Unsec. - Unsecured
</Table>
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.
(c) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$2,370,330,826)* $ 2,594,014,578
- ------------------------------------------------------------
Receivables for:
Investments sold 9,715,228
- ------------------------------------------------------------
Fund shares sold 1,197,168
- ------------------------------------------------------------
Dividends and interest 384,222
- ------------------------------------------------------------
Investment for deferred compensation plan 85,644
- ------------------------------------------------------------
Other assets 53,478
============================================================
Total assets 2,605,450,318
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 13,187,286
- ------------------------------------------------------------
Fund shares reacquired 3,738,267
- ------------------------------------------------------------
Deferred compensation plan 85,644
- ------------------------------------------------------------
Collateral upon return of securities
loaned 542,651,164
- ------------------------------------------------------------
Accrued distribution fees 777,052
- ------------------------------------------------------------
Accrued trustees' fees 2,141
- ------------------------------------------------------------
Accrued transfer agent fees 2,027,684
- ------------------------------------------------------------
Accrued operating expenses 592,909
============================================================
Total liabilities 563,062,147
============================================================
Net assets applicable to shares outstanding $ 2,042,388,171
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 2,973,901,265
- ------------------------------------------------------------
Undistributed net investment income (loss) (11,851,037)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (1,143,345,809)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities 223,683,752
============================================================
$ 2,042,388,171
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 1,747,540,195
____________________________________________________________
============================================================
Class B $ 223,273,347
____________________________________________________________
============================================================
Class C $ 68,956,276
____________________________________________________________
============================================================
Class R $ 469,450
____________________________________________________________
============================================================
Institutional Class $ 2,148,903
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 235,244,607
____________________________________________________________
============================================================
Class B 31,245,609
____________________________________________________________
============================================================
Class C 9,651,675
____________________________________________________________
============================================================
Class R 63,330
____________________________________________________________
============================================================
Institutional Class 287,423
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 7.43
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $7.43 divided by
94.50%) $ 7.86
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 7.15
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 7.14
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 7.41
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 7.48
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $532,957,007
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $13,150) $ 2,197,381
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 465,253
- --------------------------------------------------------------------------
Interest 372
- --------------------------------------------------------------------------
Security lending income 508,911
==========================================================================
Total investment income 3,171,917
==========================================================================
EXPENSES:
Advisory fees 6,433,529
- --------------------------------------------------------------------------
Administrative services fees 214,677
- --------------------------------------------------------------------------
Custodian fees 80,400
- --------------------------------------------------------------------------
Distribution fees -- Class A 2,160,636
- --------------------------------------------------------------------------
Distribution fees -- Class B 1,094,998
- --------------------------------------------------------------------------
Distribution fees -- Class C 344,063
- --------------------------------------------------------------------------
Distribution fees -- Class R 822
- --------------------------------------------------------------------------
Transfer agent fees 4,069,223
- --------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 212
- --------------------------------------------------------------------------
Trustees' fees 10,397
- --------------------------------------------------------------------------
Other 427,257
==========================================================================
Total expenses 14,836,214
==========================================================================
Less: Fees waived and expenses paid indirectly (22,138)
==========================================================================
Net expenses 14,814,076
==========================================================================
Net investment income (loss) (11,642,159)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (33,523,970)
- --------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 77,572,162
==========================================================================
Net gain from investment securities 44,048,192
==========================================================================
Net increase in net assets resulting from operations $ 32,406,033
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (11,642,159) $ (29,737,807)
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (33,523,970) (454,400,428)
- ------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 77,572,162 70,396,760
================================================================================================
Net increase (decrease) in net assets resulting from
operations 32,406,033 (413,741,475)
================================================================================================
Share transactions-net:
Class A (79,429,052) (368,156,521)
- ------------------------------------------------------------------------------------------------
Class B (6,360,076) (19,209,543)
- ------------------------------------------------------------------------------------------------
Class C (4,567,151) (8,446,307)
- ------------------------------------------------------------------------------------------------
Class R 318,105 133,795
- ------------------------------------------------------------------------------------------------
Institutional Class 1,945,356 145,043
================================================================================================
Net increase (decrease) in net assets resulting from
share transactions (88,092,818) (395,533,533)
================================================================================================
Net increase (decrease) in net assets (55,686,785) (809,275,008)
================================================================================================
NET ASSETS:
Beginning of period 2,098,074,956 2,907,349,964
================================================================================================
End of period $ 2,042,388,171 $ 2,098,074,956
________________________________________________________________________________________________
================================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware statutory trust registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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 to achieve long-term growth of capital.
Each company listed in the Schedule of Investments is organized in the United
States unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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
F-6
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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in affiliated money market
funds with cash collateral from securities loaned by the Fund). For the six
months ended April 30, 2003, AIM waived fees of $7,450.
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, 2003, AIM
was paid $214,677 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. During the six months ended April 30, 2003,
AFS retained $1,885,191 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Institutional Class shares of the
Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A shares, Class B shares, Class C shares and Class R
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.25% of the Fund's average
daily net assets of Class A shares, 1.00% of the average daily net assets of
Class B and Class C shares and 0.50% of the average daily net assets of Class R
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, Class C or Class R 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. NASD Rules also impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. Pursuant to the Plans, for the six months ended
April 30, 2003, the Class A, Class B, Class C and Class R shares paid
$2,160,636, $1,094,998, $344,063, and $822, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $124,584 in front-end sales commissions from the sale of
Class A shares and $23,033, $0, $5,295 and $0 for Class A, Class B, Class C and
Class R shares, respectively, for CDSCs imposed upon redemptions by
shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$3,158 for services rendered by Kramer, Levin, Naftalis & Frankel LLP
F-7
as counsel to the Board of Trustees. A member of that firm is a trustee of the
Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $14,506 and reductions in
custodian fees of $182 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $14,688.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day following the
valuation date of the securities loaned. Therefore, the value of the collateral
may be temporarily less than the value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $532,957,007 were
on loan to brokers. The loans were secured by cash collateral of $542,651,164
received by the Fund and subsequently invested in affiliated money market funds.
For the six months ended April 30, 2003, the Fund received fees of $508,911 for
securities lending.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ------------------------------------------------------------
October 31, 2009 $ 636,872,876
- ------------------------------------------------------------
October 31, 2010 463,739,024
============================================================
Total capital loss carryforward $1,100,611,900
____________________________________________________________
============================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $506,959,627 and $559,739,460, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $299,470,416
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (83,323,499)
===========================================================
Net unrealized appreciation of investment
securities $216,146,917
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $2,377,867,661.
</Table>
F-8
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and the Institutional Class
shares. Class A shares are sold with a front-end sales charge. Class B shares
and Class C shares are sold with a CDSC. Class R shares and the Institutional
Class shares are sold at net asset value. Under some circumstances, Class A
shares and Class R shares are subject to CDSCs. Generally, Class B shares will
automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 18,207,485 $ 132,203,829 44,066,976 $ 384,377,775
- -----------------------------------------------------------------------------------------------------------------------
Class B 2,550,073 17,724,756 6,507,666 55,189,130
- -----------------------------------------------------------------------------------------------------------------------
Class C 1,011,760 7,032,708 2,934,855 24,752,456
- -----------------------------------------------------------------------------------------------------------------------
Class R* 56,210 404,505 18,814 133,820
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class** 270,382 1,958,544 18,865 145,043
=======================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 94,732 677,567 182,647 1,563,408
- -----------------------------------------------------------------------------------------------------------------------
Class B (98,332) (677,567) (188,487) (1,563,408)
=======================================================================================================================
Reacquired:
Class A (29,559,036) (212,310,448) (87,574,389) (754,097,704)
- -----------------------------------------------------------------------------------------------------------------------
Class B (3,405,205) (23,407,265) (8,963,129) (72,835,265)
- -----------------------------------------------------------------------------------------------------------------------
Class C (1,679,287) (11,599,859) (4,058,002) (33,198,763)
- -----------------------------------------------------------------------------------------------------------------------
Class R* (11,691) (86,400) (3) (25)
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class** (1,824) (13,188) -- --
=======================================================================================================================
(12,564,733) $ (88,092,818) (47,054,187) $(395,533,533)
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
** Institutional Class shares commenced sales on March 15, 2002.
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A(a)
-----------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.30 $ 8.68 $ 18.41 $ 13.90 $ 10.04 $ 12.49
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(b) (0.09)(b) (0.09)(b) (0.13) (0.09) (0.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.17 (1.29) (6.34) 11.08 4.05 (1.93)
=================================================================================================================================
Total from investment operations 0.13 (1.38) (6.43) 10.95 3.96 (2.01)
=================================================================================================================================
Less distributions from net realized
gains -- -- (3.30) (6.44) (0.10) (0.44)
=================================================================================================================================
Net asset value, end of period $ 7.43 $ 7.30 $ 8.68 $ 18.41 $ 13.90 $ 10.04
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 1.78% (15.90)% (40.51)% 47.53% 39.73% (16.36)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,747,540 $1,798,318 $2,516,407 $4,444,515 $2,808,451 $2,638,038
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets 1.36%(d) 1.32% 1.17% 1.04% 1.09% 1.06%
=================================================================================================================================
Ratio of net investment income (loss)
to average net assets (1.05)%(d) (1.00)% (0.79)% (0.77)% (0.69)% (0.64)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 26% 68% 89% 79% 75% 69%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$1,742,833,827.
(e) Not annualized for periods less than one year.
F-9
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B(a)
---------------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.04 $ 8.45 $ 18.12 $ 13.81 $ 10.85
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(b) (0.15)(b) (0.17)(b) (0.29) (0.07)
- -------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.17 (1.26) (6.20) 11.04 3.03
===================================================================================================================
Total from investment operations 0.11 (1.41) (6.37) 10.75 2.96
===================================================================================================================
Less distributions from net realized
gains -- -- (3.30) (6.44) --
===================================================================================================================
Net asset value, end of period $ 7.15 $ 7.04 $ 8.45 $ 18.12 $ 13.81
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(c) 1.56% (16.69)% (40.90)% 46.29% 27.27%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $223,273 $226,806 $294,303 $374,010 $24,914
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net
assets 2.11%(d) 2.07% 1.94% 1.86% 2.08%(e)
===================================================================================================================
Ratio of net investment income (loss)
to average net assets (1.80)%(d) (1.75)% (1.55)% (1.59)% (1.68)%(e)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate(f) 26% 68% 89% 79% 75%
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$220,814,456.
(e) Annualized.
(f) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS C(a)
-------------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ------------------------------------ OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.04 $ 8.45 $ 18.11 $ 13.81 $10.85
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(b) (0.15)(b) (0.17)(b) (0.29) (0.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.16 (1.26) (6.19) 11.03 3.03
=================================================================================================================================
Total from investment operations 0.10 (1.41) (6.36) 10.74 2.96
=================================================================================================================================
Less distributions from net realized gains -- -- (3.30) (6.44) --
=================================================================================================================================
Net asset value, end of period $ 7.14 $ 7.04 $ 8.45 $ 18.11 $13.81
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 1.42% (16.69)% (40.86)% 46.21% 27.27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $68,956 $72,676 $96,640 $120,591 $6,807
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.11%(d) 2.07% 1.94% 1.86% 2.08%(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.80)%(d) (1.75)% (1.55)% (1.59)% (1.68)%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 26% 68% 89% 79% 75%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Per share information and distributions prior to October 31, 1999 have
been restated to reflect a 4 for 1 stock split, effected in the form of
a 300% stock dividend, on July 14, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$69,382,913.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-10
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS R
------------------------------
JUNE 3, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.29 $ 8.89
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.04)(a)
- --------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.17 (1.56)
============================================================================================
Total from investment operations 0.12 (1.60)
============================================================================================
Net asset value, end of period $ 7.41 $ 7.29
____________________________________________________________________________________________
============================================================================================
Total return(b) 1.65% (18.00)%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 469 $ 137
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets 1.61%(c) 1.62%(d)
============================================================================================
Ratio of net investment income (loss) to average net assets (1.30)%(c) (1.30)%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate(e) 26% 68%
____________________________________________________________________________________________
============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $331,382.
(d) Annualized.
(e) Not annualized for periods less than one year.
<Table>
<Caption>
INSTITUTIONAL CLASS
-------------------------------
MARCH 15, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.32 $ 9.53
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.02)(a)
- ---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.18 (2.19)
=============================================================================================
Total from investment operations 0.16 (2.21)
=============================================================================================
Net asset value, end of period $ 7.48 $ 7.32
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 2.19% (23.19)%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,149 $ 138
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets 0.81%(c) 0.81%(d)
=============================================================================================
Ratio of net investment income (loss) to average net assets (0.50)%(c) (0.49)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 26% 68%
_____________________________________________________________________________________________
=============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $427,873.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. A I M Advisors, Inc.
Jack M. Fields Kevin M. Carome 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 100
Prema Mathai-Davis Houston, TX 77046
Lewis F. Pennock Gary T. Crum
Ruth H. Quigley Senior Vice President TRANSFER AGENT
Louis S. Sklar A I M Fund Services, Inc.
Dana R. Sutton P.O. Box 4739
Vice President and Treasurer Houston, TX 77210-4739
Stuart W. Coco CUSTODIAN
Vice President State Street Bank and Trust Company
225 Franklin Street
Melville B. Cox Boston, MA 02110
Vice President
COUNSEL TO THE FUND
Edgar M. Larsen Ballard Spahr
Vice President Andrews & Ingersoll, LLP
1735 Market Street
Nancy L. Martin Philadelphia, PA 19103
Secretary
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health are Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENT LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIMinvestments.com AGRO-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM BASIC VALUE II FUND
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.
--Servicemark--
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
AIM BASIC VALUE II
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------------------
COMMON STOCK--98.05%
ADVERTISING--5.66%
Interpublic Group of Cos., Inc. (The)(a) 2,300 $ 26,220
- ---------------------------------------------------------------------------------------------
Omnicom Group Inc. 450 27,855
=============================================================================================
54,075
=============================================================================================
AEROSPACE & DEFENSE--1.73%
Honeywell International Inc. 700 16,520
=============================================================================================
APPAREL RETAIL--3.30%
Gap, Inc. (The) 1,900 31,597
=============================================================================================
BANKS--2.64%
Bank One Corp. 700 25,235
=============================================================================================
BUILDING PRODUCTS--2.61%
American Standard Cos. Inc.(a) 350 24,916
=============================================================================================
DATA PROCESSING SERVICES--4.91%
Ceridian Corp.(a) 1,400 19,530
- ---------------------------------------------------------------------------------------------
First Data Corp. 700 27,461
=============================================================================================
46,991
=============================================================================================
DIVERSIFIED COMMERCIAL SERVICES--4.40%
Cendant Corp.(a) 2,000 28,560
- ---------------------------------------------------------------------------------------------
H&R Block, Inc. 350 13,517
=============================================================================================
42,077
=============================================================================================
DIVERSIFIED FINANCIAL SERVICES--16.73%
Citigroup Inc. 1,100 43,175
- ---------------------------------------------------------------------------------------------
Freddie Mac 500 28,950
- ---------------------------------------------------------------------------------------------
J.P. Morgan Chase & Co. 1,000 29,350
- ---------------------------------------------------------------------------------------------
Janus Capital Group Inc. 1,250 17,375
- ---------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,000 41,050
=============================================================================================
159,900
=============================================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.76%
Waters Corp.(a) 1,100 26,411
=============================================================================================
EMPLOYMENT SERVICES--1.87%
Robert Half International Inc.(a) 1,100 17,908
=============================================================================================
ENVIRONMENTAL SERVICES--3.18%
Waste Management, Inc. 1,400 30,408
=============================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------------------
FOOD RETAIL--3.86%
Kroger Co. (The)(a) 1,650 23,595
- ---------------------------------------------------------------------------------------------
Safeway Inc.(a) 800 13,296
=============================================================================================
36,891
=============================================================================================
GENERAL MERCHANDISE STORES--2.10%
Target Corp. 600 20,064
=============================================================================================
HEALTH CARE DISTRIBUTORS & SERVICES--5.35%
IMS Health Inc. 1,700 26,180
- ---------------------------------------------------------------------------------------------
McKesson Corp. 900 24,966
=============================================================================================
51,146
=============================================================================================
HEALTH CARE FACILITIES--2.86%
Tenet Healthcare Corp.(a) 800 11,872
- ---------------------------------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 400 15,468
=============================================================================================
27,340
=============================================================================================
HOTELS, RESORTS & CRUISE LINES--2.81%
Starwood Hotels & Resorts Worldwide, Inc. 1,000 26,840
=============================================================================================
INDUSTRIAL CONGLOMERATES--3.75%
Tyco International Ltd. (Bermuda) 2,300 35,880
=============================================================================================
LEISURE PRODUCTS--2.74%
Brunswick Corp. 1,200 26,196
=============================================================================================
MANAGED HEALTH CARE--3.39%
Aetna Inc. 650 32,370
=============================================================================================
OIL & GAS DRILLING--4.35%
Pride International, Inc.(a) 1,450 22,504
- ---------------------------------------------------------------------------------------------
Transocean Inc. (Cayman Island) 1,000 19,050
=============================================================================================
41,554
=============================================================================================
OIL & GAS EQUIPMENT & SERVICES--1.89%
Weatherford International Ltd. (Bermuda)(a) 450 18,104
=============================================================================================
PHARMACEUTICALS--2.73%
Wyeth 600 26,118
=============================================================================================
PROPERTY & CASUALTY INSURANCE--5.02%
ACE Ltd. (Cayman Island) 850 28,118
- ---------------------------------------------------------------------------------------------
Radian Group Inc. 500 19,850
=============================================================================================
47,968
=============================================================================================
SEMICONDUCTOR EQUIPMENT--3.67%
Novellus Systems, Inc.(a) 1,250 35,050
=============================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------------------
SYSTEMS SOFTWARE--3.74%
Computer Associates International, Inc. 2,200 35,728
- ---------------------------------------------------------------------------------------------
Total Common Stocks (Cost $946,004) 937,287
- ---------------------------------------------------------------------------------------------
=============================================================================================
TOTAL INVESTMENTS--98.05% (Cost $946,004) 937,287
- ---------------------------------------------------------------------------------------------
=============================================================================================
OTHER ASSETS LESS LIABILITIES--1.95% 18,625
- ---------------------------------------------------------------------------------------------
=============================================================================================
NET ASSETS--100.00% $ 955,912
- ---------------------------------------------------------------------------------------------
=============================================================================================
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
See Notes to Financial Statements.
AIM BASIC VALUE II
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2003
(UNAUDITED)
<Table>
ASSETS:
Investments, at market value (cost $946,004) $ 937,287
- --------------------------------------------------------------------------------------------------
Cash 19,871
- --------------------------------------------------------------------------------------------------
Receivables for:
Due from Advisor 7,987
- --------------------------------------------------------------------------------------------------
Dividends 63
- --------------------------------------------------------------------------------------------------
Investment for deferred compensation plan 1,802
==================================================================================================
Other assets 1,289
==================================================================================================
Total assets 968,299
- --------------------------------------------------------------------------------------------------
==================================================================================================
LIABILITIES:
Payable for deferred compensation plan 1,802
- --------------------------------------------------------------------------------------------------
Accrued trustees' fees 746
- --------------------------------------------------------------------------------------------------
Accrued transfer agent fees 374
- --------------------------------------------------------------------------------------------------
Accrued operating expenses 9,465
==================================================================================================
Total liabilities 12,387
==================================================================================================
Net assets applicable to shares outstanding $ 955,912
- --------------------------------------------------------------------------------------------------
==================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 1,004,034
- --------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (7,128)
- --------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities (32,277)
- --------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (8,717)
==================================================================================================
$ 955,912
- --------------------------------------------------------------------------------------------------
==================================================================================================
NET ASSETS:
Class A $ 382,362
- --------------------------------------------------------------------------------------------------
==================================================================================================
Class B $ 286,775
- --------------------------------------------------------------------------------------------------
==================================================================================================
Class C $ 286,775
- --------------------------------------------------------------------------------------------------
==================================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 40,476
- --------------------------------------------------------------------------------------------------
==================================================================================================
Class B 30,357
- --------------------------------------------------------------------------------------------------
==================================================================================================
Class C 30,357
- --------------------------------------------------------------------------------------------------
==================================================================================================
Class A :
Net asset value per share $ 9.45
- --------------------------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.45 / 94.50%) $ 10.00
- --------------------------------------------------------------------------------------------------
==================================================================================================
Class B :
Net asset value and offering price per share $ 9.45
- --------------------------------------------------------------------------------------------------
==================================================================================================
Class C :
Net asset value and offering price per share $ 9.45
- --------------------------------------------------------------------------------------------------
==================================================================================================
</Table>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2003
(UNAUDITED)
<Table>
INVESTMENT INCOME:
Dividends $ 5,604
==================================================================================================
EXPENSES:
Advisory fees 3,414
- --------------------------------------------------------------------------------------------------
Administrative services fees 24,795
- --------------------------------------------------------------------------------------------------
Custodian fees 124
- --------------------------------------------------------------------------------------------------
Distribution fees--Class A 637
- --------------------------------------------------------------------------------------------------
Distribution fees--Class B 1,366
- --------------------------------------------------------------------------------------------------
Distribution fees--Class C 1,366
- --------------------------------------------------------------------------------------------------
Transfer agent fees 291
- --------------------------------------------------------------------------------------------------
Trustees' fees 4,291
- --------------------------------------------------------------------------------------------------
Printing 4,867
- --------------------------------------------------------------------------------------------------
Professional fees 10,284
- --------------------------------------------------------------------------------------------------
Other 557
==================================================================================================
Total expenses 51,992
==================================================================================================
Less: Fees waived, expenses reimbursed and expenses paid indirectly (44,029)
- --------------------------------------------------------------------------------------------------
Net expenses 7,963
==================================================================================================
Net investment income (loss) (2,359)
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (11,939)
- --------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities 57,087
==================================================================================================
Net gain from investment securities 45,148
==================================================================================================
Net increase in net assets resulting from operations $ 42,789
- --------------------------------------------------------------------------------------------------
==================================================================================================
</Table>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND THE PERIOD AUGUST 30,
2002 (DATE OPEATIONS COMMENCED) TO OCTOBER 31, 2002
(UNAUDITED)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
----------- ------------
OPERATIONS:
Net investment income (loss) $ (2,359) $ (765)
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (11,939) (20,338)
- -----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities 57,087 (65,804)
=======================================================================================================================
Net increase (decrease) in net assets resulting from operations 42,789 (86,907)
=======================================================================================================================
Distributions to shareholders from net investment income:
Class A (4,400) --
- -----------------------------------------------------------------------------------------------------------------------
Class B (3,300) --
- -----------------------------------------------------------------------------------------------------------------------
Class C (3,300) --
=======================================================================================================================
Total distributions from net investment income (11,000) --
=======================================================================================================================
Net increase (decrease) in net assets resulting from distributions (11,000) --
=======================================================================================================================
Share transactions-net:
Class A 4,400 400,010
- -----------------------------------------------------------------------------------------------------------------------
Class B 3,300 300,010
- -----------------------------------------------------------------------------------------------------------------------
Class C 3,300 300,010
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share transactions 11,000 1,000,030
=======================================================================================================================
Net increase in net assets 42,789 913,123
=======================================================================================================================
NET ASSETS:
Beginning of period 913,123 --
=======================================================================================================================
End of period $ 955,912 $ 913,123
- -----------------------------------------------------------------------------------------------------------------------
=======================================================================================================================
</Table>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Basic Value II Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
consists of multiple classes of shares. 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 to provide long-term growth of capital.
Each company listed in the Schedule of Investments is organized in the United
States unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished by
independent pricing services or market makers. Each security reported on the
NASDAQ National Market System is valued at the NASDAQ Official Closing Price
("NOCP") as of the close of the customary trading session on the valuation
date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and commercial
paper 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").
Foreign securities are converted into U.S. dollar amounts using
exchange rates as of the close of he 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 the close of the
respective markets. Events affecting the values of such foreign securities
may occur between the times at which the particular foreign market closes
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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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. Premiums and discounts
are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. Distributions - Distributions from income and net realized capital gain, 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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Expenses - Fees provided for under the Rule 12b-1 plan of a particular class
of the Fund and which are directly attributable to that class are charged to
the operations of such class. Transfer agency fees and expenses and other
shareholder recordkeeping fees and expenses are charged to each class
pursuant to a transfer agency and service agreement adopted by the Fund with
respect to such class. All other expenses are allocated among the classes
based on relative net assets.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $1
billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1
billion of average daily net assets, plus 0.65% of the Fund's average daily nest
assets in excess of $2 billion. AIM has voluntarily agreed to waive fees and/or
reimburse expenses (excluding interest, taxes, dividends on short sales,
extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A, Class B and Class C shares to the extent
necessary to limit the total annual fund operating expenses of Class A to 1.75%.
Voluntary fee waivers or reimbursements may be rescinded, terminated or modified
at any time without further notice to investors. During periods of voluntary
waivers or reimbursements to the extent the annualized expense ratio does not
exceed the voluntary limit for the period committed, AIM will retain its ability
to be reimbursed for such fee waivers or reimbursements prior to the end of each
fiscal year. Further, AIM has voluntarily agreed to waive advisory fees of the
Fund in the amount of 25% of the advisory fee AIM receives from the affiliated
money market funds in which the Fund has invested. For the six months ended
April 30, 2003, AIM waived fees of $3,414 and reimbursed expenses of $36,676.
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, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $40 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total amount of sales charges, including
asset-based sales charges that may be paid by any class
of shares of the Fund. AIM Distributors has voluntarily agreed to waive all fees
during the time the shares are not available for sale. This waiver may be
rescinded, terminated or modified at any time. For the six months ended April
30, 2003, the Class A, Class B and Class C shares paid $0, $0 and $0,
respectively, after AIM Distributors waived fees of $3,369.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors. During the six months ended April 30, 2003,
the Fund paid legal fees of $1,241 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.
NOTE 3 - INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $6 and reductions in
custodian fees of $564 under expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $570.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5 - BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. The Fund did not borrow or lend under the
facility during the six months ended April 30, 2003.
NOTE 6 - TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations. The tax character of any
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------
October 31, 2010 $20,338
==============================================
</Table>
NOTE 7 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $99,609 and $101,739, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
<Caption>
Aggregate unrealized appreciation of investment securities $ 65,109
- --------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (73,826)
- --------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment $ (8,717)
securities
================================================================================
Investments have the same cost for tax and financial statement purposes
</Table>
NOTE 8 - SHARE INFORMATION
The Fund commenced operations August 30, 2002 and consists of three different
classes of shares that are not currently available for sale: 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 CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the period August 30, 2002 (date operations commenced)
through October 31, 2002 were as follows:
<Table>
<Caption>
AUGUST 30, 2002 (DATE
SIX MONTHS ENDED OPERATIONS COMMENCED) TO
APRIL 30, 2003 OCTOBER 31, 2002
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ---------- ---------- ----------
Sold:
Class A -- $ -- 40,001 $ 400,010
- -----------------------------------------------------------------------------------------------------------
Class B -- -- 30,001 300,010
- -----------------------------------------------------------------------------------------------------------
Class C -- -- 30,001 300,010
===========================================================================================================
Issued as reinvestment
of dividends:
Class A 475 4,400 -- --
- -----------------------------------------------------------------------------------------------------------
Class B 356 3,300 -- --
- -----------------------------------------------------------------------------------------------------------
Class C 356 3,300 -- --
===========================================================================================================
1,187 $ 11,000 100,003 $1,000,030
- -----------------------------------------------------------------------------------------------------------
===========================================================================================================
</Table>
*Currently all shares are owned by AIM
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding during the six months ended April 30, 2003 and the period August 30,
2002 (date operations commenced) through October 31, 2002.
<Table>
<Caption>
CLASS A
--------------------------------
AUGUST 30, 2002
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------- ----------------
Net asset value, beginning of period $ 9.13 $ 10.00
- -------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02) (0.01)
- -------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 0.45 (0.86)
=============================================================================================================
Total from investment operations 0.43 (0.87)
=============================================================================================================
Less dividends from net investment income (0.11) --
=============================================================================================================
Net asset value, end of period $ 9.45 $ 9.13
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
Total return (a) 4.73% (8.70)%
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 382 $ 365
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.87%(b) 1.75%(c)
- -------------------------------------------------------------------------------------------------------------
Without fee waivers 11.03%(b) 23.74%(c)
=============================================================================================================
Ratio of net investment income (loss) to average net assets (0.52)(b) (0.49)(c)
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
Portfolio turnover rate (d) 11% 4%
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $367,155.
(c) Annualized.
(d) Not annualized for periods less than one year.
NOTE 9 - FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------
AUGUST 30, 2002
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------- ----------------
Net asset value, beginning of period $ 9.13 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02) (0.01)
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 0.45 (0.86)
==========================================================================================================================
Total from investment operations 0.43 (0.87)
==========================================================================================================================
Less dividends from net investment income (0.11) --
==========================================================================================================================
Net asset value, end of period $ 9.45 $ 9.13
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
Total return(a) 4.73% (8.70)%
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 287 $ 274
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.87%(b) 1.75%(c)
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers 11.68%(b) 24.39%(c)
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.52)(b) (0.49)(c)
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
Portfolio turnover rate(d) 11% 4%
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $275,370.
(c) Annualized.
(d) Not annualized for periods less than one year.
NOTE 9 - FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
---------------------------------------
AUGUST 30, 2002
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------- ----------------
Net asset value, beginning of period $ 9.13 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02) (0.01)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 0.45 (0.86)
===========================================================================================================================
Total from investment operations 0.43 (0.87)
===========================================================================================================================
Less dividends from net investment income (0.11) --
===========================================================================================================================
Net asset value, end of period $ 9.45 9.13
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
Total return (a) 4.73% (8.70)%
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 287 274
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.87%(b) 1.75%(c)
- ---------------------------------------------------------------------------------------------------------------------------
Without fee waivers 11.68%(b) 24.39%(c)
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.52)(b) (0.49)(c)
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
Portfolio turnover rate (d) 11% 4%
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $275,370.
(c) Annualized.
(d) Not annualized for periods less than one year.
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Vice President INVESTMENT ADVISOR
Bruce L. Crockett M. Carome A I M Advisors, Inc.
Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM BLUE CHIP FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Blue Chip Fund seeks to provide long-term growth
of capital and, secondarily, current income. The fund seeks
to meet its objectives by investing, normally, at least 80%
of its assets in securities of blue-chip companies.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to persons who have
received a current prospectus of the fund.
FUND DATA
PORTFOLIO COMPOSITION BY SECTOR
As of 4/30/03
================================================================================
(PIE CHART)
FINANCIALS 20.5%
MATERIALS, TELECOMMUNICATIONS
AND UTILITIES COMBINED 4.7%
CONSUMER STAPLES 7.0%
CONSUMER DISCRETIONARY 14.0%
CASH AND OTHER INSTRUMENTS 3.5%
ENERGY 5.4%
HEALTH CARE 18.6%
INDUSTRIALS 8.4%
INFORMATION TECHNOLOGY 17.9%
TOTAL NUMBER OF HOLDINGS* 83
TOTAL NET ASSETS $2.7 billion
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (2/04/87) 8.14%
10 Years 7.11
5 Years -6.04
1 Year -19.15
CLASS B SHARES
Inception (10/01/96) 2.62%
5 Years -6.02
1 Year -19.32
CLASS C SHARES
Inception (8/04/97) -2.25%
5 Years -5.63
1 Year -15.92
CLASS R SHARES**
10 Years 7.56
5 Years -5.11
1 Year -14.57
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without sales charges. Class R shares were
first offered on June 3, 2002. Returns prior to that date are hypothetical
results based on Class A share performance at net asset value, adjusted to
reflect Class R 12b-1 fees. (The inception date of Class A shares is 2/04/87.)
Class R share returns do not include a 0.75% contingent deferred sales charge
that may be imposed on a total redemption of retirement plan assets with
in the first year.
In addition to fund returns as of the close of the reporting period, industry
regulations require us to provide average annual total returns (including sales
charges) for periods ended 3/31/03, the most recent calendar quarter-end, which
were as follows. Class A shares, inception (2/04/87), 7.70%; 10 years, 6.27%;
five years, -7.07%; one year, -30.32%. Class B shares, inception (10/01/96),
1.54%; five years, -7.02%; one year, -30.44%. Class C shares, inception
(8/04/97), -3.50%; five years, -6.64%; one year, -27.51%. Class R shares, 10
years, 6.71%; five years, -6.15%; one year, -26.40%.
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
Class A Shares 2.60%
Class B Shares 2.14
Class C Shares 2.14
Class R Shares 2.49
S&P 500 Index 4.47
(Broad Market and Style-specific Index)
Lipper Large Cap Core Fund Index 2.96
(Peer Group Index)
Source: Lipper, Inc.
*Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
==============================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ----------------------------------------------------------------------------------------------
1. Microsoft Corp. 3.6% 1. Diversified Financial Services 13.2%
2. Pfizer Inc. 3.5 2. Pharmaceuticals 9.3
3. Wal-Mart Stores, Inc. 3.5 3. Systems Software 5.4
4. General Electric Co. 3.5 4. Banks 4.9
5. Citigroup Inc. 3.4 5. General Merchandise Stores 4.3
6. Exxon Mobil Corp. 3.2 6. Health Care Equipment 4.3
7. Johnson & Johnson 2.7 7. Semiconductors 4.2
8. Bank of America Corp. 2.2 8. Computer Hardware 3.5
9. Cisco Systems, Inc. 2.1 9. Household Products 3.5
10. Procter & Gamble Co. (The) 2.1 10. Industrial Conglomerates 3.5
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
==============================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective May 1, 2003, after the close of the reporting period, the
portfolio management team for AIM Blue Chip Fund is as follows: Kirk L.
Anderson and Monika H. Degan.
o AIM Blue Chip Fund's performance figures are historical, and they reflect
fund expenses, 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 B shares is 1% for the first year after purchase.
The performance of the fund's share classes will differ due to different
sales charge structures and class expenses.
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.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanly Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock-market performance.
o The unmanaged Lipper Large-Cap Core Fund Index represents an average of the
performance of the 30 largest large-capitalization core equity funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o A direct investment cannot be made in an Index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities is available without
charge, upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMinvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
(PHOTO OF This is the report on AIM Blue Chip Fund for the six months
ROBERT H. ended April 30, 2003. You will note that we have adopted a
GRAHAM) more concise format for our semiannual reports. Important
information such as top holdings and performance as of the
close of the reporting period appear on the opposite page.
This letter will provide an overview of the markets and your
fund during the six months covered by this report. As
always, timely information about your fund and the markets
in general is available at our Web site, aiminvestments.com.
MARKET CONDITIONS
Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of
common stocks frequently used as a general measure of U.S. stock market
performance, returned 4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally mid- and small-cap stocks outperformed large-cap stocks and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value Index, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
During the six-month reporting period, all share classes of AIM Blue Chip Fund
posted positive returns at net asset value. As compared to its holdings at the
end of the previous reporting period, the fund's weighting in the technology
sector increased slightly, and its health care exposure was slightly reduced.
Portfolio Managers Monika Degan and Jonathan Schoolar attribute the fund's
allocation in the technology sector as a help to performance during the period.
Besides having a rally in the technology sector of the S&P 500 during October
and November 2002, technology was the best-performing sector in the S&P 500 for
the four-month period ended April 30, 2003.
Over the same four-month period in 2003, the telecommunications, utilities
and materials sectors have performed poorly. However, the fund was only
minimally invested in these sectors. At the end of the reporting period, only
4.7% of the fund's portfolio was invested in these three sectors combined.
We encourage you to visit our Web site, aiminvestments.com, for a wealth of
information about your fund, including regular performance updates, quarterly
details of portfolio composition, and much more. From our home page, click on
Products & Performance, then Mutual Funds, and then select the type of
information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Blue Chip Fund, and I look
forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department are ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
GENERALLY, MID- AND SMALL-CAP
STOCKS OUTPERFORMED LARGE-CAP
STOCKS, AND THE VALUE INVESTMENT
STYLE OUTPERFORMED THE GROWTH
INVESTMENT STYLE DURING THE
SIX-MONTH REPORTING PERIOD.
ROBERT H. GRAHAM
================================================================================
SUPPLEMENT TO SEMIANNUAL REPORT DATED 4/30/03
AIM BLUE CHIP FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class
shareholders with a performance overview specific to their holdings.
Institutional Class shares are offered exclusively to institutional investors,
including defined contribution plans that meet certain criteria. Performance of
Institutional Class shares will differ from performance of Class A shares due
to differing sales charges and class expenses.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 4/30/03
================================================================================
Inception (3/15/02) -19.28%
1 year -13.91
6 months 2.92*
*NOT ANNUALIZED
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 3/31/03 (most recent calendar quarter-end)
================================================================================
Inception (3/15/02) -25.99%
1 year -25.86
================================================================================
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. All returns assume
reinvestment of distributions at net asset value. Investment return and
principal value will fluctuate so your shares, when redeemed, may be worth more
or less than their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or call
AIM toll free at 800-451-4246.
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
A I M DISTRIBUTORS, INC. BCH-INS-2
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-96.43%
ADVERTISING-0.96%
Omnicom Group Inc. 425,000 $ 26,307,500
==========================================================================
AEROSPACE & DEFENSE-2.17%
Lockheed Martin Corp. 475,000 23,773,750
- --------------------------------------------------------------------------
United Technologies Corp. 575,000 35,540,750
==========================================================================
59,314,500
==========================================================================
ALUMINUM-0.50%
Alcoa Inc. 600,000 13,758,000
==========================================================================
APPAREL RETAIL-0.61%
Gap, Inc. (The) 1,000,000 16,630,000
==========================================================================
BANKS-4.85%
Bank of America Corp. 825,000 61,091,250
- --------------------------------------------------------------------------
Fifth Third Bancorp 550,000 27,109,500
- --------------------------------------------------------------------------
Wells Fargo & Co. 925,000 44,640,500
==========================================================================
132,841,250
==========================================================================
BIOTECHNOLOGY-1.96%
Amgen Inc.(a) 875,000 53,646,250
==========================================================================
BREWERS-0.82%
Anheuser-Busch Cos., Inc. 450,000 22,446,000
==========================================================================
BROADCASTING & CABLE TV-0.97%
Clear Channel Communications, Inc.(a) 675,000 26,399,250
==========================================================================
COMPUTER HARDWARE-3.52%
Dell Computer Corp.(a) 1,600,000 46,256,000
- --------------------------------------------------------------------------
Hewlett-Packard Co. 600,000 9,780,000
- --------------------------------------------------------------------------
International Business Machines Corp. 475,000 40,327,500
==========================================================================
96,363,500
==========================================================================
DATA PROCESSING SERVICES-2.03%
First Data Corp. 925,000 36,287,750
- --------------------------------------------------------------------------
Fiserv, Inc.(a) 650,000 19,136,000
==========================================================================
55,423,750
==========================================================================
DEPARTMENT STORES-0.93%
Kohl's Corp.(a) 450,000 25,560,000
==========================================================================
DIVERSIFIED CHEMICALS-0.31%
E. I. Du Pont de Nemours & Co. 200,000 8,506,000
==========================================================================
DIVERSIFIED FINANCIAL SERVICES-13.18%
American Express Co. 900,000 34,074,000
- --------------------------------------------------------------------------
Citigroup Inc. 2,400,000 94,200,000
- --------------------------------------------------------------------------
Fannie Mae 650,000 47,053,500
- --------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES-(CONTINUED)
Freddie Mac 475,000 $ 27,502,500
- --------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 450,000 34,155,000
- --------------------------------------------------------------------------
J.P. Morgan Chase & Co. 900,000 26,415,000
- --------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 800,000 32,840,000
- --------------------------------------------------------------------------
Morgan Stanley 875,000 39,156,250
- --------------------------------------------------------------------------
SLM Corp. 225,000 25,200,000
==========================================================================
360,596,250
==========================================================================
ELECTRIC UTILITIES-1.53%
Dominion Resources, Inc. 152,000 8,995,360
- --------------------------------------------------------------------------
FPL Group, Inc. 275,000 16,739,250
- --------------------------------------------------------------------------
Southern Co. (The) 550,000 15,999,500
==========================================================================
41,734,110
==========================================================================
FOOD DISTRIBUTORS-1.26%
SYSCO Corp. 1,200,000 34,476,000
==========================================================================
GENERAL MERCHANDISE STORES-4.32%
Target Corp. 675,000 22,572,000
- --------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1,700,000 95,744,000
==========================================================================
118,316,000
==========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-0.96%
Cardinal Health, Inc. 475,000 26,258,000
==========================================================================
HEALTH CARE EQUIPMENT-4.32%
Boston Scientific Corp.(a) 650,000 27,982,500
- --------------------------------------------------------------------------
Medtronic, Inc. 975,000 46,546,500
- --------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 320,000 16,787,200
- --------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 575,000 26,967,500
==========================================================================
118,283,700
==========================================================================
HEALTH CARE FACILITIES-0.67%
HCA Inc. 575,000 18,457,500
==========================================================================
HOME IMPROVEMENT RETAIL-1.54%
Home Depot, Inc. (The) 1,500,000 42,195,000
==========================================================================
HOTELS, RESORTS & CRUISE LINES-0.66%
Carnival Corp. (Panama) 650,000 17,933,500
==========================================================================
HOUSEHOLD PRODUCTS-3.49%
Colgate-Palmolive Co. 650,000 37,160,500
- --------------------------------------------------------------------------
Procter & Gamble Co. (The) 650,000 58,402,500
==========================================================================
95,563,000
==========================================================================
INDUSTRIAL CONGLOMERATES-3.47%
General Electric Co. 3,225,000 94,976,250
==========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
INDUSTRIAL GASES-0.59%
Air Products & Chemicals, Inc. 375,000 $ 16,151,250
==========================================================================
INTEGRATED OIL & GAS-3.15%
Exxon Mobil Corp. 2,450,000 86,240,000
==========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.05%
BellSouth Corp. 350,000 8,921,500
- --------------------------------------------------------------------------
SBC Communications Inc. 850,000 19,856,000
==========================================================================
28,777,500
==========================================================================
INTERNET RETAIL-0.48%
eBay Inc.(a) 140,000 12,987,800
==========================================================================
LIFE & HEALTH INSURANCE-0.70%
Prudential Financial, Inc. 600,000 19,182,000
==========================================================================
MANAGED HEALTH CARE-1.31%
UnitedHealth Group Inc. 390,000 35,930,700
==========================================================================
MOTORCYCLE MANUFACTURERS-0.38%
Harley-Davidson, Inc. 235,000 10,443,400
==========================================================================
MOVIES & ENTERTAINMENT-1.79%
Viacom Inc.-Class B(a) 1,125,000 48,836,250
==========================================================================
MULTI-LINE INSURANCE-1.80%
American International Group, Inc. 850,000 49,257,500
==========================================================================
NETWORKING EQUIPMENT-2.14%
Cisco Systems, Inc.(a) 3,900,000 58,656,000
==========================================================================
OIL & GAS DRILLING-1.32%
ENSCO International Inc. 650,000 16,510,000
- --------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 500,000 19,600,000
==========================================================================
36,110,000
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.88%
Schlumberger Ltd. (Netherlands) 575,000 24,109,750
==========================================================================
PHARMACEUTICALS-9.34%
Allergan, Inc. 375,000 26,343,750
- --------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 525,000 27,153,000
- --------------------------------------------------------------------------
Johnson & Johnson 1,300,000 73,268,000
- --------------------------------------------------------------------------
Pfizer Inc. 3,125,000 96,093,750
- --------------------------------------------------------------------------
Wyeth 750,000 32,647,500
==========================================================================
255,506,000
==========================================================================
RAILROADS-0.71%
Canadian National Railway Co. (Canada) 400,000 19,452,000
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT-2.27%
Applied Materials, Inc.(a) 2,250,000 $ 32,850,000
- --------------------------------------------------------------------------
KLA-Tencor Corp.(a) 375,000 15,375,000
- --------------------------------------------------------------------------
Novellus Systems, Inc.(a) 500,000 14,020,000
==========================================================================
62,245,000
==========================================================================
SEMICONDUCTORS-4.20%
Analog Devices, Inc.(a) 800,000 26,496,000
- --------------------------------------------------------------------------
Intel Corp. 1,500,000 27,600,000
- --------------------------------------------------------------------------
Linear Technology Corp. 450,000 15,511,500
- --------------------------------------------------------------------------
Maxim Integrated Products, Inc. 300,000 11,787,000
- --------------------------------------------------------------------------
Microchip Technology Inc. 675,000 14,033,250
- --------------------------------------------------------------------------
Xilinx, Inc.(a) 725,000 19,625,750
==========================================================================
115,053,500
==========================================================================
SOFT DRINKS-1.40%
Coca-Cola Co. (The) 600,000 24,240,000
- --------------------------------------------------------------------------
PepsiCo, Inc. 325,000 14,066,000
==========================================================================
38,306,000
==========================================================================
SPECIALTY STORES-1.41%
Bed Bath & Beyond Inc.(a) 725,000 28,644,750
- --------------------------------------------------------------------------
Staples, Inc.(a) 515,000 9,805,600
==========================================================================
38,450,350
==========================================================================
SYSTEMS SOFTWARE-5.40%
Microsoft Corp. 3,900,000 99,723,000
- --------------------------------------------------------------------------
Oracle Corp.(a) 2,700,000 32,076,000
- --------------------------------------------------------------------------
VERITAS Software Corp.(a) 725,000 15,957,250
==========================================================================
147,756,250
==========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.39%
Nokia Oyj-ADR (Finland) 650,000 10,770,500
==========================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.69%
Vodafone Group PLC-ADR (United Kingdom) 950,000 18,772,000
==========================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,385,650,865) 2,638,979,060
==========================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. TREASURY BILL-0.06%
1.13%, 06/19/03 (Cost $1,497,693)(b) $1,500,000(c) 1,497,693
==========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
MONEY MARKET FUNDS-3.48%
STIC Liquid Assets Portfolio(d) 47,562,194 47,562,194
- --------------------------------------------------------------------------
STIC Prime Portfolio(d) 47,562,194 47,562,194
==========================================================================
Total Money Market Funds (Cost
$95,124,388) 95,124,388
==========================================================================
TOTAL INVESTMENTS-99.97% (Cost
$2,482,272,946) 2,735,601,141
==========================================================================
OTHER ASSETS LESS LIABILITIES-0.03% 945,913
==========================================================================
NET ASSETS-100.00% $2,736,547,054
__________________________________________________________________________
==========================================================================
</Table>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1 section H and Note 7.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$2,482,272,946) $ 2,735,601,141
- ------------------------------------------------------------
Receivables for:
Investments sold 6,265,328
- ------------------------------------------------------------
Fund shares sold 2,886,476
- ------------------------------------------------------------
Dividends and interest 1,558,883
- ------------------------------------------------------------
Investment for deferred compensation plan 70,234
- ------------------------------------------------------------
Other assets 65,350
============================================================
Total assets 2,746,447,412
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 5,185,846
- ------------------------------------------------------------
Deferred compensation plan 70,234
- ------------------------------------------------------------
Accrued distribution fees 2,178,934
- ------------------------------------------------------------
Accrued trustees' fees 2,408
- ------------------------------------------------------------
Accrued transfer agent fees 2,116,683
- ------------------------------------------------------------
Accrued operating expenses 346,253
============================================================
Total liabilities 9,900,358
============================================================
Net assets applicable to shares outstanding $ 2,736,547,054
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 4,313,792,048
- ------------------------------------------------------------
Undistributed net investment income (loss) (7,381,934)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and futures contracts (1,823,868,230)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and
futures contracts 254,005,170
============================================================
$ 2,736,547,054
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 1,328,347,894
____________________________________________________________
============================================================
Class B $ 1,131,716,568
____________________________________________________________
============================================================
Class C $ 275,789,970
____________________________________________________________
============================================================
Class R $ 559,026
____________________________________________________________
============================================================
Institutional Class $ 133,596
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 140,477,693
____________________________________________________________
============================================================
Class B 124,736,941
____________________________________________________________
============================================================
Class C 30,398,833
____________________________________________________________
============================================================
Class R 59,168
____________________________________________________________
============================================================
Institutional Class 14,020
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 9.46
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $9.46 divided by
94.50%) $ 10.01
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 9.07
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 9.07
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 9.45
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 9.53
____________________________________________________________
============================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $59,604) $ 16,865,155
- ---------------------------------------------------------------------------
Dividends from affiliated money market funds 568,112
- ---------------------------------------------------------------------------
Interest 33,493
- ---------------------------------------------------------------------------
Security lending income 22,257
===========================================================================
Total investment income 17,489,017
===========================================================================
EXPENSES:
Advisory fees 8,637,245
- ---------------------------------------------------------------------------
Administrative services fees 254,987
- ---------------------------------------------------------------------------
Custodian fees 107,618
- ---------------------------------------------------------------------------
Distribution fees -- Class A 2,275,535
- ---------------------------------------------------------------------------
Distribution fees -- Class B 5,586,202
- ---------------------------------------------------------------------------
Distribution fees -- Class C 1,382,894
- ---------------------------------------------------------------------------
Distribution fees -- Class R 552
- ---------------------------------------------------------------------------
Transfer agent fees 5,928,780
- ---------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 58
- ---------------------------------------------------------------------------
Trustees' fees 12,361
- ---------------------------------------------------------------------------
Other 565,051
===========================================================================
Total expenses 24,751,283
===========================================================================
Less: Fees waived and expenses paid indirectly (34,701)
===========================================================================
Net expenses 24,716,582
===========================================================================
Net investment income (loss) (7,227,565)
===========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (112,321,447)
- ---------------------------------------------------------------------------
Foreign currencies 1,362
- ---------------------------------------------------------------------------
Futures contracts 3,292,625
===========================================================================
(109,027,460)
===========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 172,447,494
- ---------------------------------------------------------------------------
Foreign currencies (538)
- ---------------------------------------------------------------------------
Futures contracts (487,416)
===========================================================================
171,959,540
===========================================================================
Net gain from investment securities, foreign currencies and
future contracts 62,932,080
===========================================================================
Net increase in net assets resulting from operations $ 55,704,515
___________________________________________________________________________
===========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (7,227,565) $ (26,181,399)
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts (109,027,460) (605,224,882)
- ------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and futures
contracts 171,959,540 (87,627,440)
================================================================================================
Net increase (decrease) in net assets resulting from
operations 55,704,515 (719,033,721)
================================================================================================
Share transactions-net:
Class A (103,927,449) (325,975,435)
- ------------------------------------------------------------------------------------------------
Class B (87,813,988) (303,773,409)
- ------------------------------------------------------------------------------------------------
Class C (31,734,378) (109,471,968)
- ------------------------------------------------------------------------------------------------
Class R 493,479 36,356
- ------------------------------------------------------------------------------------------------
Institutional Class (29,178) 168,155
================================================================================================
Net increase (decrease) in net assets resulting from
share transactions (223,011,514) (739,016,301)
================================================================================================
Net increase (decrease) in net assets (167,306,999) (1,458,050,022)
================================================================================================
NET ASSETS:
Beginning of period 2,903,854,053 4,361,904,075
================================================================================================
End of period $ 2,736,547,054 $ 2,903,854,053
________________________________________________________________________________________________
================================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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 primary investment objective is long-term growth of capital with
a secondary objective of current income. Each company listed in the Schedule of
Investments is organized in the United States unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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
F-7
changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. The combined
results of changes in foreign exchange rates and the fluctuation of market
prices on investments are included with the net realized and unrealized
gain or loss from investments in the Statement of Operations.
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 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. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
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 also include to
varying degrees, the risk of loss in excess of the variation margin
disclosed in the Statement of Assets and Liabilities.
I. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays 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. AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in affiliated money market
funds with cash collateral from securities loaned by the Fund). For the six
months ended April 30, 2003, AIM waived fees of $12,869.
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, 2003, AIM
was paid $254,987 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. During the six months ended April 30, 2003,
AFS retained $3,096,900 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Institutional Class shares of the
Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A shares, Class B shares, Class C shares and Class R
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, 1.00% of the average daily net assets of
Class B and Class C shares and 0.50% of the average daily net assets of Class R
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, Class C or Class R 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. NASD Rules also impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. Pursuant to the Plans, for the six months ended
April 30, 2003, the Class A, Class B, Class C and Class R shares paid
$2,275,535, $5,586,202, $1,382,894 and $552, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $172,222 in front-end sales commissions from the sale of
Class A shares and $25,033,
F-8
$1,915, $11,236 and $0 for Class A, Class B, Class C and Class R shares,
respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$3,837 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $19,754 and reductions in
custodian fees of $2,078 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $21,832.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At April 30, 2003, there were no securities on loan to brokers. For the six
months ended April 30, 2003, the Fund received fees of $22,257 for securities
lending.
NOTE 7--FUTURES CONTRACTS
On April 30, 2003, $1,193,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts as of April 30, 2003 were as follows:
<Table>
<Caption>
NO. OF MONTH/ MARKET UNREALIZED
CONTRACT CONTRACTS COMMITMENT VALUE APPRECIATION
- -------------------------------------------------------------------------------
S&P 500 Index 75 Jun.-03/Long $17,176,875 $676,975
_______________________________________________________________________________
===============================================================================
</Table>
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- --------------------------------------------------------------------------------
October 31, 2007 $ 38,614,682
- --------------------------------------------------------------------------------
October 31, 2008 185,511,022
- --------------------------------------------------------------------------------
October 31, 2009 833,974,843
- --------------------------------------------------------------------------------
October 31, 2010 615,639,140
================================================================================
Total capital loss carryforward $1,673,739,687
________________________________________________________________________________
================================================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $282,271,398 and $471,826,336, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $ 371,046,989
- --------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (155,726,850)
================================================================================
Net unrealized appreciation of investment securities $ 215,320,139
________________________________________________________________________________
================================================================================
Cost of investments for tax purposes is $2,520,281,002.
