<PAGE> 1
ANNUAL REPORT / OCTOBER 31 1999
AIM AGGRESSIVE GROWTH FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
SUNFLOWERS IN THE FIELD BY ERIC ISENBURGER
SUNFLOWERS ARE AMONG THE FASTEST-GROWING PLANTS IN THE
BOTANICAL KINGDOM. THEY COME IN MANY VARIETIES AND FLOURISH
IN A WIDE RANGE OF SOILS AND CLIMATES. WE BELIEVE THE DYNAM-
IC SUNFLOWER REFLECTS THE ATTRIBUTES OF THE DIVERSE, RAPIDLY
GROWING AND FUNDAMENTALLY STRONG COMPANIES WE SEEK TO OWN
IN AIM AGGRESSIVE GROWTH FUND.
-------------------------------------
AIM Aggressive Growth Fund is for shareholders who seek long-term growth of
capital by investing in a portfolio consisting primarily of small-company
stocks which the fund's portfolio managers believe will have earnings growth in
excess of the general economy.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Aggressive Growth Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class
C share performance reflects the applicable contingent deferred sales
charge (CDSC) for the period involved. The CDSC on Class B shares declines
from 5% beginning at the time of purchase to 0% at the beginning of the
seventh year. The CDSC on Class C shares is 1% for the first year after
purchase. The performance of the fund's Class B and Class C shares will
differ from that of Class A shares due to differences in sales-charge
structure and fund expenses.
o The fund's average annual total returns, including sales charges, for the
periods ended 9/30/99 (the most recent calendar quarter end), were as
follows: for Class A shares, one year, 30.73%; five years, 15.94%; 10
years, 19.00%; inception (5/1/84), 15.25%. For Class B shares, inception
(3/1/99), 16.61%. For Class C shares, inception (3/1/99), 20.61%.
o Because Class B and Class C shares have been offered for less than one
year, total return provided is cumulative total return that has not been
annualized.
o During the fiscal year ended 10/31/99, the fund paid distributions of
$0.392 per share for Class A shares.
o Investing in smaller companies may involve greater risk and potential
reward than investing in more established companies.
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 Small Cap Funds Index represents an average of the
performance of the 30 largest small-capitalization growth funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
o The unmanaged Russell 2000 Index is generally considered representative of
the performance of the stocks of small-capitalization companies.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of
30 actively traded primarily industrial stocks.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on October 31, 1998, saw a market dominated by
THE FUND large-capitalization stocks and high-quality bonds,
APPEARS HERE] especially U.S. Treasuries. Ten months into 1998, two
well-known indexes of large-capitalization U.S. company
stocks, the S&P 500 and the Dow Jones Industrial Average,
were up by double digits, but the smaller-company stocks in
the Russell 2000 had lost 12.80%. Overseas, many markets
were languishing, especially in Asia, where many financial
difficulties originated in 1997.
In bond markets also, name-brand quality was the place
to be. The Lehman Corporate/Government Bond Index, which
follows intermediate and long-term government and investment-grade debt, was up
8.56%, while the Lehman High Yield Index, which tracks riskier "junk bonds,"
had dropped 2.30%.
It would be easy for an investor to conclude that blue chips, whether
equity or fixed-income, were the only place to be. That investor, of course,
would be wrong.
MARKETS TURN
While large-capitalization stocks continue to do very well, during 1999 markets
broadened considerably, with many investment sectors performing a complete
turnaround. Year to date by October 31, 1999, the small-cap stocks in the
Russell 2000 were back in positive territory, and the many Asian markets had
staged a comeback. The same holds true for bonds. The higher-quality Lehman
index is down 1.49% year to date through October 31, 1999, while high-yield
bonds have moved into positive returns.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the
markets' overall trend has been upward. Selecting an asset class or a market
sector on the basis of a short-term snapshot of conditions is usually unwise,
as is concentrating your portfolio in one asset class. Staying fully invested
in a diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by signs
of economic health in Europe and Asia, not to mention the prolonged U.S.