</Table>
F-9
NOTE 10--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and the Institutional Class
shares. Class A shares are sold with a front-end sales charge. Class B shares
and Class C shares are sold with a CDSC. Class R shares and the Institutional
Class shares are sold at net asset value. Under some circumstances, Class A
shares and Class R shares are subject to CDSCs. Generally, Class B shares will
automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 14,292,548 $ 129,599,534 35,714,782 $ 388,117,102
- --------------------------------------------------------------------------------------------------------------------------
Class B 6,309,065 55,168,960 15,784,454 168,633,848
- --------------------------------------------------------------------------------------------------------------------------
Class C 2,273,452 19,862,931 5,922,957 63,436,977
- --------------------------------------------------------------------------------------------------------------------------
Class R* 63,321 568,214 3,975 36,381
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class** -- -- 19,795 192,879
==========================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 500,369 4,532,678 1,132,609 12,298,772
- --------------------------------------------------------------------------------------------------------------------------
Class B (520,818) (4,532,678) (1,170,222) (12,298,772)
==========================================================================================================================
Reacquired:
Class A (26,402,701) (238,059,661) (68,970,741) (726,391,309)
- --------------------------------------------------------------------------------------------------------------------------
Class B (16,058,131) (138,450,270) (45,721,299) (460,108,485)
- --------------------------------------------------------------------------------------------------------------------------
Class C (5,957,868) (51,597,309) (16,701,794) (172,908,945)
- --------------------------------------------------------------------------------------------------------------------------
Class R* (8,125) (74,735) (3) (25)
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class** (3,260) (29,178) (2,515) (24,724)
==========================================================================================================================
(25,512,148) $(223,011,514) (73,988,002) $(739,016,301)
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
* Class R commenced sales as of June 3, 2002.
** Institutional Class commenced sales as of March 15, 2002.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A(a)
-------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.22 $ 11.22 $ 17.29 $ 15.49 $ 12.05 $ 10.32
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(b) (0.04)(b) (0.04) (0.05)(b) 0.01 0.04(b)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.25 (1.96) (6.03) 1.85 3.47 1.92
=================================================================================================================================
Total from investment operations 0.24 (2.00) (6.07) 1.80 3.48 1.96
=================================================================================================================================
Less distributions:
Dividends from net investment
income -- -- -- -- (0.01) (0.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gains -- -- -- -- (0.03) (0.21)
=================================================================================================================================
Total distributions -- -- -- -- (0.04) (0.23)
=================================================================================================================================
Net asset value, end of period $ 9.46 $ 9.22 $ 11.22 $ 17.29 $ 15.49 $ 12.05
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 2.60% (17.82)% (35.11)% 11.60% 29.01% 19.36%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,328,348 $1,402,589 $2,067,602 $3,163,453 $2,299,551 $1,085,648
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets 1.50%(d) 1.40% 1.28% 1.19% 1.19% 1.22%
=================================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.20)%(d) (0.33)% (0.29)% (0.31)% 0.03% 0.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 11% 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$1,311,081,521.
(e) Not annualized for periods less than one year.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B(a)
-------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.88 $ 10.87 $ 16.87 $ 15.22 $ 11.91 $ 10.25
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(b) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.23 (1.89) (5.87) 1.82 3.44 1.91
=================================================================================================================================
Total from investment operations 0.19 (1.99) (6.00) 1.65 3.34 1.87
=================================================================================================================================
Less distributions from net realized
gains -- -- -- -- (0.03) (0.21)
=================================================================================================================================
Net asset value, end of period $ 9.07 $ 8.88 $ 10.87 $ 16.87 $ 15.22 $ 11.91
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return (c) 2.14% (18.31)% (35.57)% 10.87% 28.08% 18.52%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,131,717 $1,198,513 $1,806,464 $2,746,149 $1,891,171 $745,862
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets 2.15%(d) 2.05% 1.94% 1.88% 1.91% 1.94%
=================================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.85)%(d) (0.98)% (0.94)% (1.00)% (0.68)% (0.38)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate (e) 11% 28% 31% 22% 22% 27%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$1,126,499,315.
(e) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS C(a)
---------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.88 $ 10.87 $ 16.86 $ 15.21 $ 11.91 $ 10.25
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(b) (0.10)(b) (0.13) (0.17)(b) (0.10)(b) (0.04)(b)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.23 (1.89) (5.86) 1.82 3.43 1.91
===========================================================================================================================
Total from investment operations 0.19 (1.99) (5.99) 1.65 3.33 1.87
===========================================================================================================================
Less distributions from net realized
gains -- -- -- -- (0.03) (0.21)
===========================================================================================================================
Net asset value, end of period $ 9.07 $ 8.88 $ 10.87 $ 16.86 $ 15.21 $ 11.91
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(c) 2.14% (18.31)% (35.53)% 10.82% 28.09% 18.52%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $275,790 $302,555 $487,838 $720,186 $349,951 $87,554
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 2.15%(d) 2.05% 1.94% 1.88% 1.90% 1.94%
===========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.85)%(d) (0.98)% (0.94)% (1.00)% (0.68)% (0.38)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(e) 11% 28% 31% 22% 22% 27%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Per share information for all periods prior to October 31, 2000 have
been restated to reflect a 3 for 1 stock split, effected in the form of
a 200% stock dividend, on September 8, 2000.
(b) Calculated using average shares outstanding.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$278,870,886.
(e) Not annualized for periods less than one year.
F-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS R
-------------------------------
JUNE 3, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.22 $ 10.53
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.02)(a)
- ---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.25 (1.29)
=============================================================================================
Total from investment operations 0.23 (1.31)
=============================================================================================
Net asset value, end of period $ 9.45 $ 9.22
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 2.49% (12.44)%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 559 $ 37
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets 1.65%(c) 1.55%(d)
=============================================================================================
Ratio of net investment income (loss) to average net assets (0.35)%(c) (0.49)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate(e) 11% 28%
_____________________________________________________________________________________________
=============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $222,575.
(d) Annualized
(e) Not annualized for periods less than one year.
<Table>
<Caption>
INSTITUTIONAL CLASS
---------------------------------
MARCH 15, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED)
APRIL 30, TO OCTOBER 31,
2003 2002
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $9.26 $ 12.13
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a) 0.02(a)
- -----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.25 (2.89)
===============================================================================================
Total from investment operations 0.27 (2.87)
===============================================================================================
Net asset value, end of period $9.53 $ 9.26
_______________________________________________________________________________________________
===============================================================================================
Total return(b) 2.92% (23.66)%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 134 $ 160
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets 0.79%(c) 0.77%(d)
===============================================================================================
Ratio of net investment income to average net assets 0.51%(c) 0.30%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate(e) 11% 28%
_______________________________________________________________________________________________
===============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $149,391.
(d) Annualized
(e) Not annualized for periods less than one year.
F-13
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS. (AIM INVESTMENT LOGO APPEARS HERE)
--Servicemark-- --Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com BCH-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM CAPITAL DEVELOPMENT FUND
(COVER IMAGE)
(AIM FUNDS LOGO)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Capital Development Fund seeks to provide
long-term growth of capital.
The fund seeks to achieve its objective
through investments in the stocks
of small and medium-sized companies.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
CLASS A SHARES VS. INDEX
Cumulative Total Returns
10/31/02 - 4/30/03, excluding sales charges.
BAR CHART
CLASS A SHARES 5.55%
LIPPER MID-CAP CORE FUND
INDEX 5.32%
TOTAL NUMBER OF HOLDINGS* 105
TOTAL NET ASSETS $850.7 MILLION
Source: Lipper, Inc.
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
AS OF 4/30/03, including sales charges
CLASS A SHARES
Inception (6/17/96) 5.89%
5 Years -2.32
1 Year -26.13
CLASS B SHARES
Inception (10/1/96) 4.44%
5 Years -2.22
1 Year -26.15
CLASS C SHARES
Inception (8/4/97) 1.85%
5 Years -1.88
1 Year -23.05
CLASS R SHARES**
Inception 6.61%
5 Years -1.36
1 Year -21.94
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without sales charges. Class R shares were
first offered on June 3, 2002. Returns prior to that date are hypothetical
results based on Class A share performance at net asset value, adjusted to
reflect Class R 12b-1 fees. (The inception date of Class A shares is 6/17/96).
Class R share returns do not include a 0.75% contingent deferred sales charge
that may be imposed on a total redemption of retirement plan assets within the
first year.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 5.55%
CLASS B SHARES 5.24
CLASS C SHARES 5.25
CLASS R SHARES 5.47
S&P 500 INDEX (Broad Market Index) 4.47
RUSSELL 2500 INDEX 7.87
(Style-specific index)
LIPPER MID-CAP CORE FUND INDEX 5.32
(Peer Group Index)
Source: Lipper, Inc.
In addition to returns as of the close of the fiscal year period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (6/17/96), 4.98%; five years, -3.49%; one year, -31.31%.
Class B shares, inception (10/1/96), 3.48%; five years, -3.39%; one year,
- -31.40%. Class C shares, inception (8/4/97), 0.74%; five years, -3.07%; one
year, -28.52%. Class R shares, inception, 5.69%; five years, -2.54%; one year,
- -27.43%.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
=======================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- -------------------------------------------------------------------------------------------------------
1. iShares Nasdaq Biotechnology Index Fund 2.0% 1. Data Processing Services 6.2%
2. Radian Group Inc. 1.6 2. Electronic Equipment & Instruments 4.7
3. PMI Group, Inc. (The) 1.5 3. Health Care Distributors & Services 4.3
4. Hasbro, Inc. 1.5 4. Application Software 4.3
5. Alliance Data Systems Corp. 1.5 5. Property & Casualty Insurance 3.9
6. Iron Mountain Inc. 1.4 6. Real Estate 3.3
7. Rockwell Automation, Inc. 1.3 7. IT Consulting & Services 3.2
8. American Financial Realty Trust 1.3 8. Pharmaceuticals 3.0
9. Anthem, Inc. 1.2 9. Reinsurance 2.8
10. Pride International, Inc. 1.2 10. Diversified Financial Services 2.7
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
=======================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Capital Development Fund's performance figures are historical, and they
reflect fund expenses, 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 share classes will differ due to different
sales charge structures and class expenses.
o Investing in small and mid-size companies may involve greater risk and
potential reward than investing in more established companies. Also, small
companies may have business risk, significant stock-price fluctuations and
illiquidity.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
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 Lipper Mid-Cap Core Fund Index represents an average of the
performance of the 30 largest mid-capitalization core funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 2500 Index measures the performance of the 2,500
smallest companies in the Russell 3000 Index, which measures the performance
of the 3,000 largest U.S. companies based on total market capitalization.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT aiminvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Capital Development Fund for the
ROBERT H. six months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page. This letter will provide an overview of the
markets and your fund during the six months covered by this
report. As always, timely information about your fund and
the markets in general is available at our Web site,
aiminvestments.com.
MARKET CONDITIONS
Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed the
growth investment style during the six-month reporting period. For example, the
Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Capital Development Fund, at net asset
value, posted positive returns for the six months ended April 30, 2003.
Throughout the reporting period, fund managers Paul J. Rasplicka, Michael
Chapman and James Gassman sought to own the stocks of companies, based on their
assessment of the growth prospects for these firms' product lines, their
evaluation of the managements of these corporations and other considerations.
At the close of the reporting period, the three largest sector weightings
in the fund's portfolio were information technology, financials and consumer
discretionary. The fund had 105 equity holdings at the end of the reporting
period.
We encourage you to visit aiminvestments.com for a wealth of information
about your fund, including regular performance updates, quarterly details of
portfolio composition, and much more. From our home page, click on Products and
Performance, then Mutual Funds, and then select the type of information you wish
to view.
IN CLOSING
I thank you for your continued participation in AIM Capital Development Fund,
and I look forward to reporting to you again in six months. If you have any
questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
POSITIVE PERFORMANCE DURING
MARCH AND APRIL 2003
ENABLED MAJOR STOCK
MARKET INDEXES TO POST GAINS
FOR THE REPORTING PERIOD.
ROBERT H. GRAHAM
================================================================================
SUPPLEMENT TO SEMIANNUAL REPORT DATED 4/30/03
AIM CAPITAL DEVELOPMENT FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class
shareholders with a performance overview specific to their holdings.
Institutional Class shares are offered exclusively to institutional investors,
including defined contribution plans that meet certain criteria. Performance of
Institutional Class shares will differ from performance of Class A shares due
to differing sales charges and class expenses.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 4/30/03
================================================================================
[BAR CHART]
Inception (3/15/02) -19.03%
1 year -21.34
6 months 5.92*
*NOT ANNUALIZED
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 3/31/03 (most recent calendar quarter-end)
Inception (3/15/02) -25.09%
1 year -26.84
================================================================================
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. All returns assume
reinvestment of distributions at net asset value. Investment return and
principal value will fluctuate so your shares, when redeemed, may be worth more
or less than their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or call
AIM toll free at 800-451-4246.
================================================================================
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
A I M DISTRIBUTORS, INC. CDV-INS-2
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCK & OTHER EQUITY INTERESTS-96.42%
ADVERTISING-1.87%
Interpublic Group of Cos., Inc. (The)(a) 498,200 $ 5,679,480
- ------------------------------------------------------------------------
Lamar Advertising Co.(a) 284,000 10,201,280
========================================================================
15,880,760
========================================================================
AIR FREIGHT & LOGISTICS-1.19%
C.H. Robinson Worldwide, Inc. 274,900 10,113,571
========================================================================
APPAREL RETAIL-1.16%
Abercrombie & Fitch Co.-Class A(a) 299,800 9,857,424
========================================================================
APPLICATION SOFTWARE-4.31%
Amdocs Ltd. (United Kingdom)(a) 293,800 5,188,508
- ------------------------------------------------------------------------
Autodesk, Inc. 578,100 8,995,236
- ------------------------------------------------------------------------
Business Objects S.A.-ADR (France)(a) 327,400 7,114,402
- ------------------------------------------------------------------------
Fair Issac Corp. 175,800 9,155,664
- ------------------------------------------------------------------------
Intuit Inc.(a) 159,500 6,185,410
========================================================================
36,639,220
========================================================================
BANKS-2.02%
Compass Bancshares, Inc. 200,000 6,744,000
- ------------------------------------------------------------------------
New York Community Bancorp, Inc. 300,000 10,416,000
========================================================================
17,160,000
========================================================================
BROADCASTING & CABLE TV-2.71%
Cablevision Systems Corp.-NY Group-Class A(a) 307,900 6,903,118
- ------------------------------------------------------------------------
Cox Radio, Inc.-Class A(a) 300,000 6,843,000
- ------------------------------------------------------------------------
Entercom Communications Corp.(a) 100,000 4,859,000
- ------------------------------------------------------------------------
Westwood One, Inc.(a) 126,800 4,425,320
========================================================================
23,030,438
========================================================================
BUILDING PRODUCTS-1.08%
American Standard Cos. Inc.(a) 129,600 9,226,224
========================================================================
COMPUTER & ELECTRONICS RETAIL-2.12%
Best Buy Co., Inc.(a) 277,400 9,592,492
- ------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 197,200 8,408,608
========================================================================
18,001,100
========================================================================
CONSUMER FINANCE-1.64%
Capital One Financial Corp. 224,700 9,408,189
- ------------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $3,120,900)(a)(b)(c)(d) 309,000 4,557,750
========================================================================
13,965,939
========================================================================
DATA PROCESSING SERVICES-6.23%
Alliance Data Systems Corp.(a) 590,200 12,394,200
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
DATA PROCESSING SERVICES-(CONTINUED)
BISYS Group, Inc. (The)(a) 494,100 $ 8,340,408
- ------------------------------------------------------------------------
Ceridian Corp.(a) 296,000 4,129,200
- ------------------------------------------------------------------------
Certegy Inc.(a) 329,150 8,225,459
- ------------------------------------------------------------------------
DST Systems, Inc.(a) 262,900 8,071,030
- ------------------------------------------------------------------------
Iron Mountain Inc.(a) 297,000 11,835,450
========================================================================
52,995,747
========================================================================
DIVERSIFIED FINANCIAL SERVICES-2.74%
Affiliated Managers Group, Inc.(a) 98,600 4,566,166
- ------------------------------------------------------------------------
American Capital Strategies, Ltd. 342,400 8,306,624
- ------------------------------------------------------------------------
Friedman, Billings, Ramsey Group, Inc.-Class A 820,155 9,005,302
- ------------------------------------------------------------------------
LaBranche & Co. Inc. 83,800 1,389,404
========================================================================
23,267,496
========================================================================
ELECTRIC UTILITIES-2.10%
FPL Group, Inc. 147,900 9,002,673
- ------------------------------------------------------------------------
Wisconsin Energy Corp. 337,500 8,886,375
========================================================================
17,889,048
========================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-2.25%
Cooper Industries, Ltd.-Class A (Bermuda) 214,000 7,939,400
- ------------------------------------------------------------------------
Rockwell Automation, Inc. 491,900 11,215,320
========================================================================
19,154,720
========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-4.69%
Amphenol Corp.-Class A(a) 187,600 8,308,804
- ------------------------------------------------------------------------
Symbol Technologies, Inc. 783,700 8,565,841
- ------------------------------------------------------------------------
Thermo Electron Corp.(a) 309,300 5,619,981
- ------------------------------------------------------------------------
Varian Inc.(a) 282,800 8,939,308
- ------------------------------------------------------------------------
Waters Corp.(a) 353,400 8,485,134
========================================================================
39,919,068
========================================================================
ENVIRONMENTAL SERVICES-1.10%
Republic Services, Inc.(a) 435,000 9,335,100
========================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-0.51%
Potash Corp. of Saskatchewan Inc. (Canada) 70,400 4,333,120
========================================================================
FOOTWEAR-0.93%
Reebok International Ltd.(a) 253,300 7,867,498
========================================================================
FOREST PRODUCTS-0.75%
Louisiana-Pacific Corp.(a) 793,300 6,409,864
========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
GAS UTILITIES-1.14%
Kinder Morgan, Inc. 205,800 $ 9,676,716
========================================================================
GENERAL MERCHANDISE STORES-1.04%
Dollar Tree Stores, Inc.(a) 349,200 8,887,140
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-4.31%
AdvancePCS(a) 238,400 7,166,304
- ------------------------------------------------------------------------
Caremark Rx, Inc.(a) 490,900 9,773,819
- ------------------------------------------------------------------------
Cerner Corp.(a) 100,000 1,998,000
- ------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 301,300 8,876,298
- ------------------------------------------------------------------------
Lincare Holdings Inc.(a) 153,100 4,649,647
- ------------------------------------------------------------------------
Omnicare, Inc. 157,700 4,182,204
========================================================================
36,646,272
========================================================================
HEALTH CARE EQUIPMENT-1.57%
Bard (C.R.), Inc. 153,800 9,747,844
- ------------------------------------------------------------------------
Cytyc Corp.(a) 273,400 3,608,880
========================================================================
13,356,724
========================================================================
HEALTH CARE SUPPLIES-0.98%
Fisher Scientific International Inc.(a) 290,000 8,354,900
========================================================================
HOTELS, RESORTS & CRUISE LINES-0.36%
Starwood Hotels & Resorts Worldwide, Inc. 113,800 3,054,392
========================================================================
HOUSEHOLD APPLIANCES-0.84%
Snap-on Inc. 244,100 7,164,335
========================================================================
INDUSTRIAL GASES-1.08%
Airgas, Inc.(a) 455,000 9,204,650
========================================================================
INDUSTRIAL MACHINERY-1.97%
Parker-Hannifin Corp. 194,400 7,908,192
- ------------------------------------------------------------------------
SPX Corp.(a) 262,100 8,858,980
========================================================================
16,767,172
========================================================================
INSURANCE BROKERS-0.89%
Willis Group Holdings Ltd. (Bermuda) 242,400 7,560,456
========================================================================
INTEGRATED OIL & GAS-0.85%
Murphy Oil Corp. 174,200 7,255,430
========================================================================
IT CONSULTING & SERVICES-3.15%
Acxiom Corp.(a) 545,800 7,619,368
- ------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 289,800 6,230,700
- ------------------------------------------------------------------------
Titan Corp. (The)(a) 565,200 4,538,556
- ------------------------------------------------------------------------
Unisys Corp.(a) 806,400 8,386,560
========================================================================
26,775,184
========================================================================
LEISURE PRODUCTS-2.03%
Brunswick Corp. 216,600 4,728,378
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
LEISURE PRODUCTS-(CONTINUED)
Hasbro, Inc. 782,700 $ 12,523,200
========================================================================
17,251,578
========================================================================
LIFE & HEALTH INSURANCE-0.54%
Nationwide Financial Services, Inc.-Class A 163,000 4,588,450
========================================================================
MANAGED HEALTH CARE-2.39%
Anthem, Inc.(a) 153,000 10,501,920
- ------------------------------------------------------------------------
Coventry Health Care, Inc.(a) 240,900 9,833,538
========================================================================
20,335,458
========================================================================
MUTUAL FUNDS-1.99%
iShares Nasdaq Biotechnology Index Fund(a) 295,100 16,909,230
========================================================================
OFFICE ELECTRONICS-1.09%
Zebra Technologies Corp.-Class A(a) 138,900 9,260,463
========================================================================
OIL & GAS DRILLING-1.23%
Pride International, Inc.(a) 672,900 10,443,408
========================================================================
OIL & GAS EQUIPMENT & SERVICES-1.86%
BJ Services Co.(a) 285,700 10,430,907
- ------------------------------------------------------------------------
Key Energy Services, Inc.(a) 539,500 5,432,765
========================================================================
15,863,672
========================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.84%
Devon Energy Corp. 152,021 7,182,983
========================================================================
OIL & GAS REFINING, MARKETING &
TRANSPORTATION-1.12%
Valero Energy Corp. 260,000 9,555,000
========================================================================
PAPER PACKAGING-0.50%
Smurfit-Stone Container Corp.(a) 300,800 4,232,256
========================================================================
PAPER PRODUCTS-1.16%
Bowater Inc. 253,000 9,849,290
========================================================================
PERSONAL PRODUCTS-0.85%
NBTY, Inc.(a) 464,500 7,199,750
========================================================================
PHARMACEUTICALS-3.00%
Allergan, Inc. 58,100 4,081,525
- ------------------------------------------------------------------------
Biovail Corp. (Canada)(a) 152,000 5,494,800
- ------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 97,600 5,625,664
- ------------------------------------------------------------------------
Mylan Laboratories Inc. 143,400 4,053,918
- ------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 315,047 6,269,435
========================================================================
25,525,342
========================================================================
PROPERTY & CASUALTY INSURANCE-3.92%
ACE Ltd. (Cayman Islands) 208,917 6,910,974
- ------------------------------------------------------------------------
PMI Group, Inc. (The) 421,300 12,984,466
- ------------------------------------------------------------------------
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
PROPERTY & CASUALTY INSURANCE-(CONTINUED)
KyRadian Group Inc. 338,500 $ 13,438,450
========================================================================
33,333,890
========================================================================
PUBLISHING-1.08%
Knight-Ridder, Inc. 142,400 9,191,920
========================================================================
REAL ESTATE-3.29%
American Financial Realty Trust (Acquired
09/04/02; Cost $9,401,000)(b)(d) 940,100 10,905,160
- ------------------------------------------------------------------------
Annaly Mortgage Management Inc. 450,000 8,550,000
- ------------------------------------------------------------------------
Plum Creek Timber Co., Inc. 368,200 8,564,332
========================================================================
28,019,492
========================================================================
REINSURANCE-2.80%
Everest Re Group, Ltd. (Bermuda) 77,500 5,397,875
- ------------------------------------------------------------------------
PartnerRe Ltd. (Bermuda) 178,000 9,523,000
- ------------------------------------------------------------------------
Platinum Underwriters Holdings, Ltd.
(Bermuda) 337,200 8,918,940
========================================================================
23,839,815
========================================================================
RESTAURANTS-2.00%
Brinker International, Inc.(a) 305,600 9,702,800
- ------------------------------------------------------------------------
Ruby Tuesday, Inc. 371,500 7,318,550
========================================================================
17,021,350
========================================================================
SEMICONDUCTOR EQUIPMENT-0.97%
Novellus Systems, Inc.(a) 295,600 8,288,624
========================================================================
SEMICONDUCTORS-2.32%
Integrated Circuit Systems, Inc.(a) 375,700 8,160,204
- ------------------------------------------------------------------------
Intersil Corp.-Class A(a) 276,300 5,111,550
- ------------------------------------------------------------------------
Microchip Technology Inc. 311,162 6,469,058
========================================================================
19,740,812
========================================================================
SPECIALTY CHEMICALS-1.12%
International Flavors & Fragrances Inc. 301,000 9,565,780
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
SPECIALTY STORES-1.18%
Advance Auto Parts, Inc.(a) 202,400 $ 10,067,376
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.56%
Avocent Corp.(a) 172,400 5,106,488
- ------------------------------------------------------------------------
Harris Corp. 284,900 8,136,744
========================================================================
13,243,232
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $710,332,125) 820,258,879
========================================================================
MONEY MARKET FUNDS-3.74%
STIC Liquid Assets Portfolio(e) 15,900,354 15,900,354
- ------------------------------------------------------------------------
STIC Prime Portfolio(e) 15,900,354 15,900,354
========================================================================
Total Money Market Funds (Cost
$31,800,708) 31,800,708
========================================================================
TOTAL INVESTMENTS-100.16% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $742,132,833) 852,059,587
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-17.97%
STIC Liquid Assets Portfolio(e)(f) 76,447,245 76,447,245
- ------------------------------------------------------------------------
STIC Prime Portfolio(e)(f) 76,447,245 76,447,245
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $152,894,490) 152,894,490
========================================================================
TOTAL INVESTMENTS-118.13% (Cost $895,027,323) 1,004,954,077
========================================================================
OTHER ASSETS LESS LIABILITIES-(18.13%) (154,236,833)
========================================================================
NET ASSETS-100.00% $850,717,244
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 04/30/03 was $15,462,910,
which represented 1.82% of the Fund's net assets.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Security considered to be illiquid. The market value of the securities at
04/30/03 was $15,462,910, which represented 1.82% of the Fund's net assets.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
(f) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$895,027,323)* $1,004,954,077
- ------------------------------------------------------------
Foreign currencies, at value (cost $78) 84
- ------------------------------------------------------------
Receivables for:
Investments sold 7,847,217
- ------------------------------------------------------------
Fund shares sold 787,752
- ------------------------------------------------------------
Dividends 158,049
- ------------------------------------------------------------
Investment for deferred compensation plan 40,148
- ------------------------------------------------------------
Other assets 39,292
============================================================
Total assets 1,013,826,619
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 7,531,292
- ------------------------------------------------------------
Fund shares reacquired 1,346,254
- ------------------------------------------------------------
Deferred compensation plan 40,148
- ------------------------------------------------------------
Collateral upon return of securities
loaned 152,894,490
- ------------------------------------------------------------
Accrued distribution fees 728,864
- ------------------------------------------------------------
Accrued trustees' fees 1,121
- ------------------------------------------------------------
Accrued transfer agent fees 481,591
- ------------------------------------------------------------
Accrued operating expenses 85,615
============================================================
Total liabilities 163,109,375
============================================================
Net assets applicable to shares outstanding $ 850,717,244
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 790,135,680
- ------------------------------------------------------------
Undistributed net investment income (loss) (3,617,898)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (45,729,549)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 109,929,011
============================================================
$ 850,717,244
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 457,722,206
____________________________________________________________
============================================================
Class B $ 336,177,544
____________________________________________________________
============================================================
Class C $ 55,972,950
____________________________________________________________
============================================================
Class R $ 836,658
____________________________________________________________
============================================================
Institutional Class $ 7,886
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 33,869,252
____________________________________________________________
============================================================
Class B 26,168,760
____________________________________________________________
============================================================
Class C 4,359,917
____________________________________________________________
============================================================
Class R 62,007
____________________________________________________________
============================================================
Institutional Class 580
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 13.51
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $13.51 divided by
94.50%) $ 14.30
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 12.85
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 12.84
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 13.49
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 13.60
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $150,038,132
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $5,543) $ 3,671,497
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 359,453
- -------------------------------------------------------------------------
Interest 194
- -------------------------------------------------------------------------
Security lending income 154,032
=========================================================================
Total investment income 4,185,176
=========================================================================
EXPENSES:
Advisory fees 2,831,443
- -------------------------------------------------------------------------
Administrative services fees 111,654
- -------------------------------------------------------------------------
Custodian fees 55,458
- -------------------------------------------------------------------------
Distribution fees -- Class A 783,076
- -------------------------------------------------------------------------
Distribution fees -- Class B 1,669,657
- -------------------------------------------------------------------------
Distribution fees -- Class C 275,176
- -------------------------------------------------------------------------
Distribution fees -- Class R 478
- -------------------------------------------------------------------------
Transfer agent fees 1,711,563
- -------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 20
- -------------------------------------------------------------------------
Trustees' fees 6,757
- -------------------------------------------------------------------------
Other 300,212
=========================================================================
Total expenses 7,745,494
=========================================================================
Less: Fees waived, expenses reimbursed and expenses paid
indirectly (13,266)
=========================================================================
Net expenses 7,732,228
=========================================================================
Net investment income (loss) (3,547,052)
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (5,098,471)
- -------------------------------------------------------------------------
Foreign currencies 59,712
- -------------------------------------------------------------------------
Option contracts written 126,096
=========================================================================
(4,912,663)
=========================================================================
Change in net unrealized appreciation of:
Investment securities 52,031,058
- -------------------------------------------------------------------------
Foreign currencies 1,354
=========================================================================
52,032,412
=========================================================================
Net gain from investment securities, foreign currencies and
option contracts 47,119,749
=========================================================================
Net increase in net assets resulting from operations $43,572,697
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (3,547,052) $ (6,585,862)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (4,912,663) (27,642,639)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts 52,032,412 (101,615,274)
============================================================================================
Net increase (decrease) in net assets resulting from
operations 43,572,697 (135,843,775)
============================================================================================
Share transactions-net:
Class A (22,608,736) (49,872,882)
- --------------------------------------------------------------------------------------------
Class B (26,956,266) (51,574,661)
- --------------------------------------------------------------------------------------------
Class C (3,118,835) (497,034)
- --------------------------------------------------------------------------------------------
Class R 789,964 12,300
- --------------------------------------------------------------------------------------------
Institutional Class -- 10,000
============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (51,893,873) (101,922,277)
============================================================================================
Net increase (decrease) in net assets (8,321,176) (237,766,052)
============================================================================================
NET ASSETS:
Beginning of period 859,038,420 1,096,804,472
============================================================================================
End of period $850,717,244 $ 859,038,420
____________________________________________________________________________________________
============================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Capital Development Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware statutory trust registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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
F-7
changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. The combined
results of changes in foreign exchange rates and the fluctuation of market
prices on investments are included with the net realized and unrealized
gain or loss from investments in the Statement of Operations.
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 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. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays 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. AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in affiliated money market
funds with cash collateral from securities loaned by the Fund). For the six
months ended April 30, 2003, AIM waived fees of $6,356.
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, 2003, AIM
was paid $111,654 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. During the six months ended April 30, 2003,
AFS retained $916,961 for such services. For the six months ended April 30,
2003, AFS reimbursed fees of $16 on the Institutional Class.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Institutional Class shares of the
Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A shares, Class B shares, Class C shares and Class R
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, 1.00% of the average daily net assets of
Class B and Class C shares and 0.50% of the average daily net assets of Class R
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, Class C or Class R 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. NASD Rules also impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. Pursuant to the Plans, for the six months ended
April 30, 2003, the Class A, Class B, Class C and Class R shares paid $783,076,
$1,669,657, $275,176 and $478, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During six months ended April 30, 2003, AIM
Distributors retained $50,567 in front-end sales commissions from the sale of
Class A shares and $362, $55, $3,059 and $0 for Class A, Class B, Class C and
Class R shares, respectively, for CDSCs imposed upon redemptions by
shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$2,067 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $6,108 and reductions in
custodian fees of $786 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $6,894.
F-8
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, following the
valuation date of the securities loaned. Therefore, the value of the collateral
may be temporarily less than the value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $150,038,132 were
on loan to brokers. The loans were secured by cash collateral of $152,894,490
received by the Fund and subsequently invested in affiliated money market funds.
For the six months ended April 30, 2003, the Fund received fees of $154,032 for
securities lending.
NOTE 7--CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- ----------------------------------------------------------
Beginning of period -- $ --
- ----------------------------------------------------------
Written 1,300 126,096
- ----------------------------------------------------------
Expired (1,300) (126,096)
==========================================================
End of period -- $ --
__________________________________________________________
==========================================================
</Table>
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2009 $11,152,255
- ----------------------------------------------------------
October 31, 2010 27,828,753
==========================================================
Total capital loss carryforward $38,981,008
__________________________________________________________
==========================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $405,908,944 and $425,249,687, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $132,384,333
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (22,473,441)
===========================================================
Net unrealized appreciation of investment
securities $109,910,892
___________________________________________________________
===========================================================
</Table>
Cost of investments for tax purposes is $895,043,185.
F-9
NOTE 10--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and Institutional Class shares.
Class A shares are sold with a front-end sales charge. Class B shares and Class
C shares are sold with a CDSC. Under some circumstances, Class A shares and
Class R shares are subject to CDSCs. Class R shares and Institutional Class
shares are sold at net asset value. Generally, Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Changes in shares outstanding during the six months ended April 30,
2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 4,300,132 $ 55,974,344 8,723,183 $ 137,031,183
- ------------------------------------------------------------------------------------------------------------------------
Class B 1,039,576 12,817,521 3,358,008 50,474,614
- ------------------------------------------------------------------------------------------------------------------------
Class C 412,340 5,087,212 1,443,905 21,757,217
- ------------------------------------------------------------------------------------------------------------------------
Class R* 63,099 813,826 749 12,300
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class** -- -- 580 10,000
========================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 109,267 1,422,121 -- --
- ------------------------------------------------------------------------------------------------------------------------
Class B (114,824) (1,422,121) -- --
========================================================================================================================
Reacquired:
Class A (6,190,362) (80,005,201) (12,317,285) (186,904,065)
- ------------------------------------------------------------------------------------------------------------------------
Class B (3,140,995) (38,351,666) (7,163,019) (102,049,275)
- ------------------------------------------------------------------------------------------------------------------------
Class C (667,999) (8,206,047) (1,519,831) (22,254,251)
- ------------------------------------------------------------------------------------------------------------------------
Class R* (1,841) (23,862) -- --
========================================================================================================================
(4,191,607) $(51,893,873) (7,473,710) $(101,922,277)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
** Institutional Class shares commenced sales on March 15, 2002.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, --------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.80 $ 14.69 $ 21.79 $ 15.24 $ 12.89 $ 14.57
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.04)(a) (0.04) (0.13) (0.10)(a) (0.06)(a)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.75 (1.85) (4.27) 6.68 2.45 (1.62)
===========================================================================================================================
Total from investment operations 0.71 (1.89) (4.31) 6.55 2.35 (1.68)
===========================================================================================================================
Less distributions from net realized gains -- -- (2.79) -- -- --
===========================================================================================================================
Net asset value, end of period $ 13.51 $ 12.80 $ 14.69 $ 21.79 $ 15.24 $ 12.89
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 5.55% (12.87)% (21.76)% 42.98% 18.23% (11.53)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $457,722 $456,268 $576,660 $759,838 $579,514 $717,263
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 1.55%(c) 1.38% 1.33% 1.28% 1.38% 1.28%
===========================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.55)%(c) (0.29)% (0.21)% (0.60)% (0.70)% (0.40)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(d) 51% 120% 130% 101% 117% 78%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$451,180,124.
(d) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS B
-------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, --------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.21 $ 14.10 $ 21.16 $ 14.90 $ 12.70 $ 14.46
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.14)(a) (0.15) (0.26) (0.20)(a) (0.16)(a)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.71 (1.75) (4.12) 6.52 2.40 (1.60)
===========================================================================================================================
Total from investment operations 0.64 (1.89) (4.27) 6.26 2.20 (1.76)
===========================================================================================================================
Less distributions from net realized gains -- -- (2.79) -- -- --
===========================================================================================================================
Net asset value, end of period $ 12.85 $ 12.21 $ 14.10 $ 21.16 $ 14.90 $ 12.70
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 5.24% (13.40)% (22.29)% 42.01% 17.32% (12.17)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $336,178 $346,456 $454,018 $617,576 $451,508 $493,993
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 2.20%(c) 2.03% 1.99% 1.99% 2.12% 2.02%
===========================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.20)%(c) (0.94)% (0.87)% (1.30)% (1.44)% (1.14)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(d) 51% 120% 130% 101% 117% 78%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$336,698,895.
(d) Not annualized for periods less than one year.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
--------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.20 $ 14.10 $ 21.15 $ 14.89 $ 12.69 $ 14.45
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.14)(a) (0.14) (0.25) (0.20)(a) (0.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.71 (1.76) (4.12) 6.51 2.40 (1.60)
=================================================================================================================================
Total from investment operations 0.64 (1.90) (4.26) 6.26 2.20 (1.76)
=================================================================================================================================
Less distributions from net realized gains -- -- (2.79) -- -- --
=================================================================================================================================
Net asset value, end of period $ 12.84 $ 12.20 $ 14.10 $ 21.15 $ 14.89 $ 12.69
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 5.25% (13.48)% (22.24)% 42.04% 17.34% (12.18)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $55,973 $56,298 $66,127 $82,982 $53,832 $48,293
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.20%(c) 2.03% 1.99% 1.99% 2.12% 2.02%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.20)%(c) (0.94)% (0.87)% (1.30)% (1.44)% (1.14)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(d) 51% 120% 130% 101% 117% 78%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$55,491,275.
(d) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS R
------------------------------
JUNE 3, 2003
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.79 $ 16.62
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.03)(a)
- --------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.74 (3.80)
============================================================================================
Total from investment operations 0.70 (3.83)
============================================================================================
Net asset value, end of period $13.49 $ 12.79
____________________________________________________________________________________________
============================================================================================
Total return(b) 5.47% (23.05)%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 837 $ 10
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets 1.70%(c) 1.54%(d)
============================================================================================
Ratio of net investment income (loss) to average net assets (0.70)%(c) (0.44)%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate(e) 51% 120%
____________________________________________________________________________________________
============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $192,893.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
------------------------------
MARCH 15,
2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.84 $ 17.25
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01(a) 0.02(a)
- --------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.75 (4.43)
============================================================================================
Total from investment operations 0.76 (4.41)
============================================================================================
Net asset value, end of period $13.60 $ 12.84
____________________________________________________________________________________________
============================================================================================
Total return(b) 5.92% (25.57)%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 8 $ 7
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 0.89%(c) 0.84%(d)
- --------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 1.33%(c) 0.99%(d)
============================================================================================
Ratio of net investment income to average net assets 0.12%(c) 0.25%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate(e) 51% 120%
____________________________________________________________________________________________
============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $7,528.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-13
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
<Caption>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Energy Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com CDV-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM CHARTER FUND
(COVER IMAGE)
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Charter Fund seeks growth of capital.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
PORTFOLIO COMPOSITION BY SECTOR
As of 4/30/03
(PIE CHART)
CONSUMER STAPLES 15.2%
INFORMATION TECHNOLOGY 15.2%
FINANCIALS 11.4%
HEALTH CARE 10.8%
OTHER 21.1%
CONSUMER DISCRETIONARY 11.9%
INDUSTRIALS 14.4%
TOTAL NUMBER OF HOLDINGS* 74
TOTAL NET ASSETS $3.2 BILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (11/26/68) 11.48%
10 Years 6.42
5 Years -4.30
1 Year -17.48
CLASS B SHARES
Inception (6/26/95) 5.23%
5 Years -4.24
1 Year -17.70
CLASS C SHARES
Inception (8/4/97) -1.82%
5 Years -3.93
1 Year -14.28
CLASS R SHARES**
10 Years 6.80%
5 Years -3.43
1 Year -12.97
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without up-front sales charges. Class R
shares were first offered on June 3, 2002. Returns prior to that date are
hypothetical results based on Class A share performance (inception date
11/26/68) at net asset value, adjusted to reflect Class R 12b-1 fees. Class R
share returns do not include a 0.75% contingent deferred sales charge that may
be imposed on a total redemption of retirement plan assets within the first
year.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03 excluding sales charges
CLASS A SHARES 2.09%
CLASS B SHARES 1.73
CLASS C SHARES 1.62
CLASS R SHARES 1.88
S&P 500 INDEX (Broad Market Index) 4.47
RUSSELL 1000 INDEX 4.75
(Style-specific index)
LIPPER LARGE-CAP CORE FUND INDEX 2.96
(Peer Group Index)
Source: Lipper, Inc.
In addition to the fund's average annual total returns as of the close of the
reporting period shown in the table at left, industry regulations require us to
provide average annual total returns (including sales charges) as of 3/31/03,
the most recent calendar quarter-end, which were: Class A shares, inception
(11/26/68), 11.28%; 10 years, 5.48%; five years, -5.62%; one year, -25.55%.
Class B shares, inception (6/26/95), 4.36%; five years, -5.57%; one year,
- -25.73%. Class C shares, inception (8/4/97), -3.00%; five years, -5.23%; one
year, -22.54%. Class R shares, 10 years, 5.87%; five years, -4.75%; one year,
- -21.44%.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
==================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- --------------------------------------------------------------------------------------------------
1. General Mills, Inc. 2.8% 1. Packaged Foods & Meats 9.7%
2. Computer Associates International, Inc. 2.8 2. Pharmaceuticals 9.2
3. Pfizer Inc. 2.1 3. Systems Software 5.6
4. Intel Corp. 2.0 4. Semiconductors 5.0
5. Kellogg Co. 2.0 5. Integrated Oil & Gas 4.4
6. Citigroup Inc. 1.9 6. Diversified Financial Services 4.2
7. Washington Mutual, Inc. 1.8 7. Aerospace & Defense 4.0
8. Wyeth 1.8 8. Banks 3.1
9. Best Buy Co., Inc. 1.7 9. Property & Casualty Insurance 3.0
10. Raytheon Co. 1.6 10. Industrial Machinery 2.9
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will continue
to hold any particular security.
==================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective 5/1/03, after the close of the reporting period, the portfolio
management team for AIM Charter Fund is as follows: David W. Pointer and
Ronald S. Sloan
o AIM Charter Fund's performance figures are historical, and they reflect the
reinvestment of distributions and charges 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 share classes will differ due to different
sales charge structures and class expenses.
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.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Large-Cap Core Fund Index represents an average of the
performance of the 30 largest large-capitalization core equity funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
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)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMINVESTMENTS.COM.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
This is the report on AIM Charter Fund for the six months
(PHOTO OF ended April 30, 2003. You will note that we have adopted a
ROBERT H. more concise format for our semiannual reports. Important
GRAHAM) information such as top holdings and performance as of the
close of the reporting period appear on the opposite page.
This letter will provide an overview of the markets and your
fund during the six months covered by this report. As
always, timely information about your fund and the markets
in general is available at our Web site, aiminvestments.com.
MARKET CONDITIONS
Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of
common stocks frequently used as a general measure of U.S. stock market
performance, returned 4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally mid- and small-cap stocks outperformed large-cap stocks and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Charter Fund, at net asset value, posted
positive returns for the six months ended April 30, 2003. Throughout the
reporting period, fund managers Ronald S. Sloan and Michael Yellen sought to
identify stocks that they believe have the potential for above-average growth in
earnings, and companies that are, in their view, undervalued relative to current
or projected earnings. At the close of the reporting period, the three largest
sectors in the fund's portfolio were information technology, consumer staples,
and industrials. Keep in mind that managers focus on individual companies rather
than particular industries or sectors. The fund had 74 equity holdings at the
end of the reporting period.
We encourage you to visit our Web site, aiminvestments.com, for a wealth of
information about your fund, including regular performance updates, quarterly
details of portfolio composition, and much more. From our home page, click on
Products & Performance, then Mutual Funds, and then select the type of
information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Charter Fund, and I look
forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department are ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
GENERALLY, MID- AND SMALL-CAP
STOCKS OUTPERFORMED LARGE-CAP
STOCKS, AND THE VALUE INVESTMENT
STYLE OUTPERFORMED THE GROWTH
INVESTMENT STYLE DURING THE SIX-
MONTH REPORTING PERIOD.
ROBERT H. GRAHAM
================================================================================
SUPPLEMENT TO SEMIANNUAL REPORT DATED 4/30/03
AIM CHARTER FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class
shareholders with a performance overview specific to their holdings.
Institutional Class shares are offered exclusively to institutional investors,
including defined contribution plans that meet certain criteria. Performance of
Institutional Class shares will differ from performance of Class A shares due
to differing sales charges and class expenses.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 4/30/03
================================================================================
Inception (7/30/91) 7.80%
10 years 7.49
5 years -2.79
1 year -12.32
6 months 2.35*
*NOT ANNUALIZED
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 3/31/03 (most recent calendar quarter-end)
================================================================================
Inception (7/30/91) 7.22%
10 years 6.53
5 years -4.13
1 year -20.88
================================================================================
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. All returns assume
reinvestment of distributions at net asset value. Investment return and
principal value will fluctuate so your shares, when redeemed, may be worth more
or less than their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or call
AIM toll free at 800-451-4246.
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
A I M DISTRIBUTORS, INC. CHT-INS-2
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-88.16%
ADVERTISING-1.57%
Omnicom Group Inc. 800,000 $ 49,520,000
===========================================================================
AEROSPACE & DEFENSE-3.98%
Lockheed Martin Corp. 492,200 24,634,610
- ---------------------------------------------------------------------------
Northrop Grumman Corp. 560,000 49,252,000
- ---------------------------------------------------------------------------
Raytheon Co. 1,716,000 51,359,880
===========================================================================
125,246,490
===========================================================================
APPAREL RETAIL-1.55%
Limited Brands 3,355,000 48,781,700
===========================================================================
APPLICATION SOFTWARE-0.58%
SAP A.G.-ADR (Germany) 712,000 18,163,120
===========================================================================
BANKS-3.05%
Bank of America Corp. 530,000 39,246,500
- ---------------------------------------------------------------------------
Washington Mutual, Inc. 1,440,000 56,880,000
===========================================================================
96,126,500
===========================================================================
BUILDING PRODUCTS-1.80%
American Standard Cos. Inc.(a) 449,000 31,964,310
- ---------------------------------------------------------------------------
Masco Corp. 1,174,500 24,746,715
===========================================================================
56,711,025
===========================================================================
COMPUTER & ELECTRONICS RETAIL-1.72%
Best Buy Co., Inc.(a) 1,570,000 54,290,600
===========================================================================
COMPUTER HARDWARE-2.53%
Dell Computer Corp.(a) 700,000 20,237,000
- ---------------------------------------------------------------------------
Hewlett-Packard Co. 1,000,000 16,300,000
- ---------------------------------------------------------------------------
International Business Machines Corp. 510,000 43,299,000
===========================================================================
79,836,000
===========================================================================
DATA PROCESSING SERVICES-1.45%
Automatic Data Processing, Inc. 1,355,000 45,568,650
===========================================================================
DIVERSIFIED CHEMICALS-0.88%
Dow Chemical Co. (The) 850,000 27,744,000
===========================================================================
DIVERSIFIED FINANCIAL SERVICES-4.22%
Citigroup Inc. 1,540,000 60,445,000
- ---------------------------------------------------------------------------
Morgan Stanley 830,000 37,142,500
- ---------------------------------------------------------------------------
Principal Financial Group, Inc. 1,215,000 35,356,500
===========================================================================
132,944,000
===========================================================================
ELECTRIC UTILITIES-1.37%
FPL Group, Inc. 430,000 26,174,100
- ---------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
ELECTRIC UTILITIES-(CONTINUED)
TXU Corp. 850,000 $ 16,932,000
===========================================================================
43,106,100
===========================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-1.41%
Emerson Electric Co. 875,000 44,362,500
===========================================================================
ENVIRONMENTAL SERVICES-0.99%
Waste Management, Inc. 1,440,000 31,276,800
===========================================================================
FOOD RETAIL-2.37%
Kroger Co. (The)(a) 3,210,000 45,903,000
- ---------------------------------------------------------------------------
Safeway Inc.(a) 1,720,000 28,586,400
===========================================================================
74,489,400
===========================================================================
FOOTWEAR-1.52%
NIKE, Inc.-Class B 894,500 47,882,585
===========================================================================
GENERAL MERCHANDISE STORES-0.89%
Wal-Mart Stores, Inc. 500,000 28,160,000
===========================================================================
HEALTH CARE SUPPLIES-1.61%
Alcon, Inc. (Switzerland)(a) 1,150,000 50,657,500
===========================================================================
HOME IMPROVEMENT RETAIL-1.29%
Home Depot, Inc. (The) 1,445,000 40,647,850
===========================================================================
HOTELS, RESORTS & CRUISE LINES-1.07%
Carnival Corp. (Panama) 1,225,000 33,797,750
===========================================================================
HOUSEHOLD PRODUCTS-1.07%
Kimberly-Clark Corp. 680,000 33,843,600
===========================================================================
INDUSTRIAL MACHINERY-2.93%
Dover Corp. 1,690,000 48,570,600
- ---------------------------------------------------------------------------
Illinois Tool Works Inc. 685,000 43,826,300
===========================================================================
92,396,900
===========================================================================
INTEGRATED OIL & GAS-4.37%
ChevronTexaco Corp. 520,000 32,661,200
- ---------------------------------------------------------------------------
ConocoPhillips 610,000 30,683,000
- ---------------------------------------------------------------------------
Exxon Mobil Corp. 1,225,000 43,120,000
- ---------------------------------------------------------------------------
Occidental Petroleum Corp. 1,050,000 31,342,500
===========================================================================
137,806,700
===========================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.54%
AT&T Corp. 1,000,000 17,050,000
===========================================================================
LIFE & HEALTH INSURANCE-1.21%
Prudential Financial, Inc. 1,190,000 38,044,300
===========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
NETWORKING EQUIPMENT-0.57%
Cisco Systems, Inc.(a) 1,200,000 $ 18,048,000
===========================================================================
OIL & GAS DRILLING-1.01%
GlobalSantaFe Corp. (Cayman Islands) 1,500,000 31,740,000
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-1.07%
Baker Hughes Inc. 1,200,000 33,600,000
===========================================================================
PACKAGED FOODS & MEATS-9.71%
Campbell Soup Co. 1,510,000 33,265,300
- ---------------------------------------------------------------------------
ConAgra Foods, Inc. 1,330,300 27,936,300
- ---------------------------------------------------------------------------
General Mills, Inc. 1,930,000 87,062,300
- ---------------------------------------------------------------------------
Kellogg Co. 1,930,000 63,188,200
- ---------------------------------------------------------------------------
Kraft Foods Inc.-Class A 1,400,000 43,260,000
- ---------------------------------------------------------------------------
Sara Lee Corp. 3,045,000 51,095,100
===========================================================================
305,807,200
===========================================================================
PERSONAL PRODUCTS-1.08%
Gillette Co. (The) 1,120,000 34,104,000
===========================================================================
PHARMACEUTICALS-9.22%
Abbott Laboratories 790,000 32,097,700
- ---------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,450,000 37,033,000
- ---------------------------------------------------------------------------
Johnson & Johnson 405,000 22,825,800
- ---------------------------------------------------------------------------
Merck & Co. Inc. 560,000 32,580,800
- ---------------------------------------------------------------------------
Pfizer Inc. 2,170,000 66,727,500
- ---------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 940,000 43,898,000
- ---------------------------------------------------------------------------
Wyeth 1,270,000 55,283,100
===========================================================================
290,445,900
===========================================================================
PROPERTY & CASUALTY INSURANCE-2.95%
ACE Ltd. (Cayman Islands) 1,025,000 33,907,000
- ---------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A 856,486 13,900,768
- ---------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class B 1,054,271 17,131,904
- ---------------------------------------------------------------------------
XL Capital Ltd.-Class A (Cayman Islands) 340,000 27,982,000
===========================================================================
92,921,672
===========================================================================
PUBLISHING-1.10%
New York Times Co. (The)-Class A 750,000 34,785,000
===========================================================================
RAILROADS-1.82%
Norfolk Southern Corp. 1,334,000 28,294,140
- ---------------------------------------------------------------------------
Union Pacific Corp. 490,000 29,164,800
===========================================================================
57,458,940
===========================================================================
RESTAURANTS-1.20%
McDonald's Corp. 2,205,000 37,705,500
===========================================================================
SEMICONDUCTOR EQUIPMENT-0.94%
KLA-Tencor Corp.(a) 720,000 $ 29,520,000
===========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
SEMICONDUCTORS-4.97%
Analog Devices, Inc.(a) 850,000 28,152,000
- ---------------------------------------------------------------------------
Intel Corp. 3,500,000 64,400,000
- ---------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 2,266,000 18,966,420
- ---------------------------------------------------------------------------
Xilinx, Inc.(a) 1,665,000 45,071,550
===========================================================================
156,589,970
===========================================================================
SOFT DRINKS-1.00%
Coca-Cola Co. (The) 780,000 31,512,000
===========================================================================
SYSTEMS SOFTWARE-5.55%
Computer Associates International, Inc. 5,360,000 87,046,400
- ---------------------------------------------------------------------------
Microsoft Corp. 1,820,000 46,537,400
- ---------------------------------------------------------------------------
Oracle Corp.(a) 3,460,000 41,104,800
===========================================================================
174,688,600
===========================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,879,258,250) 2,777,380,852
===========================================================================
<Caption>
PRINCIPAL
AMOUNT
CORPORATE DEBT-0.10%
COMPUTER HARDWARE-0.10%
Candescent Technologies Corp., Sr. Unsec.
Gtd. Sub. Deb., 8.00%, 05/01/03 (Acquired
04/17/98-04/19/01; Cost
$47,529,750)(b)(c)(d) $60,700,000 3,217,100
===========================================================================
Total Corporate Debt (Cost $49,098,968) 3,217,100
===========================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-12.94%
STIC Liquid Assets Portfolio(e) 203,794,868 203,794,868
- ---------------------------------------------------------------------------
STIC Prime Portfolio(e) 203,794,868 203,794,868
===========================================================================
Total Money Market Funds (Cost
$407,589,736) 407,589,736
===========================================================================
TOTAL INVESTMENTS-101.20% (excluding
investments purchased with cash collateral
from securities loaned) (Cost
$3,335,946,954) 3,188,187,688
===========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-1.34%
STIC Liquid Assets Portfolio(e)(f) 42,144,500 42,144,500
===========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $42,144,500) 42,144,500
===========================================================================
TOTAL INVESTMENTS-102.54% (Cost
$3,378,091,454) 3,230,332,188
===========================================================================
OTHER ASSETS LESS LIABILITIES-(2.54%) (79,989,167)
===========================================================================
NET ASSETS-100.00% $3,150,343,021
___________________________________________________________________________
===========================================================================
</Table>
F-2
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Deb. - Debentures
Gtd. - Guaranteed
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The market value of this security at 04/30/03 represented 0.10% of the
Fund's net assets. This security is considered to be illiquid.