economic expansion. However, we are aware of how easily an investor could have
been misled by conditions just 12 months ago. For our shareholders, we
therefore reiterate our commitment to investing through a financial advisor. In
addition to helping you select investments appropriate to your time horizon and
risk tolerance, a financial advisor can keep you informed about how changing
market conditions affect you and your portfolio and can help assure that when
you do alter your investments, there's a logical reason for doing so. AIM
believes every investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended October 31, 1999, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative. If you have any questions or comments, we invite you to
contact us, either at our Web site, aimfunds.com, or through our Client
Services department at 800-959-4246. Information about your account is also
available through our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM AGGRESSIVE GROWTH FUND
<PAGE> 4
ANNUAL REPORT / MANAGER'S OVERVIEW
FUND REGISTERS IMPRESSIVE TOTAL RETURNS
SMALL-CAP STOCKS POSTED RESPECTABLE GAINS FOR THE FISCAL YEAR. HOW DID AIM
AGGRESSIVE GROWTH FUND PERFORM?
The fund's performance was excellent for the fiscal year ended October 31,
1999. Excluding sales charges, total return for Class A shares was 39.73%. That
beat the total returns for the Russell 2000 Index and the Lipper Small Cap
Funds Index--14.87% and 26.62%, respectively--for the same period. We credit
stock selection for the fund's outstanding performance.
WHAT WERE THE MAJOR DEVELOPMENTS IN THE U.S. STOCK MARKET?
When the fiscal year began, the stock market was rebounding from a steep
decline stemming from severe economic problems in Asia, Russia and Latin
America. The rally continued into 1999, and the Dow Jones Industrial Average
(the Dow) set a record in August. However, markets were volatile, as investors
were concerned that torrid economic growth would prompt the Federal Reserve
Board (the Fed) to tighten monetary policy to head off inflation. In separate
moves in June and August, the central bank raised the key federal funds rate
from 4.75% to 5.25%. Between June and October, stock markets were volatile.
Markets rallied in October after data showed that inflation remained relatively
subdued.
For the fiscal year, large-cap stocks outperformed mid- and small-cap
stocks, although all three classes posted impressive gains. Growth stocks
outperformed value stocks. Technology was by far the top-performing sector.
HOW DID SMALL-CAP STOCKS FARE?
At the outset of the fiscal year, small-cap stocks were in the midst of a
strong rally following months of sharp losses. The recovery continued into 1999
before sustaining a significant setback in February over concerns about
inflation and Fed policy. Small-cap stocks bounced back in April to become the
market leaders during the second quarter of 1999.
Investors found small-cap stocks attractive because of their low prices
relative to large-cap stocks and the more favorable earnings-growth prospects
for smaller companies. Small-cap stocks declined along with other equities in
August and September before rebounding in October.
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO?
We continued to reduce the number of holdings in the portfolio to the stocks of
the companies we believe have the greatest earnings-growth potential. As of
October 31, 1999, the fund had 196 holdings, about 60 fewer than six months ago
and more than 100 fewer than a year ago.
Over the last six months, we increased the fund's technology holdings from
38% to 46% while reducing the consumer-cyclical stocks from 25% to 20% of the
portfolio. Please keep in mind that our sector weightings are the result of our
stock-selection process, which is based on company earnings and not
macroeconomic predictions. We are finding more companies with excellent growth
prospects in the technology sector.
HOW DID TECHNOLOGY STOCKS FARE?
Although extremely volatile, technology stocks posted significant gains for the
year. Internet stocks surged with the growth of online commerce. Toward the end
of the reporting period, semi-conductor stocks emerged as the sector leaders.
Semiconductor firms benefited from an increase in demand for microchips for
communications and Internet infrastructure.
Tech stocks that we liked included Emulex, which designs network
connectivity products, including network access servers, printer servers and
high-speed fiber channel products. Other tech stocks in the portfolio included
Harmonic, which develops products for major communications providers, such as
cable-television operators; Microchip Technology, which makes embedded control
products for the automotive, consumer, communications, industrial and office
automation markets; and Alpha Industries, which provides integrated circuits
that help send and
FUND POSTS EXCELLENT RETURNS
Total return 10/31/98-10/31/99
excluding sales charges
================================================================================
CLASS A SHARES 39.73%
LIPPER SMALL CAP FUNDS 26.62%
RUSSELL 2000 14.87%
Class B and Class C shares began sales on March 1, 1999. Both registered
cumulative total returns, excluding sales charges, of 27.27% for the period
ended October 31.