(c) Defaulted security. Currently, the issuer is in default with respect to
principal and interest payments.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
(f) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$3,378,091,454)* $3,230,332,188
- ------------------------------------------------------------
Receivables for:
Investments sold 8,116,171
- ------------------------------------------------------------
Fund shares sold 1,138,956
- ------------------------------------------------------------
Dividends 3,480,410
- ------------------------------------------------------------
Investment for deferred compensation plan 128,521
- ------------------------------------------------------------
Other assets 76,495
============================================================
Total assets 3,243,272,741
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 46,445,152
- ------------------------------------------------------------
Deferred compensation plan 128,521
- ------------------------------------------------------------
Collateral upon return of securities
loaned 42,144,500
- ------------------------------------------------------------
Accrued distribution fees 2,062,199
- ------------------------------------------------------------
Accrued trustees' fees 2,310
- ------------------------------------------------------------
Accrued transfer agent fees 1,727,684
- ------------------------------------------------------------
Accrued operating expenses 419,354
============================================================
Total liabilities 92,929,720
============================================================
Net assets applicable to shares outstanding $3,150,343,021
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $4,210,297,184
- ------------------------------------------------------------
Undistributed net investment income 280,648
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (912,475,545)
- ------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities and foreign
currencies (147,759,266)
============================================================
$3,150,343,021
____________________________________________________________
============================================================
NET ASSETS:
Class A $1,890,369,263
____________________________________________________________
============================================================
Class B $1,102,040,835
____________________________________________________________
============================================================
Class C $ 155,677,684
____________________________________________________________
============================================================
Class R $ 722,902
____________________________________________________________
============================================================
Institutional Class $ 1,532,337
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 193,576,407
____________________________________________________________
============================================================
Class B 117,271,380
____________________________________________________________
============================================================
Class C 16,518,713
____________________________________________________________
============================================================
Class R 74,209
____________________________________________________________
============================================================
Institutional Class 152,792
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 9.77
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $9.77 divided by
94.50%) $ 10.34
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 9.40
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 9.42
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 9.74
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 10.03
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $38,730,990
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $23,397) $ 25,823,721
- ---------------------------------------------------------------------------
Dividends from affiliated money market funds 2,379,246
- ---------------------------------------------------------------------------
Interest 494
- ---------------------------------------------------------------------------
Security lending income 210,685
===========================================================================
Total investment income 28,414,146
===========================================================================
EXPENSES:
Advisory fees 10,291,533
- ---------------------------------------------------------------------------
Administrative services fees 276,758
- ---------------------------------------------------------------------------
Custodian fees 120,801
- ---------------------------------------------------------------------------
Distribution fees -- Class A 2,942,548
- ---------------------------------------------------------------------------
Distribution fees -- Class B 5,644,785
- ---------------------------------------------------------------------------
Distribution fees -- Class C 796,585
- ---------------------------------------------------------------------------
Distribution fees -- Class R 472
- ---------------------------------------------------------------------------
Transfer agent fees 5,410,598
- ---------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 737
- ---------------------------------------------------------------------------
Trustees' fees 14,249
- ---------------------------------------------------------------------------
Other 564,589
===========================================================================
Total expenses 26,063,655
===========================================================================
Less: Fees waived and expenses paid indirectly (61,720)
===========================================================================
Net expenses 26,001,935
===========================================================================
Net investment income 2,412,211
===========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from investment securities (137,134,420)
- ---------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 187,078,411
- ---------------------------------------------------------------------------
Foreign currencies (67)
===========================================================================
187,078,344
===========================================================================
Net gain from investment securities and foreign currencies 49,943,924
===========================================================================
Net increase in net assets resulting from operations $ 52,356,135
___________________________________________________________________________
===========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- -----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 2,412,211 $ (8,504,860)
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (137,134,420) 304,583,841
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 187,078,344 (628,211,415)
===============================================================================================
Net increase (decrease) in net assets resulting from
operations 52,356,135 (332,132,434)
===============================================================================================
Share transactions-net:
Class A (241,572,564) (870,998,051)
- -----------------------------------------------------------------------------------------------
Class B (117,637,517) (391,079,522)
- -----------------------------------------------------------------------------------------------
Class C (16,928,246) (61,301,813)
- -----------------------------------------------------------------------------------------------
Class R 683,243 17,606
- -----------------------------------------------------------------------------------------------
Institutional Class 41,284 (60,090)
===============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (375,413,800) (1,323,421,870)
===============================================================================================
Net increase (decrease) in net assets (323,057,665) (1,655,554,304)
===============================================================================================
NET ASSETS:
Beginning of period 3,473,400,686 5,128,954,990
===============================================================================================
End of period $3,150,343,021 $ 3,473,400,686
_______________________________________________________________________________________________
===============================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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 growth of capital. Each company listed in
the Schedule of Investments is organized in the United States unless otherwise
noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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. Premiums and
discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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
F-7
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. The combined results of
changes in foreign exchange rates and the fluctuation of market prices on
investments are included with the net realized and unrealized gain or loss
from investments in the Statement of Operations.
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 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. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million.
Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the
amount of 25% of the advisory fee AIM receives from the affiliated money market
funds in which the Fund has invested (excluding investments made in affiliated
money market funds with cash collateral from securities loaned by the Fund). For
the six months ended April 30, 2003, AIM waived fees of $36,960. Under the terms
of a master sub-advisory agreement between AIM and A I M Capital Management,
Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to
AIM.
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, 2003, AIM
was paid $276,758 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. During the six months ended April 30, 2003,
AFS retained $2,730,354 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Institutional Class shares of the
Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A shares, Class B shares, Class C shares and Class R
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.30% of the Fund's average
daily net assets of Class A shares, 1.00% of the average daily net assets of
Class B and Class C shares and 0.50% of the average daily net assets of Class R
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, Class C or Class R 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. NASD Rules also impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. Pursuant to the Plans, for the six months ended
April 30, 2003, the Class A, Class B, Class C and Class R shares paid
$2,942,548, $5,644,785, $796,585 and $472, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During six months ended April 30, 2003, AIM
Distributors retained $136,242 in front-end sales commissions from the sale of
Class A shares and $2,440, $1,255, $6,111 and $0 for Class A, Class B, Class C
and Class R shares, respectively, for CDSCs imposed upon redemptions by
shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$4,392 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $23,240 and reductions in
custodian fees of $1,520 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $24,760.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
F-8
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At April 30, 2003, securities with an aggregate value of $38,730,990 were on
loan to brokers. The loans were secured by cash collateral of $42,144,500
received by the Fund and subsequently invested in an affiliated money market
fund. For the six months ended April 30, 2003, the Fund received fees of
$210,685 for securities lending.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2009 $771,331,122
__________________________________________________________
==========================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $608,052,304 and $972,593,540, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $ 241,646,795
- ------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (392,447,882)
============================================================
Net unrealized appreciation (depreciation)
of investment securities $(150,801,087)
____________________________________________________________
============================================================
Cost of investments for tax purposes is $3,381,133,275.
</Table>
F-9
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and Institutional Class shares.
Class A shares are sold with a front-end sales charge. Class B shares and Class
C shares are sold with a CDSC. Under some circumstances, Class A shares and
Class R shares are subject to CDSCs. Class R shares and Institutional Class
shares are sold at net asset value. Generally, Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Changes in shares outstanding during the six months ended April 30,
2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
---------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 9,448,811 $ 89,382,634 16,193,575 $ 174,972,073
- -----------------------------------------------------------------------------------------------------------------------------
Class B 4,491,669 41,315,790 9,302,039 97,387,968
- -----------------------------------------------------------------------------------------------------------------------------
Class C 1,218,765 11,263,567 2,633,061 27,700,439
- -----------------------------------------------------------------------------------------------------------------------------
Class R* 75,796 715,247 1,719 17,663
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 15,449 150,785 45,275 481,439
=============================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 285,825 2,709,596 717,246 7,724,451
- -----------------------------------------------------------------------------------------------------------------------------
Class B (296,584) (2,709,596) (739,880) (7,724,451)
=============================================================================================================================
Reacquired:
Class A (35,210,782) (333,664,794) (99,779,666) (1,053,694,575)
- -----------------------------------------------------------------------------------------------------------------------------
Class B (17,241,307) (156,243,711) (47,214,599) (480,743,039)
- -----------------------------------------------------------------------------------------------------------------------------
Class C (3,086,600) (28,191,813) (8,599,959) (89,002,252)
- -----------------------------------------------------------------------------------------------------------------------------
Class R* (3,301) (32,004) (5) (57)
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class (11,268) (109,501) (51,011) (541,529)
=============================================================================================================================
(40,313,527) $(375,413,800) (127,492,205) $(1,323,421,870)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
F-10
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
---------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.57 $ 10.46 $ 18.07 $ 17.16 $ 13.32 $ 13.41
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02(a) 0.01(b) (0.03) (0.04)(a) 0.02 0.12
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.18 (0.90) (6.70) 2.30 4.39 1.23
=================================================================================================================================
Total from investment operations 0.20 (0.89) (6.73) 2.26 4.41 1.35
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.03) (0.10)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- -- (0.88) (1.35) (0.57) (1.44)
=================================================================================================================================
Net asset value, end of period $ 9.77 $ 9.57 $ 10.46 $ 18.07 $ 17.16 $ 13.32
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 2.09% (8.51)% (38.75)% 13.60% 34.05% 11.20%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,890,369 $2,096,866 $3,159,304 $5,801,869 $4,948,666 $3,706,938
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.33%(d) 1.22% 1.16% 1.06% 1.05% 1.08%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.33%(d) 1.22% 1.17% 1.08% 1.07% 1.10%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets 0.43%(d) 0.09%(b) (0.24)% (0.20)% 0.11% 0.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 21% 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) As required, effective November 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and
began amortizing premiums on debt securities. Had the Fund not amortized
premiums on debt securities, the net investment income per share and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$1,977,955,439.
(e) Not annualized for periods less than one year.
F-11
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.24 $ 10.18 $ 17.72 $ 16.97 $ 13.24 $ 13.37
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.08)(b) (0.13) (0.17)(a) (0.10) 0.02
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.17 (0.86) (6.53) 2.27 4.37 1.22
=================================================================================================================================
Total from investment operations 0.16 (0.94) (6.66) 2.10 4.27 1.24
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- -- (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.40 $ 9.24 $ 10.18 $ 17.72 $ 16.97 $ 13.24
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 1.73% (9.23)% (39.14)% 12.76% 33.06% 10.33%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,102,041 $1,204,617 $1,719,470 $3,088,611 $2,206,752 $1,408,687
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.03%(d) 1.92% 1.86% 1.80% 1.80% 1.84%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.03%(d) 1.92% 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.27)%(d) (0.61)%(b) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 21% 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) As required, effective November 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and
began amortizing premiums on debt securities. Had the Fund not amortized
premiums on debt securities, the net investment income per share and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$1,138,312,982.
(e) Not annualized for periods less than one year.
F-12
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -----------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.27 $ 10.21 $ 17.77 $ 17.01 $ 13.27 $ 13.39
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.08)(b) (0.13) (0.17)(a) (0.09) 0.02
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 0.16 (0.86) (6.55) 2.28 4.37 1.23
=================================================================================================================================
Total from investment operations 0.15 (0.94) (6.68) 2.11 4.28 1.25
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- -- (0.03)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.88) (1.35) (0.54) (1.34)
=================================================================================================================================
Total distributions -- -- (0.88) (1.35) (0.54) (1.37)
=================================================================================================================================
Net asset value, end of period $ 9.42 $ 9.27 $ 10.21 $ 17.77 $ 17.01 $ 13.27
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 1.62% (9.21)% (39.14)% 12.78% 33.06% 10.39%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $155,678 $170,444 $248,533 $412,872 $138,467 $37,846
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.03%(d) 1.92% 1.86% 1.80% 1.80% 1.84%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.03%(d) 1.92% 1.87% 1.82% 1.82% 1.86%
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.27)%(d) (0.61)%(b) (0.94)% (0.94)% (0.64)% 0.19%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 21% 103% 78% 80% 107% 154%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) As required, effective November 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and
began amortizing premiums on debt securities. Had the Fund not amortized
premiums on debt securities, the net investment income per share and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios for periods prior to November
1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$160,637,350.
(e) Not annualized for periods less than one year.
F-13
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS R
---------------------------------------
SIX MONTHS JUNE 3, 2002
ENDED (DATE SALES COMMENCED)
APRIL 30, TO OCTOBER 31,
2003 2002
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $9.56 $ 10.94
- -----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01(a) 0.00
- -----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.17 (1.38)
=====================================================================================================
Total from investment operations 0.18 (1.38)
=====================================================================================================
Net asset value, end of period $9.74 $ 9.56
_____________________________________________________________________________________________________
=====================================================================================================
Total return(b) 1.88% (12.61)%
_____________________________________________________________________________________________________
=====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 723 $ 16
_____________________________________________________________________________________________________
=====================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.53%(c) 1.42%(d)
- -----------------------------------------------------------------------------------------------------
Without fee waivers 1.53%(c) 1.42%(d)
=====================================================================================================
Ratio of net investment income (loss) to average net assets 0.23%(c) (0.11)%(d)
_____________________________________________________________________________________________________
=====================================================================================================
Portfolio turnover rate(e) 21% 103%
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $190,351.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-14
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.80 $10.67 $ 18.33 $17.33 $ 13.42 $ 13.48
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05(a) 0.06(b) 0.04 0.52 0.09 0.18
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.18 (0.93) (6.82) 1.83 4.43 1.24
================================================================================================================================
Total from investment operations 0.23 (0.87) (6.78) 2.35 4.52 1.42
================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.07) (0.14)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.88) (1.35) (0.54) (1.34)
================================================================================================================================
Total distributions -- -- (0.88) (1.35) (0.61) (1.48)
================================================================================================================================
Net asset value, end of period $10.03 $ 9.80 $ 10.67 $18.33 $ 17.33 $ 13.42
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(c) 2.35% (8.15)% (38.46)% 14.02% 34.61% 11.69%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,532 $1,457 $ 1,648 $3,234 $66,801 $43,815
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 0.80%(d) 0.79% 0.68% 0.66% 0.65% 0.66%
- --------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 0.80%(d) 0.83% 0.69% 0.68% 0.67% 0.67%
================================================================================================================================
Ratio of net investment income to average net assets 0.96%(d) 0.52%(b) 0.25% 0.20% 0.51% 1.37%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate(e) 21% 103% 78% 80% 107% 154%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) As required, effective November 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and
began amortizing premiums on debt securities. Had the Fund not amortized
premiums on debt securities, the net investment income per share and the
ratio of net investment income to average net assets would have remained
the same. In accordance with the AICPA Audit and Accounting Guide for
Investment Companies, per share and ratios prior to November 1, 2001
have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(d) Ratios are annualized and based on average daily net assets of
$1,486,817.
(e) Not annualized for periods less than one year.
F-15
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
11 Greenway Plaza
Robert H. Graham Robert H. Graham Suite 100
Chairman and President Houston, TX 77046
Mark H. Williamson
Mark H. Williamson INVESTMENT ADVISOR
Frank S. Bayley Executive Vice President A I M Advisors, Inc.
11 Greenway Plaza
Bruce L. Crockett Kevin M. Carome Suite 100
Senior Vice President Houston, TX 77046
Albert R. Dowden
Gary T. Crum SUB-ADVISOR
Edward K. Dunn Jr. Senior Vice President A I M Capital Management Inc.
11 Greenway Plaza
Jack M. Fields Dana R. Sutton Suite 100
Vice President and Treasurer Houston, TX 77046
Carl Frischling
Stuart W. Coco TRANSFER AGENT
Prema Mathai-Davis Vice President A I M Fund Services, Inc.
P.O. Box 4739
Lewis F. Pennock Melville B. Cox Houston, TX 77210-4739
Vice President
Ruth H. Quigley CUSTODIAN
Edgar M. Larsen State Street Bank and Trust Company
Louis S. Sklar Vice President 225 Franklin Street
Boston, MA 02110
Nancy L. Martin
Secretary COUNSEL TO THE FUND
Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
<Caption>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Energy Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
College Separately
Mutual Retirement Annuities Savings Managed Offshore Alternative Cash
Funds Products Plans Accounts Products Investments Management
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com CHT-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM CONSTELLATION FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Constellation Fund seeks to provide growth of capital.
The fund seeks to meet this objective by investing principally
in common stocks of companies likely to benefit from new
or innovative products, services or processes as well as
those that have experienced above-average long-term growth
in earnings and have excellent prospects for future growth.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or
to persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
LONG-TERM PERFORMANCE
Average Annual Total Returns Since Inception
4/30/76-4/30/03, excluding sales charges.
BAR CHART
Class A Shares 14.41%
S&P 500 12.17%
Total Number of Holdings* 115
Total Net Assets $7.1 billion
Source: Lipper, Inc.
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
- --------------------------------------------------------------------------------
CLASS A SHARES
Inception (4/30/76) 14.16%
10 Years 6.64
5 Years -5.14
1 Year -20.68
CLASS B SHARES
Inception (11/3/97) -3.21%
5 Years -5.06
1 Year -20.83
CLASS C SHARES
Inception (8/4/97) -3.13%
5 Years -4.80
1 Year -17.51
CLASS R SHARES**
10 Years 7.07%
5 Years -4.17
1 Year -15.88
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without sales charges. Class R shares were
first offered on June 3, 2002. Returns prior to that date are hypothetical
results based on Class A share performance at net asset value, adjusted to
reflect Class R 12b-1 fees. (The inception date of Class A shares is 4/30/76).
Class R share returns do not include a 0.75% contingent deferred sales charge
that may be imposed on a total redemption of retirement plan assets within the
first year.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 1.28%
CLASS B SHARES 0.92
CLASS C SHARES 0.86
CLASS R SHARES 1.16
S&P 500 INDEX (Broad Market Index) 4.47
RUSSELL 1000 GROWTH INDEX 4.28
(Style-specific index)
LIPPER MULTI-CAP GROWTH FUND INDEX 4.79
(Peer Group Index)
Source: Lipper, Inc.
In addition to returns as of the close of the fiscal year period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (4/30/76), 13.94%; 10 years, 5.56%; five years, -5.92%; one
year, -29.96%. Class B shares, inception (11/3/97), -4.41%; five years, -5.85;
one year, -30.12%. Class C shares, inception (8/4/97), -4.26%; five years,
- -5.58; one year, -27.14%. Class R shares, 10 years, 5.98%; five years, -4.97%;
one year, -25.78%.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
==================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- --------------------------------------------------------------------------------------------------
1. Microsoft Corp. 3.4% 1. Pharmaceuticals 8.3%
2. Pfizer Inc. 2.5 2. Diversified Financial Services 8.2
3. Lockheed Martin Corp. 2.1 3. Semiconductors 5.9
4. Fiserv, Inc. 1.9 4. Health Care Equipment 4.8
5. Amgen Inc. 1.7 5. Aerospace & Defense 4.3
6. Cisco Systems, Inc. 1.7 6. Systems Software 3.9
7. CDW Computer Centers, Inc. 1.7 7. Semiconductor Equipment 3.7
8. Biomet, Inc. 1.6 8. Biotechnology 3.4
9. Medicis Pharmaceutical Corp.-Class A 1.6 9. Apparel Retail 2.9
10. Wal-Mart Stores, Inc. 1.6 10. Restaurants 2.8
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
==================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective 5/1/03, after the close of the reporting period, the portfolio
management team for AIM Constellation Fund is as follows: Christian A.
Costanzo, Robert J. Lloyd and Kenneth A. Zschappel.
o AIM Constellation Fund's performance figures are historical and they reflect
fund expenses, 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 share classes will differ due to different
sales charge structures and class expenses.
o Investing in small and mid-sized companies may involve greater risk and
potential reward than investing in more established companies. Also, small
companies may have business risk, significant stock-price fluctuations and
illiquidity.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
o The fund's investment return and principal value will fluctuate so that 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 Lipper Multi-Cap Growth Fund Index represents an average of
the performance of the 30 largest multi-capitalization growth funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 1000 Index represents the performance of the stocks of
large-capitalization companies; the Growth segment measures the performance
of those Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMINVESTMENTS.COM.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Constellation Fund for the six
ROBERT H. months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page. This letter will provide an overview of the
markets and your fund during the six months covered by this
report. As always, timely information about your fund and
the markets in general is available at our Web site,
aiminvestments.com.
MARKET CONDITIONS
Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed the
growth investment style during the six-month reporting period. For example, the
Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Constellation Fund, at net asset value,
posted positive returns for the six months ended April 30, 2003. Throughout the
reporting period, fund managers Kenneth A. Zschappel and Robert M. Kippes sought
to identify the stocks of companies that they believe have the potential for
above-average growth in earnings.
At the close of the reporting period, the three largest sector weightings in
the fund's portfolio were information technology, consumer discretionary and
health care. Keep in mind that fund managers focus on individual companies
rather than particular industries or sectors. The fund had 115 equity holdings
at the end of the reporting period.
We encourage you to visit aiminvestments.com for a wealth of information
about your fund, including regular performance updates, quarterly details of
portfolio composition, and much more. From our home page, click on Products and
Performance, then Mutual Funds, and then select the type of information you wish
to view.
IN CLOSING
I thank you for your continued participation in AIM Constellation Fund, and I
look forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department are ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
POSITIVE PERFORMANCE DURING
MARCH AND APRIL 2003 ENABLED
MAJOR STOCK MARKET INDEXES TO POST
GAINS FOR THE REPORTING PERIOD.
ROBERT H. GRAHAM
================================================================================
SUPPLEMENT TO SEMIANNUAL REPORT DATED 4/30/03
AIM CONSTELLATION FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class
shareholders with a performance overview specific to their holdings.
Institutional Class shares are offered exclusively to institutional investors,
including defined contribution plans that meet certain criteria. Performance of
Institutional Class shares will differ from performance of Class A shares due
to differing sales charges and class expenses.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 4/30/03
================================================================================
Inception (4/8/92) 8.63%
10 years 7.76
5 years -3.60
1 year -15.59
6 months 1.58*
*NOT ANNUALIZED
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 3/31/03 (most recent calendar quarter-end)
================================================================================
Inception (4/8/92) 8.06%
10 years 6.66
5 years -4.39
1 year -25.47
================================================================================
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. All returns assume
reinvestment of distributions at net asset value. Investment return and
principal value will fluctuate so your shares, when redeemed, may be worth more
or less than their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or call
AIM toll free at 800-451-4246.
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
A I M DISTRIBUTORS, INC. CST-INS-2
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-94.84%
ADVERTISING-1.52%
Lamar Advertising Co.(a) 3,000,000 $ 107,760,000
===========================================================================
AEROSPACE & DEFENSE-4.30%
L-3 Communications Holdings, Inc.(a) 1,820,000 80,808,000
- ---------------------------------------------------------------------------
Lockheed Martin Corp. 3,000,000 150,150,000
- ---------------------------------------------------------------------------
Northrop Grumman Corp. 850,000 74,757,500
===========================================================================
305,715,500
===========================================================================
AIR FREIGHT & LOGISTICS-0.35%
FedEx Corp. 420,800 25,197,504
===========================================================================
AIRLINES-0.90%
Southwest Airlines Co. 4,000,000 63,840,000
===========================================================================
APPAREL RETAIL-2.92%
Abercrombie & Fitch Co.-Class A(a) 1,000,000 32,880,000
- ---------------------------------------------------------------------------
Gap, Inc. (The) 6,000,000 99,780,000
- ---------------------------------------------------------------------------
Ross Stores, Inc. 443,800 16,820,020
- ---------------------------------------------------------------------------
TJX Cos., Inc. (The) 3,000,000 57,750,000
===========================================================================
207,230,020
===========================================================================
APPLICATION SOFTWARE-2.46%
Citrix Systems, Inc.(a) 2,000,000 37,920,000
- ---------------------------------------------------------------------------
Electronic Arts Inc.(a) 850,000 50,379,500
- ---------------------------------------------------------------------------
Intuit Inc.(a) 1,500,000 58,170,000
- ---------------------------------------------------------------------------
Mercury Interactive Corp.(a) 839,800 28,502,812
===========================================================================
174,972,312
===========================================================================
BANKS-1.58%
Bank of America Corp. 500,000 37,025,000
- ---------------------------------------------------------------------------
New York Community Bancorp, Inc. 49,700 1,725,584
- ---------------------------------------------------------------------------
Washington Mutual, Inc. 1,250,000 49,375,000
- ---------------------------------------------------------------------------
Wells Fargo & Co. 500,000 24,130,000
===========================================================================
112,255,584
===========================================================================
BIOTECHNOLOGY-3.41%
Amgen Inc.(a) 1,989,200 121,957,852
- ---------------------------------------------------------------------------
Genzyme Corp.(a) 697,300 28,087,244
- ---------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 937,400 43,251,636
- ---------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 1,486,700 48,689,425
===========================================================================
241,986,157
===========================================================================
BROADCASTING & CABLE TV-2.01%
Clear Channel Communications, Inc.(a) 2,000,000 78,220,000
- ---------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 750,000 19,237,500
- ---------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
BROADCASTING & CABLE TV-(CONTINUED)
Univision Communications Inc.-Class A(a) 1,500,000 $ 45,420,000
===========================================================================
142,877,500
===========================================================================
CASINOS & GAMBLING-0.80%
MGM Mirage(a) 2,000,000 56,840,000
===========================================================================
COMPUTER & ELECTRONICS RETAIL-1.65%
CDW Computer Centers, Inc.(a) 2,750,000 117,260,000
===========================================================================
COMPUTER HARDWARE-1.53%
Dell Computer Corp.(a) 3,750,000 108,412,500
===========================================================================
COMPUTER STORAGE & PERIPHERALS-0.65%
EMC Corp.(a) 5,110,200 46,451,718
===========================================================================
DATA PROCESSING SERVICES-1.86%
Fiserv, Inc.(a) 4,500,000 132,480,000
===========================================================================
DEPARTMENT STORES-0.48%
Kohl's Corp.(a) 600,000 34,080,000
===========================================================================
DIVERSIFIED FINANCIAL SERVICES-8.15%
American Express Co. 1,766,100 66,864,546
- ---------------------------------------------------------------------------
Citigroup Inc. 2,250,000 88,312,500
- ---------------------------------------------------------------------------
Fannie Mae 500,000 36,195,000
- ---------------------------------------------------------------------------
Freddie Mac 500,000 28,950,000
- ---------------------------------------------------------------------------
Goldman Sachs Group, Inc. 1,100,000 83,490,000
- ---------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 2,005,400 82,321,670
- ---------------------------------------------------------------------------
Moody's Corp. 1,250,000 60,362,500
- ---------------------------------------------------------------------------
Morgan Stanley 1,713,600 76,683,600
- ---------------------------------------------------------------------------
SLM Corp. 500,000 56,000,000
===========================================================================
579,179,816
===========================================================================
DRUG RETAIL-0.87%
Walgreen Co. 2,000,000 61,720,000
===========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-0.77%
Molex Inc. 1,500,000 35,010,000
- ---------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 1,596,600 19,957,500
===========================================================================
54,967,500
===========================================================================
EMPLOYMENT SERVICES-0.69%
Robert Half International Inc.(a) 3,000,000 48,840,000
===========================================================================
FOOD DISTRIBUTORS-0.51%
SYSCO Corp. 1,250,000 35,912,500
===========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
FOOTWEAR-0.56%
NIKE, Inc.-Class B 750,000 $ 40,147,500
===========================================================================
GENERAL MERCHANDISE STORES-2.31%
Family Dollar Stores, Inc. 1,500,000 51,285,000
- ---------------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,000,000 112,640,000
===========================================================================
163,925,000
===========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-2.42%
AdvancePCS(a) 1,089,603 32,753,466
- ---------------------------------------------------------------------------
Cardinal Health, Inc. 1,071,600 59,238,048
- ---------------------------------------------------------------------------
Caremark Rx, Inc.(a) 4,011,400 79,866,974
===========================================================================
171,858,488
===========================================================================
HEALTH CARE EQUIPMENT-4.79%
Biomet, Inc. 3,770,675 114,854,760
- ---------------------------------------------------------------------------
Boston Scientific Corp.(a) 841,000 36,205,050
- ---------------------------------------------------------------------------
Medtronic, Inc. 2,042,600 97,513,724
- ---------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 1,211,500 63,555,290
- ---------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 600,000 28,140,000
===========================================================================
340,268,824
===========================================================================
HEALTH CARE FACILITIES-0.41%
Health Management Associates, Inc.-Class A 1,706,000 29,104,360
===========================================================================
HOME IMPROVEMENT RETAIL-0.93%
Lowe's Cos., Inc. 1,500,000 65,835,000
===========================================================================
HOUSEHOLD PRODUCTS-1.51%
Clorox Co. (The) 750,000 33,915,000
- ---------------------------------------------------------------------------
Procter & Gamble Co. (The) 816,100 73,326,585
===========================================================================
107,241,585
===========================================================================
INDUSTRIAL MACHINERY-0.49%
Danaher Corp. 500,000 34,490,000
===========================================================================
INTEGRATED OIL & GAS-0.46%
Exxon Mobil Corp. 920,500 32,401,600
===========================================================================
INTERNET RETAIL-0.43%
eBay Inc.(a) 327,000 30,335,790
===========================================================================
IT CONSULTING & SERVICES-0.70%
SunGard Data Systems Inc.(a) 2,298,500 49,417,750
===========================================================================
LIFE & HEALTH INSURANCE-0.51%
AFLAC Inc. 1,100,000 35,981,000
===========================================================================
MANAGED HEALTH CARE-2.01%
Aetna Inc. 417,800 20,806,440
- ---------------------------------------------------------------------------
UnitedHealth Group Inc. 661,700 60,962,421
- ---------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 806,000 61,207,640
===========================================================================
142,976,501
===========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
MOTORCYCLE MANUFACTURERS-1.41%
Harley-Davidson, Inc. 2,250,000 $ 99,990,000
===========================================================================
MOVIES & ENTERTAINMENT-1.33%
Pixar, Inc.(a) 500,000 29,195,000
- ---------------------------------------------------------------------------
Viacom Inc.-Class B(a) 1,500,000 65,115,000
===========================================================================
94,310,000
===========================================================================
MULTI-LINE INSURANCE-1.22%
American International Group, Inc. 1,500,000 86,925,000
===========================================================================
NETWORKING EQUIPMENT-1.69%
Cisco Systems, Inc.(a) 8,000,000 120,320,000
===========================================================================
OIL & GAS DRILLING-1.87%
ENSCO International Inc. 1,519,000 38,582,600
- ---------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 1,000,000 39,200,000
- ---------------------------------------------------------------------------
Noble Corp. (Cayman Islands)(a) 1,000,000 30,950,000
- ---------------------------------------------------------------------------
Transocean Inc. 1,250,000 23,812,500
===========================================================================
132,545,100
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-1.48%
BJ Services Co.(a) 1,169,600 42,702,096
- ---------------------------------------------------------------------------
Smith International, Inc.(a) 900,000 32,004,000
- ---------------------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 750,000 30,172,500
===========================================================================
104,878,596
===========================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.89%
Apache Corp. 525,000 30,056,250
- ---------------------------------------------------------------------------
Devon Energy Corp. 700,000 33,075,000
===========================================================================
63,131,250
===========================================================================
PACKAGED FOODS & MEATS-0.49%
General Mills, Inc. 777,600 35,077,536
===========================================================================
PERSONAL PRODUCTS-0.54%
Gillette Co. (The) 1,250,000 38,062,500
===========================================================================
PHARMACEUTICALS-8.31%
Allergan, Inc. 291,400 20,470,850
- ---------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 885,700 45,808,404
- ---------------------------------------------------------------------------
Johnson & Johnson 714,300 40,257,948
- ---------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a)(b) 1,960,600 113,008,984
- ---------------------------------------------------------------------------
Pfizer Inc. 5,789,800 178,036,350
- ---------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 2,244,800 104,832,160
- ---------------------------------------------------------------------------
Wyeth 2,017,500 87,821,775
===========================================================================
590,236,471
===========================================================================
PUBLISHING-0.53%
Gannett Co., Inc. 500,000 37,860,000
===========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
RESTAURANTS-2.82%
Brinker International, Inc.(a) 2,640,200 $ 83,826,350
- ---------------------------------------------------------------------------
Outback Steakhouse, Inc. 1,335,800 47,741,492
- ---------------------------------------------------------------------------
P.F. Chang's China Bistro, Inc.(a) 700,000 29,330,000
- ---------------------------------------------------------------------------
Wendy's International, Inc. 1,352,600 39,279,504
===========================================================================
200,177,346
===========================================================================
SEMICONDUCTOR EQUIPMENT-3.73%
Applied Materials, Inc.(a) 5,000,000 73,000,000
- ---------------------------------------------------------------------------
KLA-Tencor Corp.(a) 1,739,400 71,315,400
- ---------------------------------------------------------------------------
Lam Research Corp.(a) 4,000,000 58,120,000
- ---------------------------------------------------------------------------
Novellus Systems, Inc.(a) 1,000,000 28,040,000
- ---------------------------------------------------------------------------
Teradyne, Inc.(a) 3,000,000 34,800,000
===========================================================================
265,275,400
===========================================================================
SEMICONDUCTORS-5.86%
Analog Devices, Inc.(a) 3,000,000 99,360,000
- ---------------------------------------------------------------------------
Intel Corp. 3,000,000 55,200,000
- ---------------------------------------------------------------------------
Linear Technology Corp. 2,000,000 68,940,000
- ---------------------------------------------------------------------------
Maxim Integrated Products, Inc. 1,750,000 68,757,500
- ---------------------------------------------------------------------------
Microchip Technology Inc. 5,068,952 105,383,512
- ---------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 2,240,800 18,755,496
===========================================================================
416,396,508
===========================================================================
SPECIALTY STORES-1.90%
Bed Bath & Beyond Inc.(a) 2,350,000 92,848,500
- ---------------------------------------------------------------------------
Staples, Inc.(a) 2,200,000 41,888,000
===========================================================================
134,736,500
===========================================================================
SYSTEMS SOFTWARE-3.88%
Microsoft Corp. 9,500,000 242,915,000
- ---------------------------------------------------------------------------
VERITAS Software Corp.(a) 1,500,000 33,015,000
===========================================================================
275,930,000
===========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT-0.77%
Nokia Oyj (Finland) 1,330,100 $ 22,545,722
- ---------------------------------------------------------------------------
Nortel Networks Corp. (Canada)(a) 12,500,000 32,250,000
===========================================================================
54,795,722
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.18%
Nextel Communications, Inc.-Class A(a) 2,040,000 30,171,600
- ---------------------------------------------------------------------------
Vodafone Group PLC (United Kingdom) 27,345,190 54,029,030
===========================================================================
84,200,630
===========================================================================
Total Common Stocks and Other Equity
Interests (Cost $6,237,120,293) 6,736,810,568
===========================================================================
MONEY MARKET FUNDS-3.77%
STIC Liquid Assets Portfolio(c) 133,930,283 133,930,283
- ---------------------------------------------------------------------------
STIC Prime Portfolio(c) 133,930,283 133,930,283
===========================================================================
Total Money Market Funds (Cost
$267,860,566) 267,860,566
===========================================================================
TOTAL INVESTMENTS-98.61% (excluding
investments purchased with cash collateral
from securities loaned) (Cost
$6,504,980,859) 7,004,671,134
===========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED-2.18%
MONEY MARKET FUNDS-2.18%
STIC Liquid Assets Portfolio(c)(d) 129,639,700 129,639,700
- ---------------------------------------------------------------------------
STIC Prime Portfolio(c)(d) 24,938,484 24,938,484
===========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $154,578,184) 154,578,184
===========================================================================
TOTAL INVESTMENTS-100.79% (Cost
$6,659,559,043) 7,159,249,318
===========================================================================
OTHER ASSETS LESS LIABILITIES-(0.79%) (55,976,158)
===========================================================================
NET ASSETS-100.00% $7,103,273,160
___________________________________________________________________________
===========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities. The Fund
has not owned enough of the outstanding voting securities of the issuer to
have control (as defined in the Investment Company Act of 1940) of that
issuer. The following is a summary of the transactions with affiliates for
the period ended April 30, 2003.
<Table>
<Caption>
CHANGE IN
MARKET VALUE PURCHASES SALES UNREALIZED MARKET VALUE DIVIDEND REALIZED
10/31/2002 AT COST AT COST APPR./(DEPR.) 4/30/2003 INCOME GAIN/(LOSS)
--------------------------------------------------------------------------------------------------------------------
Medicis
Pharmaceutical
Corp.-Class A $91,800,000 $ -- $(2,837,098) $24,046,082 $113,008,984 $ -- $(875,337)
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
(d) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$6,659,559,043)* $ 7,159,249,318
- ------------------------------------------------------------
Receivables for:
Investments sold 186,786,588
- ------------------------------------------------------------
Fund shares sold 5,129,721
- ------------------------------------------------------------
Dividends 2,348,815
- ------------------------------------------------------------
Investment for deferred compensation plan 264,873
- ------------------------------------------------------------
Other assets 114,550
============================================================
Total assets 7,353,893,865
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 68,548,043
- ------------------------------------------------------------
Fund shares reacquired 16,292,394
- ------------------------------------------------------------
Deferred compensation plan 264,873
- ------------------------------------------------------------
Collateral upon return of securities
loaned 154,578,184
- ------------------------------------------------------------
Accrued distribution fees 3,663,937
- ------------------------------------------------------------
Accrued trustees' fees 5,000
- ------------------------------------------------------------
Accrued transfer agent fees 5,335,511
- ------------------------------------------------------------
Accrued operating expenses 1,932,763
============================================================
Total liabilities 250,620,705
============================================================
Net assets applicable to shares outstanding $ 7,103,273,160
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 9,421,267,999
- ------------------------------------------------------------
Undistributed net investment income (loss) (27,392,698)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign
currencies (2,790,292,416)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 499,690,275
============================================================
$ 7,103,273,160
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 6,202,228,681
____________________________________________________________
============================================================
Class B $ 598,860,912
____________________________________________________________
============================================================
Class C $ 173,184,114
____________________________________________________________
============================================================
Class R $ 1,447,960
____________________________________________________________
============================================================
Institutional Class $ 127,551,493
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 356,225,314
____________________________________________________________
============================================================
Class B 36,296,215
____________________________________________________________
============================================================
Class C 10,499,292
____________________________________________________________
============================================================
Class R 83,000
____________________________________________________________
============================================================
Institutional Class 6,829,484
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 17.41
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $17.41 divided by
94.50%) $ 18.42
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 16.50
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 16.49
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 17.45
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 18.68
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $148,921,546
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $85,767) $ 21,522,892
- ---------------------------------------------------------------------------
Dividends from affiliated money market funds 1,366,996
- ---------------------------------------------------------------------------
Security lending income 94,343
===========================================================================
Total investment income 22,984,231
===========================================================================
EXPENSES:
Advisory fees 22,476,868
- ---------------------------------------------------------------------------
Administrative services fees 335,277
- ---------------------------------------------------------------------------
Custodian fees 267,859
- ---------------------------------------------------------------------------
Distribution fees -- Class A 9,399,568
- ---------------------------------------------------------------------------
Distribution fees -- Class B 2,952,704
- ---------------------------------------------------------------------------
Distribution fees -- Class C 862,017
- ---------------------------------------------------------------------------
Distribution fees -- Class R 1,386
- ---------------------------------------------------------------------------
Transfer agent fees 12,191,891
- ---------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 59,914
- ---------------------------------------------------------------------------
Trustees' fees 27,389
- ---------------------------------------------------------------------------
Other 1,379,555
===========================================================================
Total expenses 49,954,428
===========================================================================
Less: Fees waived and expenses paid indirectly (347,710)
===========================================================================
Net expenses 49,606,718
===========================================================================
Net investment income (loss) (26,622,487)
===========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (324,761,137)
- ---------------------------------------------------------------------------
Foreign currencies 484,940
===========================================================================
(324,276,197)
===========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 417,075,659
- ---------------------------------------------------------------------------
Foreign currencies 17,825
- ---------------------------------------------------------------------------
Option contracts written (123,292)
===========================================================================
416,970,192
===========================================================================
Net gain from investment securities, foreign currencies and
option contracts 92,693,995
===========================================================================
Net increase in net assets resulting from operations $ 66,071,508
___________________________________________________________________________
===========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (26,622,487) $ (81,004,558)
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (324,276,197) (1,231,119,667)
- ------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option contracts 416,970,192 143,436,189
================================================================================================
Net increase (decrease) in net assets resulting from
operations 66,071,508 (1,168,688,036)
================================================================================================
Share transactions-net:
Class A (637,329,746) (1,905,685,542)
- ------------------------------------------------------------------------------------------------
Class B (29,996,027) (89,586,163)
- ------------------------------------------------------------------------------------------------
Class C (12,208,086) (44,303,197)
- ------------------------------------------------------------------------------------------------
Class R 1,142,612 204,500
- ------------------------------------------------------------------------------------------------
Institutional Class 2,880,061 (10,243,640)
================================================================================================
Net increase (decrease) in net assets resulting from
share transactions (675,511,186) (2,049,614,042)
================================================================================================
Net increase (decrease) in net assets (609,439,678) (3,218,302,078)
================================================================================================
NET ASSETS:
Beginning of period 7,712,712,838 10,931,014,916
================================================================================================
End of period $ 7,103,273,160 $ 7,712,712,838
________________________________________________________________________________________________
================================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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 growth of capital. Each company listed in
the Schedule of Investments is organized in the United States unless otherwise
noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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
F-7
fluctuations arising from changes in market prices of securities held. The
combined results of changes in foreign exchange rates and the fluctuation
of market prices on investments are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
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 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. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.00% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
voluntarily agreed to waive advisory fees payable by the Fund to AIM at the
annual rate of 0.025% for each $5 billion increment in net assets over $5
billion, up to a maximum waiver of 0.175% on net assets in excess of $35
billion. Further, AIM has voluntarily agreed to waive advisory fees of the Fund
in the amount of 25% of the advisory fee AIM receives from the affiliated money
market funds in which the Fund has invested (excluding investments made in
affiliated money market funds with cash collateral from securities loaned by the
Fund). Voluntary fee waivers may be rescinded, terminated or modified with
approval of Board of Trustees without further notice to investors. For the six
months ended April 30, 2003, AIM waived fees of $295,954. Under the terms of a
master sub-advisory agreement between AIM and A I M Capital Management, Inc.
("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
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, 2003, AIM
was paid $335,277 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. During the six months ended April 30, 2003,
AFS retained $5,821,255 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Institutional Class shares of the
Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A shares, Class B shares, Class C shares and Class R
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.30% of the Fund's average
daily net assets of Class A shares, 1.00% of the average daily net assets of
Class B and Class C shares and 0.50% of the average daily net assets of Class R
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, Class C or Class R 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. NASD Rules also impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. Pursuant to the Plans, for the six months ended
April 30, 2003, the Class A, Class B, Class C and Class R shares paid
$9,399,568, $2,952,704, $862,017 and $1,386, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During six months ended April 30, 2003, AIM
Distributors retained $432,290 in front-end sales commissions from the sale of
Class A shares and $2,486, $0, $7,398 and $0 for Class A, Class B, Class C and
Class R shares, respectively, for CDSCs imposed upon redemptions by
shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$8,001 for services rendered by Kramer, Levin, Naftalis & Frankel LLP
F-8
as counsel to the Board of Trustees. A member of that firm is a trustee of the
Trust.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $50,786 and reductions in
custodian fees of $970 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $51,756.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At April 30, 2003, securities with an aggregate value of $148,921,546 were
on loan to brokers. The loans were secured by cash collateral of $154,578,184
received by the Fund and subsequently invested in affiliated money market funds.
For the six months ended April 30, 2003, the Fund received fees of $94,343 for
securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- -------------------------------------------------------------------------------
Beginning of period 1,551 $ 398,595
- -------------------------------------------------------------------------------
Written 1,375 291,491
- -------------------------------------------------------------------------------
Exercised (1,551) (398,595)
- -------------------------------------------------------------------------------
Expired (1,375) (291,491)
===============================================================================
End of period -- $ --
_______________________________________________________________________________
===============================================================================
</Table>
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- --------------------------------------------------------------------------------
October 31, 2009 $1,224,074,030
- --------------------------------------------------------------------------------
October 31, 2010 1,223,985,487
================================================================================
Total capital loss carryforward $2,448,059,517
________________________________________________________________________________
================================================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $1,611,842,886 and $2,470,575,380, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $1,263,076,420
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (768,371,395)
===============================================================================
Net unrealized appreciation of investment securities $ 494,705,025
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $6,664,544,293.
</Table>
F-9
NOTE 10--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and Institutional Class shares.
Class A shares are sold with a front-end sales charge. Class B shares and Class
C shares are sold with a CDSC. Under some circumstances, Class A shares and
Class R shares are subject to CDSCs. Class R shares and Institutional Class
shares are sold at net asset value. Generally, Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Changes in shares outstanding during the six months ended April 30,
2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 22,251,277 $ 373,428,788 48,969,691 $ 970,494,859
- -------------------------------------------------------------------------------------------------------------------------------
Class B 2,350,445 37,555,133 5,811,283 111,506,491
- -------------------------------------------------------------------------------------------------------------------------------
Class C 956,708 15,271,713 2,391,741 46,150,281
- -------------------------------------------------------------------------------------------------------------------------------
Class R* 92,422 1,530,783 13,083 204,591
- -------------------------------------------------------------------------------------------------------------------------------
Institutional Class 615,736 11,106,198 6,254,346 139,801,926
===============================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 107,070 1,805,515 223,534 4,426,684
- -------------------------------------------------------------------------------------------------------------------------------
Class B (112,840) (1,805,515) (234,440) (4,426,684)
===============================================================================================================================
Reacquired:
Class A (60,246,141) (1,012,564,049) (147,108,087) (2,880,607,085)
- -------------------------------------------------------------------------------------------------------------------------------
Class B (4,163,040) (65,745,645) (10,685,339) (196,665,970)
- -------------------------------------------------------------------------------------------------------------------------------
Class C (1,731,710) (27,479,799) (4,824,172) (90,453,478)
- -------------------------------------------------------------------------------------------------------------------------------
Class R* (22,500) (388,171) (5) (91)
- -------------------------------------------------------------------------------------------------------------------------------
Institutional Class (455,724) (8,226,137) (6,757,582) (150,045,566)
===============================================================================================================================
(40,358,297) $ (675,511,186) (105,945,947) $(2,049,614,042)
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.20 $ 19.72 $ 43.50 $ 34.65 $ 26.37 $ 29.23
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) (0.15)(a) (0.12) (0.26) (0.17) (0.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.27 (2.37) (16.24) 12.39 9.18 (0.62)
=================================================================================================================================
Total from investment operations 0.21 (2.52) (16.36) 12.13 9.01 (0.76)
=================================================================================================================================
Less distributions from net realized
gains -- -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 17.41 $ 17.20 $ 19.72 $ 43.50 $ 34.65 $ 26.37
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.22% (12.78)% (43.10)% 36.56% 34.81% (2.30)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $6,202,229 $6,780,055 $9,703,277 $19,268,977 $14,292,905 $12,391,844
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.32%(c) 1.26% 1.14% 1.08% 1.10% 1.10%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.33%(c) 1.27% 1.17% 1.11% 1.12% 1.12%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.68)%(c) (0.74)% (0.46)% (0.61)% (0.50)% (0.47)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(d) 23% 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$6,318,310,156.
(d) Not annualized for periods less than one year.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
------------------------------------------------------------------------
NOVEMBER 3, 1997
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ---------------------------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.36 $ 18.89 $ 42.28 $ 34.00 $ 26.11 $ 30.04
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.27)(a) (0.28) (0.58)(a) (0.42) (0.37)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.25 (2.26) (15.69) 12.14 9.04 (1.46)
=================================================================================================================================
Total from investment operations 0.14 (2.53) (15.97) 11.56 8.62 (1.83)
=================================================================================================================================
Less distributions from net realized
gains -- -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 16.50 $ 16.36 $ 18.89 $ 42.28 $ 34.00 $ 26.11
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 0.86% (13.39)% (43.49)% 35.51% 33.64% (5.86)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $598,861 $625,294 $818,343 $1,315,524 $589,718 $275,676
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 2.02%(c) 1.96% 1.86% 1.85% 1.98% 1.98%(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.03%(c) 1.97% 1.89% 1.88% 2.00% 2.00%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income (loss)
to average net assets (1.38)%(c) (1.44)% (1.17)% (1.38)% (1.38)% (1.36)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(e) 23% 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$595,434,717.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.36 $ 18.88 $ 42.27 $ 33.99 $ 26.10 $ 29.18
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.27)(a) (0.29) (0.59)(a) (0.42) (0.37)(a)
- ------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.24 (2.25) (15.68) 12.15 9.04 (0.61)
========================================================================================================================
Total from investment operations 0.13 (2.52) (15.97) 11.56 8.62 (0.98)
========================================================================================================================
Less distributions from net realized
gains -- -- (7.42) (3.28) (0.73) (2.10)
========================================================================================================================
Net asset value, end of period $ 16.49 $ 16.36 $ 18.88 $ 42.27 $ 33.99 $ 26.10
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) 0.80% (13.35)% (43.51)% 35.52% 33.65% (3.12)%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $173,184 $184,393 $258,786 $434,544 $161,490 $76,522
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.02%(c) 1.96% 1.86% 1.85% 1.98% 1.97%
- ------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.03%(c) 1.97% 1.89% 1.88% 2.00% 1.99%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.38)%(c) (1.44)% (1.17)% (1.38)% (1.38)% (1.35)%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate(d) 23% 57% 75% 88% 62% 76%
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$173,832,119.
(d) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS R
---------------------------
JUNE 3, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------
Net asset value, beginning of period $17.26 $ 19.82
- --------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.07)(a)
- --------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.30 (2.49)
==========================================================================
Total from investment operations 0.19 (2.56)
==========================================================================
Net asset value, end of period $17.45 $ 17.26
__________________________________________________________________________
==========================================================================
Total return(b) 1.10% (12.92)%
__________________________________________________________________________
==========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,448 $ 226
__________________________________________________________________________
==========================================================================
Ratio of expenses to average net assets:
With fee waivers 1.52%(c) 1.53%(d)
- --------------------------------------------------------------------------
Without fee waivers 1.53%(c) 1.54%(d)
__________________________________________________________________________
==========================================================================
Ratio of net investment income (loss) to
average net assets (0.88)%(c) (1.01)%(d)
__________________________________________________________________________
==========================================================================
Portfolio turnover rate(e) 23% 57%
__________________________________________________________________________
==========================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $559,184.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-13
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.40 $ 21.00 $ 45.55 $ 36.01 $ 27.25 $ 30.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.06)(a) 0.01 (0.09) (0.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.29 (2.54) (17.14) 12.91 9.50 (0.65)
=================================================================================================================================
Total from investment operations 0.28 (2.60) (17.13) 12.82 9.49 (0.65)
=================================================================================================================================
Less distributions from net realized
gains -- -- (7.42) (3.28) (0.73) (2.10)
=================================================================================================================================
Net asset value, end of period $ 18.68 $ 18.40 $ 21.00 $ 45.55 $ 36.01 $ 27.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.52% (12.38)% (42.80)% 37.14% 35.46% (1.85)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $127,551 $122,746 $150,609 $288,097 $244,369 $189,039
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.78%(c) 0.80% 0.65% 0.65% 0.64% 0.63%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.79%(c) 0.81% 0.68% 0.68% 0.66% 0.65%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income (loss) to
average net assets (0.13)%(c) (0.28)% 0.03% (0.18)% (0.04)% (0.01)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(d) 23% 57% 75% 88% 62% 76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$122,068,861.
(d) Not annualized for periods less than one year.
F-14
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
<Caption>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
SUB-ADVISOR
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Capital Management Inc.
Carl Frischling 11 Greenway Plaza
Stuart W. Coco Suite 100
Prema Mathai-Davis Vice President Houston, TX 77046
Lewis F. Pennock Melville B. Cox TRANSFER AGENT
Vice President
Ruth H. Quigley A I M Fund Services, Inc.
Edgar M. Larsen P.O. Box 4739
Louis S. Sklar Vice President Houston, TX 77210-4739
Nancy L. Martin CUSTODIAN
Secretary
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
COUNSEL TO THE FUND
Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
FIXED INCOME
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY TAXABLE
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) AIM Floating Rate Fund
AIM Balanced Fund* AIM Developing Markets Fund AIM High Yield Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Income Fund
AIM Basic Value Fund AIM European Small Company Fund AIM Intermediate Government Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Capital Development Fund AIM Global Growth Fund AIM Money Market Fund
AIM Charter Fund AIM Global Trends Fund AIM Short-Term Bond Fund
AIM Constellation Fund AIM Global Value Fund(5) AIM Total Return Bond Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2)
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund TAX-FREE
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund AIM High Income Municipal Fund
AIM Large Cap Growth Fund AIM Municipal Bond Fund
AIM Libra Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Tax-Free Intermediate Fund(6,7)
AIM Mid Cap Core Equity Fund(2)
AIM Mid Cap Growth Fund AIM Global Energy Fund
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com CST-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM CORE STRATEGIES FUND
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
Your Goals. Our Solutions.