================================================================================
-------------------------------------
WE CONTINUED TO REDUCE THE
NUMBER OF HOLDINGS IN THE PORTFOLIO
TO THE STOCKS OF THE COMPANIES
WE BELIEVE HAVE THE GREATEST EARN-
INGS-GROWTH POTENTIAL.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
<TABLE>
<CAPTION>
=====================================================================================
TOP 10 INDUSTRIES TOP 10 EQUITY HOLDINGS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Computers (Software & Services) 10.35% 1. Emulex Corp. 2.20%
2. Electronics (Semiconductors) 9.92 2. Concord EFS, Inc. 1.91
3. Communications Equipment 6.99 3. Microchip Technology, Inc. 1.76
4. Retail (Specialty-Apparel) 5.56 4. Alpha Industries, Inc. 1.75
5. Electrical Equipment 4.79 5. CDW Computer Centers, Inc 1.63
6. Services (Data Processing) 4.65 6. Powerwave Technologies, Inc. 1.49
7. Computers (Peripherals) 4.33 7. Harmonic, Inc. 1.46
8. Retail (Specialty) 4.12 8. Applied Micro Circuits Corp. 1.37
9. Computers (Networking) 2.98 9. Insight Enterprises, Inc. 1.32
10. Equipment (Semiconductors) 2.54 10. Adtran, Inc. 1.31
The fund's portfolio composition is subject to change, and there is no assurance that
the fund will continue to hold any particular security.
=====================================================================================
</TABLE>
receive radio frequencies.
We remain optimistic about the growth prospects for tech companies.
Technology is assuming an increasingly important position in the U.S. and world
economies. Just recently, adjustments were made to the Dow to reflect this
development.
WHAT WERE SOME OF THE KEY DEVELOPMENTS IN THE CONSUMER-CYCLICAL SECTOR?
Consumer-cyclical stocks performed well, although a significant portion of
these gains was recorded during the first half of the fiscal year. For much of
the period, consumer-cyclical companies benefited from a booming economy,
nearly full employment and robust sales.
Among the nation's retailers, specialty, apparel and discount
department-store chains were among the best performers. Consumers may have been
on a spending spree for much of the fiscal year, but they were selective about
where they spent their money, preferring specialty shops and discounters.
Consumer-cyclical stocks the fund owned included CDW Computer Centers,
which sells more than 46,000 computer products through catalogs, telephone
sales and the Internet; American Eagle Outfitters, which sells collegiate-style
casual wear and accessories; and O'Reilly Automotive, which sells car parts,
tools, professional service equipment and other accessories.
While consumer confidence slipped in the last few months of the fiscal
year, it remains relatively high. Consequently, analysts were predicting strong
holiday sales, which could bode well for the nation's retailers.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
The climate appears favorable for stocks, particularly for small-cap issues.
The economy is growing at a healthy pace and corporate profits are solid,
especially for smaller companies. Although there is still some question about
the Fed's future actions to keep inflation in check, we don't expect the Fed to
adopt an aggressive tightening policy. On November 16, 1999, the central bank
raised the federal funds rate to 5.5% because of the continued strong economic
expansion and adopted a neutral position on further rate hikes. Moreover, while
interest rates increased over the fiscal year, they remain relatively low.
Perhaps most significant has been the improvement in the performance of
small-cap stocks. We remain optimistic about the long-term prospects for these
stocks because of their attractive valuations and the positive earnings-growth
projections of smaller companies.
-------------------------------------
THE ECONOMY IS GROWING AT A
HEALTHY PACE AND CORPORATE
PROFITS ARE SOLID, ESPECIALLY
FOR SMALLER COMPANIES.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A
$10,000 INVESTMENT
5/1/84-10/31/99
This chart compares your fund's Class A Shares to benchmark indexes. It is
intended to give you a general idea of how your fund performed compared to the
stock market over the period 5/1/84-10/31/99. (Please note that the indexes'
performance figures are for the period 4/30/84-10/31/99).