--Servicemark--
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
AIM CORE STRATEGIES FUND
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------
COMMON STOCKS & OTHER
EQUITY INTERESTS--96.97%
AEROSPACE & DEFENSE--2.01%
Precision Castparts Corp. 150 $ 4,153
- --------------------------------------------------------------------------------
Rockwell Collins, Inc. 220 4,704
- --------------------------------------------------------------------------------
United Technologies Corp. 120 7,417
================================================================================
16,274
================================================================================
APPAREL RETAIL--1.07%
Abercrombie & Fitch Co.-Class A(a) 100 3,288
- --------------------------------------------------------------------------------
Gap, Inc. (The) 150 2,494
- --------------------------------------------------------------------------------
Talbots, Inc. (The) 100 2,865
================================================================================
8,647
================================================================================
APPAREL, ACCESSORIES & LUXURY GOODS--0.25%
Jones Apparel Group, Inc.(a) 70 1,996
================================================================================
APPLICATION SOFTWARE--0.32%
PeopleSoft, Inc.(a) 170 2,555
================================================================================
BANKS--7.83%
Bank of America Corp. 200 14,810
- --------------------------------------------------------------------------------
Bank One Corp. 200 7,210
- --------------------------------------------------------------------------------
Huntington Bancshares Inc. 460 8,952
- --------------------------------------------------------------------------------
IndyMac Bancorp, Inc. 80 1,782
- --------------------------------------------------------------------------------
National City Corp. 280 8,389
- --------------------------------------------------------------------------------
Synovus Financial Corp. 150 2,920
- --------------------------------------------------------------------------------
U.S. Bancorp. 380 8,417
- --------------------------------------------------------------------------------
Wachovia Corp. 130 4,967
- --------------------------------------------------------------------------------
Washington Mutual, Inc. 150 5,925
================================================================================
63,372
================================================================================
BIOTECHNOLOGY--1.25%
Amgen Inc.(a) 150 9,196
- --------------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 20 923
================================================================================
10,119
================================================================================
BROADCASTING & CABLE TV--0.77%
Clear Channel Communications, Inc.(a) 60 2,347
- --------------------------------------------------------------------------------
Comcast Corp.-Class A(a) 122 3,893
================================================================================
6,240
================================================================================
CASINOS & GAMBLING--0.25%
GTECH Holdings Corp.(a) 60 2,020
================================================================================
CATALOG RETAIL--0.33%
USA Interactive(a) 90 2,695
================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------
COMPUTER & ELECTRONICS RETAIL--0.64%
Best Buy Co., Inc.(a) 150 $ 5,187
================================================================================
COMPUTER HARDWARE--4.13%
Dell Computer Corp.(a) 640 18,502
- --------------------------------------------------------------------------------
Hewlett-Packard Co. 290 4,727
- --------------------------------------------------------------------------------
International Business Machines Corp. 120 10,188
================================================================================
33,417
================================================================================
COMPUTER STORAGE & PERIPHERALS--0.24%
Storage Technology Corp.(a) 80 1,978
================================================================================
CONSUMER FINANCE--0.67%
Capital One Financial Corp. 130 5,443
================================================================================
DATA PROCESSING SERVICES--2.56%
CheckFree Corp.(a)(b) 250 6,893
- --------------------------------------------------------------------------------
First Data Corp. 180 7,061
- --------------------------------------------------------------------------------
Fiserv, Inc.(a) 50 1,472
- --------------------------------------------------------------------------------
Global Payments Inc. 110 3,411
- --------------------------------------------------------------------------------
Paychex, Inc. 60 1,868
================================================================================
20,705
================================================================================
DEPARTMENT STORES--0.42%
J.C. Penney Co., Inc. 200 3,412
================================================================================
DIVERSIFIED COMMERCIAL SERVICES--0.57%
Equifax Inc. 200 4,638
================================================================================
DIVERSIFIED FINANCIAL SERVICES--7.57%
American Express Co. 300 11,358
- --------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The) 40 2,674
- --------------------------------------------------------------------------------
Citigroup Inc. 510 20,018
- --------------------------------------------------------------------------------
Fannie Mae 165 11,944
- --------------------------------------------------------------------------------
Freddie Mac(b) 110 6,369
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 130 5,337
- --------------------------------------------------------------------------------
Morgan Stanley 80 3,580
================================================================================
61,280
================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------
DRUG RETAIL--0.36%
CVS Corp. 120 $ 2,905
================================================================================
ELECTRIC UTILITIES--2.22%
Entergy Corp. 120 5,593
- --------------------------------------------------------------------------------
Southern Co. (The) 425 12,363
================================================================================
17,956
================================================================================
ELECTRICAL COMPONENTS & EQUIPMENT--0.33%
American Power Conversion Corp.(a) 170 2,649
================================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.22%
PerkinElmer, Inc. 180 1,786
================================================================================
FOOD DISTRIBUTORS--0.46%
Sysco Corp. 130 3,735
================================================================================
FOOD RETAIL--0.49%
Kroger Co. (The)(a) 280 4,004
================================================================================
FOOTWEAR--0.27%
Reebok International Ltd.(a) 70 2,174
================================================================================
GENERAL MERCHANDISE STORES--2.30%
Wal-Mart Stores, Inc. 330 18,586
================================================================================
HEALTH CARE DISTRIBUTORS & SERVICES--1.52%
Cardinal Health, Inc. 60 3,317
- --------------------------------------------------------------------------------
Caremark Rx, Inc.(a) 120 2,389
- --------------------------------------------------------------------------------
Express Scripts, Inc.(a) 50 2,948
- --------------------------------------------------------------------------------
Pharmaceutical Product Development, Inc.(a) 70 1,832
- --------------------------------------------------------------------------------
Quintiles Transnational Corp.(a) 130 1,827
================================================================================
12,313
================================================================================
HEALTH CARE EQUIPMENT--1.56%
Becton, Dickinson & Co. 230 8,142
- --------------------------------------------------------------------------------
Cytyc Corp.(a) 190 2,508
- --------------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 70 2,017
================================================================================
12,667
================================================================================
HEALTH CARE SUPPLIES--0.22%
Bausch & Lomb Inc. 50 1,758
================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------
HOME IMPROVEMENT RETAIL--1.53%
Home Depot, Inc. (The) 270 $ 7,595
- --------------------------------------------------------------------------------
Lowe's Cos., Inc. 110 4,828
================================================================================
12,423
================================================================================
HOUSEHOLD PRODUCTS--2.89%
Clorox Co. (The) 120 5,426
- --------------------------------------------------------------------------------
Procter & Gamble Co. (The) 200 17,970
================================================================================
23,396
================================================================================
INDUSTRIAL CONGLOMERATES--4.28%
General Electric Co. 960 28,272
- --------------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 410 6,396
================================================================================
34,668
================================================================================
INTEGRATED OIL & GAS--4.14%
Exxon Mobil Corp. 650 22,880
- --------------------------------------------------------------------------------
Occidental Petroleum Corp. 220 6,567
- --------------------------------------------------------------------------------
Royal Dutch Petroleum Co.-New York Shares
(Netherlands) 100 4,088
================================================================================
33,535
================================================================================
INTEGRATED TELECOMMUNICATION SERVICES--2.59%
BellSouth Corp. 65 1,657
- --------------------------------------------------------------------------------
SBC Communications Inc. 330 7,709
- --------------------------------------------------------------------------------
Verizon Communications Inc. 310 11,588
================================================================================
20,954
================================================================================
INTERNET SOFTWARE & SERVICES--0.31%
VeriSign, Inc.(a) 200 2,484
================================================================================
IT CONSULTING & SERVICES--0.29%
SunGard Data Systems Inc.(a) 110 2,365
================================================================================
LEISURE PRODUCTS--0.89%
Mattel, Inc. 330 7,174
================================================================================
LIFE & HEALTH INSURANCE--2.26%
AFLAC Inc. 250 8,178
- --------------------------------------------------------------------------------
John Hancock Financial Services, Inc. 110 3,192
- --------------------------------------------------------------------------------
MetLife, Inc. 240 6,895
================================================================================
18,265
================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------
MANAGED HEALTH CARE--2.12%
Anthem, Inc.(a) 90 $ 6,178
- --------------------------------------------------------------------------------
UnitedHealth Group Inc. 70 6,449
- --------------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 60 4,556
================================================================================
17,183
================================================================================
METAL & GLASS CONTAINERS--0.86%
Pactiv Corp.(a) 340 6,977
================================================================================
MOVIES & ENTERTAINMENT--0.54%
AOL Time Warner Inc.(a) 130 1,778
- --------------------------------------------------------------------------------
Viacom Inc.-Class B(a) 60 2,605
================================================================================
4,383
================================================================================
MULTI-LINE INSURANCE--0.72%
American International Group, Inc. 100 5,795
================================================================================
MULTI-UTILITIES & UNREGULATED POWER--0.24%
SCANA Corp. 60 1,904
================================================================================
MUTUAL FUNDS--0.57%
S&P 500 Depositary Receipts Trust 50 4,596
================================================================================
NETWORKING EQUIPMENT--1.75%
Cisco Systems, Inc.(a) 940 14,138
================================================================================
OFFICE ELECTRONICS--0.48%
IKON Office Solutions, Inc. 500 3,880
================================================================================
OIL & GAS EQUIPMENT & SERVICES--0.80%
Halliburton Co. 240 5,138
- --------------------------------------------------------------------------------
Tidewater Inc. 50 1,345
================================================================================
6,483
================================================================================
OIL & GAS EXPLORATION & PRODUCTION--0.51%
XTO Energy, Inc. 213 4,154
================================================================================
PACKAGED FOODS & MEATS--1.52%
ConAgra Foods, Inc. 290 6,090
- --------------------------------------------------------------------------------
Sara Lee Corp. 370 6,209
================================================================================
12,299
================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------
PAPER PACKAGING--0.32%
Sealed Air Corp.(a) 60 $ 2,571
================================================================================
PHARMACEUTICALS--10.39%
Abbott Laboratories 210 8,532
- --------------------------------------------------------------------------------
Johnson & Johnson 480 27,053
- --------------------------------------------------------------------------------
Lilly (Eli) & Co. 80 5,106
- --------------------------------------------------------------------------------
Merck & Co. Inc. 200 11,636
- --------------------------------------------------------------------------------
Pfizer Inc. 850 26,138
- --------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 120 3,488
- --------------------------------------------------------------------------------
Wyeth 50 2,177
================================================================================
84,130
================================================================================
PROPERTY & CASUALTY INSURANCE--0.73%
Allstate Corp. (The) 80 3,023
- --------------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class B 180 2,925
================================================================================
5,948
================================================================================
REAL ESTATE INVESTMENT TRUSTS--0.15%
Host Marriott Corp.(a) 160 1,235
================================================================================
RESTAURANTS--0.86%
Brinker International, Inc.(a) 110 3,493
- --------------------------------------------------------------------------------
Yum! Brands, Inc.(a) 140 3,458
================================================================================
6,951
================================================================================
SEMICONDUCTORS--2.67%
Intel Corp. 700 12,880
- --------------------------------------------------------------------------------
Maxim Integrated Products, Inc. 50 1,965
- --------------------------------------------------------------------------------
NVIDIA Corp.(a) 120 1,712
- --------------------------------------------------------------------------------
QLogic Corp.(a) 60 2,639
- --------------------------------------------------------------------------------
Xilinx, Inc.(a) 90 2,436
================================================================================
21,632
================================================================================
SOFT DRINKS--2.78%
Coca-Cola Co. (The)(b) 160 6,464
- --------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc. 70 1,364
- --------------------------------------------------------------------------------
Pepsi Bottling Group, Inc. (The) 210 4,313
- --------------------------------------------------------------------------------
PepsiCo, Inc. 240 10,387
================================================================================
22,528
================================================================================
SPECIALTY STORES--1.49%
AutoNation, Inc.(a) 120 1,662
- --------------------------------------------------------------------------------
Foot Locker, Inc. 150 1,650
- --------------------------------------------------------------------------------
PETCO Animal Supplies, Inc.(a) 100 2,113
- --------------------------------------------------------------------------------
Staples, Inc.(a) 350 6,664
================================================================================
12,089
================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------
SYSTEMS SOFTWARE--4.87%
Microsoft Corp. 1,020 $ 26,081
- --------------------------------------------------------------------------------
Oracle Corp.(a) 750 8,910
- --------------------------------------------------------------------------------
Symantec Corp.(a) 50 2,198
- --------------------------------------------------------------------------------
VERITAS Software Corp.(a) 100 2,201
================================================================================
39,390
================================================================================
TELECOMMUNICATIONS EQUIPMENT--0.73%
Advanced Fibre Communications, Inc.(a) 180 2,754
- --------------------------------------------------------------------------------
QUALCOMM Inc. 100 3,189
================================================================================
5,943
================================================================================
TOBACCO--0.38%
Altria Group, Inc. 100 3,076
================================================================================
TRADING COMPANIES & DISTRIBUTORS--0.64%
MSC Industrial Direct Co., Inc.-Class A(a) 280 5,180
================================================================================
WIRELESS TELECOMMUNICATION SERVICES--0.84%
AT&T Wireless Services Inc.(a) 370 2,390
- --------------------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 300 4,437
================================================================================
6,827
================================================================================
Total Common Stocks & Other Equity Interests
(Cost $820,959) 785,067
================================================================================
TOTAL INVESTMENTS--96.97% (Cost $820,959) 785,067
================================================================================
OTHER ASSETS LESS LIABILITIES--3.03% 24,498
================================================================================
NET ASSETS--100.00% $809,565
________________________________________________________________________________
================================================================================
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 1
section E and Note 8.
See Notes to Financial Statements.
AIM CORE STRATEGIES FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2003
(UNAUDITED)
<Table>
ASSETS:
Investments, at market value (cost $820,959) $ 785,067
- ------------------------------------------------------------------------------
Cash 25,757
- ------------------------------------------------------------------------------
Receivables for:
Due from advisor 21,413
- ------------------------------------------------------------------------------
Dividends 839
- ------------------------------------------------------------------------------
Investment for deferred compensation plan 3,411
- ------------------------------------------------------------------------------
Other assets 106
==============================================================================
Total assets 836,593
______________________________________________________________________________
==============================================================================
LIABILITIES:
Payables for:
Options written (premiums received $218) 333
- ------------------------------------------------------------------------------
Deferred compensation plan 3,411
- ------------------------------------------------------------------------------
Accrued trustees' fees 688
- ------------------------------------------------------------------------------
Accrued transfer agent fees 11
- ------------------------------------------------------------------------------
Accrued operating expenses 22,585
==============================================================================
Total liabilities 27,028
==============================================================================
Net assets applicable to shares outstanding $ 809,565
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 998,957
- ------------------------------------------------------------------------------
Undistributed net investment income (loss) (3,375)
- ------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities
and option contracts (150,011)
- ------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities
and option contracts (36,006)
==============================================================================
$ 809,565
______________________________________________________________________________
==============================================================================
NET ASSETS:
Class A $ 323,825
______________________________________________________________________________
==============================================================================
Class B $ 242,870
______________________________________________________________________________
==============================================================================
Class C $ 242,870
______________________________________________________________________________
==============================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 40,723
______________________________________________________________________________
==============================================================================
Class B 30,542
______________________________________________________________________________
==============================================================================
Class C 30,542
______________________________________________________________________________
==============================================================================
Class A:
Net asset value per share $ 7.95
- ------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $7.95 divided by 94.50%) $ 8.41
______________________________________________________________________________
==============================================================================
Class B:
Net asset value and offering price per share $ 7.95
______________________________________________________________________________
==============================================================================
Class C:
Net asset value and offering price per share $ 7.95
______________________________________________________________________________
==============================================================================
</Table>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2003
(UNAUDITED)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $27) $ 5,735
==============================================================================
EXPENSES:
Advisory fees 2,916
- ------------------------------------------------------------------------------
Administrative services fees 24,795
- ------------------------------------------------------------------------------
Custodian fees 2,074
- ------------------------------------------------------------------------------
Distribution fees--Class A 544
- ------------------------------------------------------------------------------
Distribution fees--Class B 1,167
- ------------------------------------------------------------------------------
Distribution fees--Class C 1,167
- ------------------------------------------------------------------------------
Transfer agent fees 59
- ------------------------------------------------------------------------------
Trustees' fees 4,034
- ------------------------------------------------------------------------------
Printing 9,675
- ------------------------------------------------------------------------------
Professional fees 10,024
- ------------------------------------------------------------------------------
Other 1,146
==============================================================================
Total expenses 57,601
==============================================================================
Less: Fees waived, expenses reimbursed and expenses paid indirectly (50,798
==============================================================================
Net expenses 6,803
==============================================================================
Net investment income (loss) (1,068)
______________________________________________________________________________
==============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (50,959)
- ------------------------------------------------------------------------------
Option contracts written 1,422
- ------------------------------------------------------------------------------
(49,537)
- ------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 61,135
- ------------------------------------------------------------------------------
Option contracts written (191)
==============================================================================
60,944
==============================================================================
Net gain from investment securities and option contracts 11,407
==============================================================================
Net increase in net assets resulting from operations $ 10,339
______________________________________________________________________________
==============================================================================
</Table>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND THE PERIOD DECEMBER 31, 2001
(DATE OPERATIONS COMMENCED) TO OCTOBER 31, 2002
(UNAUDITED)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
----------- -----------
OPERATIONS:
Net investment income (loss) $ (1,068) $ (3,380)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts (49,537) (100,474)
- ------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and option contracts 60,944 (96,950)
======================================================================================================
Net increase (decrease) in net assets resulting from operations 10,339 (200,804)
======================================================================================================
Distributions to shareholders from net investment income:
Class A (5,600) --
- ------------------------------------------------------------------------------------------------------
Class B (4,200) --
- ------------------------------------------------------------------------------------------------------
Class C (4,200) --
======================================================================================================
Net increase (decrease) in net assets resulting from distributions (14,000) --
======================================================================================================
Share transactions-net:
Class A 5,600 400,010
- ------------------------------------------------------------------------------------------------------
Class B 4,200 300,010
- ------------------------------------------------------------------------------------------------------
Class C 4,200 300,010
======================================================================================================
Net increase in net assets resulting from share transactions 14,000 1,000,030
======================================================================================================
Net increase in net assets 10,339 799,226
======================================================================================================
NET ASSETS:
Beginning of period 799,226 --
======================================================================================================
End of period $ 809,565 $ 799,226
______________________________________________________________________________________________________
======================================================================================================
</Table>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Core Strategies Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
consists of multiple classes of shares. 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 to provide long-term growth of capital.
Each company listed in the Schedule of Investments is organized in the United
States unless otherwise noted.
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 traded in the
over-the-counter market (but not securities reported on the NASDAQ National
Market System) is valued at the basis of prices furnished by independent
pricing services or market makers. Each security reported on the NASDAQ
National Market System is valued at the NASDAQ Official Closing Price
("NOCP") as of the close of the customary trading session on the valuation
date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate, yield,
quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a development/event is so
significant that there is a reasonably high degree of certainty as to both
the effect and the degree of effect that the development/event has actually
caused that closing price to no longer reflect actual value, the closing
prices, as determined at the close of the applicable foreign market, may be
adjusted to reflect the fair value of the affected foreign securities as of
the close of the NYSE 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. Premiums and discounts
are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS - Distributions from income and net realized capital gain, 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 gain) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. COVERED CALL OPTIONS - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. 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 risk in writing a call option is that the Fund
gives up the opportunity for profit if the market price of the security
increases and the option is exercised.
F. EXPENSES - Fees provided for under the Rule 12b-1 plan of a particular class
of the Fund and which are directly attributable to that class are charged to
the operations of such class. Transfer agency fees and expenses and other
shareholder recordkeeping fees and expenses are charged to each class
pursuant to a transfer agency and service agreement adopted by the Fund with
respect to such class. All other expenses are allocated among the classes
based on relative net assets.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $1
billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1
billion of average daily net assets, plus 0.625% of the Fund's average daily
nest assets in excess of $2 billion. AIM has voluntarily agreed to waive fees
and/or reimburse expenses (excluding interest, taxes, dividends on short sales,
extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A, Class B and Class C shares to the extent
necessary to limit the total annual fund operating expenses of Class A shares to
1.75%. Voluntary expense limitations may be rescinded, terminated or modified at
any time without further notice to investors. During periods of voluntary
waivers or reimbursements to the extent the annualized expense ratio does not
exceed the voluntary limit for the period committed, AIM will retain its ability
to be reimbursed for such fee waivers or reimbursements prior to the end of each
fiscal year. Further, AIM has voluntarily agreed to waive advisory fees of the
Fund in the amount of 25% of the advisory fee AIM receives from the affiliated
money market funds in which the Fund has invested (excluding investments made in
affiliated money market funds with cash collateral from securities loaned by the
Fund). For the six months ended April 30, 2003, AIM waived fees of $2,916 and
reimbursed fees of $44,840.
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, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $30 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total amount of sales charges, including
asset-based sales charges that may be paid by any class of shares of the Fund.
AIM Distributors has voluntarily agreed to waive all fees during the time the
shares are not available for sale. This waiver may be rescinded, terminated or
modified at any time. AIM Distributors has voluntarily agreed to waive all fees
during the time the shares are not available for sale. This waiver may be
terminated or modified at any time. For the six months ended April 30, 2003, the
Class A, Class B and Class C shares paid $0, $0 and $0, respectively, and AIM
Distributors waived fees of $2,878.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,241 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.
NOTE 3 - INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $5 and reductions in
custodian fees of $159 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $164.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5 - BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. The Fund did not borrow or lend under the
facility during the six months ended April 30, 2003.
NOTE 6 - TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of any
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL
EXPIRATION LOSS CARRYFORWARD
---------- -----------------
October 31, 2010 $ 100,474
________________________________________________________________________________
================================================================================
</Table>
NOTE 7 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $267,827 and $271,675, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $ 46,948
- --------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (82,840)
================================================================================
Net unrealized appreciation (depreciation) of investment securities $ (35,892)
________________________________________________________________________________
================================================================================
Investments have the same cost for tax and financial statement purposes.
</Table>
NOTE 8 - CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of period 10 $ 405
- --------------------------------------------------------------------------------
Written 34 1,638
- --------------------------------------------------------------------------------
Closed (12) (574)
- --------------------------------------------------------------------------------
Exercised (2) (56)
- --------------------------------------------------------------------------------
Expired (27) (1,195)
================================================================================
End of period 3 $ 218
________________________________________________________________________________
================================================================================
</Table>
Open call options written at April 30, 2003 were as follows:
<Table>
<Caption>
APRIL 30, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 2003 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
----- -------- ------ --------- -------- ------------ --------------
CheckFree Corp. May-03 $25 1 $122 $278 $(156)
-----------------------------------------------------------------------------------------------
Coca-Cola Co. (The) May-03 45 1 28 5 23
-----------------------------------------------------------------------------------------------
Freddie Mac May-03 60 1 68 50 18
===============================================================================================
3 $218 $333 $(115)
_______________________________________________________________________________________________
===============================================================================================
</Table>
NOTE 9 - SHARE INFORMATION
The Fund consists of three different classes of shares that are not currently
available for sale: 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 ("CDSC"). Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the period December 31, 2001 (date operations
commenced) through October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED DECEMBER 31, 2001 (DATE
APRIL 30, OPERATIONS COMMENCED) TO
2003 OCTOBER 31, 2002
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ----------
Sold:
Class A* -- $ -- 40,001 $ 400,010
-----------------------------------------------------------------------------------------------------------
Class B* -- -- 30,001 300,010
-----------------------------------------------------------------------------------------------------------
Class C* -- -- 30,001 300,010
-----------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A* 722 5,600 -- --
-----------------------------------------------------------------------------------------------------------
Class B* 541 4,200 -- --
-----------------------------------------------------------------------------------------------------------
Class C* 541 4,200 -- --
===========================================================================================================
1,804 $ 14,000 100,003 $1,000,030
___________________________________________________________________________________________________________
===========================================================================================================
</Table>
* Currently, all shares are owned by AIM.
NOTE 10 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the period indicated.
<Table>
<Caption>
CLASS A
------------------------------------------
SIX MONTHS DECEMBER 31, 2001 (DATE
ENDED OPERATIONS COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
----------- ------------------------
Net asset value, beginning of period $ 7.99 $10.00
---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.03)
---------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 0.11 (1.98)
===============================================================================================================
Total from investment operations 0.10 (2.01)
===============================================================================================================
Less distributions from net investment income (0.14) --
===============================================================================================================
Net asset value, end of period $ 7.95 $7.99
_______________________________________________________________________________________________________________
===============================================================================================================
Total return(a) 1.29% (20.10)%
_______________________________________________________________________________________________________________
===============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 324 $ 320
_______________________________________________________________________________________________________________
===============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.79% (b) 1.82%(c)
---------------------------------------------------------------------------------------------------------------
Without fee waivers 14.42% (b) 13.71%(c)
_______________________________________________________________________________________________________________
===============================================================================================================
Ratio of net investment income (loss) to average net assets (0.27)(b) (0.45)(c)
_______________________________________________________________________________________________________________
===============================================================================================================
Portfolio turnover rate(d) 35% 42%
_______________________________________________________________________________________________________________
===============================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges and
is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $313,648.
(c) Annualized.
(d) Not annualized for periods less than one year.
NOTE 10 - FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------------
SIX MONTHS DECEMBER 31, 2001 (DATE
ENDED OPERATIONS COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------- -----------------------
Net asset value, beginning of period $ 7.99 $10.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.03)
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 0.11 (1.98)
===================================================================================================================
Total from investment operations 0.10 (2.01)
===================================================================================================================
Less distributions from net investment income (0.14) --
===================================================================================================================
Net asset value, end of period $ 7.95 $ 7.99
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(a) 1.29% (20.10)%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 243 $ 240
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.79%(b) 1.82%(c)
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 15.07%(b) 14.36%(c)
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.27)%(b) (0.45)%(c)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate(d) 35% 42%
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges and
is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $235,238.
(c) Annualized.
(d) Not annualized for periods less than one year.
NOTE 10 - FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
------------------------------------------
SIX MONTHS DECEMBER 31, 2001 (DATE
ENDED OPERATIONS COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------- ------------------------
Net asset value, beginning of period $ 7.99 $10.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.03)
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 0.11 (1.98)
===================================================================================================================
Total from investment operations 0.10 (2.01)
===================================================================================================================
Less distributions from net investment income (0.14) --
===================================================================================================================
Net asset value, end of period $ 7.95 $7.99
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(a) 1.29% (20.10)%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 243 $ 240
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.79% b) 1.82%(c)
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 15.07%(b) 14.36%(c)
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.27)%(b) (0.45)%(c)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate(d) 35% 42%
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of $235,238.
(c) Annualized.
(d) Not annualized for periods less than one year.
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Vice President INVESTMENT ADVISOR
Bruce L. Crockett M. Carome A I M Advisors, Inc.
Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM DENT DEMOGRAPHIC TRENDS FUND
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
Your goals. Our solutions.
--Servicemark--
AIM Dent Demographic Trends Fund seeks to provide
long-term growth of capital.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
HOLDINGS BY MARKET CAPITALIZATION*
As of 4/30/03
[PIE CHART]
MID-CAP STOCKS 22%
SMALL-CAP STOCKS 8%
LARGE-CAP STOCKS 70%
Source: Lipper, Inc.
TOTAL NUMBER OF HOLDINGS* 101
TOTAL NET ASSETS $472.2 MILLION
================================================================================
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
[BAR CHART]
CLASS A SHARES
Inception (6/7/99) -12.31%
1 Year -23.98
CLASS B SHARES
Inception (6/7/99) -12.30%
1 Year -24.05
CLASS C SHARES
Inception (6/7/99) -11.61%
1 Year -20.85
In addition to the fund's average annual total returns as of the close of the
reporting period shown in the table above, industry regulations require us to
provide average annual total returns (including sales charges) as of 3/31/03,
the most recent calendar quarter-end, which were: Class A shares, inception
(6/7/99), -14.38%; one year, -34.71%. Class B shares, inception (6/7/99),
- -14.34%; one year, -34.80%. Class C shares, inception (6/7/99), -13.70%; one
year, -32.18%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 5.67%
CLASS B SHARES 5.28
CLASS C SHARES 5.28
RUSSELL 3000 INDEX 4.93
(Broad Market Index)
RUSSELL 3000 GROWTH INDEX 4.49
(Style-Specific Index)
LIPPER MULTI-CAP GROWTH FUND INDEX 4.79
(Peer Group Index)
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORIC PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
====================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ----------------------------------------------------------------------------------------------------
1. Microsoft Corp. 2.9% 1. Diversified Financial Services 9.4%
2. Pfizer Inc. 2.8 2. Pharmaceuticals 8.7
3. Amgen Inc. 2.5 3. Systems Software 6.8
4. Citigroup Inc. 2.5 4. Semiconductors 6.4
5. Goldman Sachs Group, Inc. (The) 2.4 5. Networking Equipment 4.5
6. Oracle Corp. 2.0 6. Biotechnology 4.2
7. Dell Computer Corp. 1.8 7. Semiconductor Equipment 4.0
8. Cisco Systems, Inc. 1.8 8. Health Care Equipment 3.9
9. Gilead Sciences, Inc. 1.7 9. Computer Hardware 3.7
10. J.P. Morgan Chase & Co. 1.6 10. Internet Retail 2.6
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
====================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective 5/1/03, after the close of the reporting period, the portfolio
management team for AIM Dent Demographic Trends Fund is as follows: Kirk L.
Anderson, James G. Birdsall, and Lanny H. Sachnowitz.
o AIM Dent Demographic Trends 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 share classes will differ due to different
sales charge structures and class expenses.
o Harry S. Dent's stock market scenario is based on historical data and
represents his opinion. Unforeseen events such as rising inflation,
declining productivity, irregular spending and service patterns, and other
social, political, and economic uncertainty could affect corporate earnings
and the stock market, negatively altering Mr. Dent's view.
o Investing in small and mid-size companies may involve risks not associated
with investing in more established companies. Also, small companies may have
business risk, significant stock price fluctuations and illiquidity.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is a the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Multi-Cap Growth Fund Index represents an average of
the performance of the 30 largest multi-capitalization growth funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 3000 Index is an index of common stocks that measures
performance of the largest 3,000 U.S. companies based on market
capitalization. The Growth component of the index measures the performance
of Russell 3000 companies with higher price/book ratios and higher
forecasted growth values.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT aiminvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Dent Demographic Trends Fund for
ROBERT H. the six months ended April 30, 2003. You will note that we
GRAHAM] have adopted a more concise format for our semiannual
reports. Important information such as top holdings and
GENERALLY, MID- performance as of the close of the reporting period appear
AND SMALL-CAP STOCKSon the opposite page. This letter will provide an overview
OUTPERFORMED LARGE- of the markets and your fund during the six months covered
CAP-STOCKS, by this report. As always, timely information about your
AND THE VALUE fund and the markets in general is available at our Web
INVESTMENT site, aiminvestments.com.
STYLE OUTPERFORMED
GROWTH DURING MARKET CONDITIONS
THE SIX-MONTH
REPORTING PERIOD. Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
ROBERT H. GRAHAM period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of
common stocks frequently used as a general measure of U.S. stock market
performance, returned 4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Dent Demographic Trends Fund, at net asset
value, posted positive returns for the six months ended April 30, 2003.
Throughout the reporting period, fund managers Lanny H. Sachnowitz and Edgar M.
Larsen sought to identify companies likely to benefit from changing demographic,
economic, and lifestyle trends--and then invest in those companies' common
stock, convertible bonds, convertible preferred stock, and warrants.
At the close of the reporting period, the four largest sectors in the fund's
portfolio were information technology, health care, consumer discretionary, and
financials. Keep in mind that managers focus on individual companies rather than
particular industries or sectors. The fund had 101 equity holdings at the end of
the reporting period compared to 116 at its outset.
We encourage you to visit our Web site, aiminvestments.com, for a wealth of
information about your fund, including regular performance updates, quarterly
details of portfolio composition, and much more. From our home page, click on
Products & Performance, then Mutual Funds, and then select the type of
information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Dent Demographic Trends
Fund, and I look forward to reporting to you again in six months. If you have
any questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-96.31%
AIRLINES-0.39%
Ryanair Holdings PLC-ADR (Ireland)(a) 47,000 $ 1,864,490
========================================================================
APPAREL RETAIL-1.83%
Abercrombie & Fitch Co.-Class A(a) 60,000 1,972,800
- ------------------------------------------------------------------------
Gap, Inc. (The) 400,000 6,652,000
========================================================================
8,624,800
========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.88%
Coach, Inc.(a) 95,000 4,133,450
========================================================================
APPLICATION SOFTWARE-2.32%
Amdocs Ltd. (United Kingdom)(a) 135,000 2,384,100
- ------------------------------------------------------------------------
Electronic Arts Inc.(a)(b) 70,000 4,148,900
- ------------------------------------------------------------------------
Mercury Interactive Corp.(a) 130,000 4,412,200
========================================================================
10,945,200
========================================================================
BANKS-2.41%
Bank of America Corp. 95,500 7,071,775
- ------------------------------------------------------------------------
Golden West Financial Corp. 26,000 1,960,920
- ------------------------------------------------------------------------
Wachovia Corp. 62,000 2,369,020
========================================================================
11,401,715
========================================================================
BIOTECHNOLOGY-4.24%
Amgen Inc.(a) 195,000 11,955,450
- ------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 175,000 8,074,500
========================================================================
20,029,950
========================================================================
BREWERS-0.92%
Anheuser-Busch Cos., Inc. 87,500 4,364,500
========================================================================
BROADCASTING & CABLE TV-1.26%
Clear Channel Communications, Inc.(a) 67,500 2,639,925
- ------------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 100,000 3,310,000
========================================================================
5,949,925
========================================================================
COMPUTER & ELECTRONICS RETAIL-0.81%
Best Buy Co., Inc.(a) 110,000 3,803,800
========================================================================
COMPUTER HARDWARE-3.73%
Dell Computer Corp.(a) 300,000 8,673,000
- ------------------------------------------------------------------------
Hewlett-Packard Co. 210,000 3,423,000
- ------------------------------------------------------------------------
International Business Machines Corp. 65,000 5,518,500
========================================================================
17,614,500
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
COMPUTER STORAGE & PERIPHERALS-0.80%
EMC Corp.(a) 415,000 3,772,350
========================================================================
CONSUMER FINANCE-0.76%
Doral Financial Corp. (Puerto Rico) 90,000 $ 3,600,900
========================================================================
DATA PROCESSING SERVICES-1.68%
Fiserv, Inc.(a) 110,000 3,238,400
- ------------------------------------------------------------------------
Paychex, Inc. 150,000 4,671,000
========================================================================
7,909,400
========================================================================
DEPARTMENT STORES-0.54%
Kohl's Corp.(a) 44,700 2,538,960
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.98%
Apollo Group, Inc.-Class A(a) 45,000 2,438,955
- ------------------------------------------------------------------------
Career Education Corp.(a) 36,000 2,164,680
========================================================================
4,603,635
========================================================================
DIVERSIFIED FINANCIAL SERVICES-9.42%
American Express Co. 110,000 4,164,600
- ------------------------------------------------------------------------
Citigroup Inc. 300,000 11,775,000
- ------------------------------------------------------------------------
Fannie Mae 35,000 2,533,650
- ------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 150,000 11,385,000
- ------------------------------------------------------------------------
J.P. Morgan Chase & Co. 265,000 7,777,750
- ------------------------------------------------------------------------
Janus Capital Group Inc. 225,000 3,127,500
- ------------------------------------------------------------------------
SLM Corp. 33,000 3,696,000
========================================================================
44,459,500
========================================================================
EMPLOYMENT SERVICES-1.26%
Hewitt Associates, Inc.-Class A(a) 85,000 2,355,350
- ------------------------------------------------------------------------
Robert Half International Inc.(a) 220,000 3,581,600
========================================================================
5,936,950
========================================================================
FOOD RETAIL-0.80%
Whole Foods Market, Inc.(a)(b) 64,000 3,799,040
========================================================================
FOOTWEAR-0.57%
NIKE, Inc.-Class B 50,000 2,676,500
========================================================================
GENERAL MERCHANDISE STORES-0.72%
Family Dollar Stores, Inc. 100,000 3,419,000
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-2.39%
AdvancePCS(a) 100,000 3,006,000
- ------------------------------------------------------------------------
Caremark Rx, Inc.(a) 230,000 4,579,300
- ------------------------------------------------------------------------
Omnicare, Inc. 140,000 3,712,800
========================================================================
11,298,100
========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
HEALTH CARE EQUIPMENT-3.86%
Boston Scientific Corp.(a) 145,000 $ 6,242,250
- ------------------------------------------------------------------------
Medtronic, Inc. 115,000 5,490,100
- ------------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 55,000 2,962,300
- ------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 75,000 3,517,500
========================================================================
18,212,150
========================================================================
HEALTH CARE SUPPLIES-1.35%
Alcon, Inc. (Switzerland)(a) 60,000 2,643,000
- ------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 130,000 3,745,300
========================================================================
6,388,300
========================================================================
HOTELS, RESORTS & CRUISE LINES-0.74%
Starwood Hotels & Resorts Worldwide, Inc. 130,000 3,489,200
========================================================================
HOUSEHOLD PRODUCTS-1.52%
Procter & Gamble Co. (The) 80,000 7,188,000
========================================================================
INSURANCE BROKERS-0.79%
Willis Group Holdings Ltd. (Bermuda) 120,000 3,742,800
========================================================================
INTERNET RETAIL-2.64%
Amazon.com, Inc.(a) 225,000 6,450,750
- ------------------------------------------------------------------------
eBay Inc.(a) 65,000 6,030,050
========================================================================
12,480,800
========================================================================
INTERNET SOFTWARE & SERVICES-1.31%
Yahoo! Inc.(a) 250,000 6,195,000
========================================================================
IT CONSULTING & SERVICES-1.77%
Accenture Ltd.-Class A (Bermuda)(a) 225,000 3,604,500
- ------------------------------------------------------------------------
Affiliated Computer Services, Inc.-Class A(a) 100,000 4,770,000
========================================================================
8,374,500
========================================================================
MANAGED HEALTH CARE-1.80%
Aetna Inc. 92,500 4,606,500
- ------------------------------------------------------------------------
UnitedHealth Group Inc. 42,000 3,869,460
========================================================================
8,475,960
========================================================================
MOTORCYCLE MANUFACTURERS-0.61%
Harley-Davidson, Inc. 65,000 2,888,600
========================================================================
MOVIES & ENTERTAINMENT-0.92%
Viacom Inc.-Class B(a) 100,500 4,362,705
========================================================================
MULTI-LINE INSURANCE-0.79%
HCC Insurance Holdings, Inc. 135,000 3,712,500
========================================================================
NETWORKING EQUIPMENT-4.53%
Cisco Systems, Inc.(a) 570,000 8,572,800
- ------------------------------------------------------------------------
Foundry Networks, Inc.(a) 200,000 2,176,000
- ------------------------------------------------------------------------
Juniper Networks, Inc.(a) 235,000 2,401,700
- ------------------------------------------------------------------------
McDATA Corp.-Class A(a) 340,000 $ 3,597,200
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
NETWORKING EQUIPMENT-(CONTINUED)
NetScreen Technologies, Inc.(a) 230,000 4,664,400
========================================================================
21,412,100
========================================================================
PERSONAL PRODUCTS-0.52%
Estee Lauder Cos. Inc. (The)-Class A 75,000 2,437,500
========================================================================
PHARMACEUTICALS-8.65%
Allergan, Inc. 60,000 4,215,000
- ------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 70,000 3,620,400
- ------------------------------------------------------------------------
Johnson & Johnson 85,000 4,790,600
- ------------------------------------------------------------------------
Lilly (Eli) & Co. 43,000 2,744,260
- ------------------------------------------------------------------------
Pfizer Inc. 435,000 13,376,250
- ------------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Israel)(a) 61,000 2,791,360
- ------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 115,000 5,370,500
- ------------------------------------------------------------------------
Wyeth 90,000 3,917,700
========================================================================
40,826,070
========================================================================
PROPERTY & CASUALTY INSURANCE-0.85%
Progressive Corp. (The) 30,000 2,040,000
- ------------------------------------------------------------------------
Radian Group Inc. 50,000 1,985,000
========================================================================
4,025,000
========================================================================
PUBLISHING-0.72%
Getty Images, Inc.(a) 100,000 3,385,000
========================================================================
RESTAURANTS-1.07%
Brinker International, Inc.(a) 90,000 2,857,500
- ------------------------------------------------------------------------
Starbucks Corp.(a) 94,000 2,208,060
========================================================================
5,065,560
========================================================================
SEMICONDUCTOR EQUIPMENT-3.99%
Applied Materials, Inc.(a) 160,000 2,336,000
- ------------------------------------------------------------------------
Entegris Inc.(a) 450,000 5,161,500
- ------------------------------------------------------------------------
Lam Research Corp.(a) 275,000 3,995,750
- ------------------------------------------------------------------------
Novellus Systems, Inc.(a) 262,500 7,360,500
========================================================================
18,853,750
========================================================================
SEMICONDUCTORS-6.37%
Analog Devices, Inc.(a) 215,000 7,120,800
- ------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 200,000 3,578,000
- ------------------------------------------------------------------------
Linear Technology Corp. 182,700 6,297,669
- ------------------------------------------------------------------------
National Semiconductor Corp.(a) 150,000 2,809,500
- ------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 620,000 5,189,400
- ------------------------------------------------------------------------
Xilinx, Inc.(a) 187,500 5,075,625
========================================================================
30,070,994
========================================================================
SOFT DRINKS-0.81%
PepsiCo, Inc. 88,000 3,808,640
========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
SPECIALTY STORES-2.00%
Advance Auto Parts, Inc.(a) 57,000 $ 2,835,180
- ------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 100,000 3,951,000
- ------------------------------------------------------------------------
Staples, Inc.(a) 140,000 2,665,600
========================================================================
9,451,780
========================================================================
SYSTEMS SOFTWARE-6.79%
Microsoft Corp. 540,000 13,807,800
- ------------------------------------------------------------------------
Oracle Corp.(a) 800,000 9,504,000
- ------------------------------------------------------------------------
Symantec Corp.(a) 84,000 3,691,800
- ------------------------------------------------------------------------
VERITAS Software Corp.(a) 229,400 5,049,094
========================================================================
32,052,694
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.34%
Nortel Networks Corp. (Canada)(a) 1,405,000 3,624,900
- ------------------------------------------------------------------------
QUALCOMM Inc. 85,000 2,710,650
========================================================================
6,335,550
========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.86%
AT&T Wireless Services Inc.(a) 700,000 4,522,000
- ------------------------------------------------------------------------
Vodafone Group PLC-ADR (United Kingdom) 215,000 $ 4,248,400
========================================================================
8,770,400
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $402,011,631) 454,752,218
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
MONEY MARKET FUNDS-3.82%
STIC Liquid Assets Portfolio(c) 9,021,498 9,021,498
- ------------------------------------------------------------------------
STIC Prime Portfolio(c) 9,021,498 9,021,498
========================================================================
Total Money Market Funds (Cost
$18,042,996) 18,042,996
========================================================================
TOTAL INVESTMENTS -- 100.13% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $420,054,627) 472,795,214
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-1.44%
STIC Liquid Assets Portfolio(c)(d) 6,804,400 6,804,400
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $6,804,400) 6,804,400
========================================================================
TOTAL INVESTMENTS-101.57% (Cost $426,859,027) 479,599,614
========================================================================
OTHER ASSETS LESS LIABILITIES-(1.57)% (7,402,402)
========================================================================
NET ASSETS-100.00% $472,197,212
________________________________________________________________________
========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 1
section H and Note 7.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
(d) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$426,859,027)* $ 479,599,614
- ------------------------------------------------------------
Foreign currencies, at value (cost $192) 198
- ------------------------------------------------------------
Receivables for:
Investments sold 9,912,260
- ------------------------------------------------------------
Fund shares sold 734,338
- ------------------------------------------------------------
Dividends 125,921
- ------------------------------------------------------------
Due from advisor - See Note 2 58,910
- ------------------------------------------------------------
Investment for deferred compensation plan 23,807
- ------------------------------------------------------------
Other assets 26,085
============================================================
Total assets 490,481,133
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 9,139,312
- ------------------------------------------------------------
Fund shares reacquired 802,661
- ------------------------------------------------------------
Options written (premiums received
$122,156) 321,750
- ------------------------------------------------------------
Deferred compensation plan 23,807
- ------------------------------------------------------------
Collateral upon return of securities
loaned 6,804,400
- ------------------------------------------------------------
Accrued distribution fees 397,893
- ------------------------------------------------------------
Accrued trustees' fees 940
- ------------------------------------------------------------
Accrued transfer agent fees 614,816
- ------------------------------------------------------------
Accrued operating expenses 178,342
============================================================
Total liabilities 18,283,921
============================================================
Net assets applicable to shares outstanding $ 472,197,212
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,358,132,963
- ------------------------------------------------------------
Undistributed net investment income (loss) (4,067,677)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (934,409,073)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 52,540,999
============================================================
$ 472,197,212
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 177,556,971
____________________________________________________________
============================================================
Class B $ 212,137,221
____________________________________________________________
============================================================
Class C $ 82,503,020
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 28,021,630
____________________________________________________________
============================================================
Class B 34,347,258
____________________________________________________________
============================================================
Class C 13,359,474
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 6.34
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $6.34 divided by
94.50%) $ 6.71
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 6.18
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 6.18
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $6,517,160
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $26,350) $ 1,754,986
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 105,591
- --------------------------------------------------------------------------
Interest 12,440
- --------------------------------------------------------------------------
Security lending income 12,837
==========================================================================
Total investment income 1,885,854
==========================================================================
EXPENSES:
Advisory fees 1,996,702
- --------------------------------------------------------------------------
Administrative services fees 61,435
- --------------------------------------------------------------------------
Custodian fees 39,880
- --------------------------------------------------------------------------
Distribution fees -- Class A 310,025
- --------------------------------------------------------------------------
Distribution fees -- Class B 1,051,647
- --------------------------------------------------------------------------
Distribution fees -- Class C 411,628
- --------------------------------------------------------------------------
Transfer agent fees 1,899,090
- --------------------------------------------------------------------------
Trustees' fees 5,408
- --------------------------------------------------------------------------
Other 205,767
==========================================================================
Total expenses 5,981,582
==========================================================================
Less: Fees waived, expenses reimbursed and expenses paid
indirectly (64,864)
==========================================================================
Net expenses 5,916,718
==========================================================================
Net investment income (loss) (4,030,864)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (31,006,987)
- --------------------------------------------------------------------------
Foreign currencies (899)
- --------------------------------------------------------------------------
Option contracts written (79,985)
==========================================================================
(31,087,871)
==========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 58,891,670
- --------------------------------------------------------------------------
Foreign currencies 18,847
- --------------------------------------------------------------------------
Option contracts written (207,866)
==========================================================================
58,702,651
==========================================================================
Net gain from investment securities, foreign currencies and
option contracts 27,614,780
==========================================================================
Net increase in net assets resulting from operations $ 23,583,916
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (4,030,864) $ (12,825,259)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (31,087,871) (202,713,132)
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option contracts 58,702,651 63,144,429
==============================================================================================
Net increase (decrease) in net assets resulting from
operations 23,583,916 (152,393,962)
==============================================================================================
Share transactions-net:
Class A (21,886,491) (64,886,914)
- ----------------------------------------------------------------------------------------------
Class B (21,899,531) (75,460,458)
- ----------------------------------------------------------------------------------------------
Class C (9,456,374) (35,199,684)
==============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (53,242,396) (175,547,056)
==============================================================================================
Net increase (decrease) in net assets (29,658,480) (327,941,018)
==============================================================================================
NET ASSETS:
Beginning of period 501,855,692 829,796,710
==============================================================================================
End of period $ 472,197,212 $ 501,855,692
______________________________________________________________________________________________
==============================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Dent Demographic Trends Fund (the "Fund") is a series portfolio of AIM
Equity Funds (the "Trust"). The Trust is a Delaware statutory trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of fifteen separate
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund currently offers multiple classes of shares. 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. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper are valued at amortized cost which approximates market
value. For purposes of
F-6
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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
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 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. 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 also include to
varying degrees, the risk of loss in excess of the variation margin
disclosed in the Statement of Assets and Liabilities.
H. COVERED CALL OPTIONS -- The Fund may write call options, on a covered
basis; that is, the Fund will own the underlying security. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
I. PUT OPTIONS -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
Fund to hedge securities it owns by locking in a minimum price at which the
Fund can sell. If security prices fall, the put option could be exercised
to offset all or a portion of the Fund's resulting losses. At
F-7
the same time, because the maximum the Fund has at risk is the cost of the
option, purchasing put options does not eliminate the potential for the
Fund to profit from an increase in the value of the securities hedged. A
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. In addition, there can be no assurance that a liquid
secondary market will exist for any option purchased or sold.
J. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). H.S. Dent Advisors, Inc. ("H.S. Dent") is the Fund's
subadvisor. Under the terms of the master investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $2
billion of the Fund's average daily net assets, plus 0.80% of the Fund's average
daily net assets exceeding $2 billion. Under the terms of a subadvisory
agreement between AIM and H.S. Dent, AIM pays H.S. Dent at the annual rate of
0.13% of the first $1 billion of the Fund's average daily net assets, plus 0.10%
of the next $1 billion of the Fund's average daily net assets, plus 0.07% of the
Fund's average daily net assets exceeding $2 billion. AIM has voluntarily agreed
to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in affiliated money market funds with cash
collateral from securities loaned by the Fund). For the six months ended April
30, 2003, AIM waived fees of $2,192. Under an agreement to limit the aggregate
costs of certain shareholder services provided by third party administrators, a
receivable of $58,910 has been recorded for the estimated amount which AIM
reimbursed to the Fund on June 27, 2003.
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, 2003, AIM
was paid $61,435 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. During the six months ended April 30, 2003,
AFS retained $998,491 for such services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $310,025, $1,051,647 and $411,628, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During six months ended April 30, 2003, AIM
Distributors retained $35,941 in front-end sales commissions from the sale of
Class A shares and $0, $38 and $2,323 for Class A, Class B and Class C shares,
respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,733 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $3,762 under an expense
offset arrangement which resulted in a reduction of the Fund's total expenses of
$3,762.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net
F-8
assets for the period. The committed line of credit facility expired May 20,
2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day, following the
valuation date of the securities loaned. Therefore, the value of the collateral
may be temporarily less than the value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $6,517,160 were on
loan to brokers. The loans were secured by cash collateral of $6,804,400
received by the Fund and subsequently invested in an affiliated money market
fund. For the six months ended April 30, 2003, the Fund received fees of $12,837
for securities lending.
NOTE 7--CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- -------------------------------------------------------------------------------
Beginning of period 275 $ 69,460
- -------------------------------------------------------------------------------
Written 17,276 2,422,932
- -------------------------------------------------------------------------------
Closed (16,661) (2,370,236)
===============================================================================
End of period 890 $ 122,156
_______________________________________________________________________________
===============================================================================
</Table>
Open call options written at April 30, 2003 were as follows:
<Table>
<Caption>
APRIL 30,
NUMBER 2003 UNREALIZED
CONTRACT STRIKE OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------------
Electronic
Arts Inc. Sep-03 $70 250 $ 50,478 $ 33,750 $ 16,728
- ---------------------------------------------------------------------------------
Whole
Foods
Market,
Inc. May-03 55 640 71,678 288,000 (216,322)
=================================================================================
890 $122,156 $321,750 $(199,594)
_________________________________________________________________________________
=================================================================================
</Table>
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- --------------------------------------------------------------------------------
October 31, 2007 $ 3,389,675
- --------------------------------------------------------------------------------
October 31, 2008 144,576,334
- --------------------------------------------------------------------------------
October 31, 2009 541,794,870
- --------------------------------------------------------------------------------
October 31, 2010 195,681,695
================================================================================
Total capital loss carryforward $885,442,574
________________________________________________________________________________
================================================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $354,836,960 and $410,416,241, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $57,956,652
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (8,152,140)
===============================================================================
Net unrealized appreciation of investment securities $49,804,512
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $429,795,102.
</Table>
F-9
NOTE 10--SHARE INFORMATION
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 CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,638,278 $ 9,942,711 5,537,858 $ 43,117,200
- ------------------------------------------------------------------------------------------------------------------------
Class B 1,294,607 7,638,727 3,503,829 26,984,220
- ------------------------------------------------------------------------------------------------------------------------
Class C 460,945 2,708,232 1,824,515 14,029,736
========================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 70,546 426,480 214,960 1,628,659
- ------------------------------------------------------------------------------------------------------------------------
Class B (72,282) (426,480) (217,773) (1,628,659)
========================================================================================================================
Reacquired:
Class A (5,399,103) (32,255,682) (15,019,465) (109,632,773)
- ------------------------------------------------------------------------------------------------------------------------
Class B (4,999,825) (29,111,778) (14,137,854) (100,816,019)
- ------------------------------------------------------------------------------------------------------------------------
Class C (2,092,146) (12,164,606) (6,815,024) (49,229,420)
========================================================================================================================
(9,098,980) $(53,242,396) (25,108,954) $(175,547,056)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
------------------------------------------------------------------
JUNE 7, 1999
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.00 $ 7.62 $ 15.40 $ 12.14 $ 10.00
- ------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.12) (0.12) (0.11) (0.03)
- ------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.38 (1.50) (7.66) 3.37 2.17
============================================================================================================
Total from investment operations 0.34 (1.62) (7.78) 3.26 2.14
============================================================================================================
Net asset value, end of period $ 6.34 $ 6.00 $ 7.62 $ 15.40 $ 12.14
____________________________________________________________________________________________________________
============================================================================================================
Total return(a) 5.67% (21.26)% (50.52)% 26.85% 21.40%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $177,557 $190,253 $312,377 $666,929 $163,872
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets 2.12%(b)(c) 1.87% 1.64% 1.50% 1.60%(c)(d)
============================================================================================================
Ratio of net investment income (loss) to
average net assets (1.31)%(b) (1.31)% (1.04)% (0.93)% (1.00)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate(e) 78% 189% 143% 90% 29%
____________________________________________________________________________________________________________
============================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of
$178,625,484.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 2.14% (annualized) and 1.65% (annualized) for periods ended April
30, 2003 and October 31, 1999, respectively.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
------------------------------------------------------------------
JUNE 7, 1999
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.87 $ 7.50 $ 15.26 $ 12.11 $ 10.00
- ------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) (0.17) (0.18) (0.18) (0.04)
- ------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.37 (1.46) (7.58) 3.33 2.15
============================================================================================================
Total from investment operations 0.31 (1.63) (7.76) 3.15 2.11
============================================================================================================
Net asset value, end of period $ 6.18 $ 5.87 $ 7.50 $ 15.26 $ 12.11
____________________________________________________________________________________________________________
============================================================================================================
Total return(a) 5.28% (21.73)% (50.85)% 26.01% 21.10%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $212,137 $223,666 $367,494 $748,480 $177,430
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets 2.77%(b)(c) 2.53% 2.32% 2.17% 2.24%(c)(d)
============================================================================================================
Ratio of net investment income (loss) to
average net assets (1.96)%(b) (1.97)% (1.72)% (1.60)% (1.64)%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate(e) 78% 189% 143% 90% 29%
____________________________________________________________________________________________________________
============================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of
$212,072,369.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 2.79% (annualized) and 2.29% (annualized) for periods ended April
30, 2003 and October 31, 1999, respectively.
(d) Annualized.
(e) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS C
-----------------------------------------------------------------
JUNE 7, 1999
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.87 $ 7.50 $ 15.26 $ 12.11 $ 10.00
- -----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) (0.17) (0.19) (0.17) (0.04)
- -----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.37 (1.46) (7.57) 3.32 2.15
===========================================================================================================
Total from investment operations 0.31 (1.63) (7.76) 3.15 2.11
===========================================================================================================
Net asset value, end of period $ 6.18 $ 5.87 $ 7.50 $ 15.26 $ 12.11
___________________________________________________________________________________________________________
===========================================================================================================
Total return(a) 5.28% (21.73)% (50.85)% 26.01% 21.10%
___________________________________________________________________________________________________________
===========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $82,503 $87,938 $149,925 $309,821 $51,605
___________________________________________________________________________________________________________
===========================================================================================================
Ratio of expenses to average net assets 2.77%(b) 2.53% 2.32% 2.17% 2.24%(c)(d)
===========================================================================================================
Ratio of net investment income (loss) to
average net assets (1.96)%(b) (1.97)% (1.72)% (1.60)% (1.64)%(d)
___________________________________________________________________________________________________________
===========================================================================================================
Portfolio turnover rate(e) 78% 189% 143% 90% 29%
___________________________________________________________________________________________________________
===========================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of
$83,007,800.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 2.79% (annualized) and 2.29% (annualized) for periods ended April
30, 2003 and October 31, 1999, respectively.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. A I M Advisors, Inc.
Jack M. Fields Kevin M. Carome 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 100
Prema Mathai-Davis Houston, TX 77046
Lewis F. Pennock Gary T. Crum
Ruth H. Quigley Senior Vice President SUB-ADVISOR
Louis S. Sklar H.S. Dent Advisors, Inc.
Dana R. Sutton 6515 Gwin Road
Vice President and Treasurer Oakland, CA 94611
Stuart W. Coco TRANSFER AGENT
Vice President A I M Fund Services, Inc.
P.O. Box 4739
Melville B. Cox Houston, TX 77210-4739
Vice President
CUSTODIAN
Edgar M. Larsen State Street Bank and Trust Company
Vice President 225 Franklin Street
Boston, MA 02110
Nancy L. Martin
Secretary COUNSEL TO THE FUND
Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
The AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
TAXABLE
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) AIM Floating Rate Fund
AIM Balanced Fund* AIM Developing Markets Fund AIM High Yield Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Income Fund
AIM Basic Value Fund AIM European Small Company Fund AIM Intermediate Government Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Capital Development Fund AIM Global Growth Fund AIM Money Market Fund
AIM Charter Fund AIM Global Trends Fund AIM Short-Term Bond Fund
AIM Constellation Fund AIM Global Value Fund(5) AIM Total Return Bond Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2)
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund TAX-FREE
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund AIM High Income Municipal Fund
AIM Large Cap Growth Fund SECTOR EQUITY AIM Municipal Bond Fund
AIM Libra Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIMinvestments.com DDT-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM EMERGING GROWTH FUND
AIM Emerging Growth Fund is for risk-tolerant investors who
seek long-term growth of capital by investing in securities of
companies that are likely to benefit from new or innovative
products, services or processes.
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.
--Servicemark--
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
CLASS A SHARES VS. INDEX
Cumulative Total Returns
10/31/02-4/30/03, excluding sales charges
- --------------------------------------------------------------------------------
[BAR CHART]
CLASS A SHARES 12.38%
RUSSELL 2500 GROWTH INDEX 7.76%
TOTAL NUMBER OF HOLDINGS* 119
TOTAL NET ASSETS $108.8 MILLION
Source: Lipper, Inc.
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (3/31/00) -22.29%
1 Year -24.59
CLASS B SHARES
Inception (3/31/00) -22.08%
1 Year -24.60
CLASS C SHARES
Inception (3/31/00) -21.40%
1 Year -21.60
In addition to returns as of the close of the fiscal year period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (3/31/00), -24.58%; one year,-32.61%. Class B shares,
inception (3/31/00), -24.36%; one year, -32.64%. Class C shares, inception
(3/31/00), -23.68%; one year, -29.97%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 12.38%
CLASS B SHARES 12.10
CLASS C SHARES 11.85
S&P 500 INDEX (BROAD MARKET INDEX) 4.47
RUSSELL 2500 GROWTH INDEX (STYLE-SPECIFIC INDEX) 7.76
LIPPER MID-CAP GROWTH FUND INDEX
(Peer group index) 4.79
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
===============================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- -----------------------------------------------------------------------------------------------
1. Express Scripts, Inc. 2.7% 1. Health Care Distributors & Services 7.1%
2. SunGard Data Systems Inc. 2.0 2. IT Consulting & Services 5.7
3. Robert Half International Inc. 1.7 3. Data Processing Services 4.4
4. Lamar Advertising Co. 1.7 4. Managed Health Care 3.4
5. Anthem, Inc. 1.6 5. Health Care Facilities 3.3
6. CDW Computer Centers, Inc. 1.6 6. Oil & Gas Drilling 3.2
7. Bisys Group, Inc. (The) 1.6 7. Industrial Machinery 3.0
8. McKesson Corp. 1.5 8. Hotels, Resorts & Cruise Lines 3.0
9. Microchip Technology Inc. 1.5 9. Oil & Gas Equipment & Services 2.5
10. HCA Inc. 1.5 10. Aerospace & Defense 2.5
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
===============================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Emerging Growth Fund's performance figures are historical, and they
reflect fund expenses, 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 share classes will differ due to different
sales charge structures and class expenses.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. A significant portion of the fund's returns during certain
periods was attributable to its investments in IPOs. These investments have
a magnified impact when the fund's asset base is relatively small. As the
fund's assets grow, the impact of IPO investments will decline, which may
reduce the effect of IPO investments on the fund's total return. For
additional information regarding the impact of IPO investments on the fund's
performance, please see the fund's prospectus.
o Investing in small and mid-sized companies may involve greater risk and
potential reward than investing in more established companies. Also, small
companies may have business risk, significant stock price fluctuations and
illiquidity.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
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 Lipper Mid-Cap Growth Fund Index represents an average of the
performance of the 30 largest mid-capitalization growth funds, tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 2500 Index measures the performance of the 2,500
smallest companies in the Russell 3000 Index, which measures the performance
of the 3,000 largest U.S. companies based on total market capitalization;
the Growth segment measures the performance of those Russell 2500 companies
with higher price-to-book ratios and higher forecasted growth values.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMinvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Emerging Growth Fund for the six
ROBERT H. months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
POSITIVE opposite page. This letter will provide an overview of the
PERFORMANCE DURING markets and your fund during the six months covered by this
MARCH AND APRIL report. As always, timely information about your fund and
2003 ENABLED MAJOR the markets in general is available at our Web site,
STOCK MARKET aiminvestments.com.
INDEXES TO POST
GAINS FOR THE MARKET CONDITIONS
REPORTING PERIOD.
ROBERT H. GRAHAM Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003. Year to date as of April 30,
consumer discretionary, information technology and financials were among the
better-performing sectors of the S&P 500, while telecommunications services was
the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value Index, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Emerging Growth Fund, at net asset value,
posted positive returns for the six months ended April 30, 2003. Throughout the
reporting period, fund managers Karl Farmer and Jay K. Rushin sought to identify
the stocks of companies that they believe have the potential for above-average
growth in earnings.
At the close of the reporting period, the three largest sector weightings in
the fund's portfolio were consumer discretionary, health care and information
technology. Keep in mind that fund managers focus on individual companies rather
than particular industries or sectors. The fund had 119 equity holdings at the
end of the reporting period.
IN CLOSING
I thank you for your continued participation in AIM Emerging Growth Fund, and I
look forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department is ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS-89.16%
ADVERTISING-2.22%
Lamar Advertising Co.(a) 50,000 $ 1,796,000
- ------------------------------------------------------------------------
Omnicom Group Inc. 10,000 619,000
========================================================================
2,415,000
========================================================================
AEROSPACE & DEFENSE-2.46%
Alliant Techsystems Inc.(a) 25,000 1,343,000
- ------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 30,000 1,332,000
========================================================================
2,675,000
========================================================================
AGRICULTURAL PRODUCTS-0.54%
Fresh Del Monte Produce Inc. (Cayman Islands) 30,000 584,400
========================================================================
AIR FREIGHT & LOGISTICS-0.57%
Ryder System, Inc. 25,000 621,000
========================================================================
APPAREL RETAIL-2.15%
AnnTaylor Stores Corp.(a) 40,000 946,400
- ------------------------------------------------------------------------
Limited Brands 70,000 1,017,800
- ------------------------------------------------------------------------
Too Inc.(a) 20,000 371,200
========================================================================
2,335,400
========================================================================
APPLICATION SOFTWARE-1.25%
Intuit Inc.(a) 35,000 1,357,300
========================================================================
BANKS-0.37%
Commerce Bancorp, Inc. 10,000 406,700
========================================================================
BIOTECHNOLOGY-1.34%
ICOS Corp.(a) 30,000 802,500
- ------------------------------------------------------------------------
Invitrogen Corp.(a) 20,000 654,000
========================================================================
1,456,500
========================================================================
BROADCASTING & CABLE TV-2.00%
Hispanic Broadcasting Corp.(a) 50,000 1,282,500
- ------------------------------------------------------------------------
Radio One, Inc.-Class D(a) 35,000 535,500
- ------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 12,000 363,360
========================================================================
2,181,360
========================================================================
CATALOG RETAIL-0.87%
Insight Enterprises, Inc.(a) 125,000 942,500
========================================================================
COMMODITY CHEMICALS-0.42%
Georgia Gulf Corp. 20,000 452,000
========================================================================
COMPUTER & ELECTRONICS RETAIL-1.84%
CDW Computer Centers, Inc.(a) 40,000 1,705,600
- ------------------------------------------------------------------------
GameStop Corp.(a) 25,000 298,750
========================================================================
2,004,350
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
COMPUTER HARDWARE-1.14%
Apple Computer, Inc.(a) 30,000 $ 426,000
- ------------------------------------------------------------------------
Hewlett-Packard Co. 50,000 815,000
========================================================================
1,241,000
========================================================================
COMPUTER STORAGE & PERIPHERALS-0.40%
Applied Films Corp.(a) 20,000 435,000
========================================================================
CONSTRUCTION, FARM MACHINERY & HEAVY
TRUCKS-0.75%
AGCO Corp.(a) 45,000 819,450
========================================================================
CONSUMER FINANCE-1.13%
MBNA Corp. 65,000 1,228,500
========================================================================
DATA PROCESSING SERVICES-4.44%
Automatic Data Processing, Inc. 37,500 1,261,125
- ------------------------------------------------------------------------
BISYS Group, Inc. (The)(a) 100,000 1,688,000
- ------------------------------------------------------------------------
DST Systems, Inc.(a) 35,000 1,074,500
- ------------------------------------------------------------------------
Fiserv, Inc.(a) 27,500 809,600
========================================================================
4,833,225
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.34%
Cintas Corp. 12,500 448,750
- ------------------------------------------------------------------------
FTI Consulting, Inc.(a) 5,000 226,250
- ------------------------------------------------------------------------
Kroll Inc.(a) 35,000 780,500
========================================================================
1,455,500
========================================================================
DIVERSIFIED FINANCIAL SERVICES-1.20%
Investors Financial Services Corp. 60,000 1,308,600
========================================================================
DRUG RETAIL-1.27%
CVS Corp. 25,000 605,250
- ------------------------------------------------------------------------
Walgreen Co. 25,000 771,500
========================================================================
1,376,750
========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.69%
Optimal Robotics Corp.-Class A (Canada)(a) 45,000 306,000
- ------------------------------------------------------------------------
ScanSource, Inc.(a) 35,000 696,850
- ------------------------------------------------------------------------
Waters Corp.(a) 35,000 840,350
========================================================================
1,843,200
========================================================================
EMPLOYMENT SERVICES-1.72%
Robert Half International Inc.(a) 115,000 1,872,200
========================================================================
ENVIRONMENTAL SERVICES-0.53%
Headwaters Inc.(a) 35,000 574,000
========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
FOOD DISTRIBUTORS-0.45%
SUPERVALU INC. 30,000 $ 494,100
========================================================================
GENERAL MERCHANDISE STORES-1.29%
Dollar Tree Stores, Inc.(a) 55,000 1,399,750
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-7.13%
Accredo Health, Inc.(a) 30,000 443,100
- ------------------------------------------------------------------------
AmerisourceBergen Corp. 20,000 1,157,000
- ------------------------------------------------------------------------
AMN Healthcare Services, Inc.(a) 45,000 409,500
- ------------------------------------------------------------------------
Express Scripts, Inc.(a) 50,000 2,948,000
- ------------------------------------------------------------------------
Henry Schein, Inc.(a) 10,000 431,500
- ------------------------------------------------------------------------
McKesson Corp. 60,000 1,664,400
- ------------------------------------------------------------------------
Omnicare, Inc. 15,000 397,800
- ------------------------------------------------------------------------
Patterson Dental Co.(a) 7,500 301,275
========================================================================
7,752,575
========================================================================
HEALTH CARE EQUIPMENT-0.84%
Baxter International Inc. 20,000 460,000
- ------------------------------------------------------------------------
CTI Molecular Imaging, Inc.(a) 25,000 459,000
========================================================================
919,000
========================================================================
HEALTH CARE FACILITIES-3.29%
HCA Inc. 50,000 1,605,000
- ------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 17,900 305,374
- ------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 55,000 1,210,550
- ------------------------------------------------------------------------
United Surgical Partners International,
Inc.(a) 25,000 463,250
========================================================================
3,584,174
========================================================================
HEALTH CARE SUPPLIES-0.93%
Fisher Scientific International Inc.(a) 35,000 1,008,350
========================================================================
HOME IMPROVEMENT RETAIL-0.39%
Home Depot, Inc. (The) 15,000 421,950
========================================================================
HOTELS, RESORTS & CRUISE LINES-2.96%
Carnival Corp. (Panama) 30,000 827,700
- ------------------------------------------------------------------------
Intrawest Corp. (Canada) 125,000 1,457,500
- ------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 35,000 939,400
========================================================================
3,224,600
========================================================================
HOUSEHOLD PRODUCTS-0.69%
Kimberly-Clark Corp. 15,000 746,550
========================================================================
INDUSTRIAL MACHINERY-3.00%
Kennametal Inc. 25,000 787,250
- ------------------------------------------------------------------------
Manitowoc Co., Inc. (The) 35,000 651,000
- ------------------------------------------------------------------------
Parker-Hannifin Corp. 20,000 813,600
- ------------------------------------------------------------------------
SPX Corp.(a) 30,000 1,014,000
========================================================================
3,265,850
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
INTERNET RETAIL-0.41%
Priceline.com Inc.(a) 200,000 $ 444,000
========================================================================
INTERNET SOFTWARE & SERVICES-0.33%
SonicWALL, Inc.(a) 100,000 357,000
========================================================================
IT CONSULTING & SERVICES-5.74%
Accenture Ltd.-Class A (Bermuda)(a) 55,000 881,100
- ------------------------------------------------------------------------
Affiliated Computer Services, Inc.-Class A(a) 25,000 1,192,500
- ------------------------------------------------------------------------
Cognizant Technology Solutions Corp.(a) 35,000 628,600
- ------------------------------------------------------------------------
SRA International, Inc.-Class A(a) 20,000 473,000
- ------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 100,000 2,150,000
- ------------------------------------------------------------------------
Titan Corp. (The)(a) 115,000 923,450
========================================================================
6,248,650
========================================================================
LEISURE FACILITIES-0.54%
Six Flags, Inc.(a) 100,000 588,000
========================================================================
LEISURE PRODUCTS-0.51%
RC2 Corp.(a) 35,000 555,800
========================================================================
MANAGED HEALTH CARE-3.38%
Aetna Inc. 11,000 547,800
- ------------------------------------------------------------------------
AMERIGROUP Corp.(a) 20,000 582,400
- ------------------------------------------------------------------------
Anthem, Inc.(a) 25,000 1,716,000
- ------------------------------------------------------------------------
Humana Inc.(a) 75,000 828,750
========================================================================
3,674,950
========================================================================
METAL & GLASS CONTAINERS-0.34%
Intertape Polymer Group Inc. (Canada)(a) 75,000 375,000
========================================================================
MOVIES & ENTERTAINMENT-0.45%
Regal Entertainment Group-Class A 25,000 490,000
========================================================================
OIL & GAS DRILLING-3.15%
ENSCO International Inc. 40,000 1,016,000
- ------------------------------------------------------------------------
Parker Drilling Co.(a) 300,000 588,000
- ------------------------------------------------------------------------
Precision Drilling Corp. (Canada)(a) 35,000 1,203,300
- ------------------------------------------------------------------------
Pride International, Inc.(a) 40,000 620,800
========================================================================
3,428,100
========================================================================
OIL & GAS EQUIPMENT & SERVICES-2.49%
Cal Dive International, Inc.(a) 75,000 1,207,500
- ------------------------------------------------------------------------
Hanover Compressor Co.(a) 125,000 1,051,250
- ------------------------------------------------------------------------
Oil States International, Inc.(a) 40,000 455,200
========================================================================
2,713,950
========================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.94%
Ultra Petroleum Corp.(a) 60,000 600,000
- ------------------------------------------------------------------------
Westport Resources Corp.(a) 20,300 423,052
========================================================================
1,023,052
========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
PACKAGED FOODS & MEATS-1.80%
Hershey Foods Corp. 15,000 $ 978,750
- ------------------------------------------------------------------------
Smithfield Foods, Inc.(a) 50,000 980,000
========================================================================
1,958,750
========================================================================
PERSONAL PRODUCTS-0.75%
Estee Lauder Cos. Inc. (The)-Class A 25,000 812,500
========================================================================
PHARMACEUTICALS-1.53%
American Pharmaceutical Partners, Inc.(a) 25,000 583,750
- ------------------------------------------------------------------------
Pfizer Inc. 35,000 1,076,250
========================================================================
1,660,000
========================================================================
PROPERTY & CASUALTY INSURANCE-1.15%
ACE Ltd. (Cayman Islands) 25,000 827,000
- ------------------------------------------------------------------------
Infiniti Property & Casualty Corp. 20,000 422,000
========================================================================
1,249,000
========================================================================
REINSURANCE-0.54%
Everest Re Group, Ltd. (Bermuda) 8,500 592,025
========================================================================
RESTAURANTS-2.14%
Darden Restaurants, Inc. 25,000 437,750
- ------------------------------------------------------------------------
Jack in the Box Inc.(a) 30,000 534,000
- ------------------------------------------------------------------------
Landry's Restaurants, Inc. 30,000 561,000
- ------------------------------------------------------------------------
Papa John's International, Inc.(a) 15,000 356,700
- ------------------------------------------------------------------------
Wendy's International, Inc. 15,000 435,600
========================================================================
2,325,050
========================================================================
SEMICONDUCTOR EQUIPMENT-0.99%
Cabot Microelectronics Corp.(a) 25,000 1,080,500
========================================================================
SEMICONDUCTORS-2.19%
Agere Systems Inc.-Class A(a) 400,000 716,000
- ------------------------------------------------------------------------
Microchip Technology Inc. 80,000 1,663,200
========================================================================
2,379,200
========================================================================
SOFT DRINKS-0.74%
Coca-Cola Co. (The) 20,000 808,000
========================================================================
SPECIALTY STORES-2.43%
Foot Locker, Inc. 75,000 825,000
- ------------------------------------------------------------------------
Linens 'n Things, Inc.(a) 20,000 423,800
- ------------------------------------------------------------------------
Michaels Stores, Inc.(a) 9,000 $ 281,160
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
SPECIALTY STORES-(CONTINUED)
Pier 1 Imports, Inc. 25,000 464,000
- ------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 25,000 647,000
========================================================================
2,640,960
========================================================================
SYSTEMS SOFTWARE-1.38%
Microsoft Corp. 40,000 1,022,800
- ------------------------------------------------------------------------
NetIQ Corp.(a) 35,000 482,300
========================================================================
1,505,100
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.45%
Arris Group Inc.(a) 125,000 487,625
- ------------------------------------------------------------------------
UTStarcom, Inc.(a) 50,000 1,088,550
========================================================================
1,576,175
========================================================================
TRADING COMPANIES & DISTRIBUTORS-0.32%
Fastenal Co. 10,000 345,900
========================================================================
TRUCKING-0.86%
Yellow Corp.(a) 35,000 934,500
========================================================================
Total Common Stocks (Cost $96,418,135) 97,001,996
========================================================================
MONEY MARKET FUNDS-12.99%
STIC Liquid Assets Portfolio(b) 7,068,820 7,068,820
- ------------------------------------------------------------------------
STIC Prime Portfolio(b) 7,068,820 7,068,820
========================================================================
Total Money Market Funds (Cost
$14,137,640) 14,137,640
========================================================================
TOTAL INVESTMENTS-102.15% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $110,555,775) 111,139,636
========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-12.96%
STIC Liquid Assets Portfolio(b)(c) 14,095,815 14,095,815
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $14,095,815) 14,095,815
========================================================================
TOTAL INVESTMENTS-115.11% (Cost $124,651,590) 125,235,451
========================================================================
OTHER ASSETS LESS LIABILITIES-(15.11%) (16,434,576)
========================================================================
NET ASSETS-100.00% $108,800,875
________________________________________________________________________
========================================================================
</Table>
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.
(c) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$124,651,590)* $125,235,451
- -----------------------------------------------------------
Receivables for:
Investments sold 5,190,826
- -----------------------------------------------------------
Fund shares sold 227,756
- -----------------------------------------------------------
Dividends 17,260
- -----------------------------------------------------------
Investment for deferred compensation plan 12,874
- -----------------------------------------------------------
Other assets 20,469
===========================================================
Total assets 130,704,636
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 6,980,399
- -----------------------------------------------------------
Fund shares reacquired 541,119
- -----------------------------------------------------------
Deferred compensation plan 12,874
- -----------------------------------------------------------
Collateral upon return of securities loaned 14,095,815
- -----------------------------------------------------------
Accrued distribution fees 89,093
- -----------------------------------------------------------
Accrued trustees' fees 756
- -----------------------------------------------------------
Accrued transfer agent fees 120,016
- -----------------------------------------------------------
Accrued operating expenses 63,689
===========================================================
Total liabilities 21,903,761
===========================================================
Net assets applicable to shares outstanding $108,800,875
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $287,183,295
- -----------------------------------------------------------
Undistributed net investment income (loss) (1,153,720)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and option contracts (177,812,561)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities 583,861
===========================================================
$108,800,875
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 55,758,108
___________________________________________________________
===========================================================
Class B $ 36,513,289
___________________________________________________________
===========================================================
Class C $ 16,529,478
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 12,055,419
___________________________________________________________
===========================================================
Class B 8,050,882
___________________________________________________________
===========================================================
Class C 3,647,073
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 4.63
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $4.63 divided by
94.50%) $ 4.90
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 4.54
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 4.53
___________________________________________________________
===========================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $13,499,539
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends $ 172,413
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 52,905
- -------------------------------------------------------------------------
Security lending income 13,309
=========================================================================
Total investment income 238,627
=========================================================================
EXPENSES:
Advisory fees 461,327
- -------------------------------------------------------------------------
Administrative services fees 24,795
- -------------------------------------------------------------------------
Custodian fees 28,431
- -------------------------------------------------------------------------
Distribution fees -- Class A 96,303
- -------------------------------------------------------------------------
Distribution fees -- Class B 184,747
- -------------------------------------------------------------------------
Distribution fees -- Class C 82,838
- -------------------------------------------------------------------------
Transfer agent fees 419,252
- -------------------------------------------------------------------------
Trustees' fees 4,641
- -------------------------------------------------------------------------
Other 76,763
=========================================================================
Total expenses 1,379,097
=========================================================================
Less: Fees waived and expenses paid indirectly (1,640)
=========================================================================
Net expenses 1,377,457
=========================================================================
Net investment income (loss) (1,138,830)
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,797,182)
- -------------------------------------------------------------------------
Option contracts written 291,831
=========================================================================
(1,505,351)
=========================================================================
Change in net unrealized appreciation of investment
securities 14,054,504
=========================================================================
Net gain from investment securities and option contracts 12,549,153
=========================================================================
Net increase in net assets resulting from operations $11,410,323
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,138,830) $ (2,977,371)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (1,505,351) (43,488,298)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 14,054,504 7,080,269
============================================================================================
Net increase (decrease) in net assets resulting from
operations 11,410,323 (39,385,400)
============================================================================================
Share transactions-net:
Class A (1,759,890) (10,076,931)
- --------------------------------------------------------------------------------------------
Class B (3,422,576) (8,139,807)
- --------------------------------------------------------------------------------------------
Class C (2,502,626) (2,937,370)
============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (7,685,092) (21,154,108)
============================================================================================
Net increase (decrease) in net assets 3,725,231 (60,539,508)
============================================================================================
NET ASSETS:
Beginning of period 105,075,644 165,615,152
============================================================================================
End of period $ 108,800,875 $ 105,075,644
____________________________________________________________________________________________
============================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Emerging Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
F-6
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
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 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. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of
the first $1 billion of the Fund's average daily net assets plus 0.80% of the
Fund's average daily net assets over $1 billion. AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in money market funds with cash collateral from
securities loaned by the Fund). For the six months ended April 30, 2003, AIM
waived fees of $766.
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, 2003, AIM
was paid $24,795 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
F-7
transfer agency and shareholder services to the Fund. During the six months
ended April 30, 2003, AFS retained $226,575 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $96,303, $184,747 and $82,838, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $10,032 in front-end sales commissions from the sale of
Class A shares and $278, $158 and $930 for Class A, Class B and Class C shares,
respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,273 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $874 under an expense
offset arrangement which resulted in a reduction of the Fund's total expenses of
$874.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day following the
valuation date of the securities loaned. Therefore, the value of the collateral
may be temporarily less than the value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $13,499,539 were on
loan to brokers. The loans were secured by cash collateral of $14,095,815
received by the Fund and subsequently invested in an affiliated money market
fund. For the six months ended April 30, 2003, the Fund received fees of $13,309
for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- ----------------------------------------------------------
Beginning of period -- $ --
- ----------------------------------------------------------
Written 6,300 445,583
- ----------------------------------------------------------
Closed (4,650) (326,387)
- ----------------------------------------------------------
Exercised (276) (22,857)
- ----------------------------------------------------------
Expired (1,374) (96,339)
==========================================================
End of period -- $ --
__________________________________________________________
==========================================================
</Table>
F-8
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2009 $128,445,323
- ----------------------------------------------------------
October 31, 2010 45,298,855
==========================================================
Total capital loss carryforward $173,744,178
__________________________________________________________
==========================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $157,884,051 and $165,038,585, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $ 5,377,269
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (5,041,761)
===========================================================
Net unrealized appreciation of investment
securities $ 335,508
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $124,899,943.
</Table>
NOTE 10--SHARE INFORMATION
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 CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 5,752,258 $ 25,389,591 8,104,455 $ 45,061,733
- -----------------------------------------------------------------------------------------------------------------------
Class B 1,000,322 4,331,744 1,711,610 9,848,093
- -----------------------------------------------------------------------------------------------------------------------
Class C 436,921 1,896,887 1,313,206 7,417,468
=======================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 40,111 173,037 70,830 388,408
- -----------------------------------------------------------------------------------------------------------------------
Class B (40,885) (173,037) (72,057) (388,408)
=======================================================================================================================
Reacquired:
Class A (6,326,126) (27,322,518) (10,450,880) (55,527,072)
- -----------------------------------------------------------------------------------------------------------------------
Class B (1,811,824) (7,581,283) (3,473,227) (17,599,492)
- -----------------------------------------------------------------------------------------------------------------------
Class C (1,038,429) (4,399,513) (1,969,513) (10,354,838)
=======================================================================================================================
(1,987,652) $ (7,685,092) (4,765,576) $(21,154,108)
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
F-9
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-------------------------------------------------------------
MARCH 31, 2000
SIX MONTHS YEAR ENDED (DATE OPERATIONS
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, --------------------- OCTOBER 31,
2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 4.12 $ 5.46 $ 10.50 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.08)(a) (0.10) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.55 (1.26) (4.51) 0.54
===========================================================================================================================
Total from investment operations 0.51 (1.34) (4.61) 0.50
===========================================================================================================================
Less distributions from net realized gains -- -- (0.43) --
===========================================================================================================================
Net asset value, end of period $ 4.63 $ 4.12 $ 5.46 $ 10.50
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 12.38% (24.54)% (45.37)% 5.00%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $55,758 $51,822 $81,114 $147,101
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 2.22%(c) 1.89% 1.71%(d) 1.68%(e)
===========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.78)%(c) (1.54)% (1.32)% (1.04)%(e)
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(f) 157% 407% 242% 111%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$55,486,594.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 1.83%.
(e) Annualized.
(f) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS B
-------------------------------------------------------------
MARCH 31, 2000
SIX MONTHS YEAR ENDED (DATE OPERATIONS
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, --------------------- OCTOBER 31,
2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 4.05 $ 5.40 $ 10.47 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.12)(a) (0.14) (0.07)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.54 (1.23) (4.50) 0.54
===========================================================================================================================
Total from investment operations 0.49 (1.35) (4.64) 0.47
===========================================================================================================================
Less distributions from net realized gains -- -- (0.43) --
===========================================================================================================================
Net asset value, end of period $ 4.54 $ 4.05 $ 5.40 $ 10.47
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 12.10% (25.00)% (45.81)% 4.70%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,513 $36,060 $58,019 $94,740
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 2.87%(c) 2.55% 2.36%(d) 2.37%(e)
===========================================================================================================================
Ratio of net investment income (loss) to average net assets (2.43)%(c) (2.19)% (1.98)% (1.73)%(e)
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(f) 157% 407% 242% 111%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$37,255,638.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 2.48%.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
-------------------------------------------------------------
MARCH 31, 2000
SIX MONTHS YEAR ENDED (DATE OPERATIONS
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, --------------------- OCTOBER 31,
2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 4.05 $ 5.40 $ 10.46 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.12)(a) (0.14) (0.07)
- ---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.53 (1.23) (4.49) 0.53
===========================================================================================================================
Total from investment operations 0.48 (1.35) (4.63) 0.46
===========================================================================================================================
Less distributions from net realized gains -- -- (0.43) --
===========================================================================================================================
Net asset value, end of period $ 4.53 $ 4.05 $ 5.40 $ 10.46
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(b) 11.85% (25.00)% (45.76)% 4.60%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $16,529 $17,194 $26,483 $41,361
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 2.87%(c) 2.55% 2.36%(d) 2.37%(e)
===========================================================================================================================
Ratio of net investment income (loss) to average net assets (2.43)%(c) (2.19)% (1.98)% (1.73)%(e)
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate(f) 157% 407% 242% 111%
___________________________________________________________________________________________________________________________
===========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$16,704,824.
(d) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 2.48%.
(e) Annualized.
(f) Not annualized for periods less than one year.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. A I M Advisors, Inc.
Jack M. Fields Kevin M. Carome 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 100
Prema Mathai-Davis Houston, TX 77046
Lewis F. Pennock Gary T. Crum
Ruth H. Quigley Senior Vice President TRANSFER AGENT
Louis S. Sklar A I M Fund Services, Inc.
Dana R. Sutton P.O. Box 4739
Vice President and Treasurer Houston, TX 77210-4739
Stuart W. Coco CUSTODIAN
Vice President State Street Bank and Trust Company
225 Franklin Street
Melville B. Cox Boston, MA 02110
Vice President
COUNSEL TO THE FUND
Edgar M. Larsen Ballard Spahr
Vice President Andrews & Ingersoll, LLP
1735 Market Street
Nancy L. Martin Philadelphia, PA 19103
Secretary
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDs--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIMinvestments.com EMG-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM LARGE CAP BASIC VALUE FUND
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Large Cap Basic Value Fund seeks to provide long-term growth
of capital with a secondary objective of current income. The fund
invests primarily in equity securities of large U.S. companies
believed to be undervalued compared to their intrinsic value.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
GEOGRAPHICAL BREAKDOWN
As of 4/30/03, based on total net assets
(PIE CHART)
BERMUDA 3.8%
NETHERLANDS 4.1%
CAYMAN ISLANDS 4.7%
U.S. 87.4%
TOTAL NUMBER OF HOLDINGS* 43
TOTAL NET ASSETS $186.8 MILLION
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (6/30/99) -1.64%
1 Year -24.74
CLASS B SHARES
Inception (8/1/00) -5.95%
1 Year -24.82
CLASS C SHARES
Inception (8/1/00) -4.90%
1 Year -21.65
CLASS R SHARES**
Inception 6/3/99 -0.32%
1 Year -20.46
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without sales charges. Class R shares were
first offered on June 3, 2002. Returns prior to that date are hypothetical
results based on Class A share performance at net asset value, adjusted to
reflect Class R 12b-1 fees. (The inception date of Class A shares is 6/30/99).
Class R share returns do not include a 0.75% contingent deferred sales charge
that may be imposed on a total redemption of retirement plan assets within the
first year.
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 4.13%
CLASS B SHARES 3.75
CLASS C SHARES 3.75
CLASS R SHARES 4.02
RUSSELL 1000 INDEX (Broad market index) 4.75
RUSSELL 1000 VALUE INDEX (Style specific index) 5.25
LIPPER LARGE CAP VALUE FUND INDEX (Peer group) 4.39
Source: Lipper, Inc.
In addition to returns as of the close of the reporting period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (6/30/99), -4.05%; one year, -33.74%. Class B shares,
inception (8/1/00), -9.28%; one year, -33.82%. Class C shares, inception
(8/1/00), -8.25%; one year, -30.97%. Class R shares, inception, -2.74%, one
year, -29.95%.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
=============================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ---------------------------------------------------------------------------------------------
1. Citigroup Inc. 3.9% 1. Diversified Financial Services 14.7%
2. Tyco International Ltd. (Bermuda) 3.8 2. Banks 6.7
3. Freddie Mac 3.7 3. Industrial Conglomerates 5.9
4. Gap, Inc. (The) 3.2 4. Advertising 5.0
5. Walt Disney Co. (The) 3.2 5. Pharmaceuticals 4.5
6. Waste Management, Inc. 3.0 6. Data Processing Services 4.4
7. Applied Materials, Inc. 2.9 7. Oil & Gas Drilling 3.9
8. Omnicom Group Inc. 2.9 8. Diversified Commercial Services 3.9
9. First Data Corp. 2.8 9. Food Retail 3.4
10. Schlumberger Ltd. (Netherlands) 2.8 10. Apparel Retail 3.2
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
=============================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Large Cap Basic Value 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 share classes will differ due to different
sales charge structures and class expenses.
o "The fund may participate in the initial public offering (IPO) market in
some market cycles. A significant portion of the fund's returns during
certain periods was attributable to its investments in IPOs. These
investments have a magnified impact when the fund's asset base is relatively
small. As the fund's assets grow, the impact of IPO investments will
decline, which may reduce the effect of IPO investments on the fund's total
return. For additional information regarding the impact of IPO investments
on the fund's performance, please see the fund's prospectus."
o In the schedule of investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
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:
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT
o The unmanaged Lipper Large Cap Value Fund Index represents as average of the
performance of the 30 largest large-capitalization value funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 1000 Index represents the performance of the stocks of
large-capitalization companies.
o The unmanaged Russell 1000 Value Index measures the performance of Russell
1000 companies with lower price/book ratios and lower forecasted growth
values.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
For more information, please visit aiminvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
(PHOTO OF This is the report on AIM Large Cap Basic Value Fund for the
ROBERT H. six months ended April 30, 2003. You will note that we have
GRAHAM) adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page. This letter will provide an overview of the
markets and your fund during the six months covered by this
report. As always, timely information about your fund and
the markets in general is available at our Web site,
aiminvestments.com.
MARKET CONDITIONS
Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
tele-communications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values returned 5.25%.
YOUR FUND
The long-term strategy of buying quality companies when they are undervalued and
out of favor on Wall Street produced positive results for AIM Large Cap Basic
Value Fund, with the portfolio achieving favorable results at net asset value
for the six months ended April 30, 2003.
Fund managers Bret W. Stanley, Matthew W. Seinsheimer, Robert Canon Coleman
II and Michael J. Simon purchase companies that they believe have the potential
for above-average growth in revenues and earnings and that they believe are
undervalued in relation to long-term earning power or other factors.
At the close of the reporting period, the fund's largest industry positions
were in diversified financial services, banks, and industrial conglomerates. The
fund had 43 total holdings as of April 30, 2003.
We encourage you to visit our Web site, aiminvestments.com, for a wealth of
information about your fund, including regular performance updates, quarterly
details of portfolio composition, and much more. From our home page, click on
Products & Performance, then Mutual Funds, and then select the type of
information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Large Cap Basic Value Fund,
and I look forward to reporting to you again in six months. If you have any
questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
================================================================================
POSITIVE PERFORMANCE DURING MARCH
AND APRIL 2003 ENABLED MAJOR STOCK
MARKET INDEXES TO POST GAINS FOR THE
REPORTING PERIOD.
ROBERT H. GRAHAM
================================================================================
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-96.32%
ADVERTISING-5.01%
Interpublic Group of Cos., Inc. (The)(a) 347,500 $ 3,961,500
- ------------------------------------------------------------------------
Omnicom Group Inc. 87,300 5,403,870
========================================================================
9,365,370
========================================================================
AEROSPACE & DEFENSE-1.75%
Honeywell International Inc. 138,600 3,270,960
========================================================================
APPAREL RETAIL-3.20%
Gap, Inc. (The) 359,100 5,971,833
========================================================================
BANKS-6.75%
Bank of America Corp. 60,900 4,509,645
- ------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 163,000 4,311,350
- ------------------------------------------------------------------------
Bank One Corp. 105,000 3,785,250
========================================================================
12,606,245
========================================================================
BUILDING PRODUCTS-2.48%
Masco Corp. 219,800 4,631,186
========================================================================
CONSTRUCTION, FARM MACHINERY & HEAVY
TRUCKS-1.47%
Deere & Co. 62,200 2,738,666
========================================================================
CONSUMER ELECTRONICS-1.29%
Koninklijke (Royal) Philips Electronics
N.V.-New York Shares (Netherlands) 129,270 2,414,763
========================================================================
DATA PROCESSING SERVICES-4.40%
Ceridian Corp.(a) 215,300 3,003,435
- ------------------------------------------------------------------------
First Data Corp. 133,200 5,225,436
========================================================================
8,228,871
========================================================================
DIVERSIFIED COMMERCIAL SERVICES-3.90%
Cendant Corp.(a) 322,000 4,598,160
- ------------------------------------------------------------------------
H&R Block, Inc. 69,700 2,691,814
========================================================================
7,289,974
========================================================================
DIVERSIFIED FINANCIAL SERVICES-14.73%
Citigroup Inc. 185,293 7,272,751
- ------------------------------------------------------------------------
Freddie Mac 117,900 6,826,410
- ------------------------------------------------------------------------
J.P. Morgan Chase & Co. 152,000 4,461,200
- ------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 104,000 4,269,200
- ------------------------------------------------------------------------
Morgan Stanley 105,000 4,698,750
========================================================================
27,528,311
========================================================================
ENVIRONMENTAL SERVICES-2.95%
Waste Management, Inc. 253,750 $ 5,511,450
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
FOOD RETAIL-3.45%
Kroger Co. (The)(a) 289,100 4,134,130
- ------------------------------------------------------------------------
Safeway Inc.(a) 139,000 2,310,180
========================================================================
6,444,310
========================================================================
GENERAL MERCHANDISE STORES-2.67%
Target Corp. 149,100 4,985,904
========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-2.23%
McKesson Corp. 150,000 4,161,000
========================================================================
HEALTH CARE FACILITIES-2.19%
HCA Inc. 47,000 1,508,700
- ------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 174,000 2,582,160
========================================================================
4,090,860
========================================================================
INDUSTRIAL CONGLOMERATES-5.92%
General Electric Co. 133,000 3,916,850
- ------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 458,400 7,151,040
========================================================================
11,067,890
========================================================================
INDUSTRIAL MACHINERY-2.07%
Illinois Tool Works Inc. 60,600 3,877,188
========================================================================
INSURANCE BROKERS-1.20%
Marsh & McLennan Cos., Inc. 47,100 2,245,728
========================================================================
LIFE & HEALTH INSURANCE-1.63%
Prudential Financial, Inc. 95,000 3,037,150
========================================================================
MANAGED HEALTH CARE-1.82%
UnitedHealth Group Inc. 36,900 3,399,597
========================================================================
MOVIES & ENTERTAINMENT-3.16%
Walt Disney Co. (The) 316,800 5,911,488
========================================================================
OIL & GAS DRILLING-3.93%
ENSCO International Inc. 139,000 3,530,600
- ------------------------------------------------------------------------
Transocean Inc. (Cayman Islands) 200,277 3,815,277
========================================================================
7,345,877
========================================================================
OIL & GAS EQUIPMENT & SERVICES-2.79%
Schlumberger Ltd. (Netherlands) 124,200 5,207,706
========================================================================
PHARMACEUTICALS-4.55%
Pfizer Inc. 110,399 3,394,769
- ------------------------------------------------------------------------
Wyeth 117,200 5,101,716
========================================================================
8,496,485
========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
PHOTOGRAPHIC PRODUCTS-1.47%
Eastman Kodak Co. 92,100 $ 2,754,711
========================================================================
PROPERTY & CASUALTY INSURANCE-2.63%
ACE Ltd. (Cayman Islands) 148,300 4,905,764
========================================================================
SEMICONDUCTOR EQUIPMENT-2.93%
Applied Materials, Inc.(a) 375,000 5,475,000
========================================================================
SYSTEMS SOFTWARE-2.68%
Computer Associates International, Inc. 308,500 5,010,040
========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.07%
Motorola, Inc. 252,500 1,997,275
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $201,679,756) 179,971,602
========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ------------------------------------------------------------------------
MONEY MARKET FUNDS-3.79%
STIC Liquid Assets Portfolio(b) 3,536,898 $ 3,536,898
- ------------------------------------------------------------------------
STIC Prime Portfolio(b) 3,536,898 3,536,898
========================================================================
Total Money Market Funds (Cost
$7,073,796) 7,073,796
========================================================================
TOTAL INVESTMENTS-100.11% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $208,753,552) 187,045,398
========================================================================
INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED
MONEY MARKET FUNDS-0.08%
STIC Liquid Assets Portfolio(b)(c) 150,000 150,000
========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $150,000) 150,000
========================================================================
TOTAL INVESTMENTS-100.19% (Cost $208,903,552) 187,195,398
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.19%) (363,544)
========================================================================
NET ASSETS-100.00% $186,831,854
________________________________________________________________________
========================================================================
</Table>
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.
(c) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$208,903,552)* $187,195,398
- -----------------------------------------------------------
Receivables for:
Fund shares sold 447,490
- -----------------------------------------------------------
Dividends 108,286
- -----------------------------------------------------------
Investment for deferred compensation plan 16,310
- -----------------------------------------------------------
Other assets 35,201
===========================================================
Total assets 187,802,685
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 499,944
- -----------------------------------------------------------
Deferred compensation plan 16,310
- -----------------------------------------------------------
Collateral upon return of securities loaned 150,000
- -----------------------------------------------------------
Accrued distribution fees 176,166
- -----------------------------------------------------------
Accrued trustees' fees 967
- -----------------------------------------------------------
Accrued transfer agent fees 85,767
- -----------------------------------------------------------
Accrued operating expenses 41,677
===========================================================
Total liabilities 970,831
===========================================================
Net assets applicable to shares outstanding $186,831,854
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $236,647,394
- -----------------------------------------------------------
Undistributed net investment income (loss) (251,498)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (27,855,888)
- -----------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (21,708,154)
===========================================================
$186,831,854
___________________________________________________________
===========================================================
NET ASSETS:
Class A $ 99,590,036
___________________________________________________________
===========================================================
Class B $ 64,419,202
___________________________________________________________
===========================================================
Class C $ 22,720,301
___________________________________________________________
===========================================================
Class R $ 102,315
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 10,395,007
___________________________________________________________
===========================================================
Class B 6,845,240
___________________________________________________________
===========================================================
Class C 2,414,684
___________________________________________________________
===========================================================
Class R 10,695
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 9.58
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $9.58 divided by
94.50%) $ 10.14
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 9.41
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 9.41
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 9.57
___________________________________________________________
===========================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $139,500 were
on loan to brokers.
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $7,560) $ 1,337,726
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 60,390
- --------------------------------------------------------------------------
Security lending income 29
==========================================================================
Total investment income 1,398,145
==========================================================================
EXPENSES:
Advisory fees 554,437
- --------------------------------------------------------------------------
Administrative services fees 24,795
- --------------------------------------------------------------------------
Custodian fees 20,633
- --------------------------------------------------------------------------
Distribution fees -- Class A 171,098
- --------------------------------------------------------------------------
Distribution fees -- Class B 321,240
- --------------------------------------------------------------------------
Distribution fees -- Class C 113,677
- --------------------------------------------------------------------------
Distribution fees -- Class R 147
- --------------------------------------------------------------------------
Transfer agent fees 329,253
- --------------------------------------------------------------------------
Trustees' fees 4,729
- --------------------------------------------------------------------------
Other 93,431
==========================================================================
Total expenses 1,633,440
==========================================================================
Less: Fees waived and expenses paid indirectly (2,446)
==========================================================================
Net expenses 1,630,994
==========================================================================
Net investment income (loss) (232,849)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (10,890,245)
- --------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 16,504,259
==========================================================================
Net gain from investment securities 5,614,014
==========================================================================
Net increase in net assets resulting from operations $ 5,381,165
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (232,849) $ (400,729)
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (10,890,245) (13,193,071)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 16,504,259 (26,617,408)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations 5,381,165 (40,211,208)
==========================================================================================
Share transactions-net:
Class A 2,308,590 47,013,800
- ------------------------------------------------------------------------------------------
Class B (1,380,988) 19,109,813
- ------------------------------------------------------------------------------------------
Class C 284,603 6,186,422
- ------------------------------------------------------------------------------------------
Class R 92,263 10,003
==========================================================================================
Net increase (decrease) in net assets resulting from
share transactions 1,304,468 72,320,038
==========================================================================================
Net increase in net assets 6,685,633 32,108,830
==========================================================================================
NET ASSETS:
Beginning of period 180,146,221 148,037,391
==========================================================================================
End of period $186,831,854 $180,146,221
__________________________________________________________________________________________
==========================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Basic Value Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware statutory trust registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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 primary investment objective is long-term growth of capital with
a secondary objective of current income. Each company listed in the Schedule of
Investments is organized in the United States unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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
F-5
authorized by the Board of Trustees. Short-term obligations having 60 days
or less to maturity and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.60% of
the first $1 billion of the Fund's average daily net assets, plus 0.575% over $1
billion to and including $2 billion of the Fund's average daily net assets and
0.55% of the Fund's average daily net assets over $2 billion. AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in affiliated money market
funds with cash collateral from securities loaned by the Fund). For the six
months ended April 30, 2003, AIM waived fees of $893.
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, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $165,229 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and Class R shares of the Fund. The Trust has adopted
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares, Class B shares, Class C shares and Class R 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, 1.00% of the average daily net assets of Class B and Class C shares and
0.50% of the average daily net assets of Class R 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, Class C or Class R 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. NASD Rules also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the six months ended April 30,
2003, the Class A, Class B, Class C and Class R shares paid $171,098, $321,240,
$113,677 and $147, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $26,881 in front-end sales commissions from the sale of
Class A shares and $681, $0, $3,058 and $0 for Class A, Class B, Class C and
Class R shares, respectively, for CDSCs imposed upon redemptions by
shareholders.
F-6
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,369 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $1,322 and reductions in
custodian fees of $231 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $1,553.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day following the
valuation date of the securities loaned. Therefore, the value of the collateral
may be temporarily less than the value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $139,500 were on
loan to brokers. The loans were secured by cash collateral of $150,000 received
by the Fund and subsequently invested in an affiliated money market fund. For
the six months ended April 30, 2003, the Fund received fees of $29 for
securities lending.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2009 $ 2,651,488
- ----------------------------------------------------------
October 31, 2010 13,408,092
==========================================================
Total capital loss carryforward $16,059,580
__________________________________________________________
==========================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $31,398,829 and $20,431,704, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $ 8,489,512
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (31,102,248)
===========================================================
Net unrealized appreciation (depreciation) of
investment securities $(22,612,736)
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $209,808,134.
</Table>
F-7
NOTE 9--SHARE INFORMATION
The Fund currently offers four different classes of shares: Class A shares,
Class B shares, Class C shares and Class R shares. Class A shares are sold with
a front-end sales charge. Class B shares and Class C shares are sold with a
CDSC. Class R shares are sold at net asset value. Under some circumstances,
Class A shares and Class R shares are subject to CDSCs. Generally, Class B
shares will automatically convert to Class A shares eight years after the end of
the calendar month of purchase. Changes in shares outstanding during the six
months ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Sold:
Class A 3,424,906 $ 31,944,034 12,345,842 $130,431,434
- ---------------------------------------------------------------------------------------------------------------------
Class B 1,498,863 13,691,916 4,427,046 47,877,276
- ---------------------------------------------------------------------------------------------------------------------
Class C 625,135 5,763,641 1,524,511 16,806,696
- ---------------------------------------------------------------------------------------------------------------------
Class R* 10,950 101,715 862 10,003
=====================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 97,842 898,170 69,318 788,677
- ---------------------------------------------------------------------------------------------------------------------
Class B (99,484) (898,170) (71,494) (788,677)
=====================================================================================================================
Reacquired:
Class A (3,384,611) (30,533,614) (8,433,346) (84,206,311)
- ---------------------------------------------------------------------------------------------------------------------
Class B (1,609,409) (14,174,734) (2,706,026) (27,978,786)
- ---------------------------------------------------------------------------------------------------------------------
Class C (612,016) (5,479,038) (1,028,142) (10,620,274)
- ---------------------------------------------------------------------------------------------------------------------
Class R* (1,117) (9,452) -- --
=====================================================================================================================
(48,941) $ 1,304,468 6,128,571 $ 72,320,038
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
--------------------------------------------------------------------------
JUNE 30, 1999
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ---------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.20 $ 10.94 $ 12.05 $ 9.40 $10.00
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00 0.01(a) 0.02(a) 0.07(a) 0.03
- --------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.38 (1.75) (1.07) 2.88 (0.63)
====================================================================================================================
Total from investment operations 0.38 (1.74) (1.05) 2.95 (0.60)
====================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.04) (0.18) --
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.02) (0.12) --
====================================================================================================================
Total distributions -- -- (0.06) (0.30) --
====================================================================================================================
Net asset value, end of period $ 9.58 $ 9.20 $ 10.94 $12.05 $ 9.40
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(b) 4.13% (15.90)% (8.74)% 32.21% (6.00)%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $99,590 $94,387 $68,676 $5,888 $1,153
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.46%(c) 1.38% 1.27% 1.25% 1.25%(d)
- --------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.46%(c) 1.38% 1.36% 8.21% 10.02%(d)
====================================================================================================================
Ratio of net investment income to
average net assets 0.05%(c) 0.11% 0.17% 0.62% 0.87%(d)
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate(e) 12% 37% 18% 57% 10%
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$98,580,479.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-8
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
-----------------------------------------------------------
AUGUST 1, 2000
SIX MONTHS YEAR ENDED (DATE SALES
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, --------------------- OCTOBER 31,
2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.07 $ 10.86 $ 12.02 $10.85
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) (0.06)(a) (0.06)(a) 0.00
- ----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.37 (1.73) (1.05) 1.17
==========================================================================================================
Total from investment operations 0.34 (1.79) (1.11) 1.17
==========================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.03) --
- ----------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.02) --
==========================================================================================================
Total distributions -- -- (0.05) --
==========================================================================================================
Net asset value, end of period $ 9.41 $ 9.07 $ 10.86 $12.02
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) 3.75% (16.48)% (9.25)% 10.78%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $64,419 $63,977 $58,681 $2,815
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.11%(c) 2.02% 1.95% 1.93%(d)
- ----------------------------------------------------------------------------------------------------------
Without fee waivers 2.11%(c) 2.02% 2.04% 8.89%(d)
==========================================================================================================
Ratio of net investment income (loss) to
average net assets (0.60)%(c) (0.53)% (0.51)% (0.06)%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate(e) 12% 37% 18% 57%
__________________________________________________________________________________________________________
==========================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$64,780,456.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-9
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
-----------------------------------------------------------
AUGUST 1, 2000
SIX MONTHS YEAR ENDED (DATE SALES
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, --------------------- OCTOBER 31,
2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.07 $ 10.85 $ 12.02 $10.85
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) (0.06)(a) (0.06)(a) 0.00
- ----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.37 (1.72) (1.06) 1.17
==========================================================================================================
Total from investment operations 0.34 (1.78) (1.12) 1.17
==========================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.03) --
- ----------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.02) --
==========================================================================================================
Total distributions -- -- (0.05) --
==========================================================================================================
Net asset value, end of period $ 9.41 $ 9.07 $ 10.85 $12.02
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) 3.75% (16.41)% (9.33)% 10.78%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $22,720 $21,775 $20,680 $1,248
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.11%(c) 2.02% 1.95% 1.93%(d)
- ----------------------------------------------------------------------------------------------------------
Without fee waivers 2.11%(c) 2.02% 2.04% 8.89%(d)
==========================================================================================================
Ratio of net investment income (loss) to
average net assets (0.60)%(c) (0.53)% (0.51)% (0.06)%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate(e) 12% 37% 18% 57%
__________________________________________________________________________________________________________
==========================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$22,923,844.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-10
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS R
-----------------------------
JUNE 3, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- -------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.20 $ 11.60
- -------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.00) 0.002(a)
- -------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.37 (2.40)
===========================================================================================
Total from investment operations 0.37 (2.40)
===========================================================================================
Net asset value, end of period $ 9.57 $ 9.20
___________________________________________________________________________________________
===========================================================================================
Total return(b) 4.02% (20.69)%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 102 $ 8
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.61%(c) 1.54%(d)
- -------------------------------------------------------------------------------------------
Without fee waivers 1.61%(c) 1.54%(d)
===========================================================================================
Ratio of net investment income (loss) to average net assets (0.10)%(c) (0.05)%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate(e) 12% 37%
___________________________________________________________________________________________
===========================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $59,211.
(d) Annualized.
(e) Not annualized for periods less than one year.
NOTE 11--SUBSEQUENT EVENT
The Board of Directors of INVESCO Stock Funds, Inc. ("Seller") unanimously
approved, on June 9, 2003, an Agreement and Plan of Reorganization (the "Plan")
pursuant to which INVESCO Value Equity Fund ("Selling Fund"), a series of
Seller, would transfer all of its assets to AIM Large Cap Basic Value Fund
("Buying Fund"), a series of AIM Equity Funds ("the Reorganization"). As a
result of the Reorganization, shareholders of Selling Fund would receive shares
of Buying Fund in exchange for their shares of Selling Fund, and Selling Fund
would cease operations.