It is important to understand the difference between your fund and an
index. An index measures the performance of a hypothetical portfolio. A market
index such as the Russell 2000 Index is not managed, incurring no sales
charges, expenses or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return.
An index of funds such as the Lipper Small Cap Funds Index includes a
number of mutual funds grouped by investment objective. Each of those funds
interprets that objective differently, and each employs a different management
style and investment strategy.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
===============================================================================
CLASS A SHARES
Inception (5/1/84) 15.51%
10 Years 19.99
5 Years 16.04
1 Year 32.03*
* 39.73% excluding sales charges
CLASS B SHARES
Inception (3/1/99) 22.27%*
* 27.27% cumulative return, excluding sales charges
CLASS C SHARES
Inception (3/1/99) 26.27*
* 27.27% cumulative return, excluding sales charges
===============================================================================
Your fund's total return includes sales charges, expenses, and management fees.
For fund performance calculations and descriptions of the indexes cited on this
page, please refer to the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 7
ANNUAL REPORT / PERFORMANCE HISTORY
IN THOUSANDS
===============================================================================
AIM Aggressive Lipper Small Cap Russell 2000
Growth Fund Funds Index Stock Index
- -------------------------------------------------------------------------------
5/1/84 9500 10000 10000
10/31/84 9587 10169 10100
10/31/85 10682 11497 11699
10/31/86 12470 13694 14297
10/31/87 10040 12379 12678
10/31/88 12100 15122 15700
10/31/89 14278 18306 18150
10/31/90 11409 14256 13199
10/31/91 21330 22245 20938
10/31/92 23363 23727 22926
10/31/93 35278 30760 30357
10/31/94 41968 31375 30250
10/31/95 59365 38770 35800
10/31/96 68134 45398 41745
10/31/97 79953 53804 53990
10/31/98 66877 46463 47596
10/31/99 93444 58830 54672
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
===============================================================================
AIM AGGRESSIVE GROWTH FUND
<PAGE> 8
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-97.03%
AIR FREIGHT-0.39%
Expeditors International of
Washington, Inc. 300,000 $ 11,212,500
- ---------------------------------------------------------------
AIRLINES-0.58%
Alaska Air Group, Inc.(a) 100,000 3,975,000
- ---------------------------------------------------------------
Ryanair Holdings PLC-ADR
(Ireland)(a) 300,000 12,375,000
- ---------------------------------------------------------------
16,350,000
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.65%
Gentex Corp.(a) 350,000 6,015,625
- ---------------------------------------------------------------
Meritor Automotive, Inc. 403,300 6,830,894
- ---------------------------------------------------------------
Tower Automotive, Inc.(a) 350,000 5,709,375
- ---------------------------------------------------------------
18,555,894
- ---------------------------------------------------------------
BANKS (REGIONAL)-1.57%
Bank United Corp.-Class A 325,000 12,675,000
- ---------------------------------------------------------------
First Republic Bank(a) 300,000 7,500,000
- ---------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 750,000 13,031,250
- ---------------------------------------------------------------
Trustmark Corp. 500,000 11,437,500
- ---------------------------------------------------------------
44,643,750
- ---------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.32%
Canandaigua Brands, Inc.-Class
A(a) 150,000 9,075,000
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-1.10%
Hispanic Broadcasting Corp.(a) 225,000 18,225,000
- ---------------------------------------------------------------
Radio One, Inc.(a) 260,000 12,967,500
- ---------------------------------------------------------------
31,192,500
- ---------------------------------------------------------------
BUILDING MATERIALS-0.68%
Elcor Corp. 450,000 11,081,250
- ---------------------------------------------------------------
Simpson Manufacturing Co., Inc.(a) 200,000 8,112,500
- ---------------------------------------------------------------
19,193,750
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.71%
Cambrex Corp. 190,200 5,753,550
- ---------------------------------------------------------------
OM Group, Inc. 500,000 18,750,000
- ---------------------------------------------------------------
Optical Coating Laboratory, Inc. 225,000 24,046,875
- ---------------------------------------------------------------
48,550,425