The Plan requires approval of Selling Fund shareholders and will be submitted
to the shareholders for their consideration at a meeting to be held on or around
September 25, 2003. If the Plan is approved by shareholders of Selling Fund and
certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
Effective on or about October 1, 2003, it is anticipated that Selling Fund
will be closed to new investors.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Vice President INVESTMENT ADVISOR
Bruce L. Crockett M. Carome A I M Advisors, Inc.
Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com LCBV-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM LARGE CAP CORE EQUITY FUND
(On May 2, 2003, the Fund was Renamed AIM Diversified Dividend Fund and
Some of Its Investment Policies Were Changed.)
(COVER IMAGE)
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIM Large Cap Core Equity Fund seeks
long-term growth of capital.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to persons who
have received a current prospectus of the fund.
FUND DATA
================================================================================
PORTFOLIO COMPOSITION BY SECTOR
As of 4/30/03
[PIE CHART]
HEALTH CARE 13.4%
CONSUMER DISCRETIONARY 14.4%
FINANCIALS 22.7%
OTHER 39.0%
INDUSTRIALS 10.5%
TOTAL NUMBER OF HOLDINGS* 89
TOTAL NET ASSETS $25.0 MILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
[BAR CHART]
CLASS A SHARES
Inception (12/31/01) -12.35%
1 Year -17.24
CLASS B SHARES
Inception (12/31/01) -11.84%
1 Year -17.30
CLASS C SHARES
Inception (12/31/01) -9.17%
1 Year -13.91
In addition to the fund's average annual total returns as of the close of the
reporting period shown in the table above, industry regulations require us to
provide cumulative total returns (including sales charges) as of 3/31/03, the
most recent calendar quarter-end, which were: Class A shares, inception
(12/31/01), -17.61%; one year, -24.73%. Class B shares, inception (12/31/01),
- -17.14%; one year, -24.88%. Class C shares, inception (12/31/01), -14.38%; one
year, -21.64%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 2.07%
CLASS B SHARES 1.85
CLASS C SHARES 1.73
S&P 500 INDEX (Broad Market Index) 4.47
RUSSELL 1000 INDEX (Style-Specific Index) 4.75
LIPPER LARGE-CAP CORE FUND INDEX 2.96
(Peer Group Index)
================================================================================
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
==============================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
==============================================================================================
1. General Mills, Inc. 1.9% 1. Pharmaceuticals 9.2%
2. Wyeth 1.8 2. Banks 7.9
3. Merck & Co. Inc. 1.7 3. Diversified Financial Services 7.7
4. Morgan Stanley 1.7 4. Electric Utilities 5.5
5. Johnson & Johnson 1.6 5. Integrated Oil & Gas 5.3
6. Masco Corp. 1.6 6. Property & Casualty Insurance 3.5
7. Wachovia Corp. 1.6 7. Packaged Foods & Meats 3.3
8. Bank of America Corp. 1.5 8. Health Care Equipment 2.9
9. Bard (C.R.), Inc. 1.5 9. Computer Hardware 2.6
10. Pfizer Inc. 1.5 10. Industrial Machinery 2.5
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
==============================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Effective 5/2/03, after the close of the reporting period, AIM Large Cap
Core Equity Fund was renamed AIM Diversified Dividend Fund, and some of the
fund's investment policies were changed. For more information, please
consult the fund's prospectus dated 5/2/03 that was mailed to you, or read
it online at aiminvestments.com.
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Large Cap Core Equity Fund's performance figures are historical, and
they reflect fund expenses, the reinvestment of distributions and changes in
net asset value.
o Had the advisor not waived fees and/or reimbursed expenses, returns would
have been lower.
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 share classes will differ due to different
sales charge structures and class expenses.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. Because of the fund's small asset base, any investment the
fund may make in IPOs may significantly affect the fund's total return. As
the fund's assets grow, the impact of IPO investments will decline, which
may reduce the effect of IPO investments on the fund's total return.
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.
o In the schedule of investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Large-Cap Core Fund Index represents an average of the
performance of the 30 largest large-capitalization core equity funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
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)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMinvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Large Cap Core Equity Fund for the
ROBERT H. six months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
POSITIVE as of the close of the reporting period appear on the
PERFORMANCE DURING opposite page. This letter will provide an overview of the
MARCH AND APRIL markets and your fund during the six months covered by this
2003 ENABLED report. As always, timely information about your fund and
MAJOR STOCK MARKET the markets in general is available at our Web site,
INDEXES TO POST aiminvestments.com.
GAINS FOR THE
REPORTING PERIOD. MARKET CONDITIONS
ROBERT H. GRAHAM
Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of common stocks
frequently used as a general measure of U.S. stock market performance, returned
4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Large Cap Core Equity Fund, at net asset
value, posted positive returns for the six months ended April 30, 2003. During
the course of the reporting period, fund managers J. Philip Ferguson and Meggan
M. Walsh focused on dividend-paying stocks.
As a percentage of the fund's total net assets, information technology and
consumer staples holdings declined while financials and consumer discretionary
stocks increased during the reporting period. At the close of the reporting
period, the four largest sectors in the fund's portfolio were financials, health
care, consumer discretionary, and industrials. The fund had 89 equity holdings
at the end of the reporting period compared to 73 at its outset.
IN CLOSING
I thank you for your continued participation in AIM Large Cap Core Equity Fund,
and I look forward to reporting to you again in six months. If you have any
questions, please consult your financial advisor to help you with your
investment choices. As always, members of our award-winning Client Services
department are ready to help. They can be reached at 800-959-4246.
Sincerely,
/s/ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-89.79%
ADVERTISING-1.44%
Omnicom Group Inc. 5,800 $ 359,020
=====================================================================
AEROSPACE & DEFENSE-1.24%
United Technologies Corp. 5,000 309,050
=====================================================================
APPAREL RETAIL-1.26%
Limited Brands 21,700 315,518
=====================================================================
APPLICATION SOFTWARE-0.63%
SAP A.G.-ADR (Germany) 6,200 158,162
=====================================================================
AUTO PARTS & EQUIPMENT-0.79%
Johnson Controls, Inc. 2,400 197,376
=====================================================================
BANKS-7.91%
Bank of America Corp. 5,200 385,060
- ---------------------------------------------------------------------
Cullen/Frost Bankers, Inc. 9,600 314,784
- ---------------------------------------------------------------------
FleetBoston Financial Corp. 12,700 336,804
- ---------------------------------------------------------------------
KeyCorp 13,100 315,841
- ---------------------------------------------------------------------
U.S. Bancorp 10,400 230,360
- ---------------------------------------------------------------------
Wachovia Corp. 10,300 393,563
=====================================================================
1,976,412
=====================================================================
BREWERS-1.06%
Anheuser-Busch Cos., Inc. 5,300 264,364
=====================================================================
BUILDING PRODUCTS-1.63%
Masco Corp. 19,300 406,651
=====================================================================
COMPUTER HARDWARE-2.56%
Diebold, Inc. 8,600 343,828
- ---------------------------------------------------------------------
International Business Machines Corp. 3,500 297,150
=====================================================================
640,978
=====================================================================
CONSTRUCTION MATERIALS-1.15%
Vulcan Materials Co. 8,200 286,754
=====================================================================
DATA PROCESSING SERVICES-2.48%
Automatic Data Processing, Inc. 7,600 255,588
- ---------------------------------------------------------------------
First Data Corp. 9,300 364,839
=====================================================================
620,427
=====================================================================
DEPARTMENT STORES-0.57%
Nordstrom, Inc. 8,200 142,106
=====================================================================
DIVERSIFIED CHEMICALS-2.00%
E. I. Du Pont de Nemours and Co. 6,400 272,192
- ---------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------
DIVERSIFIED CHEMICALS-(CONTINUED)
PPG Industries, Inc. 4,700 $ 227,997
=====================================================================
500,189
=====================================================================
DIVERSIFIED FINANCIAL SERVICES-6.88%
Citigroup Inc. 9,300 365,025
- ---------------------------------------------------------------------
Fannie Mae 5,100 369,189
- ---------------------------------------------------------------------
Merrill Lynch & Co., Inc. 7,700 316,085
- ---------------------------------------------------------------------
Morgan Stanley 9,700 434,075
- ---------------------------------------------------------------------
Principal Financial Group, Inc. 8,100 235,710
=====================================================================
1,720,084
=====================================================================
ELECTRIC UTILITIES-4.78%
Exelon Corp. 6,300 334,152
- ---------------------------------------------------------------------
FirstEnergy Corp. 8,900 300,197
- ---------------------------------------------------------------------
Public Service Enterprise Group Inc. 9,800 377,006
- ---------------------------------------------------------------------
Wisconsin Energy Corp. 7,000 184,310
=====================================================================
1,195,665
=====================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.85%
Emerson Electric Co. 4,200 212,940
=====================================================================
FOOTWEAR-1.26%
NIKE, Inc.-Class B 5,900 315,827
=====================================================================
GENERAL MERCHANDISE STORES-0.95%
Wal-Mart Stores, Inc. 4,200 236,544
=====================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.23%
IMS Health Inc. 19,900 306,460
=====================================================================
HEALTH CARE EQUIPMENT-2.94%
Bard (C.R.), Inc. 6,000 380,280
- ---------------------------------------------------------------------
Becton, Dickinson & Co. 10,000 354,000
=====================================================================
734,280
=====================================================================
HOME IMPROVEMENT RETAIL-0.91%
Home Depot, Inc. (The) 8,100 227,853
=====================================================================
HOTELS, RESORTS & CRUISE LINES-1.20%
Carnival Corp. (Panama) 10,900 300,731
=====================================================================
HOUSEHOLD APPLIANCES-2.19%
Black & Decker Corp. (The) 7,900 325,875
- ---------------------------------------------------------------------
Snap-on Inc. 7,500 220,125
=====================================================================
546,000
=====================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------
HOUSEHOLD PRODUCTS-2.42%
Kimberly-Clark Corp. 7,300 $ 363,321
- ---------------------------------------------------------------------
Procter & Gamble Co. (The) 2,700 242,595
=====================================================================
605,916
=====================================================================
INDUSTRIAL MACHINERY-2.51%
Dover Corp. 10,000 287,400
- ---------------------------------------------------------------------
Illinois Tool Works Inc. 5,300 339,094
=====================================================================
626,494
=====================================================================
INSURANCE BROKERS-0.99%
Marsh & McLennan Cos., Inc. 5,200 247,936
=====================================================================
INTEGRATED OIL & GAS-5.25%
BP PLC-ADR (United Kingdom) 7,500 289,050
- ---------------------------------------------------------------------
ChevronTexaco Corp. 3,100 194,711
- ---------------------------------------------------------------------
ConocoPhillips 5,700 286,710
- ---------------------------------------------------------------------
Eni S.p.A. (Italy) 19,600 279,851
- ---------------------------------------------------------------------
Total S.A. (France) 2,000 262,754
=====================================================================
1,313,076
=====================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.23%
SBC Communications Inc. 13,200 308,352
=====================================================================
LEISURE PRODUCTS-0.95%
Polaris Industries Inc. 4,500 237,915
=====================================================================
LIFE & HEALTH INSURANCE-1.09%
Prudential Financial, Inc. 8,500 271,745
=====================================================================
MULTI-LINE INSURANCE-1.04%
Hartford Financial Services Group, Inc. (The) 6,400 260,864
=====================================================================
OFFICE SERVICES & SUPPLIES-1.39%
Pitney Bowes, Inc. 9,900 347,589
=====================================================================
OIL & GAS EQUIPMENT & SERVICES-0.73%
Baker Hughes Inc. 6,500 182,000
=====================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.56%
Apache Corp. 2,460 140,835
=====================================================================
PACKAGED FOODS & MEATS-3.26%
General Mills, Inc. 10,300 464,633
- ---------------------------------------------------------------------
Kellogg Co. 3,500 114,590
- ---------------------------------------------------------------------
Sara Lee Corp. 14,000 234,920
=====================================================================
814,143
=====================================================================
PERSONAL PRODUCTS-1.20%
Avon Products, Inc. 2,800 162,876
- ---------------------------------------------------------------------
Gillette Co. (The) 4,500 137,025
=====================================================================
299,901
=====================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------
PHARMACEUTICALS-9.24%
Abbott Laboratories 7,500 $ 304,725
- ---------------------------------------------------------------------
Bristol-Myers Squibb Co. 12,400 316,696
- ---------------------------------------------------------------------
Johnson & Johnson 7,300 411,428
- ---------------------------------------------------------------------
Merck & Co. Inc. 7,500 436,350
- ---------------------------------------------------------------------
Pfizer Inc. 12,300 378,225
- ---------------------------------------------------------------------
Wyeth 10,600 461,418
=====================================================================
2,308,842
=====================================================================
PROPERTY & CASUALTY INSURANCE-3.50%
ACE Ltd. (Cayman Islands) 9,000 297,720
- ---------------------------------------------------------------------
MGIC Investment Corp. 5,900 268,214
- ---------------------------------------------------------------------
St. Paul Cos., Inc. (The) 9,000 309,060
=====================================================================
874,994
=====================================================================
RESTAURANTS-1.87%
McDonald's Corp. 9,300 159,030
- ---------------------------------------------------------------------
Outback Steakhouse, Inc. 8,600 307,364
=====================================================================
466,394
=====================================================================
SEMICONDUCTORS-2.48%
Intel Corp. 19,300 355,120
- ---------------------------------------------------------------------
Microchip Technology Inc. 5,500 114,345
- ---------------------------------------------------------------------
Texas Instruments Inc. 8,100 149,769
=====================================================================
619,234
=====================================================================
SOFT DRINKS-0.70%
Coca-Cola Co. (The) 4,300 173,720
=====================================================================
SYSTEMS SOFTWARE-1.47%
Microsoft Corp. 14,400 368,208
=====================================================================
Total Common Stocks & Other Equity
Interests (Cost $22,165,376) 22,441,549
=====================================================================
<Caption>
PRINCIPAL
AMOUNT
BONDS & NOTES-4.53%
AEROSPACE & DEFENSE-0.35%
Lockheed Martin Corp.-Series A, Medium Term
Notes, 8.66%, 11/30/06 $ 75,000 87,973
======================================================================
BROADCASTING & CABLE TV-0.97%
Clear Channel Communications, Inc., Sr.
Unsec. Notes, 7.88%, 06/15/05 50,000 55,357
- ----------------------------------------------------------------------
TCI Communications, Inc., Medium Term Notes,
8.35%, 02/15/05 100,000 108,405
- ----------------------------------------------------------------------
Turner Broadcasting System, Inc., Sr. Notes,
7.40%, 02/01/04 75,000 77,907
======================================================================
241,669
======================================================================
CONSUMER FINANCE-0.44%
Household Finance Corp., Sr. Unsec. Global
Notes, 8.00%, 05/09/05 100,000 111,411
======================================================================
</Table>
F-2
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES-0.81%
Bear Stearns, Cos. Inc. (The), Global Notes,
3.00%, 03/30/06 $100,000 $ 101,682
- ----------------------------------------------------------------------
General Electric Capital Corp.-Series A,
Medium Term Global Notes, 2.85%, 01/30/06 100,000 101,612
======================================================================
203,294
======================================================================
ELECTRIC UTILITIES-0.71%
Kansas City Power & Light Co., Sr. Unsec.
Notes, 7.13%, 12/15/05 160,000 177,342
======================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.68%
Deutsche Telekom International Finance B.V.
(Netherlands), Unsec. Gtd. Unsub. Global
Bonds, 8.25%, 06/15/05 50,000 55,499
- ----------------------------------------------------------------------
SBC Communications Capital Corp.-Series D,
Medium Term Notes, 7.11%, 08/14/06 100,000 113,676
======================================================================
169,175
======================================================================
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------
OIL & GAS EXPLORATION & PRODUCTION-0.57%
Anadarko Petroleum Corp. (Canada), Unsec.
Yankee Deb., 7.38%, 05/15/06 $125,000 $ 142,468
======================================================================
Total Bonds & Notes (Cost $1,125,153) 1,133,332
======================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-6.94%
STIC Liquid Assets Portfolio(a) 867,590 867,590
- ----------------------------------------------------------------------
STIC Prime Portfolio(a) 867,590 867,590
======================================================================
Total Money Market Funds (Cost
$1,735,180) 1,735,180
======================================================================
TOTAL INVESTMENTS-101.26% (Cost $25,025,709) 25,310,061
======================================================================
OTHER ASSETS LESS LIABILITIES-(1.26%) (315,593)
======================================================================
NET ASSETS-100.00% $24,994,468
______________________________________________________________________
======================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Deb. - Debentures
Gtd. - Guaranteed
Sr. - Senior
Unsec. - Unsecured
Unsub. - Unsubordinated
</Table>
Notes to Schedule of Investments:
(a) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$25,025,709) $25,310,061
- -----------------------------------------------------------
Receivables for:
Investments sold 44,241
- -----------------------------------------------------------
Fund shares sold 104,405
- -----------------------------------------------------------
Dividends and interest 48,090
- -----------------------------------------------------------
Investment for deferred compensation plan 3,430
- -----------------------------------------------------------
Other assets 25,544
===========================================================
Total assets 25,535,771
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased 418,559
- -----------------------------------------------------------
Fund shares reacquired 48,779
- -----------------------------------------------------------
Deferred compensation plan 3,430
- -----------------------------------------------------------
Accrued distribution fees 20,239
- -----------------------------------------------------------
Accrued trustees' fees 2,017
- -----------------------------------------------------------
Accrued transfer agent fees 18,921
- -----------------------------------------------------------
Accrued operating expenses 29,358
===========================================================
Total liabilities 541,303
===========================================================
Net assets applicable to shares outstanding $24,994,468
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $25,855,111
- -----------------------------------------------------------
Undistributed net investment income (loss) (14,614)
- -----------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (1,130,381)
- -----------------------------------------------------------
Unrealized appreciation of investment
securities 284,352
===========================================================
$24,994,468
___________________________________________________________
===========================================================
NET ASSETS:
Class A $11,486,703
___________________________________________________________
===========================================================
Class B $11,178,616
___________________________________________________________
===========================================================
Class C $ 2,329,149
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 1,292,859
___________________________________________________________
===========================================================
Class B 1,268,923
___________________________________________________________
===========================================================
Class C 264,686
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 8.88
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $8.88 divided by
94.50%) $ 9.40
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 8.81
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 8.80
___________________________________________________________
===========================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $312) $ 172,324
- ------------------------------------------------------------------------
Dividends from affiliated money market funds 16,906
- ------------------------------------------------------------------------
Interest 3,676
========================================================================
Total investment income 192,906
========================================================================
EXPENSES:
Advisory fees 73,264
- ------------------------------------------------------------------------
Administrative services fees 24,795
- ------------------------------------------------------------------------
Custodian fees 12,536
- ------------------------------------------------------------------------
Distribution fees -- Class A 15,226
- ------------------------------------------------------------------------
Distribution fees -- Class B 45,345
- ------------------------------------------------------------------------
Distribution fees -- Class C 8,837
- ------------------------------------------------------------------------
Transfer agent fees 47,123
- ------------------------------------------------------------------------
Trustees' fees 5,378
- ------------------------------------------------------------------------
Registration and filing fees 20,578
- ------------------------------------------------------------------------
Professional fees 15,231
- ------------------------------------------------------------------------
Other 9,380
========================================================================
Total expenses 277,693
========================================================================
Less: Fees waived and expenses paid indirectly (72,222)
========================================================================
Net expenses 205,471
========================================================================
Net investment income (loss) (12,565)
========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (927,266)
- ------------------------------------------------------------------------
Foreign currencies (1,876)
- ------------------------------------------------------------------------
Option contracts written 4,942
========================================================================
(924,200)
========================================================================
Change in net unrealized appreciation of investment
securities 1,505,244
========================================================================
Net gain from investment securities, foreign currencies and
option contracts 581,044
========================================================================
Net increase in net assets resulting from operations $ 568,479
________________________________________________________________________
========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the period December 31, 2001 (date
operations commenced) through October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (12,565) $ (40,975)
- ----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (924,200) (206,181)
- ----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 1,505,244 (1,220,892)
========================================================================================
Net increase (decrease) in net assets resulting from
operations 568,479 (1,468,048)
========================================================================================
Share transactions-net:
Class A 3,319,861 8,520,795
- ----------------------------------------------------------------------------------------
Class B 3,877,405 7,728,359
- ----------------------------------------------------------------------------------------
Class C 1,179,369 1,268,248
========================================================================================
Net increase in net assets resulting from share
transactions 8,376,635 17,517,402
========================================================================================
Net increase in net assets 8,945,114 16,049,354
========================================================================================
NET ASSETS:
Beginning of period 16,049,354 --
========================================================================================
End of period $24,994,468 $16,049,354
________________________________________________________________________________________
========================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Core Equity Fund (the "Fund") is a series portfolio of AIM Equity
Funds (the "Trust"). The Trust is a Delaware statutory trust registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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 primary investment objective is growth of capital with a
secondary objective of current income. Each company listed in the Schedule of
Investments is organized in the United States unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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
F-6
authorized by the Board of Trustees. Short-term obligations having 60 days
or less to maturity and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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. Premiums and
discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
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 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. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
F-7
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $1
billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1
billion of average daily net assets, plus 0.625% of the Fund's average daily net
assets in excess of $2 billion. AIM has voluntarily agreed to waive fees and/or
reimburse expenses (excluding interest, taxes, dividends on short sales,
extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A, Class B and Class C shares to the extent
necessary to limit the total annual fund operating expenses of Class A shares to
1.75%. Voluntary fee waivers or reimbursements may be rescinded, terminated or
modified at any time without further notice to investors. During periods of
voluntary fee waivers or reimbursements, to the extent that the annualized
expense ratio does not exceed the voluntary expense limit for the period, AIM
will retain its ability to be reimbursed for such fee waivers or reimbursements
prior to the end of each fiscal year. Further, AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in money market funds with cash collateral from
securities loaned by the Fund). For the six months ended April 30, 2003, AIM
waived fees of $72,073.
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, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $21,010 for such services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by any class of shares of the Fund. Pursuant to the
Plans, for the six months ended April 30, 2003, the Class A, Class B and Class C
shares paid $15,226, $45,345 and $8,837, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $9,120 in front-end sales commissions from the sale of
Class A shares and $0, $0 and $161 for Class A, Class B and Class C shares,
respectively, for CDSCs imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,241 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $139 and reductions in
custodian fees of $10 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $149.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
F-8
NOTE 6--CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- -------------------------------------------------------------------------------
Beginning of period -- $ --
- -------------------------------------------------------------------------------
Written 92 7,576
- -------------------------------------------------------------------------------
Closed (92) (7,576)
===============================================================================
End of period -- $ --
_______________________________________________________________________________
===============================================================================
</Table>
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- -------------------------------------------------------------------------------
October 31, 2010 $154,832
_______________________________________________________________________________
===============================================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $21,761,175 and $11,944,947, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $ 772,332
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (511,761)
===============================================================================
Net unrealized appreciation of investment securities $ 260,571
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $25,049,490.
</Table>
NOTE 9--SHARE INFORMATION
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 CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the period December 31, 2001 (date operations
commenced) through October 31, 2002 were as follows:
<Table>
<Caption>
DECEMBER 31, 2001
(DATE OPERATIONS
SIX MONTHS ENDED COMMENCED) TO
APRIL 30, 2003 OCTOBER 31, 2002
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------
Sold:
Class A 938,159 $ 8,060,299 1,167,599 $10,833,949
- -----------------------------------------------------------------------------------------------------------------
Class B 691,981 5,908,225 976,016 9,080,411
- -----------------------------------------------------------------------------------------------------------------
Class C 239,144 2,059,276 158,298 1,525,564
=================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 12,970 112,778 2,855 25,596
- -----------------------------------------------------------------------------------------------------------------
Class B (13,069) (112,778) (2,981) (25,596)
=================================================================================================================
Reacquired:
Class A (558,877) (4,853,216) (269,847) (2,338,750)
- -----------------------------------------------------------------------------------------------------------------
Class B (230,609) (1,918,042) (152,415) (1,326,456)
- -----------------------------------------------------------------------------------------------------------------
Class C (103,448) (879,907) (29,308) (257,316)
=================================================================================================================
976,251 $ 8,376,635 1,850,217 $17,517,402
_________________________________________________________________________________________________________________
=================================================================================================================
</Table>
F-9
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
----------------------------------
DECEMBER 31, 2001
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- -------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.70 $ 10.00
- -------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.01(a) (0.03)(a)
- -------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.17 (1.27)
===========================================================================================
Total from investment operations 0.18 (1.30)
===========================================================================================
Net asset value, end of period $ 8.88 $ 8.70
___________________________________________________________________________________________
===========================================================================================
Total return(b) 2.07% (13.00)%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,487 $ 7,834
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.74%(c) 1.75%(d)
- -------------------------------------------------------------------------------------------
Without fee waivers 2.48%(c) 4.26%(d)
===========================================================================================
Ratio of net investment income (loss) to average net
assets 0.23%(c) (0.34)%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate(e) 69% 42%
___________________________________________________________________________________________
===========================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$8,772,887.
(d) Annualized.
(e) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS B
----------------------------------
DECEMBER 31, 2001
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- -------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.65 $ 10.00
- -------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.08)(a)
- -------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.18 (1.27)
===========================================================================================
Total from investment operations 0.16 (1.35)
===========================================================================================
Net asset value, end of period $ 8.81 $ 8.65
___________________________________________________________________________________________
===========================================================================================
Total return(b) 1.85% (13.50)%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,179 $ 7,100
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.39%(c) 2.40%(d)
- -------------------------------------------------------------------------------------------
Without fee waivers 3.13%(c) 4.91%(d)
===========================================================================================
Ratio of net investment income (loss) to average net
assets (0.42)%(c) (0.99)%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate(e) 69% 42%
___________________________________________________________________________________________
===========================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$9,144,215.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-10
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
----------------------------------
DECEMBER 31, 2001
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- -------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.65 $ 10.00
- -------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) (0.08)(a)
- -------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.17 (1.27)
===========================================================================================
Total from investment operations 0.15 (1.35)
===========================================================================================
Net asset value, end of period $ 8.80 $ 8.65
___________________________________________________________________________________________
===========================================================================================
Total return(b) 1.73% (13.50)%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,329 $ 1,116
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.39%(c) 2.40%(d)
- -------------------------------------------------------------------------------------------
Without fee waivers 3.13%(c) 4.91%(d)
===========================================================================================
Ratio of net investment income (loss) to average net
assets (0.42)%(c) (0.99)%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate(e) 69% 42%
___________________________________________________________________________________________
===========================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,781,975.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. A I M Advisors, Inc.
Jack M. Fields Kevin M. Carome 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 100
Prema Mathai-Davis Houston, TX 77046
Lewis F. Pennock Gary T. Crum
Ruth H. Quigley Senior Vice President TRANSFER AGENT
Louis S. Sklar A I M Fund Services, Inc.
Dana R. Sutton P.O. Box 4739
Vice President and Treasurer Houston, TX 77210-4739
Stuart W. Coco CUSTODIAN
Vice President State Street Bank and Trust Company
225 Franklin Street
Melville B. Cox Boston, MA 02110
Vice President
COUNSEL TO THE FUND
Edgar M. Larsen Ballard Spahr
Vice President Andrews & Ingersoll, LLP
1735 Market Street
Nancy L. Martin Philadelphia, PA 19103
Secretary
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENT LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIMinvestments.com DDI-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM LARGE CAP GROWTH FUND
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.
--Servicemark--
AIM Large Cap Growth Fund seeks to provide long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80%
of its assets in securities of large-capitalization companies believed to
have the potential for above-average growth in revenues and earnings.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
PORTFOLIO COMPOSITION BY SECTOR
As of 4/30/03
[PIE CHART]
HEALTH CARE 26.7%
CASH & OTHER 4.4%
TELECOMMUNICATIONS 1.1%
INDUSTRIALS 5.2%
CONSUMER STAPLES 8.4%
CONSUMER DISCRETIONARY 14.4%
FINANCIALS 12.9%
INFORMATION TECHNOLOGY 26.9%
TOTAL NUMBER OF HOLDINGS* 83
TOTAL NET ASSETS $256.0 MILLION
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (3/01/99) -7.81%
1 Year -19.46
CLASS B SHARES
Inception (4/05/99) -10.11%
1 Year -19.56
CLASS C SHARES
Inception (4/05/99) -9.66%
1 Year -16.28
CLASS R SHARES**
Inception -6.66%
1 Year -14.80
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without sales charges. Class R shares were
first offered on June 3, 2002. Returns prior to that date are hypothetical
results based on Class A share performance at net asset value, adjusted to
reflect Class R 12b-1 fees. (The inception date of Class A shares is 3/01/99.)
Class R share returns do not include a 0.75% contingent deferred sales charge
that may be imposed on a total redemption of retirement plan assets within the
first year.
In addition to fund returns as of the close of the reporting period,
industry regulations require us to provide average annual total returns
(including sales charges) for periods ended 3/31/03, the most recent calendar
quarter-end, which were as follows. Class A shares, inception (3/01/99), -9.13%;
one year, -28.83%. Class B shares, inception (4/05/99), -11.69%; one year,
- -28.93%. Class C shares, inception (4/05/99), -11.01%; one year, -26.02%. Class
R shares, inception, -7.97%; one year, -24.70%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 1.63%
CLASS B SHARES 1.25
CLASS C SHARES 1.11
CLASS R SHARES 1.63
S&P 500 INDEX 4.47
(Broad Market Index)
RUSSELL 1000 GROWTH INDEX 4.28
(Style-Specific Index)
LIPPER LARGE-CAP GROWTH FUND INDEX 2.37
(Peer Group Index)
Source: Lipper, Inc.
* Past performance cannot guarantee comparable future results. DUE TO
SIGNIFICANT MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER
SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR
FOR MORE CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
===============================================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- -------------------------------------------------------------------------------------------------------------------------------
1. Microsoft Corp. 5.0% 1. Pharmaceuticals 12.6%
2. Johnson & Johnson 3.7 2. Systems Software 8.8
3. Pfizer Inc. 3.6 3. Health Care Equipment 7.8
4. Dell Computer Corp. 3.0 4. Semiconductors 5.4
5. Cisco Systems, Inc. 2.6 5. Diversified Financial Services 5.1
6. Procter & Gamble Co. (The) 2.3 6. Banks 5.0
7. Amgen Inc. 2.3 7. Household Products 4.8
8. SLM Corp. 2.1 8. Computer Hardware 4.2
9. Teva Pharmaceutical Industries Ltd.-ADR (Israel) 1.7 9. Specialty Stores 3.0
10. Zimmer Holdings, Inc. 1.7 10. Biotechnology 2.9
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will continue to hold any particular
security.
===============================================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o AIM Large Cap Growth Fund's performance figures are historical, and they
reflect fund expenses, 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 share classes will differ due to different
sales charge structures and class expenses.
o The fund may participate in the initial public offering (IPO) in some market
cycles. A significant portion of the fund's returns during certain periods
was attributable to its investments in IPOs. These investments have a
magnified impact when the fund's asset base is relatively small. As the
fund's assets grow, the impact of IPO investments will decline, which may
reduce the effect of IPO investments on the fund's total return. For
additional information regarding the impact of IPO investments on
performance, please see the fund's prospectus.
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.
o In the schedule of investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock-market performance.
o The unmanaged Russell 1000 Index represents the performance of stocks of
large-capitalization companies; the Growth segment measures the performance
of Russell 1000 companies with higher price/book ratios and higher
forecasted growth values.
o The unmanaged Lipper Large-Cap Growth Fund Index represents an average of
the performance of the 30 largest large-capitalization growth funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMinvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Large Cap Growth Fund for the six
ROBERT H. months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
POSITIVE opposite page. This letter will provide an overview of the
PERFORMANCE DURING markets and your fund during the six months covered by this
MARCH AND APRIL report. As always, timely information about your fund and
2003 ENABLED MAJOR the markets in general is available at our Web site,
STOCK MARKET aiminvestments.com.
INDEXES TO POST
GAINS FOR THE MARKET CONDITIONS
REPORTING PERIOD.
ROBERT H. GRAHAM Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of
common stocks frequently used as a general measure of U.S. stock market
performance, returned 4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
tele- communications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Your fund posted positive returns at net asset value for the six-month period
ended April 30, 2003. On that date the fund's largest sectors were health care,
information technology, consumer discretionary and financials.
Of the four largest sectors in the fund, three were the best-performing
sectors in the S&P 500 for the four months of 2003 that ended April 30. These
three sectors were consumer discretionary, which accounted for 14.4% of the AIM
Large Cap Growth Fund's portfolio, information technology, which composed 26.9%,
and financials, which constituted 12.9%.
Throughout the period, portfolio managers Geoff Keeling and Robert Shoss
continued to seek out market-leading companies in industries experiencing a
favorable secular trend. We encourage you to visit our Web site,
aiminvestments.com, for a wealth of information about your fund, including
regular performance updates, quarterly details of portfolio composition, and
much more. From our home page, click on Products & Performance, then Mutual
Funds, and then select the type of information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Large Cap Growth Fund, and I
look forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department are ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.65%
AEROSPACE & DEFENSE-0.63%
United Technologies Corp. 26,200 $ 1,619,422
=========================================================================
AIRLINES-0.66%
Ryanair Holdings PLC-ADR (Ireland)(a) 42,600 1,689,942
=========================================================================
APPAREL RETAIL-1.29%
Gap, Inc. (The) 99,000 1,646,370
- -------------------------------------------------------------------------
TJX Cos., Inc. (The) 86,500 1,665,125
=========================================================================
3,311,495
=========================================================================
APPLICATION SOFTWARE-0.86%
Electronic Arts Inc.(a) 37,300 2,210,771
=========================================================================
BANKS-5.04%
Bank of America Corp. 35,000 2,591,750
- -------------------------------------------------------------------------
Charter One Financial, Inc. 55,350 1,607,918
- -------------------------------------------------------------------------
First Tennessee National Corp. 50,400 2,207,520
- -------------------------------------------------------------------------
Southtrust Corp. 52,100 1,399,458
- -------------------------------------------------------------------------
U.S. Bancorp 69,900 1,548,285
- -------------------------------------------------------------------------
Washington Mutual, Inc. 51,700 2,042,150
- -------------------------------------------------------------------------
Wells Fargo & Co. 31,300 1,510,538
=========================================================================
12,907,619
=========================================================================
BIOTECHNOLOGY-2.85%
Amgen Inc.(a) 94,000 5,763,140
- -------------------------------------------------------------------------
Genentech, Inc.(a) 40,300 1,530,997
=========================================================================
7,294,137
=========================================================================
BREWERS-1.16%
Anheuser-Busch Cos., Inc. 59,500 2,967,860
=========================================================================
CASINOS & GAMBLING-1.06%
International Game Technology(a) 31,300 2,701,190
=========================================================================
CATALOG RETAIL-0.85%
USA Interactive(a) 72,500 2,171,375
=========================================================================
COMPUTER & ELECTRONICS RETAIL-0.77%
Best Buy Co., Inc.(a) 57,000 1,971,060
=========================================================================
COMPUTER HARDWARE-4.19%
Dell Computer Corp.(a) 263,900 7,629,349
- -------------------------------------------------------------------------
International Business Machines Corp. 36,500 3,098,850
=========================================================================
10,728,199
=========================================================================
COMPUTER STORAGE & PERIPHERALS-2.09%
EMC Corp.(a) 273,000 2,481,570
- -------------------------------------------------------------------------
Lexmark International, Inc.(a) 38,600 2,876,086
=========================================================================
5,357,656
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
DATA PROCESSING SERVICES-2.48%
First Data Corp. 106,600 $ 4,181,918
- -------------------------------------------------------------------------
Paychex, Inc. 69,600 2,167,344
=========================================================================
6,349,262
=========================================================================
DIVERSIFIED COMMERCIAL SERVICES-1.44%
Apollo Group, Inc.-Class A(a) 67,800 3,674,692
=========================================================================
DIVERSIFIED FINANCIAL SERVICES-5.10%
American Express Co. 57,800 2,188,308
- -------------------------------------------------------------------------
Citigroup Inc. 52,000 2,041,000
- -------------------------------------------------------------------------
Fannie Mae 28,100 2,034,159
- -------------------------------------------------------------------------
Moody's Corp. 32,000 1,545,280
- -------------------------------------------------------------------------
SLM Corp. 46,900 5,252,800
=========================================================================
13,061,547
=========================================================================
FOOTWEAR-0.80%
NIKE, Inc.-Class B 38,300 2,050,199
=========================================================================
GENERAL MERCHANDISE STORES-0.86%
Wal-Mart Stores, Inc. 39,100 2,202,112
=========================================================================
HEALTH CARE EQUIPMENT-7.79%
Becton, Dickinson & Co. 104,300 3,692,220
- -------------------------------------------------------------------------
Boston Scientific Corp.(a) 91,400 3,934,770
- -------------------------------------------------------------------------
Medtronic, Inc. 45,100 2,153,074
- -------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 60,200 3,158,092
- -------------------------------------------------------------------------
Stryker Corp. 39,600 2,653,596
- -------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 92,800 4,352,320
=========================================================================
19,944,072
=========================================================================
HEALTH CARE SUPPLIES-1.27%
Alcon, Inc. (Switzerland)(a) 73,700 3,246,485
=========================================================================
HOME IMPROVEMENT RETAIL-0.56%
Lowe's Cos., Inc. 32,700 1,435,203
=========================================================================
HOUSEHOLD PRODUCTS-4.76%
Clorox Co. (The) 66,800 3,020,696
- -------------------------------------------------------------------------
Colgate-Palmolive Co. 55,500 3,172,935
- -------------------------------------------------------------------------
Procter & Gamble Co. (The) 66,800 6,001,980
=========================================================================
12,195,611
=========================================================================
HOUSEWARES & SPECIALTIES-0.73%
Fortune Brands, Inc. 38,600 1,868,240
=========================================================================
INTERNET RETAIL-2.23%
Amazon.com, Inc.(a) 88,600 2,540,162
- -------------------------------------------------------------------------
eBay Inc.(a) 34,300 3,182,011
=========================================================================
5,722,173
=========================================================================
INTERNET SOFTWARE & SERVICES-0.93%
Yahoo! Inc.(a) 95,900 2,376,402
=========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
LEISURE PRODUCTS-1.13%
Mattel, Inc. 132,800 $ 2,887,072
=========================================================================
LIFE & HEALTH INSURANCE-1.29%
AFLAC Inc. 100,700 3,293,897
=========================================================================
MANAGED HEALTH CARE-2.19%
Anthem, Inc.(a) 23,200 1,592,448
- -------------------------------------------------------------------------
UnitedHealth Group Inc. 43,600 4,016,868
=========================================================================
5,609,316
=========================================================================
MOVIES & ENTERTAINMENT-0.62%
Fox Entertainment Group, Inc.-Class A(a) 62,200 1,579,880
=========================================================================
NETWORKING EQUIPMENT-2.60%
Cisco Systems, Inc.(a) 442,200 6,650,688
=========================================================================
OFFICE ELECTRONICS-0.81%
Canon Inc. (Japan) 51,000 2,067,712
=========================================================================
PERSONAL PRODUCTS-1.26%
Avon Products, Inc. 55,300 3,216,801
=========================================================================
PHARMACEUTICALS-12.63%
Allergan, Inc. 49,000 3,442,250
- -------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 31,000 1,603,320
- -------------------------------------------------------------------------
Johnson & Johnson 167,900 9,462,844
- -------------------------------------------------------------------------
Mylan Laboratories Inc. 69,900 1,976,073
- -------------------------------------------------------------------------
Pfizer Inc. 299,300 9,203,475
- -------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 94,000 4,389,800
- -------------------------------------------------------------------------
Wyeth 52,000 2,263,560
=========================================================================
32,341,322
=========================================================================
PROPERTY & CASUALTY INSURANCE-1.51%
Ambac Financial Group, Inc. 32,400 1,890,540
- -------------------------------------------------------------------------
Progressive Corp. (The) 29,200 1,985,600
=========================================================================
3,876,140
=========================================================================
RESTAURANTS-0.55%
Starbucks Corp.(a) 59,500 1,397,655
=========================================================================
SEMICONDUCTOR EQUIPMENT-0.56%
Applied Materials, Inc.(a) 99,000 1,445,400
=========================================================================
SEMICONDUCTORS-5.39%
Altera Corp.(a) 135,800 2,146,998
- -------------------------------------------------------------------------
Analog Devices, Inc.(a) 58,400 1,934,208
- -------------------------------------------------------------------------
Intel Corp. 102,000 1,876,800
- -------------------------------------------------------------------------
Linear Technology Corp. 105,900 3,650,373
- -------------------------------------------------------------------------
Texas Instruments Inc. 53,100 981,819
- -------------------------------------------------------------------------
Xilinx, Inc.(a) 118,800 3,215,916
=========================================================================
13,806,114
=========================================================================
SOFT DRINKS-1.23%
PepsiCo, Inc. 73,000 3,159,440
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
SPECIALTY STORES-2.96%
AutoZone, Inc.(a) 30,300 $ 2,448,543
- -------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 38,500 1,521,135
- -------------------------------------------------------------------------
Staples, Inc.(a) 189,800 3,613,792
=========================================================================
7,583,470
=========================================================================
SYSTEMS SOFTWARE-8.79%
Adobe Systems Inc. 57,500 1,987,200
- -------------------------------------------------------------------------
Microsoft Corp. 500,600 12,800,342
- -------------------------------------------------------------------------
Oracle Corp.(a) 355,600 4,224,528
- -------------------------------------------------------------------------
Symantec Corp.(a) 44,900 1,973,355
- -------------------------------------------------------------------------
VERITAS Software Corp.(a) 69,000 1,518,690
=========================================================================
22,504,115
=========================================================================
TELECOMMUNICATIONS EQUIPMENT-0.65%
Nokia Oyj-ADR (Finland) 100,000 1,657,000
=========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.08%
Nextel Communications, Inc.-Class A(a) 186,400 2,756,856
=========================================================================
Total Common Stocks & Other Equity Interests
(Cost $226,876,550) 244,889,602
=========================================================================
MONEY MARKET FUNDS-3.84%
STIC Liquid Assets Portfolio(b) 4,912,665 4,912,665
- -------------------------------------------------------------------------
STIC Prime Portfolio(b) 4,912,665 4,912,665
=========================================================================
Total Money Market Funds (Cost
$9,825,330) 9,825,330
=========================================================================
TOTAL INVESTMENTS-99.49% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $236,701,880) 254,714,932
=========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-4.84%
STIC Liquid Assets Portfolio (b)(c) 12,397,069 12,397,069
=========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $12,397,069) 12,397,069
=========================================================================
TOTAL INVESTMENTS-104.33% (Cost $249,098,949) 267,112,001
=========================================================================
OTHER ASSETS LESS LIABILITIES-(4.33%) (11,084,971)
=========================================================================
NET ASSETS-100.00% $256,027,030
_________________________________________________________________________
=========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
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.
(c) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-2
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$249,098,949)* $ 267,112,001
- ------------------------------------------------------------
Foreign currencies, at value (cost $74) 78
- ------------------------------------------------------------
Receivables for:
Investments sold 9,270,283
- ------------------------------------------------------------
Fund shares sold 885,394
- ------------------------------------------------------------
Dividends 114,490
- ------------------------------------------------------------
Investment for deferred compensation plan 20,227
- ------------------------------------------------------------
Other assets 27,047
============================================================
Total assets 277,429,520
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 7,951,836
- ------------------------------------------------------------
Fund shares reacquired 551,821
- ------------------------------------------------------------
Deferred compensation plan 20,227
- ------------------------------------------------------------
Collateral upon return of securities loaned 12,397,069
- ------------------------------------------------------------
Accrued distribution fees 207,508
- ------------------------------------------------------------
Accrued trustees' fees 848
- ------------------------------------------------------------
Accrued transfer agent fees 199,222
- ------------------------------------------------------------
Accrued operating expenses 73,959
============================================================
Total liabilities 21,402,490
============================================================
Net assets applicable to shares outstanding $ 256,027,030
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 646,940,668
- ------------------------------------------------------------
Undistributed net investment income (loss) (1,702,644)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and futures contracts (407,224,443)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 18,013,449
============================================================
$ 256,027,030
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 113,361,183
____________________________________________________________
============================================================
Class B $ 105,786,416
____________________________________________________________
============================================================
Class C $ 36,086,004
____________________________________________________________
============================================================
Class R $ 793,427
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 15,143,765
____________________________________________________________
============================================================
Class B 14,520,472
____________________________________________________________
============================================================
Class C 4,950,139
____________________________________________________________
============================================================
Class R 105,949
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 7.49
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $7.49 divided by
94.50%) $ 7.93
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 7.29
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 7.29
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 7.49
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $11,793,927
were on loan to brokers.
See Notes to Financial Statements.
F-3
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $6,703) $ 965,050
- --------------------------------------------------------------------------
Dividends from affiliated money market funds 50,960
- --------------------------------------------------------------------------
Interest 6,517
- --------------------------------------------------------------------------
Security lending income 2,496
==========================================================================
Total investment income 1,025,023
==========================================================================
EXPENSES:
Advisory fees 888,019
- --------------------------------------------------------------------------
Administrative services fees 24,795
- --------------------------------------------------------------------------
Custodian fees 26,968
- --------------------------------------------------------------------------
Distribution fees -- Class A 179,139
- --------------------------------------------------------------------------
Distribution fees -- Class B 497,663
- --------------------------------------------------------------------------
Distribution fees -- Class C 172,521
- --------------------------------------------------------------------------
Distribution fees -- Class R 1,008
- --------------------------------------------------------------------------
Transfer agent fees 784,492
- --------------------------------------------------------------------------
Trustees' fees 4,961
- --------------------------------------------------------------------------
Other 125,546
==========================================================================
Total expenses 2,705,112
==========================================================================
Less: Fees waived and expenses paid indirectly (2,852)
==========================================================================
Net expenses 2,702,260
==========================================================================
Net investment income (loss) (1,677,237)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (16,312,113)
- --------------------------------------------------------------------------
Foreign currencies (23,083)
- --------------------------------------------------------------------------
Futures contracts (254,779)
==========================================================================
(16,589,975)
==========================================================================
Change in net unrealized appreciation of:
Investment securities 21,458,304
- --------------------------------------------------------------------------
Foreign currencies 249
==========================================================================
21,458,553
==========================================================================
Net gain from investment securities, foreign currencies and
futures contracts 4,868,578
==========================================================================
Net increase in net assets resulting from operations $ 3,191,341
__________________________________________________________________________
==========================================================================
</Table>
See Notes to Financial Statements.
F-4
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,677,237) $ (4,375,738)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (16,589,975) (87,652,595)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, and foreign currencies 21,458,553 38,162,681
============================================================================================
Net increase (decrease) in net assets resulting from
operations 3,191,341 (53,865,652)
============================================================================================
Share transactions-net:
Class A 6,282,338 (10,042,539)
- --------------------------------------------------------------------------------------------
Class B 717,463 (18,237,379)
- --------------------------------------------------------------------------------------------
Class C (860,308) (12,801,049)
- --------------------------------------------------------------------------------------------
Class R 751,840 10,502
============================================================================================
Net increase (decrease) in net assets resulting from
share transactions 6,891,333 (41,070,465)
============================================================================================
Net increase (decrease) in net assets 10,082,674 (94,936,117)
============================================================================================
NET ASSETS:
Beginning of period 245,944,356 340,880,473
============================================================================================
End of period $ 256,027,030 $ 245,944,356
____________________________________________________________________________________________
============================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Large Cap Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper are valued at
F-5
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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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. The combined results of changes in foreign exchange rates
and the fluctuation of market prices on investments are included with the
net realized and unrealized gain or loss from investments in the Statement
of Operations.
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 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. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
H. PUT OPTIONS -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
Fund to hedge securities it owns by locking in a minimum price at which the
Fund can sell. If security prices fall, the put option could be exercised
to offset all or a portion of the Fund's resulting losses. At the same
time, because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged. A risk in
buying an option is that the Fund pays a premium whether or not the option
is exercised. In addition, there can be no assurance that a liquid
secondary market will exist for any option purchased or sold.
I. 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.
F-6
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 also include to varying degrees, the risk of loss in
excess of the variation margin disclosed in the Statement of Assets and
Liabilities.
J. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $1 billion of the Fund's average daily net assets, plus 0.70% over $1
billion to and including $2 billion of the Fund's average daily net assets and
0.625% of the Fund's average daily net assets over $2 billion. AIM has
voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of
the advisory fee AIM receives from the affiliated money market funds in which
the Fund has invested (excluding investments made in money market funds with
cash collateral from securities loaned by the Fund). For the six months ended
April 30, 2003, AIM waived fees of $1,042.
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, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $399,842 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and Class R shares of the Fund. The Trust has adopted
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares, Class B shares, Class C shares and Class R 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, 1.00% of the average daily net assets of Class B and Class C shares and
0.50% of the average daily net assets of Class R 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, Class C or Class R 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. NASD Rules also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the six months ended April 30,
2003, the Class A, Class B, Class C and Class R shares paid $179,139, $497,663,
$172,521 and $1,008, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $31,140 in front-end sales commissions from the sale of
Class A shares and $381, $69, $2,250 and $0 for Class A, Class B, Class C and
Class R shares, respectively, for CDSCs imposed upon redemptions by
shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,448 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $1,810 under an expense
offset arrangement which resulted in a reduction of the Fund's total expenses of
$1,810.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such
F-7
collateral will be cash or debt securities issued or guaranteed by the U.S.
Government or any of its agencies. Cash collateral pursuant to these loans is
invested in short-term money market instruments or affiliated money market
funds. Lending securities entails a risk of loss to the Fund if and to the
extent that the market value of the securities loaned were to increase and the
borrower did not increase the collateral accordingly, and the borrower fails to
return the securities. It is the Fund's policy to obtain additional collateral
from or return excess collateral to the borrower by the end of the next business
day following the valuation date of securities loaned. Therefore, the value of
the collateral may be temporarily less than the value of the securities on loan.
At April 30, 2003, securities with an aggregate value of $11,793,927 were on
loan to brokers. The loans were secured by cash collateral of $12,397,069
received by the Fund and subsequently invested in an affiliated money market
fund. For the six months ended April 30, 2003, the Fund received fees of $2,496
for securities lending.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------------
October 31, 2007 $ 380,100
- ----------------------------------------------------------
October 31, 2008 27,182,658
- ----------------------------------------------------------
October 31, 2009 267,323,492
- ----------------------------------------------------------
October 31, 2010 94,116,910
==========================================================
Total capital loss carryforward $389,003,160
__________________________________________________________
==========================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $131,201,580 and $130,646,261, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $26,536,461
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (8,722,374)
===========================================================
Net unrealized appreciation of investment
securities $17,814,087
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $249,297,914.
</Table>
NOTE 9--SHARE INFORMATION
The Fund currently offers four different classes of shares: Class A shares,
Class B shares, Class C shares and Class R shares. Class A shares are sold with
a front-end sales charge. Class B shares and Class C shares are sold with a
CDSC. Under some circumstances, Class A shares and Class R shares are subject to
CDSCs. Class R shares are sold at net asset value. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in shares outstanding during the six months
ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 3,725,939 $ 26,619,797 5,159,669 $ 44,948,977
- ----------------------------------------------------------------------------------------------------------------------
Class B 2,428,450 17,064,572 3,444,001 28,987,280
- ----------------------------------------------------------------------------------------------------------------------
Class C 1,144,140 7,982,131 1,465,202 12,332,848
- ----------------------------------------------------------------------------------------------------------------------
Class R* 109,815 789,275 1,259 10,502
======================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 70,696 504,974 136,498 1,177,906
- ----------------------------------------------------------------------------------------------------------------------
Class B (72,526) (504,974) (139,167) (1,177,906)
======================================================================================================================
Reacquired:
Class A (2,934,805) (20,842,433) (6,691,678) (56,169,422)
- ----------------------------------------------------------------------------------------------------------------------
Class B (2,284,123) (15,842,135) (5,553,485) (46,046,753)
- ----------------------------------------------------------------------------------------------------------------------
Class C (1,270,180) (8,842,439) (3,059,594) (25,133,897)
- ----------------------------------------------------------------------------------------------------------------------
Class R* (5,125) (37,435) -- --
======================================================================================================================
912,281 $ 6,891,333 (5,237,295) $(41,070,465)
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
F-8
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
------------------------------------------------------------------------------
MARCH 1, 1999
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.37 $ 8.82 $ 17.74 $ 11.29 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.09)(a) (0.08)(a) (0.15)(a) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 0.16 (1.36) (8.84) 6.60 1.33
=================================================================================================================================
Total from investment operations 0.12 (1.45) (8.92) 6.45 1.29
=================================================================================================================================
Net asset value, end of period $ 7.49 $ 7.37 $ 8.82 $ 17.74 $11.29
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.63% (16.44)% (50.28)% 57.13% 13.70%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $113,361 $105,320 $138,269 $225,255 $7,785
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 1.92%(c) 1.70% 1.57% 1.58% 1.53%(d)(e)
=================================================================================================================================
Ratio of net investment income (loss) to average
net assets (1.05)%(c) (1.01)% (0.72)% (0.82)% (0.59)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 57% 111% 124% 113% 21%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$103,213,331.
(d) Annualized.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 3.63% (annualized).
(f) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS B
---------------------------------------------------------------------------
APRIL 5, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.20 $ 8.67 $ 17.54 $ 11.25 $11.02
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.14)(a) (0.16)(a) (0.27)(a) (0.08)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 0.15 (1.33) (8.71) 6.56 0.31
=================================================================================================================================
Total from investment operations 0.09 (1.47) (8.87) 6.29 0.23
=================================================================================================================================
Net asset value, end of period $ 7.29 $ 7.20 $ 8.67 $ 17.54 $11.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.25% (16.96)% (50.57)% 55.91% 2.09%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $105,786 $104,040 $144,747 $210,224 $5,183
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.57%(c) 2.35% 2.23% 2.24% 2.23%(d)(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.70)%(c) (1.66)% (1.39)% (1.48)% (1.29)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 57% 111% 124% 113% 21%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$100,357,546.
(d) Annualized.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 4.33% (annualized).
(f) Not annualized for periods less than one year.