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-6.99%
ADTRAN, Inc.(a) 1,000,000 37,125,000
- ---------------------------------------------------------------
ANTEC Corp.(a) 200,000 9,700,000
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 275,000 31,212,500
- ---------------------------------------------------------------
Dycom Industries, Inc.(a) 311,700 10,149,731
- ---------------------------------------------------------------
Harmonic, Inc.(a) 700,000 41,562,500
- ---------------------------------------------------------------
MasTec, Inc.(a) 500,000 16,375,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMENT-(CONTINUED)
Polycom, Inc.(a) 600,000 $ 30,000,000
- ---------------------------------------------------------------
Proxim, Inc.(a) 250,000 11,703,125
- ---------------------------------------------------------------
Sycamore Networks, Inc.(a) 50,000 10,750,000
- ---------------------------------------------------------------
198,577,856
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.64%
National Instruments Corp.(a) 1,000,000 30,062,500
- ---------------------------------------------------------------
Visual Networks, Inc.(a) 400,000 16,650,000
- ---------------------------------------------------------------
46,712,500
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-2.98%
Emulex Corp.(a) 400,000 62,375,000
- ---------------------------------------------------------------
Foundry Networks, Inc.(a) 50,100 9,493,950
- ---------------------------------------------------------------
Gadzoox Networks, Inc. 6,300 299,407
- ---------------------------------------------------------------
VeriSign, Inc.(a) 100,000 12,350,000
- ---------------------------------------------------------------
84,518,357
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-4.33%
Actel Corp.(a) 439,500 8,295,562
- ---------------------------------------------------------------
Cybex Computer Products Corp.(a) 350,000 13,671,875
- ---------------------------------------------------------------
DSP Communications, Inc.(a) 650,000 22,871,875
- ---------------------------------------------------------------
Network Appliance, Inc.(a) 125,000 9,250,000
- ---------------------------------------------------------------
QLogic Corp.(a) 300,000 31,237,500
- ---------------------------------------------------------------
SanDisk Corp.(a) 400,000 24,250,000
- ---------------------------------------------------------------
Xircom, Inc.(a) 264,400 13,335,675
- ---------------------------------------------------------------
122,912,487
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-10.35%
Business Objects S.A.-ADR
(France)(a) 250,000 18,000,000
- ---------------------------------------------------------------
Check Point Software Technologies
Ltd. (Israel)(a) 300,000 34,706,250
- ---------------------------------------------------------------
Citrix Systems, Inc.(a) 250,000 16,031,250
- ---------------------------------------------------------------
Concord Communications, Inc.(a) 150,000 7,790,625
- ---------------------------------------------------------------
Electronics for Imaging, Inc.(a) 400,000 16,125,000
- ---------------------------------------------------------------
Gemstar International Group Ltd.(a) 200,000 17,375,000
- ---------------------------------------------------------------
ISS Group, Inc.(a) 200,000 7,625,000
- ---------------------------------------------------------------
Macromedia, Inc.(a) 225,000 14,498,437
- ---------------------------------------------------------------
Mercury Interactive Corp.(a) 300,000 24,337,500
- ---------------------------------------------------------------
Micromuse, Inc.(a) 125,000 13,359,375
- ---------------------------------------------------------------
Mission Critical Software, Inc.(a) 238,900 14,065,237
- ---------------------------------------------------------------
Peregrine Systems, Inc.(a) 250,000 10,968,750
- ---------------------------------------------------------------
QRS Corp.(a) 152,550 8,485,594
- ---------------------------------------------------------------
Rational Software Corp.(a) 550,000 23,512,500
- ---------------------------------------------------------------
ScanSource, Inc.(a) 200,000 6,775,000
- ---------------------------------------------------------------
Symantec Corp.(a) 250,000 11,937,500
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Transaction Systems Architects,
Inc.- Class A(a) 200,000 $ 6,150,000
- ---------------------------------------------------------------
VERITAS Software Corp.(a) 200,000 21,575,000
- ---------------------------------------------------------------
Verity, Inc.(a) 300,000 20,662,500