F-9
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
------------------------------------------------------------------------
APRIL 5, 1999
SIX MONTHS (DATE SALES
ENDED YEAR ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, ----------------------------------- OCTOBER 31,
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.21 $ 8.67 $ 17.55 $ 11.25 $11.02
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.14)(a) (0.16)(a) (0.27)(a) (0.08)(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.14 (1.32) (8.72) 6.57 0.31
=================================================================================================================================
Total from investment operations 0.08 (1.46) (8.88) 6.30 0.23
=================================================================================================================================
Net asset value, end of period $ 7.29 $ 7.21 $ 8.67 $ 17.55 $11.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 1.11% (16.84)% (50.60)% 56.00% 2.09%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,086 $36,575 $57,865 $79,392 $ 901
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 2.57%(c) 2.35% 2.23% 2.24% 2.23%(d)(e)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.70)%(c) (1.66)% (1.39)% (1.48)% (1.29)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(f) 57% 111% 124% 113% 21%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$34,790,201.
(d) Annualized.
(e) After fee waivers. Ratio of expenses to average net assets prior to fee
waivers was 4.33% (annualized).
(f) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS R
------------------------------
JUNE 3, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.37 $ 8.40
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.04)(a)
- --------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.16 (0.99)
============================================================================================
Total from investment operations 0.12 (1.03)
============================================================================================
Net asset value, end of period $ 7.49 $ 7.37
____________________________________________________________________________________________
============================================================================================
Total return(b) 1.63% (12.26)%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 793 $ 9
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets 2.07%(c) 1.85%(d)
============================================================================================
Ratio of net investment income (loss) to average net assets (1.20)%(c) (1.16)%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate(e) 57% 111%
____________________________________________________________________________________________
============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $406,363.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-10
NOTE 11--SUBSEQUENT EVENT
The Board of Directors of INVESCO Stock Funds, Inc. ("Seller") unanimously
approved, on June 9, 2003, an Agreement and Plan of Reorganization (the "Plan")
pursuant to which INVESCO Growth Fund ("Selling Fund"), a series of Seller,
would transfer all of its assets to AIM Large Cap Growth Fund ("Buying Fund"), a
series of AIM Equity Funds ("the Reorganization"). As a result of the
Reorganization, shareholders of Selling Fund would receive shares of Buying Fund
in exchange for their shares of Selling Fund, and Selling Fund would cease
operations.
The Plan requires approval of Selling Fund shareholders and will be submitted
to the shareholders for their consideration at a meeting to be held on or around
September 25, 2003. If the Plan is approved by shareholders of Selling Fund and
certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
Effective on or about October 1, 2003, it is anticipated that Selling Fund
will be closed to new investors.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. A I M Advisors, Inc.
Jack M. Fields Kevin M. Carome 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 100
Prema Mathai-Davis Houston, TX 77046
Lewis F. Pennock Gary T. Crum
Ruth H. Quigley Senior Vice President TRANSFER AGENT
Louis S. Sklar A I M Fund Services, Inc.
Dana R. Sutton P.O. Box 4739
Vice President and Treasurer Houston, TX 77210-4739
Stuart W. Coco CUSTODIAN
Vice President State Street Bank and Trust Company
225 Franklin Street
Melville B. Cox Boston, MA 02110
Vice President
COUNSEL TO THE FUND
Edgar M. Larsen Ballard Spahr
Vice President Andrews & Ingersoll, LLP
1735 Market Street
Nancy L. Martin Philadelphia, PA 19103
Secretary
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund SECTOR EQUITY
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges
and expenses, ask your financial advisor for a prospectus. Please read it
carefully before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
AIMinvestment.com LCG-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM MID CAP GROWTH FUND
AIM Mid Cap Growth Fund seeks long-term growth of capital by
investing in medium-sized companies that management
believes have the potential for long-term earnings growth well in
excess of the general economy.
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
Your goals. Our solutions.
--Servicemark--
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
CLASS A SHARES VS. INDEX
CUMULATIVE TOTAL RETURNS
10/31/02-4/30/03, excluding sales charges
- --------------------------------------------------------------------------------
[BAR CHART]
CLASS A SHARES 6.72%
LIPPER MID-CAP GROWTH
FUND INDEX 4.94%
TOTAL NUMBER OF HOLDINGS* 116
TOTAL NET ASSETS $147.6 million
Source: Lipper, Inc.
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
- --------------------------------------------------------------------------------
CLASS A SHARES
Inception (11/01/99) -11.18%
1 Year -27.56
CLASS B SHARES
Inception (11/01/99) -11.18%
1 Year -27.71
CLASS C SHARES
Inception (11/01/99) -10.37%
1 Year -24.56
CLASS R SHARES**
Inception -9.91%
1 Year -23.59
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without sales charges. Class R shares were
first offered on June 3, 2002. Returns prior to that date are hypothetical
results based on Class A share performance at net asset value, adjusted to
reflect Class R 12b-1 fees. (The inception date of Class A shares is 11/01/99).
Class R share returns do not include a 0.75% contingent deferred sales charge
that may be imposed on a total redemption of retirement plan assets within the
first year.
In addition to returns as of the close of the fiscal year period, industry
regulations require us to provide average annual total returns (including sales
charges) as of 3/31/03, the most recent calendar quarter-end, which were: Class
A shares, inception (11/01/99), -13.03%; one year,-33.50%. Class B shares,
inception (11/01/99), -12.99%; one year, -33.59%. Class C shares, inception
(11/01/99), -12.17%; one year, -30.69%. Class R shares, inception, -11.72%; one
year, -29.78%.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 6.72%
CLASS B SHARES 6.24
CLASS C SHARES 6.40
CLASS R SHARES 6.57
S&P 500 INDEX 4.47
(Broad Market Index)
RUSSELL MIDCAP GROWTH INDEX 8.19
(Style-Specific Index)
LIPPER MID-CAP GROWTH FUND INDEX 4.94
(Peer Group Index)
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
================================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ------------------------------------------------------------------------------------------------
1. UTStarcom, Inc. 2.2% 1. Health Care Distributors & Services 8.8%
2. Express Scripts, Inc. 2.0 2. Managed Health Care 4.6
3. Anthem, Inc. 1.9 3. IT Consulting & Services 4.4
4. SunGard Data Systems Inc. 1.8 4. Oil & Gas Drilling 4.2
5. CDW Computer Centers, Inc. 1.7 5. Data Processing Services 3.8
6. Robert Half International Inc. 1.6 6. Specialty Stores 3.3
7. Lamar Advertising Co. 1.6 7. Apparel Retail 3.2
8. BISYS Group, Inc. (The) 1.4 8. Health Care Facilities 3.1
9. Community Health Systems Inc. 1.4 9. Health Care Equipment 2.9
10. McKesson Corp. 1.3 10. Computer & Electronics Retail 2.7
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the
fund will continue to hold any particular security.
================================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective May 1, 2003, after the close of the reporting period, the
portfolio management team of AIM Mid Cap Growth Fund is as follows: Karl F.
Farmer and Jay K. Rushin.
o AIM Mid Cap Growth Fund's performance figures are historical, and they
reflect fund expenses, 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 share classes will differ due to different
sales-charge structure and class expenses.
o The fund may participate in the initial public offering (IPO) market in some
market cycles. Because of the fund's small asset base, any investment the
fund may make in IPOs may significantly affect the fund's total return. As
the fund's assets grow, the impact of IPO investments will decline, which
may reduce the effect of IPO investments on the fund's total return.
o Investing in small and mid-sized companies may involve greater risk and
potential reward than investing in more established companies. Also, small
companies may have business risk, significant stock-price fluctuations and
illiquidity.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International, Inc. and Standard & Poor's.
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 Lipper Mid-Cap Growth Fund Index represents an average of the
performance of the 30 largest mid-capitalization growth funds, tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell Midcap Index measures the performance of the 800
smallest companies in the Russell 1000 Index, which represent approximately
25% of the total market capitalization of the Russell 1000 Index; the Growth
segment measures the performance of those Russell Midcap companies with
higher price-to-book ratios and higher forecasted growth values.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
For more information, please visit aiminvestments.com.
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Mid Cap Growth Fund for the six
ROBERT H. months ended April 30, 2003. You will note that we have
GRAHAM] adopted a more concise format for our semiannual reports.
Important information such as top holdings and performance
as of the close of the reporting period appear on the
opposite page. This letter will provide an overview of the
POSITIVE PERFORMANCE markets and your fund during the six months covered by this
DURING MARCH AND report. As always, timely information about your fund and
APRIL 2003 ENABLED the markets in general is available at our Web site,
MAJOR STOCK MARKET aiminvestments.com.
INDEXES TO POST
GAINS FOR THE MARKET CONDITIONS
REPORTING PERIOD.
ROBERT H. GRAHAM Positive performance during March and April 2003 enabled
major stock market indexes to post gains for the reporting
period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of
common stocks frequently used as a general measure of U.S.
stock market performance, returned 4.47% for the six months
ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed
the growth investment style during the six-month reporting period. For example,
the Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Mid Cap Growth Fund, at net asset value,
posted positive returns for the six months ended April 30, 2003. Throughout the
reporting period, fund managers Ryan E. Crane, Robert M. Kippes, Jay K. Rushin
and Kenneth A. Zschappel sought to identify the stocks of companies that they
believe have the potential for above-average growth in earnings.
At the close of the reporting period, the three largest sector weightings in
the fund's portfolio were health care, consumer discretionary and industrials.
Keep in mind that fund managers focus on individual companies rather than
particular industries or sectors.
IN CLOSING
I thank you for your continued participation in AIM Mid Cap Growth Fund, and I
look forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department are ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-89.77%
ADVERTISING-2.42%
Lamar Advertising Co.(a) 65,000 $ 2,334,800
- -------------------------------------------------------------------------
Omnicom Group Inc. 20,000 1,238,000
=========================================================================
3,572,800
=========================================================================
AEROSPACE & DEFENSE-2.36%
Alliant Techsystems Inc.(a) 30,000 1,611,600
- -------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 42,000 1,864,800
=========================================================================
3,476,400
=========================================================================
AGRICULTURAL PRODUCTS-0.32%
Fresh Del Monte Produce Inc. (Cayman Islands) 24,000 467,520
=========================================================================
AIR FREIGHT & LOGISTICS-0.50%
Ryder System, Inc. 30,000 745,200
=========================================================================
AIRLINES-0.43%
Ryanair Holdings PLC-ADR (Ireland)(a) 8,000 317,360
- -------------------------------------------------------------------------
Southwest Airlines Co. 20,000 319,200
=========================================================================
636,560
=========================================================================
APPAREL RETAIL-3.22%
Abercrombie & Fitch Co.-Class A(a) 30,000 986,400
- -------------------------------------------------------------------------
AnnTaylor Stores Corp.(a) 50,000 1,183,000
- -------------------------------------------------------------------------
Limited Brands 85,000 1,235,900
- -------------------------------------------------------------------------
TJX Cos., Inc. (The) 70,000 1,347,500
=========================================================================
4,752,800
=========================================================================
APPLICATION SOFTWARE-1.05%
Intuit Inc.(a) 40,000 1,551,200
=========================================================================
AUTO PARTS & EQUIPMENT-0.72%
Gentex Corp.(a) 35,000 1,057,000
=========================================================================
BANKS-1.87%
Comerica Inc. 16,000 696,160
- -------------------------------------------------------------------------
Commerce Bancorp, Inc. 25,000 1,016,750
- -------------------------------------------------------------------------
New York Community Bancorp, Inc. 30,000 1,041,600
=========================================================================
2,754,510
=========================================================================
BREWERS-0.54%
Coors (Adolph) Co.-Class B 15,000 802,950
=========================================================================
BROADCASTING & CABLE TV-1.81%
Cox Radio, Inc.-Class A(a) 30,000 684,300
- -------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 60,000 1,539,000
- -------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
BROADCASTING & CABLE TV-(CONTINUED)
Univision Communications Inc.-Class A(a) 15,000 454,200
=========================================================================
2,677,500
=========================================================================
BUILDING PRODUCTS-0.57%
Masco Corp. 40,000 $ 842,800
=========================================================================
COMPUTER & ELECTRONICS RETAIL-2.67%
Best Buy Co., Inc.(a) 40,000 1,383,200
- -------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 60,000 2,558,400
=========================================================================
3,941,600
=========================================================================
COMPUTER HARDWARE-0.34%
Apple Computer, Inc.(a) 35,000 497,000
=========================================================================
CONSTRUCTION & ENGINEERING-0.42%
Jacobs Engineering Group Inc.(a) 15,000 617,250
=========================================================================
CONSTRUCTION, FARM MACHINERY & HEAVY
TRUCKS-0.74%
AGCO Corp.(a) 60,000 1,092,600
=========================================================================
DATA PROCESSING SERVICES-3.79%
BISYS Group, Inc. (The)(a) 125,000 2,110,000
- -------------------------------------------------------------------------
DST Systems, Inc.(a) 50,000 1,535,000
- -------------------------------------------------------------------------
Fiserv, Inc.(a) 40,000 1,177,600
- -------------------------------------------------------------------------
Paychex, Inc. 25,000 778,500
=========================================================================
5,601,100
=========================================================================
DIVERSIFIED COMMERCIAL SERVICES-0.98%
Cintas Corp. 25,000 897,500
- -------------------------------------------------------------------------
FTI Consulting, Inc.(a) 12,000 543,000
=========================================================================
1,440,500
=========================================================================
DIVERSIFIED FINANCIAL SERVICES-1.11%
Investors Financial Services Corp. 75,000 1,635,750
=========================================================================
DRUG RETAIL-0.90%
CVS Corp. 55,000 1,331,550
=========================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS-1.71%
Celestica Inc. (Canada)(a) 50,000 578,000
- -------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 60,000 750,000
- -------------------------------------------------------------------------
Waters Corp.(a) 50,000 1,200,500
=========================================================================
2,528,500
=========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
EMPLOYMENT SERVICES-2.40%
Manpower Inc. 36,000 $ 1,183,680
- -------------------------------------------------------------------------
Robert Half International Inc.(a) 145,000 2,360,600
=========================================================================
3,544,280
=========================================================================
FOOD DISTRIBUTORS-0.39%
SUPERVALU INC. 35,000 576,450
=========================================================================
GENERAL MERCHANDISE STORES-1.21%
Dollar Tree Stores, Inc.(a) 70,000 1,781,500
=========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-8.80%
Accredo Health, Inc.(a) 35,000 516,950
- -------------------------------------------------------------------------
AmerisourceBergen Corp. 30,000 1,735,500
- -------------------------------------------------------------------------
AMN Healthcare Services, Inc.(a) 55,000 500,500
- -------------------------------------------------------------------------
Caremark Rx, Inc.(a) 60,000 1,194,600
- -------------------------------------------------------------------------
Express Scripts, Inc.(a) 50,000 2,948,000
- -------------------------------------------------------------------------
Henry Schein, Inc.(a) 13,000 560,950
- -------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 35,000 1,031,100
- -------------------------------------------------------------------------
Lincare Holdings Inc.(a) 30,000 911,100
- -------------------------------------------------------------------------
McKesson Corp. 70,000 1,941,800
- -------------------------------------------------------------------------
Omnicare, Inc. 20,000 530,400
- -------------------------------------------------------------------------
Patterson Dental Co.(a) 10,000 401,700
- -------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 12,000 717,000
=========================================================================
12,989,600
=========================================================================
HEALTH CARE EQUIPMENT-2.94%
Apogent Technologies Inc.(a) 80,000 1,374,400
- -------------------------------------------------------------------------
Baxter International Inc. 25,000 575,000
- -------------------------------------------------------------------------
Beckman Coulter, Inc. 12,000 466,440
- -------------------------------------------------------------------------
Fisher Scientific International Inc.(a) 67,000 1,930,270
=========================================================================
4,346,110
=========================================================================
HEALTH CARE FACILITIES-3.10%
Community Health Systems Inc.(a) 110,000 2,090,000
- -------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 42,900 731,874
- -------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 80,000 1,760,800
=========================================================================
4,582,674
=========================================================================
HOTELS, RESORTS & CRUISE LINES-1.56%
Carnival Corp. (Panama) 35,000 965,650
- -------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 50,000 1,342,000
=========================================================================
2,307,650
=========================================================================
INDUSTRIAL MACHINERY-2.37%
Danaher Corp. 20,000 1,379,600
- -------------------------------------------------------------------------
Parker-Hannifin Corp. 25,000 1,017,000
- -------------------------------------------------------------------------
SPX Corp.(a) 32,500 1,098,500
=========================================================================
3,495,100
=========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
INSURANCE BROKERS-1.06%
Willis Group Holdings Ltd. (Bermuda) 50,000 $ 1,559,500
=========================================================================
IT CONSULTING & SERVICES-4.38%
Accenture Ltd.-Class A (Bermuda)(a) 65,000 1,041,300
- -------------------------------------------------------------------------
Affiliated Computer Services, Inc.-Class A(a) 40,000 1,908,000
- -------------------------------------------------------------------------
Cognizant Technology Solutions Corp.(a) 46,000 826,160
- -------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 125,000 2,687,500
=========================================================================
6,462,960
=========================================================================
MANAGED HEALTH CARE-4.57%
Aetna Inc. 15,000 747,000
- -------------------------------------------------------------------------
Anthem, Inc.(a) 41,000 2,814,240
- -------------------------------------------------------------------------
First Health Group Corp.(a) 40,000 1,002,000
- -------------------------------------------------------------------------
Humana Inc.(a) 75,000 828,750
- -------------------------------------------------------------------------
WellChoice Inc.(a) 28,000 596,400
- -------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 10,000 759,400
=========================================================================
6,747,790
=========================================================================
MOVIES & ENTERTAINMENT-0.27%
Regal Entertainment Group-Class A 20,000 392,000
=========================================================================
MULTI-LINE INSURANCE-0.75%
HCC Insurance Holdings, Inc. 40,000 1,100,000
=========================================================================
OIL & GAS DRILLING-4.24%
ENSCO International Inc. 70,000 1,778,000
- -------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 15,000 588,000
- -------------------------------------------------------------------------
National-Oilwell, Inc.(a) 75,000 1,574,250
- -------------------------------------------------------------------------
Precision Drilling Corp. (Canada)(a) 45,000 1,547,100
- -------------------------------------------------------------------------
Pride International, Inc.(a) 50,000 776,000
=========================================================================
6,263,350
=========================================================================
OIL & GAS EQUIPMENT & SERVICES-2.32%
Cal Dive International, Inc.(a) 75,000 1,207,500
- -------------------------------------------------------------------------
Smith International, Inc.(a) 25,000 889,000
- -------------------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 33,000 1,327,590
=========================================================================
3,424,090
=========================================================================
PACKAGED FOODS & MEATS-1.37%
Hershey Foods Corp. 17,500 1,141,875
- -------------------------------------------------------------------------
Smithfield Foods, Inc.(a) 45,000 882,000
=========================================================================
2,023,875
=========================================================================
PERSONAL PRODUCTS-0.73%
Estee Lauder Cos. Inc. (The)-Class A 33,000 1,072,500
=========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
PHARMACEUTICALS-1.12%
Medicis Pharmaceutical Corp.-Class A(a) 15,000 $ 864,600
- -------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC-ADR (United
Kingdom)(a) 40,000 796,000
=========================================================================
1,660,600
=========================================================================
PROPERTY & CASUALTY INSURANCE-2.11%
ACE Ltd. (Cayman Islands) 40,000 1,323,200
- -------------------------------------------------------------------------
Radian Group Inc. 45,000 1,786,500
=========================================================================
3,109,700
=========================================================================
REINSURANCE-1.15%
Everest Re Group, Ltd. (Bermuda) 12,000 835,800
- -------------------------------------------------------------------------
PartnerRe Ltd. (Bermuda) 16,000 856,000
=========================================================================
1,691,800
=========================================================================
RESTAURANTS-1.80%
Darden Restaurants, Inc. 55,000 963,050
- -------------------------------------------------------------------------
Jack in the Box Inc.(a) 38,000 676,400
- -------------------------------------------------------------------------
Wendy's International, Inc. 35,000 1,016,400
=========================================================================
2,655,850
=========================================================================
SEMICONDUCTOR EQUIPMENT-1.98%
Cabot Microelectronics Corp.(a) 35,000 1,512,700
- -------------------------------------------------------------------------
Novellus Systems, Inc.(a) 40,000 1,121,600
- -------------------------------------------------------------------------
Teradyne, Inc.(a) 25,000 290,000
=========================================================================
2,924,300
=========================================================================
SEMICONDUCTORS-2.13%
Agere Systems Inc.-Class A(a) 450,000 805,500
- -------------------------------------------------------------------------
Altera Corp.(a) 30,000 474,300
- -------------------------------------------------------------------------
Microchip Technology Inc. 90,000 1,871,100
=========================================================================
3,150,900
=========================================================================
SOFT DRINKS-0.56%
Pepsi Bottling Group, Inc. (The) 40,000 821,600
=========================================================================
SPECIALTY STORES-3.33%
Advance Auto Parts, Inc.(a) 30,000 1,492,200
- -------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 12,500 493,875
- -------------------------------------------------------------------------
Foot Locker, Inc. 100,000 $ 1,100,000
- -------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- -------------------------------------------------------------------------
SPECIALTY STORES-(CONTINUED)
Michaels Stores, Inc.(a) 13,000 406,120
- -------------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 55,000 1,423,400
=========================================================================
4,915,595
=========================================================================
SYSTEMS SOFTWARE-0.49%
Computer Associates International, Inc. 45,000 730,800
=========================================================================
TELECOMMUNICATIONS EQUIPMENT-2.21%
UTStarcom, Inc.(a) 150,000 3,265,650
=========================================================================
TRADING COMPANIES & DISTRIBUTORS-0.59%
Fastenal Co. 25,000 864,750
=========================================================================
TRUCKING-1.37%
Swift Transportation Co., Inc.(a) 38,000 688,560
- -------------------------------------------------------------------------
Yellow Corp.(a) 50,000 1,335,000
=========================================================================
2,023,560
=========================================================================
Total Common Stocks & Other Equity
Interests (Cost $128,893,075) 132,507,624
=========================================================================
MONEY MARKET FUNDS-11.16%
STIC Liquid Assets Portfolio(b) 8,237,114 8,237,114
- -------------------------------------------------------------------------
STIC Prime Portfolio(b) 8,237,114 8,237,114
=========================================================================
Total Money Market Funds (Cost
$16,474,228) 16,474,228
=========================================================================
TOTAL INVESTMENTS-100.93% (excluding
investments purchased with cash collateral
from securities loaned) (Cost $145,367,303) 148,981,852
=========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-2.01%
STIC Liquid Assets Portfolio(b)(c) 2,973,980 2,973,980
=========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $2,973,980) 2,973,980
=========================================================================
TOTAL INVESTMENTS-102.94% (Cost $148,341,283) 151,955,832
=========================================================================
OTHER ASSETS LESS LIABILITIES-(2.94%) (4,346,290)
=========================================================================
NET ASSETS-100.00% $147,609,542
_________________________________________________________________________
=========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
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.
(c) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$148,341,283)* $ 151,955,832
- ------------------------------------------------------------
Receivables for:
Investments sold 2,848,326
- ------------------------------------------------------------
Fund shares sold 421,408
- ------------------------------------------------------------
Dividends 29,278
- ------------------------------------------------------------
Investment for deferred compensation plan 15,448
- ------------------------------------------------------------
Other assets 31,237
============================================================
Total assets 155,301,529
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 4,062,586
- ------------------------------------------------------------
Fund shares reacquired 338,706
- ------------------------------------------------------------
Deferred compensation plan 15,448
- ------------------------------------------------------------
Collateral upon return of securities loaned 2,973,980
- ------------------------------------------------------------
Accrued distribution fees 113,649
- ------------------------------------------------------------
Accrued trustees' fees 817
- ------------------------------------------------------------
Accrued transfer agent fees 128,494
- ------------------------------------------------------------
Accrued operating expenses 58,307
============================================================
Total liabilities 7,691,987
============================================================
Net assets applicable to shares outstanding $ 147,609,542
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 314,994,106
- ------------------------------------------------------------
Undistributed net investment income (loss) (1,351,791)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (169,647,321)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities 3,614,548
============================================================
$ 147,609,542
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 70,217,345
____________________________________________________________
============================================================
Class B $ 59,605,440
____________________________________________________________
============================================================
Class C $ 17,768,510
____________________________________________________________
============================================================
Class R $ 18,247
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 10,050,196
____________________________________________________________
============================================================
Class B 8,747,499
____________________________________________________________
============================================================
Class C 2,607,099
____________________________________________________________
============================================================
Class R 2,617
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 6.99
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $6.99 divided by
94.50%) $ 7.40
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 6.81
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 6.82
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 6.97
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $2,779,498
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends $ 243,331
- -------------------------------------------------------------------------
Dividends from affiliated money market funds 77,912
- -------------------------------------------------------------------------
Interest 42
- -------------------------------------------------------------------------
Security lending income 7,304
=========================================================================
Total investment income 328,589
=========================================================================
EXPENSES:
Advisory fees 556,806
- -------------------------------------------------------------------------
Administrative services fees 24,795
- -------------------------------------------------------------------------
Custodian fees 21,474
- -------------------------------------------------------------------------
Distribution fees -- Class A 114,442
- -------------------------------------------------------------------------
Distribution fees -- Class B 286,158
- -------------------------------------------------------------------------
Distribution fees -- Class C 82,818
- -------------------------------------------------------------------------
Distribution fees -- Class R 28
- -------------------------------------------------------------------------
Transfer agent fees 487,065
- -------------------------------------------------------------------------
Trustees' fees 4,611
- -------------------------------------------------------------------------
Other 85,848
=========================================================================
Total expenses 1,664,045
=========================================================================
Less: Fees waived and expenses paid indirectly (2,234)
=========================================================================
Net expenses 1,661,811
=========================================================================
Net investment income (loss) (1,333,222)
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (7,043,391)
- -------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 16,885,237
=========================================================================
Net gain from investment securities 9,841,846
=========================================================================
Net increase in net assets resulting from operations $ 8,508,624
_________________________________________________________________________
=========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,333,222) $ (3,709,857)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (7,043,391) (51,459,202)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 16,885,237 6,176,897
============================================================================================
Net increase (decrease) in net assets resulting from
operations 8,508,624 (48,992,162)
============================================================================================
Share transactions-net:
Class A 2,748,553 (8,529,105)
- --------------------------------------------------------------------------------------------
Class B (2,513,292) (2,639,544)
- --------------------------------------------------------------------------------------------
Class C 326,878 (1,653,044)
- --------------------------------------------------------------------------------------------
Class R 9,835 10,003
============================================================================================
Net increase (decrease) in net assets resulting from
share transactions 571,974 (12,811,690)
============================================================================================
Net increase (decrease) in net assets 9,080,598 (61,803,852)
============================================================================================
NET ASSETS:
Beginning of period 138,528,944 200,332,796
============================================================================================
End of period $ 147,609,542 $ 138,528,944
____________________________________________________________________________________________
============================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds
(the "Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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. Each company
listed in the Schedule of Investments is organized in the United States unless
otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to
F-7
such class. All other expenses are allocated among the classes based on
relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $1 billion of the Fund's average daily net assets plus 0.75% of the
Fund's average daily net assets over $1 billion. AIM has voluntarily agreed to
waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM
receives from the affiliated money market funds in which the Fund has invested
(excluding investments made in affiliated money market funds with cash
collateral from securities loaned by the Fund). For the six months ended April
30, 2003, AIM waived fees of $1,129.
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, 2003, AIM
was paid $24,795 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. During the six months ended April 30, 2003,
AFS retained $279,412 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C and Class R shares of the Fund. The Trust has adopted
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares, Class B shares, Class C shares and Class R 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, 1.00% of the average daily net assets of Class B and Class C shares and
0.50% of the average daily net assets of Class R 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, Class C or Class R 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. NASD Rules also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by any class of
shares of the Fund. Pursuant to the Plans, for the six months ended April 30,
2003, the Class A, Class B, Class C and Class R shares paid $114,442, $286,158,
$82,818 and $28, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from redemption proceeds prior to
remittance to the shareholder. During the six months ended April 30, 2003, AIM
Distributors retained $21,214 in front-end sales commissions from the sale of
Class A shares and $272, $116, $1,325 and $0 for Class A, Class B, Class C and
Class R shares, respectively, for CDSCs imposed upon redemptions by
shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,347 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $1,105 under an expense
offset arrangement which resulted in a reduction of the Fund's total expenses of
$1,105.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day following the
valuation date of the securities loaned. Therefore, the value of the collateral
may be temporarily less than the value of the securities on loan.
F-8
At April 30, 2003, securities with an aggregate value of $2,779,498 were on
loan to brokers. The loans were secured by cash collateral of $2,973,980
received by the Fund and subsequently invested in an affiliated money market
fund. For the six months ended April 30, 2003, the Fund received fees of $7,304
for securities lending.
NOTE 7--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ------------------------------------------------------
October 31, 2008 $ 23,619,065
- ------------------------------------------------------
October 31, 2009 86,724,292
- ------------------------------------------------------
October 31, 2010 50,812,218
======================================================
Total capital loss carryforward $161,155,575
______________________________________________________
======================================================
</Table>
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $103,721,056 and $105,795,834, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $11,331,823
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (8,063,788)
===========================================================
Net unrealized appreciation of investment
securities $ 3,268,035
___________________________________________________________
===========================================================
Cost of investments for tax purposes is $148,687,797.
</Table>
NOTE 9--SHARE INFORMATION
The Fund currently offers four different classes of shares: Class A shares,
Class B shares, Class C shares and Class R shares. Class A shares are sold with
a front-end sales charge. Class B shares and Class C shares are sold with a
CDSC. Class R shares are sold at net asset value. Under some circumstances,
Class A shares and Class R shares are subject to CDSCs. Generally, Class B
shares will automatically convert to Class A shares eight years after the end of
the calendar month of purchase. Changes in shares outstanding during the six
months ended April 30, 2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 2,397,745 $ 16,172,712 8,063,853 $ 72,719,270
- ----------------------------------------------------------------------------------------------------------------------
Class B 1,110,522 7,349,524 3,669,099 31,692,709
- ----------------------------------------------------------------------------------------------------------------------
Class C 467,601 3,063,261 1,168,577 10,169,033
- ----------------------------------------------------------------------------------------------------------------------
Class R* 1,674 11,219 1,146 10,003
======================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 36,424 241,187 74,934 635,418
- ----------------------------------------------------------------------------------------------------------------------
Class B (37,308) (241,187) (76,507) (635,418)
======================================================================================================================
Reacquired:
Class A (2,084,656) (13,665,346) (9,446,798) (81,883,793)
- ----------------------------------------------------------------------------------------------------------------------
Class B (1,489,394) (9,621,629) (4,122,284) (33,696,835)
- ----------------------------------------------------------------------------------------------------------------------
Class C (422,503) (2,736,383) (1,442,681) (11,822,077)
- ----------------------------------------------------------------------------------------------------------------------
Class R* (203) (1,384) -- --
======================================================================================================================
(20,098) $ 571,974 (2,110,661) $(12,811,690)
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
F-9
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-----------------------------------------------------------
NOVEMBER 1, 1999
SIX MONTHS YEAR ENDED (DATE OPERATIONS
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------- OCTOBER 31,
2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.54 $ 8.58 $ 14.38 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.13)(a) (0.11)(a) (0.12)(a)
- -------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.50 (1.91) (5.69) 4.50
=========================================================================================================================
Total from investment operations 0.45 (2.04) (5.80) 4.38
=========================================================================================================================
Net asset value, end of period $ 6.99 $ 6.54 $ 8.58 $ 14.38
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 6.88% (23.78)% (40.33)% 43.80%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,217 $63,463 $94,457 $114,913
=========================================================================================================================
Ratio of expenses to average net assets 2.04%(c) 1.83% 1.65% 1.63%(d)
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.57)%(c) (1.49)% (1.06)% (0.76)%(d)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate(e) 80% 185% 173% 183%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$65,937,097.
(d) Annualized.
(e) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS B
-----------------------------------------------------------
NOVEMBER 1, 1999
SIX MONTHS YEAR ENDED (DATE OPERATIONS
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------- OCTOBER 31,
2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.40 $ 8.45 $ 14.25 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.18)(a) (0.18)(a) (0.22)(a)
- -------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.48 (1.87) (5.62) 4.47
=========================================================================================================================
Total from investment operations 0.41 (2.05) (5.80) 4.25
=========================================================================================================================
Net asset value, end of period $ 6.81 $ 6.40 $ 8.45 $ 14.25
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 6.41% (24.26)% (40.70)% 42.50%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $59,605 $58,654 $81,905 $103,893
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 2.69%(c) 2.48% 2.32% 2.32%(d)
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (2.22)%(c) (2.14)% (1.73)% (1.45)%(d)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate(e) 80% 185% 173% 183%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$57,705,849.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-10
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
-----------------------------------------------------------
NOVEMBER 1, 1999
SIX MONTHS YEAR ENDED (DATE OPERATIONS
ENDED OCTOBER 31, COMMENCED) TO
APRIL 30, -------------------- OCTOBER 31,
2003 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.40 $ 8.45 $ 14.26 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07)(a) (0.18)(a) (0.18)(a) (0.22)(a)
- -------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.49 (1.87) (5.63) 4.48
=========================================================================================================================
Total from investment operations 0.42 (2.05) (5.81) 4.26
=========================================================================================================================
Net asset value, end of period $ 6.82 $ 6.40 $ 8.45 $ 14.26
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 6.56% (24.26)% (40.74)% 42.60%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $17,769 $16,404 $23,971 $29,969
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 2.69%(c) 2.48% 2.32% 2.32%(d)
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (2.22)%(c) (2.14)% (1.73)% (1.45)%(d)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate(e) 80% 185% 173% 183%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$16,700,904.
(d) Annualized.
(e) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS R
------------------------------
JUNE 3, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.54 $ 8.73
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.05)(a)
- --------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.49 (2.14)
============================================================================================
Total from investment operations 0.43 (2.19)
============================================================================================
Net asset value, end of period $ 6.97 $ 6.54
____________________________________________________________________________________________
============================================================================================
Total return(b) 6.57% (25.09)%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 18 $ 7
============================================================================================
Ratio of expenses to average net assets 2.19%(c) 1.98%(d)
============================================================================================
Ratio of net investment income (loss) to average net assets (1.72)%(c) (1.64)%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate(e) 80% 185%
____________________________________________________________________________________________
============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $11,278.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-11
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Mark H. Williamson Chairman and President Suite 100
Frank S. Bayley Houston, TX 77046
Bruce L. Crockett Mark H. Williamson
Albert R. Dowden Executive Vice President INVESTMENT ADVISOR
Edward K. Dunn Jr. A I M Advisors, Inc.
Jack M. Fields Kevin M. Carome 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 100
Prema Mathai-Davis Houston, TX 77046
Lewis F. Pennock Gary T. Crum
Ruth H. Quigley Senior Vice President TRANSFER AGENT
Louis S. Sklar A I M Fund Services, Inc.
Dana R. Sutton P.O. Box 4739
Vice President and Treasurer Houston, TX 77210-4739
Stuart W. Coco CUSTODIAN
Vice President State Street Bank and Trust Company
225 Franklin Street
Melville B. Cox Boston, MA 02110
Vice President
COUNSEL TO THE FUND
Edgar M. Larsen Ballard Spahr
Vice President Andrews & Ingersoll, LLP
1735 Market Street
Nancy L. Martin Philadelphia, PA 19103
Secretary
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS--Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund
AIM Large Cap Growth Fund SECTOR EQUITY TAX-FREE
AIM Libra Fund
AIM Mid Cap Basic Value Fund AIM Global Energy Fund AIM High Income Municipal Fund
AIM Mid Cap Core Equity Fund(2) AIM Global Financial Services Fund AIM Municipal Bond Fund
AIM Mid Cap Growth Fund AIM Global Health Care Fund AIM Tax-Exempt Cash Fund
AIM Opportunities I Fund(2,3) AIM Global Science and Technology Fund(2) AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities II Fund(2,3) AIM Global Utilities Fund
AIM Opportunities III Fund(2,3) AIM New Technology Fund
AIM Premier Equity Fund(2) AIM Real Estate Fund
AIM Premier Equity II Fund(2)
AIM Select Equity Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
*Domestic equity and income fund
</Table>
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2)The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002.
7Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
Your Goals. Our Solutions.
--Servicemark--
AIMinvestments.com MCG-SAR-1
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM U.S. GROWTH FUND
[COVER IMAGE]
[AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark--
Your goals. Our solutions.
--Servicemark--
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
AIM U.S. GROWTH FUND
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------
COMMON STOCKS--97.17%
AEROSPACE & DEFENSE--2.30%
Lockheed Martin Corp. 240 $ 12,012
- ---------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp. 120 10,554
===============================================================================================================
22,566
===============================================================================================================
AIR FREIGHT & LOGISTICS--0.98%
FedEx Corp. 160 9,581
===============================================================================================================
AIRLINES--1.12%
Southwest Airlines Co. 690 11,012
===============================================================================================================
APPAREL RETAIL--0.49%
TJX Cos., Inc. (The) 250 4,812
===============================================================================================================
APPLICATION SOFTWARE--0.48%
Electronic Arts Inc. (a) 80 4,742
===============================================================================================================
BANKS--5.87%
Bank of America Corp. 110 8,145
- ---------------------------------------------------------------------------------------------------------------
Fifth Third Bancorp 300 14,787
- ---------------------------------------------------------------------------------------------------------------
Synovus Financial Corp. 1,060 20,638
- ---------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 290 13,995
===============================================================================================================
57,565
===============================================================================================================
BIOTECHNOLOGY--1.06%
Amgen Inc. (a) 170 10,423
===============================================================================================================
BROADCASTING & CABLE TV--0.60%
Clear Channel Communications, Inc. (a) 150 5,866
===============================================================================================================
CASINOS & GAMBLING--0.64%
Harrah's Entertainment, Inc. (a) 160 6,302
===============================================================================================================
COMPUTER & ELECTRONICS RETAIL--2.09%
CDW Computer Centers, Inc. (a) 480 20,467
===============================================================================================================
COMPUTER HARDWARE--2.21%
Dell Computer Corp. (a) 750 21,682
===============================================================================================================
CONSUMER FINANCE--2.10%
MBNA Corp. 1,090 20,601
===============================================================================================================
DATA PROCESSING SERVICES--2.45%
Concord EFS, Inc. (a) 480 6,638
- ---------------------------------------------------------------------------------------------------------------
Fiserv, Inc. (a) 370 10,893
- ---------------------------------------------------------------------------------------------------------------
Paychex, Inc. 210 6,539
===============================================================================================================
24,070
===============================================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES--0.70%
Kohl's Corp. (a) 121 $ 6,873
===============================================================================================================
DIVERSIFIED FINANCIAL SERVICES--5.68%
Citigroup Inc. 830 32,577
- ---------------------------------------------------------------------------------------------------------------
Fannie Mae 320 23,165
===============================================================================================================
55,742
===============================================================================================================
DRUG RETAIL--1.64%
Walgreen Co. 520 16,047
===============================================================================================================
ELECTRIC UTILITIES--1.12%
FPL Group, Inc. 180 10,957
===============================================================================================================
FOOD DISTRIBUTORS--0.50%
SYSCO Corp. 170 4,884
===============================================================================================================
GENERAL MERCHANDISE STORES--3.84%
Family Dollar Stores, Inc. 180 6,154
- ---------------------------------------------------------------------------------------------------------------
Target Corp. 150 5,016
- ---------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 470 26,470
===============================================================================================================
37,640
===============================================================================================================
HEALTH CARE DISTRIBUTORS & SERVICES--1.49%
Cardinal Health, Inc. 265 14,649
===============================================================================================================
HEALTH CARE EQUIPMENT--2.09%
Biomet, Inc. 280 8,529
- ---------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 250 11,935
===============================================================================================================
20,464
===============================================================================================================
HEALTH CARE FACILITIES--0.52%
HCA Inc. 160 5,136
===============================================================================================================
HOME IMPROVEMENT RETAIL--0.81%
Lowe's Cos., Inc. 180 7,900
===============================================================================================================
HOUSEHOLD PRODUCTS--2.14%
Colgate-Palmolive Co. 100 5,717
- ---------------------------------------------------------------------------------------------------------------
Procter & Gamble Co. (The) 170 15,275
===============================================================================================================
20,992
===============================================================================================================
HOUSEWARES & SPECIALTIES--0.47%
Newell Rubbermaid Inc. 150 4,572
===============================================================================================================
INDUSTRIAL CONGLOMERATES--4.49%
3M Co. 60 7,562
- ---------------------------------------------------------------------------------------------------------------
General Electric Co. 1,240 36,518
===============================================================================================================
44,080
===============================================================================================================
INDUSTRIAL GASES--0.66%
Air Products & Chemicals, Inc. 150 6,461
===============================================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------
INDUSTRIAL MACHINERY--0.56%
Danaher Corp. 80 $ 5,518
===============================================================================================================
INSURANCE BROKERS--1.51%
Marsh & McLennan Cos., Inc. 310 14,781
===============================================================================================================
INTEGRATED OIL & GAS--3.88%
ChevronTexaco Corp. 130 8,165
- ---------------------------------------------------------------------------------------------------------------
Exxon Mobil Corp. 850 29,920
===============================================================================================================
38,085
===============================================================================================================
INTEGRATED TELECOMMUNICATION SERVICES--3.12%
AT&T Corp. 300 5,115
- ---------------------------------------------------------------------------------------------------------------
SBC Communications Inc. 580 13,549
- ---------------------------------------------------------------------------------------------------------------
Verizon Communications Inc. 320 11,962
===============================================================================================================
30,626
===============================================================================================================
IT CONSULTING & SERVICES--0.88%
SunGard Data Systems Inc. (a) 400 8,600
===============================================================================================================
LIFE & HEALTH INSURANCE--0.47%
AFLAC Inc. 140 4,579
===============================================================================================================
MANAGED HEALTH CARE--0.85%
UnitedHealth Group Inc. 90 8,292
===============================================================================================================
MOTORCYCLE MANUFACTURERS--1.36%
Harley-Davidson, Inc. 300 13,332
===============================================================================================================
MOVIES & ENTERTAINMENT--2.63%
Viacom Inc.-Class B (a) 190 8,248
- ---------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The) 940 17,540
===============================================================================================================
25,788
===============================================================================================================
MULTI-LINE INSURANCE--2.84%
American International Group, Inc. 480 27,816
===============================================================================================================
NETWORKING EQUIPMENT--1.62%
Cisco Systems, Inc. (a) 1,060 15,942
===============================================================================================================
OIL & GAS EQUIPMENT & SERVICES--0.49%
Weatherford International Ltd. (Bermuda) (a) 120 4,828
===============================================================================================================
PERSONAL PRODUCTS--0.99%
Gillette Co. (The) 320 9,744
===============================================================================================================
PHARMACEUTICALS--9.64%
Bristol-Myers Squibb Co. 290 7,407
- ---------------------------------------------------------------------------------------------------------------
Forest Laboratories, Inc. (a) 170 8,792
- ---------------------------------------------------------------------------------------------------------------
Johnson & Johnson 460 25,926
- ---------------------------------------------------------------------------------------------------------------
Lilly (Eli) & Co. 130 8,297
- ---------------------------------------------------------------------------------------------------------------
Merck & Co. Inc. 150 8,727
- ---------------------------------------------------------------------------------------------------------------
Pfizer Inc. 910 27,983
- ---------------------------------------------------------------------------------------------------------------
Wyeth 170 7,400
===============================================================================================================
94,532
===============================================================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------
PROPERTY & CASUALTY INSURANCE--3.03%
Ambac Financial Group, Inc. 350 $ 20,423
- ---------------------------------------------------------------------------------------------------------------
Berkshire Hathaway Inc.-Class B (a) 4 9,328
===============================================================================================================
29,751
===============================================================================================================
RESTAURANTS--2.84%
Brinker International, Inc. (a) 260 8,255
- ---------------------------------------------------------------------------------------------------------------
Starbucks Corp. (a) 240 5,638
- ---------------------------------------------------------------------------------------------------------------
Wendy's International, Inc. 480 13,939
===============================================================================================================
27,832
===============================================================================================================
SEMICONDUCTORS--2.99%
Intel Corp. 730 13,432
- ---------------------------------------------------------------------------------------------------------------
Linear Technology Corp. 190 6,549
- ---------------------------------------------------------------------------------------------------------------
Microchip Technology Inc. 450 9,356
===============================================================================================================
29,337
===============================================================================================================
SOFT DRINKS--1.65%
Coca-Cola Co. (The) 400 16,160
===============================================================================================================
SPECIALTY STORES--0.60%
Bed Bath & Beyond Inc. (a) 150 5,927
===============================================================================================================
SYSTEMS SOFTWARE--4.12%
Microsoft Corp. 1,580 40,401
===============================================================================================================
TOBACCO--2.07%
Altria Group, Inc. 660 20,302
===============================================================================================================
TRADING COMPANIES & DISTRIBUTORS--0.49%
Fastenal Co. 140 4,843
===============================================================================================================
Total Common Stocks (Cost $966,528) 953,102
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
TOTAL INVESTMENTS--97.17% (Cost $966,528) 953,102
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
OTHER ASSETS LESS LIABILITIES--2.83% 27,712
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
NET ASSETS--100.00% $980,814
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
See Notes to Financial Statements.
US GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2003
(UNAUDITED)
<Table>
ASSETS:
Investments, at market value (cost $966,528) $ 953,102
- ---------------------------------------------------------------------------------------------
Cash 28,197
- ---------------------------------------------------------------------------------------------
Receivables for:
Amount due from advisor 12,950
- ---------------------------------------------------------------------------------------------
Dividends 884
- ---------------------------------------------------------------------------------------------
Investment for deferred compensation plan 1,802
- ---------------------------------------------------------------------------------------------
Other assets 1,291
=============================================================================================
Total assets 998,226
- ---------------------------------------------------------------------------------------------
=============================================================================================
LIABILITIES:
Payable for deferred compensation plan 1,802
- ---------------------------------------------------------------------------------------------
Accrued trustees' fees 880
- ---------------------------------------------------------------------------------------------
Accrued transfer agent fees 8
- ---------------------------------------------------------------------------------------------
Accrued operating expenses 14,722
=============================================================================================
Total liabilities 17,412
=============================================================================================
Net assets applicable to shares outstanding $ 980,814
- ---------------------------------------------------------------------------------------------
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 1,000,105
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,774)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities (4,091)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (13,426)
=============================================================================================
$ 980,814
- ---------------------------------------------------------------------------------------------
=============================================================================================
NET ASSETS:
Class A $ 392,324
- ---------------------------------------------------------------------------------------------
=============================================================================================
Class B $ 294,245
- ---------------------------------------------------------------------------------------------
=============================================================================================
Class C $ 294,245
- ---------------------------------------------------------------------------------------------
=============================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Class A 40,295
- ---------------------------------------------------------------------------------------------
=============================================================================================
Class B 30,222
- ---------------------------------------------------------------------------------------------
=============================================================================================
Class C 30,222
- ---------------------------------------------------------------------------------------------
=============================================================================================
Class A :
Net asset value per share $ 9.74
- ---------------------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.74 / 94.50%) $ 10.31
- ---------------------------------------------------------------------------------------------
=============================================================================================
Class B :
Net asset value and offering price per share $ 9.74
- ---------------------------------------------------------------------------------------------
=============================================================================================
Class C :
Net asset value and offering price per share $ 9.74
- ---------------------------------------------------------------------------------------------
=============================================================================================
</Table>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2003
(UNAUDITED)
<Table>
INVESTMENT INCOME:
Dividends $ 6,900
=============================================================================================
EXPENSES:
Advisory fees 3,530
- ---------------------------------------------------------------------------------------------
Administrative services fees 24,795
- ---------------------------------------------------------------------------------------------
Distribution fees--Class A 659
- ---------------------------------------------------------------------------------------------
Distribution fees--Class B 1,412
- ---------------------------------------------------------------------------------------------
Distribution fees--Class C 1,412
- ---------------------------------------------------------------------------------------------
Printing fees 6,281
- ---------------------------------------------------------------------------------------------
Professional fees 16,435
- ---------------------------------------------------------------------------------------------
Transfer agent fees 44
- ---------------------------------------------------------------------------------------------
Trustees' fees 4,388
- ---------------------------------------------------------------------------------------------
Other 804
=============================================================================================
Total expenses 59,760
=============================================================================================
Less: Fees waived and expenses paid indirectly (51,525)
- ---------------------------------------------------------------------------------------------
Net expenses 8,235
=============================================================================================
Net investment income (loss) (1,335)
=============================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain from investment securities 7,216
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities (1,402)
=============================================================================================
Net gain from investment securities 5,814
=============================================================================================
Net increase in net assets resulting from operations $ 4,479
- ---------------------------------------------------------------------------------------------
=============================================================================================
</Table>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND THE PERIOD AUGUST 30, 2002
(DATE OPERATIONS COMMENCED) THROUGH OCTOBER 31, 2002
(UNAUDITED)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
----------------- ------------------
OPERATIONS:
Net investment income (loss) $ (1,335) $ (364)
- ------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities 7,216 (11,307)
- ------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities (1,402) (12,024)
==================================================================================================================
Net increase (decrease) in net assets resulting from operations 4,479 (23,695)
==================================================================================================================
Distributions to shareholders from net investment income:
Class A (2,800) --
- ------------------------------------------------------------------------------------------------------------------
Class B (2,100) --
- ------------------------------------------------------------------------------------------------------------------
Class C (2,100) --
==================================================================================================================
Total distributions from net investment income (7,000) --
==================================================================================================================
Net increase (decrease) in net assets resulting from distributions (7,000) --
==================================================================================================================
Share transactions-net:
Class A 2,800 400,010
- ------------------------------------------------------------------------------------------------------------------
Class B 2,100 300,010
- ------------------------------------------------------------------------------------------------------------------
Class C 2,100 300,010
==================================================================================================================
Net increase in net assets resulting from share transactions 7,000 1,000,030
==================================================================================================================
Net increase in net assets 4,479 976,335
==================================================================================================================
NET ASSETS:
Beginning of period 976,335 --
==================================================================================================================
End of period $ 980,814 $ 976,335
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
</Table>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM U.S. Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
consists of multiple classes of shares. 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 to provide long-term growth of
capital. Each company listed in the Schedule of Investments is organized in the
United States unless otherwise noted.
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 traded in the over-the-counter
market (but not securities reported on the NASDAQ National Market System) is
valued at the basis of prices furnished by independent pricing services or
market makers. Each security reported on the NASDAQ National Market System is
valued at the NASDAQ Official Closing Price ("NOCP") as of the close of the
customary trading session on the valuation date or absent a NOCP, 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 institution-size trading in
similar groups of securities, developments related to special securities,
dividend rate, yield, quality, type of issue, coupon rate, maturity, individual
trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using
exchange rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a development/event is so
significant that there is a reasonably high degree of certainty as to both the
effect and the degree of effect that the development/event has actually caused
that closing price to no longer reflect actual value, the closing prices, as
determined at the close of the applicable foreign market, may be adjusted to
reflect the fair value of the affected foreign securities as of the close of the
NYSE 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. Premiums and discounts are amortized
and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS - Distributions from income and net realized capital gain, 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 gain) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements.
E. EXPENSES - Fees provided for under the Rule 12b-1 plan of a particular class
of the Fund and which are directly attributable to that class are charged to the
operations of such class. Transfer agency fees and expenses and other
shareholder recordkeeping fees and expenses are charged to each class pursuant
to a transfer agency and service agreement adopted by the Fund with respect to
such class. All other expenses are allocated among the classes based on relative
net assets.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.75% of the first $1
billion of the Fund's average daily net assets, plus 0.70% of the Fund's next $1
billion of average daily net assets, plus 0.65% of the Fund's average daily net
assets in excess of $2 billion. AIM has voluntarily agreed to waive fees and/or
reimburse expenses (excluding interest, taxes, dividends on short sales,
extraordinary items and increases in expenses due to expense offset
arrangements, if any) for Class A, Class B and Class C shares to the extent
necessary to limit the total annual fund operating expenses of Class A shares to
1.75%. Voluntary fee waivers or reimbursements may be rescinded, terminated or
modified at any time without further notice to investors. During periods of
voluntary waivers or reimbursements to the extent the annualized expense ratio
does not exceed the voluntary limit for the period committed, AIM will retain
its ability to be reimbursed for such fee waivers or reimbursements prior to the
end of each fiscal year. Further, AIM has voluntarily agreed to waive advisory
fees of the Fund in the amount of 25% of the advisory fee AIM receives from the
affiliated money market funds in which the Fund has invested. For the six months
ended April 30, 2003, AIM waived fees of $3,530 and reimbursed expenses of
$40,060.
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,
2003, AIM was paid $24,795 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. During the six months ended April
30, 2003, AFS retained $23 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and Class 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. NASD
Rules also impose a cap on the total amount of sales charges, including
asset-based sales charges that may be paid by any class of shares of the Fund.
AIM Distributors has voluntarily agreed to waive all fees during the time the
shares are not available for sale. This waiver may be rescinded, terminated or
modified at any time. For the six months ended April 30, 2003, the Class A,
Class B and Class C shares paid $0, $0 and $0, respectively, after AIM
Distributors waived fees of $3,483.
Certain officers and trustees of the Trust are officers and directors
of AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$1,241 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.
NOTE 3 - INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $6 and reductions in
custodian fees of $611 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $617.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5 - BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. The Fund did not borrow or lend under the
facility during the six months ended April 30, 2003.
NOTE 6 - TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL
EXPIRATION LOSS CARRYFORWARD
- --------------------------------- ---------------------
October 31, 2010 $ 11,307
</Table>
NOTE 7 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $128,659 and $140,487, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of investment securities $ 47,602
- ---------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (61,028)
=============================================================================================
Net unrealized appreciation (depreciation) of investment securities $ (13,426)
- ---------------------------------------------------------------------------------------------
=============================================================================================
Investments have the same costs for tax and financial statement purposes.
</Table>
NOTE 8 - SHARE INFORMATION
The Fund commenced operations August 30, 2002 and consists of three different
classes of shares that are not currently available for sale: 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 CDSC. Under some
circumstances, Class A shares are subject to CDSCs. Generally, Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Changes in capital stock outstanding during the six
months ended April 30, 2003 and the period August 30, 2002 (date operations
commenced) through October 31, 2002 were as follows:
<Table>
<Caption>
AUGUST 30, 2002
SIX MONTHS ENDED (DATE OPERATIONS COMMENCED)
APRIL 30, TO OCTOBER 31,
2003 2002
---------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ------------ ------------- ------------------
Sold:
Class A * -- $ -- 40,001 $ 400,010
- ---------------------------------------------------------------------------------------------------------------
Class B * -- -- 30,001 300,010
- ---------------------------------------------------------------------------------------------------------------
Class C * -- -- 30,001 300,010
===============================================================================================================
Issued as reinvestment of dividends:
Class A * 294 2,800 -- --
- ---------------------------------------------------------------------------------------------------------------
Class B * 221 2,100 -- --
- ---------------------------------------------------------------------------------------------------------------
Class C * 221 2,100 -- --
===============================================================================================================
736 $ 7,000 100,003 $ 1,000,030
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
</Table>
* Currently, all shares are owned by AIM.
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding during the six months ended April 30, 2003 and the period August 30,
2002 (date operations commenced) through October 31, 2002.
<Table>
<Caption>
CLASS A
------------------------------------------
AUGUST 30, 2002
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------------- -------------------
Net asset value, beginning of period $ 9.76 $ 10.00
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) 0.00
- ------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 0.06 (0.24)
==================================================================================================================
Total from investment operations 0.05 (0.24)
==================================================================================================================
Less distributions from net investment income (0.07) --
==================================================================================================================
Net asset value, end of period $ 9.74 $ 9.76
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
Total return (a) 0.53% (2.40)%
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 392 $ 391
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.88%(b) 1.76% (c)
- ------------------------------------------------------------------------------------------------------------------
Without fee waivers 11.49%(b) 22.45% (c)
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
Ratio of net investment income (loss) to average net assets (0.28)(b) (0.22)(c)
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
Portfolio turnover rate (d) 14% 1%
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales
charges and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of
$379,600.
(c) Annualized.
(d) Not annualized for periods less than one year.
NOTE 9 - FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------------
AUGUST 30, 2002
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------------- -------------------
Net asset value, beginning of period $ 9.76 $ 10.00
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) 0.00
- -------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 0.06 (0.24)
===================================================================================================================
Total from investment operations 0.05 (0.24)
===================================================================================================================
Less distributions from net investment income (0.07) --
===================================================================================================================
Net asset value, end of period $ 9.74 $ 9.76
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Total return (a) 0.53% (2.40)%
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 294 $ 293
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.88%(b) 1.76%(c)
- -------------------------------------------------------------------------------------------------------------------
Without fee waivers 12.14%(b) 23.10%(c)
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.28)(b) (0.22)(c)
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Portfolio turnover rate (d) 14% 1%
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales
charges and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of
$284,702.
(c) Annualized.
(d) Not annualized for periods less than one year.
NOTE 9 - FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS C
----------------------------------------
AUGUST 30, 2002
SIX MONTHS (DATE OPERATIONS
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
---------------- -------------------
Net asset value, beginning of period $ 9.76 $ 10.00
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) 0.00
- -------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) 0.06 (0.24)
===================================================================================================================
Total from investment operations 0.05 (0.24)
===================================================================================================================
Less distributions from net investment income (0.07) --
===================================================================================================================
Net asset value, end of period $ 9.74 $ 9.76
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Total return (a) 0.53% (2.40)%
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 294 $ 293
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.88%(b) 1.76%(c)
- -------------------------------------------------------------------------------------------------------------------
Without fee waivers 12.14%(b) 23.10%(c)
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.28)(b) (0.22)(c)
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Portfolio turnover rate (d) 14% 1%
- -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales
charges and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average daily net assets of
$284,702.
(c) Annualized.
(d) Not annualized for periods less than one year.
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Vice President INVESTMENT ADVISOR
Bruce L. Crockett M. Carome A I M Advisors, Inc.
Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
TRANSFER AGENT
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Fund Services, Inc.
Carl Frischling P.O. Box 4739
Stuart W. Coco Houston, TX 77210-4739
Prema Mathai-Davis Vice President
CUSTODIAN
Lewis F. Pennock Melville B. Cox
Vice President State Street Bank and Trust Company
Ruth H. Quigley 225 Franklin Street
Edgar M. Larsen Boston, MA 02110
Louis S. Sklar Vice President
COUNSEL TO THE FUND
Nancy L. Martin
Secretary Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
SEMIANNUAL REPORT TO SHAREHOLDERS / APRIL 30, 2003
AIM WEINGARTEN FUND
(COVER IMAGE)
(AIM FUNDS LOGO)
--Servicemark--
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
AIM Weingarten Fund seeks to provide growth of capital.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
This report may be distributed only to shareholders or to
persons who have received a current prospectus of the fund.
FUND DATA
================================================================================
HOLDINGS BY MARKET CAPITALIZATION*
As of 4/30/03
(PIE CHART)
MID-CAP STOCKS 16%
LARGE-CAP STOCKS 84%
TOTAL NUMBER OF HOLDINGS* 106
TOTAL NET ASSETS $2.5 BILLION
Source: Lipper, Inc.
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/03, including sales charges
CLASS A SHARES
Inception (6/17/69) 11.24%
10 Years 3.42
5 Years -10.94
1 Year -22.97
CLASS B SHARES
Inception (6/26/95) 0.65%
5 Years -10.84
1 Year -23.01
CLASS C SHARES
Inception (8/4/97) -7.04%
5 Years -10.58
1 Year -19.76
CLASS R SHARES**
10 Years 3.81%
5 Years -10.09
1 Year -18.56
**Class R shares are generally only available to retirement plans such as
section 401 and 457 plans, section 403 plans sponsored by a section 501(c)(3)
organization and IRA rollovers from such plans if an AIM fund was offered. They
are sold at net asset value, that is, without up-front sales charges. Class R
shares were first offered on June 3, 2002. Returns prior to that date are
hypothetical results based on Class A share performance (inception date 6/17/69)
at net asset value, adjusted to reflect Class R 12b-1 fees. Class R share
returns do not include a 0.75% contingent deferred sales charge that may be
imposed on a total redemption of retirement plan assets within the first year.
================================================================================
================================================================================
FUND VS. INDEXES
Total Returns 10/31/02-4/30/03
excluding sales charges
CLASS A SHARES 2.95%
CLASS B SHARES 2.72
CLASS C SHARES 2.72
CLASS R SHARES 2.85
S&P 500 INDEX (Broad Market Index) 4.47
RUSSELL 1000 GROWTH INDEX 4.28
(Style-Specific Index)
LIPPER LARGE-CAP GROWTH FUND INDEX 2.37
(Peer Group Index)
Source: Lipper, Inc.
In addition to the fund's average annual total returns as of the close of the
reporting period shown at left, industry regulations require us to provide
average annual total returns (including sales charges) as of 3/31/03, the most
recent calendar quarter-end, which were: Class A shares, inception (6/17/69),
11.03%; 10 years, 2.22%; five years, -11.92%; one year, -34.01%. Class B shares,
inception (6/26/95), -0.27%; five years, -11.82%; one year, -34.09%. Class C
shares, inception (8/4/97), -8.31%; five years, -11.57%; one year, -31.29%.
Class R shares, 10 years, 2.61%; five years, -11.08%; one year, -30.26%.
Past performance cannot guarantee comparable future results. DUE TO SIGNIFICANT
MARKET VOLATILITY, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
FROM THE HISTORICAL PERFORMANCE SHOWN. CALL YOUR FINANCIAL ADVISOR FOR MORE
CURRENT PERFORMANCE.
================================================================================
<Table>
<Caption>
========================================================================================
TOP 10 EQUITY HOLDINGS* TOP 10 INDUSTRIES*
- ----------------------------------------------------------------------------------------
1. Microsoft Corp. 3.5% 1. Pharmaceuticals 8.2%
2. Pfizer Inc. 3.2 2. Diversified Financial Services 7.6
3. Amgen Inc. 2.2 3. Semiconductors 6.8
4. Tyco International Ltd. (Bermuda) 2.2 4. Systems Software 6.7
5. Cisco Systems, Inc. 2.1 5. Health Care Equipment 4.2
6. Dell Computer Corp. 2.0 6. Computer Hardware 3.8
7. Gap, Inc. (The) 2.0 7. Biotechnology 3.6
8. Citigroup Inc. 1.8 8. Semiconductor Equipment 2.9
9. Aetna Inc. 1.8 9. Managed Health Care 2.9
10. Analog Devices, Inc. 1.8 10. Industrial Conglomerates 2.8
*Excludes money market fund holdings.
The fund's holdings are subject to change, and there is no assurance that the fund will
continue to hold any particular security.
========================================================================================
</Table>
ABOUT FUND INFORMATION THROUGHOUT THIS REPORT:
o Unless otherwise stated, information presented here is as of 4/30/03 and is
based on total net assets.
o Effective 5/1/03, after the close of the reporting period, the portfolio
management team for AIM Weingarten Fund is as follows: James G. Birdsall,
Monika H. Degan, and Lanny H. Sachnowitz.
o AIM Weingarten 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 share classes will differ due to different
sales charge structures and class expenses.
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 the
original investment.
o In the Schedule of Investments in this report, the fund's portfolio holdings
are organized according to the Global Industry Classification Standard,
which was developed by and is the exclusive property and a service mark of
Morgan Stanley Capital International Inc. and Standard & Poor's.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Large-Cap Growth Fund Index represents an average of
the performance of the 30 largest large-capitalization growth funds tracked
by Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 1000 Index represents the performance of the stocks of
large-capitalization companies. The Growth segment measures the performance
of Russell 1000 companies with higher price/book ratios and higher
forecasted growth values.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is an index of common stocks frequently used as a general measure of U.S.
stock market performance.
o A direct investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends, and they do not reflect sales
charges. Performance of an index of funds reflects fund expenses.
Performance of a market index does not.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by calling 800-959-4246, or on the AIM Web site,
aiminvestments.com.
FOR MORE INFORMATION, PLEASE VISIT AIMinvestments.com
TO OUR SHAREHOLDERS
DEAR SHAREHOLDER:
[PHOTO OF This is the report on AIM Weingarten Fund for the six months
ROBERT H. ended April 30, 2003. You will note that we have adopted a
GRAHAM] more concise format for our semiannual reports. Important
information such as top holdings and performance as of the
close of the reporting period appear on the opposite page.
POSITIVE This letter will provide an overview of the markets and your
PERFORMANCE fund during the six months covered by this report. As
DURING MARCH AND always, timely information about your fund and the markets
APRIL 2003 in general is available at our Web site, aiminvestments.com.
ENABLED MAJOR
STOCK MARKET MARKET CONDITIONS
INDEXES TO POST
GAINS FOR THE Positive performance during March and April 2003 enabled
REPORTING PERIOD. major stock market indexes to post gains for the reporting
ROBERT H. GRAHAM period. For example, the unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P 500), an index of
common stocks frequently used as a general measure of U.S. stock market
performance, returned 4.47% for the six months ended April 30, 2003.
Year to date as of April 30, consumer discretionary, information technology
and financials were among the better-performing sectors of the S&P 500, while
telecommunications services was the worst.
Generally, mid- and small-cap stocks outperformed large-cap stocks, and the
value investment style outperformed the growth investment style during the
six-month reporting period. For example, the unmanaged Russell 1000 Index, which
represents the performance of the stocks of large-capitalization companies,
returned 4.75% while the unmanaged Russell Midcap Index, which represents the
performance of the stocks of domestic mid-capitalization companies, returned
7.58% and the unmanaged Russell 2000 Index, which represents the performance of
the stocks of small-capitalization companies, returned 7.55%.
Among large-cap stocks, the value investment style generally outperformed the
growth investment style during the six-month reporting period. For example, the
Russell 1000 Growth Index, which measures the performance of Russell 1000
companies with higher price/book ratios and higher forecasted growth values,
produced total return of 4.28% while its value counterpart, the Russell 1000
Value, which measures the performance of Russell 1000 companies with lower
price/book ratios and lower forecasted growth values, returned 5.25%.
YOUR FUND
Like the broad U.S. stock market, AIM Weingarten Fund, at net asset value,
posted positive returns for the six months ended April 30, 2003. Throughout the
reporting period, fund managers Lanny H. Sachnowitz and Monika H. Degan sought
to identify companies that have experienced above-average growth in earnings and
have excellent prospects for future growth.
Both at the beginning of the reporting period and at its end, the four
largest sectors in the fund's portfolio were information technology, health
care, consumer discretionary, and financials. Keep in mind that managers focus
on individual companies rather than particular industries or sectors. The fund
had 106 equity holdings at the end of the reporting period compared to 137 at
its outset.
We encourage you to visit our Web site, aiminvestments.com, for a wealth of
information about your fund, including regular performance updates, quarterly
details of portfolio composition, and much more. From our home page, click on
Products & Performance, then Mutual Funds, and then select the type of
information you wish to view.
IN CLOSING
I thank you for your continued participation in AIM Weingarten Fund, and I look
forward to reporting to you again in six months. If you have any questions,
please consult your financial advisor to help you with your investment choices.
As always, members of our award-winning Client Services department are ready to
help. They can be reached at 800-959-4246.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
April 30, 2003
SUPPLEMENT TO SEMIANNUAL REPORT DATED 4/30/03
AIM WEINGARTEN FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class
shareholders with a performance overview specific to their holdings.
Institutional Class shares are offered exclusively to institutional investors,
including defined contribution plans that meet certain criteria. Performance of
Institutional Class shares will differ from performance of Class A shares due
to differing sales charges and class expenses.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 4/30/03
================================================================================
[BAR CHART]
Inception (10/8/91) 4.58%
10 years 4.50
5 years -9.49
1 year -17.80
6 months 3.43*
*NOT ANNUALIZED
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For Periods Ended 3/31/03 (most recent calendar quarter-end)
================================================================================
[BAR CHART]
Inception (10/8/91) 3.95%
10 years 3.29
5 years -10.48
1 year -29.62
================================================================================
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. All returns assume
reinvestment of distributions at net asset value. Investment return and
principal value will fluctuate so your shares, when redeemed, may be worth more
or less than their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or call
AIM toll free at 800-451-4246.
================================================================================
[AIM INVESTMENTS LOGO APPEARS HERE]
--SERVICEMARK--
YOUR GOALS. OUR SOLUTIONS.
--SERVICEMARK--
A I M DISTRIBUTORS, INC. WEI-INS-2
FINANCIALS
SCHEDULE OF INVESTMENTS
April 30, 2003
(Unaudited)
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-99.97%
ADVERTISING-1.22%
Omnicom Group Inc. 500,000 $ 30,950,000
==========================================================================
AEROSPACE & DEFENSE-1.70%
Lockheed Martin Corp. 600,000 30,030,000
- --------------------------------------------------------------------------
Northrop Grumman Corp. 150,000 13,192,500
==========================================================================
43,222,500
==========================================================================
AIRLINES-1.35%
Ryanair Holdings PLC-ADR (Ireland)(a) 500,000 19,835,000
- --------------------------------------------------------------------------
Southwest Airlines Co. 900,000 14,364,000
==========================================================================
34,199,000
==========================================================================
APPAREL RETAIL-2.54%
Gap, Inc. (The) 3,000,000 49,890,000
- --------------------------------------------------------------------------
TJX Cos., Inc. (The) 750,000 14,437,500
==========================================================================
64,327,500
==========================================================================
APPLICATION SOFTWARE-2.00%
Electronic Arts Inc.(a)(b) 400,000 23,708,000
- --------------------------------------------------------------------------
Intuit Inc.(a) 350,000 13,573,000
- --------------------------------------------------------------------------
Mercury Interactive Corp.(a) 400,000 13,576,000
==========================================================================
50,857,000
==========================================================================
BANKS-1.79%
Bank of America Corp. 450,000 33,322,500
- --------------------------------------------------------------------------
Wells Fargo & Co. 250,000 12,065,000
==========================================================================
45,387,500
==========================================================================
BIOTECHNOLOGY-3.63%
Amgen Inc.(a)(b) 900,000 55,179,000
- --------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 800,000 36,912,000
==========================================================================
92,091,000
==========================================================================
BREWERS-0.98%
Anheuser-Busch Cos., Inc. 500,000 24,940,000
==========================================================================
BROADCASTING & CABLE TV-1.58%
Clear Channel Communications, Inc.(a) 600,000 23,466,000
- --------------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 500,000 16,550,000
==========================================================================
40,016,000
==========================================================================
BUILDING PRODUCTS-0.33%
Masco Corp. 400,000 8,428,000
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
COMPUTER & ELECTRONICS RETAIL-1.41%
Best Buy Co., Inc.(a) 600,000 $ 20,748,000
- --------------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 350,000 14,924,000
==========================================================================
35,672,000
==========================================================================
COMPUTER HARDWARE-3.81%
Dell Computer Corp.(a) 1,750,000 50,592,500
- --------------------------------------------------------------------------
Hewlett-Packard Co. 1,000,000 16,300,000
- --------------------------------------------------------------------------
International Business Machines Corp. 350,000 29,715,000
==========================================================================
96,607,500
==========================================================================
COMPUTER STORAGE & PERIPHERALS-0.72%
EMC Corp.(a) 2,000,000 18,180,000
==========================================================================
CONSUMER FINANCE-0.37%
MBNA Corp. 500,000 9,450,000
==========================================================================
DATA PROCESSING SERVICES-1.94%
First Data Corp. 400,000 15,692,000
- --------------------------------------------------------------------------
Fiserv, Inc.(a) 400,000 11,776,000
- --------------------------------------------------------------------------
Paychex, Inc. 700,000 21,798,000
==========================================================================
49,266,000
==========================================================================
DEPARTMENT STORES-1.12%
Kohl's Corp.(a) 500,000 28,400,000
==========================================================================
DIVERSIFIED FINANCIAL SERVICES-7.59%
American Express Co. 450,000 17,037,000
- --------------------------------------------------------------------------
Citigroup Inc. 1,150,000 45,137,500
- --------------------------------------------------------------------------
Fannie Mae 350,000 25,336,500
- --------------------------------------------------------------------------
Freddie Mac 250,000 14,475,000
- --------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 550,000 41,745,000
- --------------------------------------------------------------------------
J.P. Morgan Chase & Co. 900,000 26,415,000
- --------------------------------------------------------------------------
SLM Corp. 200,000 22,400,000
==========================================================================
192,546,000
==========================================================================
DRUG RETAIL-0.97%
Walgreen Co. 800,000 24,688,000
==========================================================================
EMPLOYMENT SERVICES-0.58%
Robert Half International Inc.(a) 900,000 14,652,000
==========================================================================
FOOD DISTRIBUTORS-0.79%
SYSCO Corp.(b) 700,000 20,111,000
==========================================================================
FOOD RETAIL-0.94%
Whole Foods Market, Inc.(a)(b) 400,000 23,744,000
==========================================================================
</Table>
F-1
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
GENERAL MERCHANDISE STORES-1.89%
Family Dollar Stores, Inc. 400,000 $ 13,676,000
- --------------------------------------------------------------------------
Target Corp. 600,000 20,064,000
- --------------------------------------------------------------------------
Wal-Mart Stores, Inc. 250,000 14,080,000
==========================================================================
47,820,000
==========================================================================
HEALTH CARE DISTRIBUTORS & SERVICES-1.06%
Cardinal Health, Inc. 250,000 13,820,000
- --------------------------------------------------------------------------
Caremark Rx, Inc.(a) 650,000 12,941,500
==========================================================================
26,761,500
==========================================================================
HEALTH CARE EQUIPMENT-4.21%
Becton, Dickinson & Co. 750,000 26,550,000
- --------------------------------------------------------------------------
Boston Scientific Corp.(a) 900,000 38,745,000
- --------------------------------------------------------------------------
Medtronic, Inc. 450,000 21,483,000
- --------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 425,000 19,932,500
==========================================================================
106,710,500
==========================================================================
HEALTH CARE SUPPLIES-1.04%
Alcon, Inc. (Switzerland)(a) 600,000 26,430,000
==========================================================================
HOUSEHOLD PRODUCTS-2.29%
Colgate-Palmolive Co. 350,000 20,009,500
- --------------------------------------------------------------------------
Procter & Gamble Co. (The) 425,000 38,186,250
==========================================================================
58,195,750
==========================================================================
HOUSEWARES & SPECIALTIES-1.08%
Newell Rubbermaid Inc. 900,000 27,432,000
==========================================================================
INDUSTRIAL CONGLOMERATES-2.77%
3M Co. 125,000 15,755,000
- --------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 3,500,000 54,600,000
==========================================================================
70,355,000
==========================================================================
INDUSTRIAL GASES-0.57%
Praxair, Inc. 250,000 14,520,000
==========================================================================
INDUSTRIAL MACHINERY-1.05%
Danaher Corp. 200,000 13,796,000
- --------------------------------------------------------------------------
Illinois Tool Works Inc. 200,000 12,796,000
==========================================================================
26,592,000
==========================================================================
INSURANCE BROKERS-0.34%
Willis Group Holdings Ltd. (Bermuda) 274,900 8,574,131
==========================================================================
INTERNET RETAIL-2.44%
Amazon.com, Inc.(a) 1,350,000 38,704,500
- --------------------------------------------------------------------------
eBay Inc.(a) 250,000 23,192,500
==========================================================================
61,897,000
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES-1.32%
Yahoo! Inc.(a) 1,350,000 $ 33,453,000
==========================================================================
IT CONSULTING & SERVICES-1.32%
Accenture Ltd.-Class A (Bermuda)(a) 900,000 14,418,000
- --------------------------------------------------------------------------
Affiliated Computer Services, Inc.-Class A(a) 400,000 19,080,000
==========================================================================
33,498,000
==========================================================================
MANAGED HEALTH CARE-2.86%
Aetna Inc. 900,000 44,820,000
- --------------------------------------------------------------------------
UnitedHealth Group Inc. 300,000 27,639,000
==========================================================================
72,459,000
==========================================================================
MOTORCYCLE MANUFACTURERS-0.61%
Harley-Davidson, Inc. 350,000 15,554,000
==========================================================================
MOVIES & ENTERTAINMENT-0.51%
Walt Disney Co. (The) 700,000 13,062,000
==========================================================================
MULTI-LINE INSURANCE-0.91%
American International Group, Inc. 400,000 23,180,000
==========================================================================
NETWORKING EQUIPMENT-2.44%
Cisco Systems, Inc.(a) 3,500,000 52,640,000
- --------------------------------------------------------------------------
Juniper Networks, Inc.(a) 900,000 9,198,000
==========================================================================
61,838,000
==========================================================================
OIL & GAS DRILLING-1.04%
ENSCO International Inc. 500,000 12,700,000
- --------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 350,000 13,720,000
==========================================================================
26,420,000
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-0.74%
Schlumberger Ltd. (Netherlands) 450,000 18,868,500
==========================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.56%
Devon Energy Corp. 300,000 14,175,000
==========================================================================
PERSONAL PRODUCTS-0.48%
Gillette Co. (The) 400,000 12,180,000
==========================================================================
PHARMACEUTICALS-8.18%
Allergan, Inc. 100,000 7,025,000
- --------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 400,000 20,688,000
- --------------------------------------------------------------------------
Johnson & Johnson 500,000 28,180,000
- --------------------------------------------------------------------------
Lilly (Eli) & Co. 450,000 28,719,000
- --------------------------------------------------------------------------
Pfizer Inc. 2,650,000 81,487,500
- --------------------------------------------------------------------------
Wyeth 950,000 41,353,500
==========================================================================
207,453,000
==========================================================================
RESTAURANTS-0.37%
Starbucks Corp.(a) 400,000 9,396,000
==========================================================================
</Table>
F-2
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT-2.94%
Applied Materials, Inc.(a) 2,700,000 $ 39,420,000
- --------------------------------------------------------------------------
Novellus Systems, Inc.(a) 1,250,000 35,050,000
==========================================================================
74,470,000
==========================================================================
SEMICONDUCTORS-6.78%
Analog Devices, Inc.(a) 1,350,000 44,712,000
- --------------------------------------------------------------------------
Broadcom Corp.-Class A(a) 500,000 8,945,000
- --------------------------------------------------------------------------
Intel Corp. 1,000,000 18,400,000
- --------------------------------------------------------------------------
Linear Technology Corp. 900,000 31,023,000
- --------------------------------------------------------------------------
Maxim Integrated Products, Inc. 350,000 13,751,500
- --------------------------------------------------------------------------
Microchip Technology Inc. 600,000 12,474,000
- --------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 2,500,000 20,925,000
- --------------------------------------------------------------------------
Xilinx, Inc.(a) 800,000 21,656,000
==========================================================================
171,886,500
==========================================================================
SOFT DRINKS-0.77%
PepsiCo, Inc. 450,000 19,476,000
==========================================================================
SPECIALTY CHEMICALS-0.60%
Ecolab Inc. 300,000 15,327,000
==========================================================================
SPECIALTY STORES-1.65%
AutoZone, Inc.(a) 175,000 14,141,750
- --------------------------------------------------------------------------
Bed Bath & Beyond Inc.(a) 700,000 27,657,000
==========================================================================
41,798,750
==========================================================================
SYSTEMS SOFTWARE-6.74%
Microsoft Corp. 3,500,000 89,495,000
- --------------------------------------------------------------------------
Oracle Corp.(a) 3,350,000 39,798,000
- --------------------------------------------------------------------------
Symantec Corp.(a) 450,000 19,777,500
- --------------------------------------------------------------------------
VERITAS Software Corp.(a) 1,000,000 22,010,000
==========================================================================
171,080,500
==========================================================================
TELECOMMUNICATIONS EQUIPMENT-1.39%
Nortel Networks Corp. (Canada)(a) 7,500,000 19,350,000
- --------------------------------------------------------------------------
QUALCOMM Inc. 500,000 15,945,000
==========================================================================
35,295,000
==========================================================================
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE
- --------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES-1.66%
AT&T Wireless Services Inc.(a) 4,000,000 $ 25,840,000
- --------------------------------------------------------------------------
Vodafone Group PLC-ADR (United Kingdom) 825,000 16,302,000
==========================================================================
42,142,000
==========================================================================
Total Common Stocks & Other Equity
Interests (Cost $2,323,042,855) 2,536,035,131
__________________________________________________________________________
==========================================================================
</Table>
<Table>
<Caption>
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
OPTIONS PURCHASED-0.01%
PUTS-0.01%
Tyco International Ltd. (Bermuda) (Industrial
Conglomerates) (Cost $201,000) 3,000 $ 15 Jun-03 217,500
_________________________________________________________________________________________________
=================================================================================================
</Table>
<Table>
<Caption>
SHARES
MONEY MARKET FUNDS-0.90%
STIC Liquid Assets Portfolio(c) 11,407,567 11,407,567
- --------------------------------------------------------------------------
STIC Prime Portfolio(c) 11,407,567 11,407,567
==========================================================================
Total Money Market Funds (Cost $22,815,134) 22,815,134
==========================================================================
TOTAL INVESTMENTS-100.88% (excluding
investments purchased with cash collateral
from securities loaned) (Cost
$2,346,058,989) 2,559,067,765
__________________________________________________________________________
==========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED
MONEY MARKET FUNDS-2.95%
STIC Liquid Assets Portfolio(c)(d) 74,815,700 74,815,700
==========================================================================
Total Money Market Funds (purchased with
cash collateral from securities loaned)
(Cost $74,815,700) 74,815,700
__________________________________________________________________________
==========================================================================
TOTAL INVESTMENTS-103.83% (Cost
$2,420,874,689) 2,633,883,465
==========================================================================
OTHER ASSETS LESS LIABILITIES-(3.83%) (97,215,936)
==========================================================================
NET ASSETS-100.00% $2,536,667,529
__________________________________________________________________________
==========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</Table>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 1
section G and Note 7.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
(d) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
See Notes to Financial Statements.
F-3
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
(Unaudited)
<Table>
ASSETS:
Investments, at market value (cost
$2,420,874,689)* $ 2,633,883,465
- ------------------------------------------------------------
Receivables for:
Investments sold 16,683,417
- ------------------------------------------------------------
Fund shares sold 926,984
- ------------------------------------------------------------
Dividends 931,062
- ------------------------------------------------------------
Investment for deferred compensation plan 172,951
- ------------------------------------------------------------
Other assets 122,054
============================================================
Total assets 2,652,719,933
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 26,462,190
- ------------------------------------------------------------
Fund shares reacquired 4,474,610
- ------------------------------------------------------------
Options written (premiums received
$3,974,726) 6,035,000
- ------------------------------------------------------------
Deferred compensation plan 172,951
- ------------------------------------------------------------
Collateral upon return of securities
loaned 74,815,700
- ------------------------------------------------------------
Accrued distribution fees 1,458,953
- ------------------------------------------------------------
Accrued trustees' fees 3,034
- ------------------------------------------------------------
Accrued transfer agent fees 2,101,646
- ------------------------------------------------------------
Accrued operating expenses 528,320
============================================================
Total liabilities 116,052,404
============================================================
Net assets applicable to shares outstanding $ 2,536,667,529
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 6,007,229,783
- ------------------------------------------------------------
Undistributed net investment income (loss) (11,565,238)
- ------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (3,669,945,583)
- ------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 210,948,567
============================================================
$ 2,536,667,529
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 1,950,008,669
____________________________________________________________
============================================================
Class B $ 502,344,229
____________________________________________________________
============================================================
Class C $ 82,305,326
____________________________________________________________
============================================================
Class R $ 184,406
____________________________________________________________
============================================================
Institutional Class $ 1,824,899
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Class A 199,732,253
____________________________________________________________
============================================================
Class B 55,468,750
____________________________________________________________
============================================================
Class C 9,079,099
____________________________________________________________
============================================================
Class R 18,910
____________________________________________________________
============================================================
Institutional Class 178,102
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 9.76
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $9.76 divided by
94.50%) $ 10.33
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 9.06
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 9.07
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 9.75
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 10.25
____________________________________________________________
============================================================
</Table>
* At April 30, 2003, securities with an aggregate market value of $69,990,662
were on loan to brokers.
See Notes to Financial Statements.
F-4
STATEMENT OF OPERATIONS
For the six months ended April 30, 2003
(Unaudited)
<Table>
INVESTMENT INCOME:
Dividends $ 9,932,650
- ---------------------------------------------------------------------------
Dividends from affiliated money market funds 237,319
- ---------------------------------------------------------------------------
Interest 3,106
- ---------------------------------------------------------------------------
Security lending income 46,824
===========================================================================
Total investment income 10,219,899
===========================================================================
EXPENSES:
Advisory fees 8,207,425
- ---------------------------------------------------------------------------
Administrative services fees 246,017
- ---------------------------------------------------------------------------
Custodian fees 81,963
- ---------------------------------------------------------------------------
Distribution fees -- Class A 2,935,429
- ---------------------------------------------------------------------------
Distribution fees -- Class B 2,522,191
- ---------------------------------------------------------------------------
Distribution fees -- Class C 409,011
- ---------------------------------------------------------------------------
Distribution fees -- Class R 289
- ---------------------------------------------------------------------------
Transfer agent fees 6,464,671
- ---------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 871
- ---------------------------------------------------------------------------
Trustees' fees 12,595
- ---------------------------------------------------------------------------
Other 492,623
===========================================================================
Total expenses 21,373,085
===========================================================================
Less: Fees waived and expenses paid indirectly (25,101)
===========================================================================
Net expenses 21,347,984
===========================================================================
Net investment income (loss) (11,128,085)
===========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (247,060,918)
- ---------------------------------------------------------------------------
Foreign currencies 115,356
- ---------------------------------------------------------------------------
Option contracts written (271,201)
===========================================================================
(247,216,763)
===========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 330,260,280
- ---------------------------------------------------------------------------
Foreign currencies 39
- ---------------------------------------------------------------------------
Option contracts written (2,104,891)
===========================================================================
328,155,428
===========================================================================
Net gain from investment securities, foreign currencies and
option contracts 80,938,665
===========================================================================
Net increase in net assets resulting from operations $ 69,810,580
___________________________________________________________________________
===========================================================================
</Table>
See Notes to Financial Statements.
F-5
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 2003 and the year ended October 31, 2002
(Unaudited)
<Table>
<Caption>
APRIL 30, OCTOBER 31,
2003 2002
- ------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (11,128,085) $ (32,392,421)
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (247,216,763) (796,583,815)
- ------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, futures
contracts and option contracts 328,155,428 (246,187,556)
================================================================================================
Net increase (decrease) in net assets resulting from
operations 69,810,580 (1,075,163,792)
================================================================================================
Share transactions-net:
Class A (210,607,658) (1,064,806,254)
- ------------------------------------------------------------------------------------------------
Class B (42,618,894) (180,109,268)
- ------------------------------------------------------------------------------------------------
Class C (6,196,189) (30,575,415)
- ------------------------------------------------------------------------------------------------
Class R 102,906 72,385
- ------------------------------------------------------------------------------------------------
Institutional Class (120,098) (5,419,461)
================================================================================================
Net increase (decrease) in net assets resulting from
share transactions (259,439,933) (1,280,838,013)
================================================================================================
Net increase (decrease) in net assets (189,629,353) (2,356,001,805)
================================================================================================
NET ASSETS:
Beginning of period 2,726,296,882 5,082,298,687
================================================================================================
End of period $ 2,536,667,529 $ 2,726,296,882
________________________________________________________________________________________________
================================================================================================
</Table>
See Notes to Financial Statements.
F-6
NOTES TO FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series portfolio of AIM Equity Funds (the
"Trust"). The Trust is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of fifteen separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers multiple classes of shares. 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 to provide growth of capital. Each
company listed in the Schedule of Investments is organized in the United States
unless otherwise noted.
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
traded in the over-the-counter market (but not securities reported on the
NASDAQ National Market System) is valued at the basis of prices furnished
by independent pricing services or market makers. Each security reported on
the NASDAQ National Market System is valued at the NASDAQ Official Closing
Price ("NOCP") as of the close of the customary trading session on the
valuation date or absent a NOCP, 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 institution-size trading in similar groups of
securities, developments related to special securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. 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 and
commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange
rates as of the close of the 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 the close of the respective
markets. Events affecting the values of such foreign securities may occur
between the times at which the particular foreign market closes 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 a
development/event is so significant that there is a reasonably high degree
of certainty as to both the effect and the degree of effect that the
development/event has actually caused that closing price to no longer
reflect actual value, the closing prices, as determined at the close of the
applicable foreign market, may be adjusted to reflect the fair value of the
affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
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 gain) 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
F-7
fluctuations arising from changes in market prices of securities held. The
combined results of changes in foreign exchange rates and the fluctuation
of market prices on investments are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
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 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. 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 risk in writing a
call option is that the Fund gives up the opportunity for profit if the
market price of the security increases and the option is exercised.
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 also include to
varying degrees, the risk of loss in excess of the variation margin
disclosed in the Statement of Assets and Liabilities.
I. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund and which are directly attributable to that class are
charged to the operations of such class. Transfer agency fees and expenses
and other shareholder recordkeeping fees and expenses are charged to each
class pursuant to a transfer agency and service agreement adopted by the
Fund with respect to such class. All other expenses are allocated among the
classes based on relative net assets.
NOTE 2--ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $350
million, plus 0.625% of the Fund's average daily net assets in excess of $350
million. AIM has voluntarily agreed to waive advisory fees of the Fund in the
amount of 25% of the advisory fee AIM receives from the affiliated money market
funds in which the Fund has invested (excluding investments made in affiliated
money market funds with cash collateral from securities loaned by the Fund). For
the six months ended April 30, 2003, AIM waived fees of $4,646. Under the terms
of a master sub-advisory agreement between AIM and A I M Capital Management,
Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to
AIM.
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, 2003, AIM
was paid $246,017 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. During the six months ended April 30, 2003,
AFS retained $3,249,635 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B, Class C, Class R and the Institutional Class shares of the
Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A shares, Class B shares, Class C shares and Class R
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.30% of the Fund's average
daily net assets of Class A shares, 1.00% of the average daily net assets of
Class B and Class C shares and 0.50% of the average daily net assets of Class R
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, Class C or Class R 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. NASD Rules also impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. Pursuant to the Plans, for the six months ended
April 30, 2003, the Class A, Class B, Class C and Class R shares paid
$2,935,429, $2,522,191, $409,011 and $289, respectively.
Front-end sales commissions and contingent deferred sales charges
(collectively the "sales charges") are not recorded as expenses of the Fund.
Front-end sales commissions are deducted from proceeds from the sales of Fund
shares prior to investment in Class A shares of the Fund. Contingent deferred
sales charges ("CDSCs") are deducted from
F-8
redemption proceeds prior to remittance to the shareholder. During six months
ended April 30, 2003, AIM Distributors retained $148,910 in front-end sales
commissions from the sale of Class A shares and $1,480, $0, $3,965 and $0 for
Class A, Class B, Class C and Class R shares, respectively, for CDSCs imposed
upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and/or AIM Distributors.
During the six months ended April 30, 2003, the Fund paid legal fees of
$3,698 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.
NOTE 3--INDIRECT EXPENSES
For the six months ended April 30, 2003, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $18,920 and reductions in
custodian fees of $1,535 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $20,455.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an
"interested person" of AIM. Trustees have the option to defer compensation
payable by the Trust. The Trustees deferring compensation have the option to
select various AIM Funds in which all or part of their deferral accounts shall
be deemed to be invested.
NOTE 5--BORROWINGS
AIM has established an interfund lending facility for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund.
During the reporting period, the Fund was a participant in a committed line
of credit facility with a syndicate administered by Citibank, N.A. The Fund
could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which were
parties to the line of credit could borrow on a first come, first served basis.
The funds which were party to the line of credit were charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee was
allocated among the funds based on their respective average net assets for the
period. The committed line of credit facility expired May 20, 2003.
During the six months ended April 30, 2003, the Fund did not borrow under
the interfund lending or the committed line of credit facility.
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities. It is
the Fund's policy to obtain additional collateral from or return excess
collateral to the borrower by the end of the next business day. Therefore, the
value of the collateral may be temporarily less than the value of the securities
on loan.
At April 30, 2003, securities with an aggregate value of $69,990,662 were on
loan to brokers. The loans were secured by cash collateral of $74,815,700
received by the Fund and subsequently invested in an affiliated money market
fund. For the six months ended April 30, 2003, the Fund received fees of $46,824
for securities lending.
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the six months ended April 30, 2003
are summarized as follows:
<Table>
<Caption>
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- ------------------------------------------------------------
Beginning of period 2,500 $ 585,867
- ------------------------------------------------------------
Written 85,660 14,384,503
- ------------------------------------------------------------
Closed (56,850) (8,990,856)
- ------------------------------------------------------------
Exercised (12,307) (1,640,983)
- ------------------------------------------------------------
Expired (1,503) (363,805)
============================================================
End of period 17,500 $ 3,974,726
____________________________________________________________
============================================================
</Table>
Open call option contracts written at April 30, 2003 were as follows:
<Table>
<Caption>
APRIL 30,
2003 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
- -------------------------------------------------------------------------------------------------
Amgen Inc. Jul-03 60 2,500 $ 767,477 $1,125,000 $ (357,523)
- -------------------------------------------------------------------------------------------------
Electronic Arts Inc. Jun-03 65 2,000 333,990 175,000 158,990
- -------------------------------------------------------------------------------------------------
Electronic Arts Inc. Sep-03 70 2,000 403,827 270,000 133,827
- -------------------------------------------------------------------------------------------------
SYSCO Corp. May-03 25 7,000 1,081,467 2,625,000 (1,543,533)
- -------------------------------------------------------------------------------------------------
Whole Foods Market,
Inc. Nov-03 60 4,000 1,387,965 1,840,000 (452,035)
=================================================================================================
17,500 $3,974,726 $6,035,000 $(2,060,274)
_________________________________________________________________________________________________
=================================================================================================
</Table>
F-9
NOTE 8--TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforward) under income tax regulations. The tax character of
distributions paid during the year and the tax components of distributable
earnings will be updated at the Fund's fiscal year-end.
The Fund has a capital loss carryforward for tax purposes which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ------------------------------------------------------------
October 31, 2009 $2,559,101,338
- ------------------------------------------------------------
October 31, 2010 763,027,747
============================================================
Total capital loss carryforward $3,322,129,085
____________________________________________________________
============================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities
and money market funds) purchased and sold by the Fund during the six months
ended April 30, 2003 was $1,614,076,870 and $1,829,779,536, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of April 30, 2003 is as follows:
<Table>
Aggregate unrealized appreciation of
investment securities $ 271,893,440
- ------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (112,914,802)
============================================================
Net unrealized appreciation of investment
securities $ 158,978,638
____________________________________________________________
============================================================
Cost of investments for tax purposes is $2,474,904,827.
</Table>
NOTE 10--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A shares,
Class B shares, Class C shares, Class R shares and Institutional Class shares.
Class A shares are sold with a front-end sales charge. Class B shares and Class
C shares are sold with a CDSC. Under some circumstances, Class A shares and
Class R shares are subject to CDSCs. Class R shares and Institutional Class
shares are sold at net asset value. Generally, Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Changes in shares outstanding during the six months ended April 30,
2003 and the year ended October 31, 2002 were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
---------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 6,151,560 $ 58,141,087 16,597,940 $ 199,251,597
- -----------------------------------------------------------------------------------------------------------------------------
Class B 2,983,121 26,356,988 5,995,984 66,787,479
- -----------------------------------------------------------------------------------------------------------------------------
Class C 978,774 8,573,034 1,919,777 21,362,371
- -----------------------------------------------------------------------------------------------------------------------------
Class R* 10,990 103,421 7,975 72,385
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 7,472 73,633 45,598 504,589
=============================================================================================================================
Conversion of Class B shares to Class A shares:
Class A 141,573 1,329,862 368,013 4,307,233
- -----------------------------------------------------------------------------------------------------------------------------
Class B (152,420) (1,329,862) (393,806) (4,307,233)
=============================================================================================================================
Reacquired:
Class A (28,727,592) (270,078,607) (111,225,206) (1,268,365,084)
- -----------------------------------------------------------------------------------------------------------------------------
Class B (7,830,666) (67,646,020) (22,942,810) (242,589,514)
- -----------------------------------------------------------------------------------------------------------------------------
Class C (1,693,948) (14,769,223) (4,815,984) (51,937,786)
- -----------------------------------------------------------------------------------------------------------------------------
Class R* (55) (515) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class (19,408) (193,731) (438,298) (5,924,050)
=============================================================================================================================
(28,150,599) $(259,439,933) (114,880,817) $(1,280,838,013)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
</Table>
* Class R shares commenced sales on June 3, 2002.
F-10
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 9.47 $ 12.65 $ 28.16 $ 28.31 $ 21.72 $ 22.72
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.07)(a) (0.10) (0.14)(a) (0.10) 0.02
- -------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 0.32 (3.11) (11.87) 3.18 8.16 2.38
===============================================================================================================================
Total from investment
operations 0.29 (3.18) (11.97) 3.04 8.06 2.40
===============================================================================================================================
Less distributions:
Dividends from net investment
income -- -- -- -- (0.01) --
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gains -- -- (3.54) (3.19) (1.46) (3.40)
===============================================================================================================================
Total distributions -- -- (3.54) (3.19) (1.47) (3.40)
===============================================================================================================================
Net asset value, end of period $ 9.76 $ 9.47 $ 12.65 $ 28.16 $ 28.31 $ 21.72
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) 3.06% (25.14)% (47.38)% 10.61% 38.62% 12.34%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,950,009 $2,104,660 $4,001,552 $8,948,781 $8,089,739 $6,094,178
===============================================================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.52%(c) 1.33% 1.21% 1.03% 1.03% 1.04%
- -------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.52%(c) 1.33% 1.22% 1.07% 1.08% 1.09%
===============================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.71)%(c) (0.64)% (0.56)% (0.45)% (0.38)% 0.07%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate(d) 63% 217% 240% 145% 124% 125%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,973,170,268.
(d) Not annualized for periods less than one year.
F-11
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS B
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.82 $ 11.86 $ 26.82 $ 27.29 $ 21.12 $ 22.34
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.30 (2.89) (11.21) 3.08 7.93 2.33
================================================================================================================================
Total from investment operations 0.24 (3.04) (11.42) 2.72 7.63 2.18
================================================================================================================================
Less distributions from net realized
gains -- -- (3.54) (3.19) (1.46) (3.40)
================================================================================================================================
Net asset value, end of period $ 9.06 $ 8.82 $ 11.86 $ 26.82 $ 27.29 $ 21.12
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) 2.72% (25.63)% (47.75)% 9.76% 37.59% 11.45%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $502,344 $533,224 $922,476 $1,927,514 $1,291,456 $705,750
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.22%(c) 2.04% 1.92% 1.78% 1.82% 1.83%
- --------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.22%(c) 2.04% 1.93% 1.82% 1.87% 1.87%
================================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.41)%(c) (1.34)% (1.27)% (1.20)% (1.17)% (0.72)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate(d) 63% 217% 240% 145% 124% 125%
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$508,618,685.
(d) Not annualized for periods less than one year.
<Table>
<Caption>
CLASS C
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.83 $ 11.87 $ 26.85 $ 27.30 $ 21.14 $ 22.34
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.15)(a) (0.21) (0.36)(a) (0.30)(a) (0.15)(a)
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.30 (2.89) (11.23) 3.10 7.92 2.35
==========================================================================================================================
Total from investment operations 0.24 (3.04) (11.44) 2.74 7.62 2.20
==========================================================================================================================
Less distributions from net realized
gains -- -- (3.54) (3.19) (1.46) (3.40)
==========================================================================================================================
Net asset value, end of period $ 9.07 $ 8.83 $ 11.87 $ 26.85 $ 27.30 $ 21.14
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 2.72% (25.61)% (47.77)% 9.83% 37.50% 11.54%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $82,305 $86,455 $150,604 $301,590 $105,420 $23,107
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.22%(c) 2.04% 1.92% 1.78% 1.82% 1.83%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.22%(c) 2.04% 1.93% 1.82% 1.87% 1.87%
==========================================================================================================================
Ratio of net investment income (loss) to
average net assets (1.41)%(c) (1.34)% (1.27)% (1.20)% (1.17)% (0.72)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(d) 63% 217% 240% 145% 124% 125%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America, does not include sales charges
and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$82,480,138.
(d) Not annualized for periods less than one year.
F-12
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
CLASS R
------------------------------
JUNE 3, 2002
SIX MONTHS (DATE SALES
ENDED COMMENCED) TO
APRIL 30, OCTOBER 31,
2003 2002
- --------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.47 $ 11.36
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.03)(a)
- --------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.32 (1.86)
============================================================================================
Total from investment operations 0.28 (1.89)
============================================================================================
Net asset value, end of period $ 9.75 $ 9.47
____________________________________________________________________________________________
============================================================================================
Total return(b) 2.96% (16.64)%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 184 $ 76
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.72%(c) 1.53%(d)
- --------------------------------------------------------------------------------------------
Without fee waivers 1.72%(c) 1.53%(d)
============================================================================================
Ratio of net investment income (loss) to average net assets (0.91)%(c) (0.84)%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate(e) 63% 217%
____________________________________________________________________________________________
============================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $116,548.
(d) Annualized.
(e) Not annualized for periods less than one year.
F-13
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
---------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.91 $ 13.16 $ 29.00 $ 28.96 $ 22.18 $ 23.05
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.00)(a) (0.01)(a) (0.01) (0.06)(a) 0.02 0.10
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) 0.34 (3.24) (12.29) 3.29 8.32 2.43
=================================================================================================================================
Total from investment operations 0.34 (3.25) (12.30) 3.23 8.34 2.53
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.10) --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (3.54) (3.19) (1.46) (3.40)
=================================================================================================================================
Total distributions -- -- (3.54) (3.19) (1.56) (3.40)
=================================================================================================================================
Net asset value, end of period $10.25 $ 9.91 $ 13.16 $ 29.00 $ 28.96 $ 22.18
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) 3.43% (24.70)% (47.11)% 11.07% 39.20% 12.79%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,825 $ 1,883 $ 7,667 $18,634 $114,076 $72,884
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 0.81%(c) 0.82% 0.69% 0.64% 0.63% 0.62%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 0.81%(c) 0.82% 0.70% 0.68% 0.68% 0.67%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.01)%(c) (0.12)% (0.04)% (0.04)% 0.02% 0.49%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate(d) 63% 217% 240% 145% 124% 125%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,755,994.
(d) Not annualized for periods less than one year.
F-14
OTHER INFORMATION
TRUSTEES AND OFFICERS
<Table>
<Caption>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman and President Suite 100
Mark H. Williamson Houston, TX 77046
Mark H. Williamson
Frank S. Bayley Executive Vice President INVESTMENT ADVISOR
Bruce L. Crockett Kevin M. Carome A I M Advisors, Inc.
Senior Vice President 11 Greenway Plaza
Albert R. Dowden Suite 100
Gary T. Crum Houston, TX 77046
Edward K. Dunn Jr. Senior Vice President
SUB-ADVISOR
Jack M. Fields Dana R. Sutton
Vice President and Treasurer A I M Capital Management Inc.
Carl Frischling 11 Greenway Plaza
Stuart W. Coco Suite 100
Prema Mathai-Davis Vice President Houston, TX 77046
Lewis F. Pennock Melville B. Cox TRANSFER AGENT
Vice President
Ruth H. Quigley A I M Fund Services, Inc.
Edgar M. Larsen P.O. Box 4739
Louis S. Sklar Vice President Houston, TX 77210-4739
Nancy L. Martin CUSTODIAN
Secretary
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
COUNSEL TO THE FUND
Ballard Spahr
Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
COUNSEL TO THE TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
</Table>
THE AIM FAMILY OF FUNDS-Registered Trademark--
<Table>
DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME
AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund(2) TAXABLE
AIM Balanced Fund* AIM Developing Markets Fund
AIM Basic Balanced Fund* AIM European Growth Fund(2) AIM Floating Rate Fund
AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund
AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund
AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund(6,7)
AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund
AIM Dent Demographic Trends Fund AIM International Core Equity Fund(2) AIM Short-Term Bond Fund
AIM Diversified Dividend Fund(1) AIM International Emerging Growth Fund AIM Total Return Bond Fund
AIM Emerging Growth Fund AIM International Growth Fund(2)
AIM Large Cap Basic Value Fund TAX-FREE
AIM Large Cap Growth Fund
AIM Libra Fund AIM High Income Municipal Fund
AIM Mid Cap Basic Value Fund SECTOR EQUITY AIM Municipal Bond Fund
AIM Mid Cap Core Equity Fund(2) AIM Tax-Exempt Cash Fund
AIM Mid Cap Growth Fund AIM Global Energy Fund AIM Tax-Free Intermediate Fund(6,7)
AIM Opportunities I Fund(2,3) AIM Global Financial Services Fund
AIM Opportunities II Fund(2,3) AIM Global Health Care Fund
AIM Opportunities III Fund(2,3) AIM Global Science and Technology Fund(2)
AIM Premier Equity Fund(2) AIM Global Utilities Fund
AIM Premier Equity II Fund(2) AIM New Technology Fund
AIM Select Equity Fund AIM Real Estate Fund
AIM Small Cap Equity Fund
AIM Small Cap Growth Fund(4)
AIM Weingarten Fund
</Table>
*Domestic equity and income fund
YOUR GOALS. OUR SOLUTIONS.--Servicemark--
<Table>
Mutual Retirement Annuities College Separately Offshore Alternative Cash
Funds Products Savings Managed Products Investments Management
Plans Accounts
</Table>
(AIM INVESTMENTS LOGO APPEARS HERE)
--Servicemark--
(1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM
Diversified Dividend Fund. (2) The following fund name changes became effective
July 1, 2002: AIM Asian Growth Fund renamed AIM Asia Pacific Growth Fund; AIM
European Development Fund renamed AIM European Growth Fund; AIM Global
Telecommunications and Technology Fund renamed AIM Global Science and Technology
Fund; AIM International Equity Fund renamed AIM International Growth Fund; AIM
International Value Fund renamed AIM International Core Equity Fund; AIM Large
Cap Opportunities Fund renamed AIM Opportunities III Fund; AIM Mid Cap Equity
Fund renamed AIM Mid Cap Core Equity Fund; AIM Mid Cap Opportunities Fund
renamed AIM Opportunities II Fund; AIM Small Cap Opportunities Fund renamed AIM
Opportunities I Fund; AIM Value Fund renamed AIM Premier Equity Fund; AIM Value
II Fund renamed AIM Premier Equity II Fund. (3) Effective October 1, 2002, the
fund was reopened to new investors. (4) AIM Small Cap Growth Fund was closed to
most investors on March 18, 2002. For information on who may continue to invest
in AIM Small Cap Growth Fund, please contact your financial advisor. (5)
Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global
Value Fund. (6) Class A shares closed to new investors on October 30, 2002. (7)
Class A3 shares were first offered on October 31, 2002.
For more complete information about any AIM fund, including sales charges and
expenses, ask your financial advisor for a prospectus. Please read it carefully
before investing. This brochure is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
fund prospectus, which contains more complete information, including sales
charges and expenses. Please read it carefully before investing. If used after
July 20, 2003, this brochure must be accompanied by a fund Performance &
Commentary or by an AIM Quarterly Performance Review for the most recent
quarter-end. Mutual Funds distributed by A I M Distributors, Inc.
A I M Management Group Inc. has provided leadership in the investment management
industry since 1976 and manages $115 billion in assets for approximately 9
million shareholders, including individual investors, corporate clients and
financial institutions. The AIM Family of Funds--Registered Trademark-- is
distributed nationwide. AIM is a subsidiary of AMVESCAP PLC, one of the world's
largest independent financial services companies with $319 billion in assets
under management. Data as of March 31, 2003.
AIMinvestments.com WEI-SAR-1
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
As of June 20, 2003, an evaluation was performed under the supervision and with
the participation of the officers of AIM Equity Funds, AIM International Funds
Inc., AIM Investment Funds, AIM Special Opportunities Funds, and AIM Summit
Funds (the "Funds"), including the Principal Executive Officer ("PEO") and
Principal Financial Officer ("PFO"), of the effectiveness of the Fund's
disclosure controls and procedures. Based on that evaluation, the Fund's
officers, including the PEO and PFO, concluded that, as of June 20, 2003, the
Fund's disclosure controls and procedures were reasonably designed so as to
ensure that material information relating to the Funds is made known to the PEO
and PFO. There have been no significant changes in the Fund's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation and until the filing of this report, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b)(1) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2 under the Investment Company Act of
1940. Certification of principal executive officer and principal
financial officer as required by Section 906 of the Sarbanes-Oxley
Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ ROBERT H. GRAHAM
-------------------------------
Robert H. Graham
Principal Executive Officer
Date: June 20, 2003
By: /s/ DANA R. SUTTON
------------------------------
Dana R. Sutton
Principal Financial Officer
Date: June 20, 2003
EXHIBIT INDEX
(b)(1) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2 under the Investment Company Act of
1940. Certification of principal executive officer and principal
financial officer as required by Section 906 of the Sarbanes-Oxley
Act of 2002.