- ---------------------------------------------------------------
293,980,518
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.44%
Fossil, Inc.(a) 450,000 12,431,250
- ---------------------------------------------------------------
CONSUMER FINANCE-0.27%
AmeriCredit Corp.(a) 250,000 4,343,750
- ---------------------------------------------------------------
Doral Financial Corp. 251,200 3,218,500
- ---------------------------------------------------------------
7,562,250
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.53%
Patterson Dental Co.(a) 335,900 15,136,494
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-4.79%
Black Box Corp.(a) 300,000 15,225,000
- ---------------------------------------------------------------
CommScope, Inc.(a) 500,000 19,937,500
- ---------------------------------------------------------------
Cree Research, Inc.(a) 600,000 25,612,500
- ---------------------------------------------------------------
DII Group, Inc.(a) 350,000 12,600,000
- ---------------------------------------------------------------
Pinnacle Systems, Inc.(a) 400,000 11,100,000
- ---------------------------------------------------------------
Sanmina Corp.(a) 200,000 18,012,500
- ---------------------------------------------------------------
Sawtek, Inc.(a) 400,000 16,400,000
- ---------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 700,000 17,106,250
- ---------------------------------------------------------------
135,993,750
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.56%
C-COR.net Corp.(a) 150,000 5,887,500
- ---------------------------------------------------------------
Power-One, Inc.(a) 500,000 10,000,000
- ---------------------------------------------------------------
15,887,500
- ---------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.14%
Aeroflex, Inc.(a) 700,000 3,893,750
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-2.50%
Alpha Industries, Inc.(a) 899,950 49,722,237
- ---------------------------------------------------------------
Waters Corp.(a) 400,000 21,250,000
- ---------------------------------------------------------------
70,972,237
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-9.92%
ANADIGICS, Inc.(a) 400,000 15,400,000
- ---------------------------------------------------------------
Applied Micro Circuits Corp.(a) 500,000 38,906,250
- ---------------------------------------------------------------
ATMI, Inc.(a) 500,000 13,468,750
- ---------------------------------------------------------------
Burr-Brown Corp.(a) 300,000 11,793,750
- ---------------------------------------------------------------
Dallas Semiconductor Corp. 350,000 20,606,250
- ---------------------------------------------------------------
Micrel, Inc.(a) 300,000 16,312,500
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 750,000 49,968,750
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 200,000 18,850,000
- ---------------------------------------------------------------
SDL, Inc.(a) 300,000 36,993,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS)-(CONTINUED)
Semtech Corp.(a) 600,000 $ 22,987,500
- ---------------------------------------------------------------
Texas Instruments, Inc. 251,150 22,540,712
- ---------------------------------------------------------------
TranSwitch Corp.(a) 100,000 4,706,250
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 200,000 9,175,000
- ---------------------------------------------------------------
281,709,462
- ---------------------------------------------------------------
ENTERTAINMENT-0.18%
Cinar Films, Inc.-Class B
(Canada)(a) 300,000 5,212,500
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.54%
Advanced Energy Industries, Inc.(a) 400,000 16,450,000
- ---------------------------------------------------------------
Asyst Technologies, Inc.(a) 500,000 19,375,000
- ---------------------------------------------------------------
Brooks Automation, Inc.(a) 200,000 3,800,000
- ---------------------------------------------------------------
Credence Systems Corp.(a) 300,000 13,687,500
- ---------------------------------------------------------------
Cymer, Inc.(a) 200,000 7,387,500
- ---------------------------------------------------------------
Etec Systems, Inc.(a) 300,000 11,456,250
- ---------------------------------------------------------------
72,156,250
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.73%
NCO Group, Inc.(a) 200,000 8,475,000
- ---------------------------------------------------------------
SEI Investments Co. 125,000 12,183,594
- ---------------------------------------------------------------
20,658,594
- ---------------------------------------------------------------
FOODS-0.44%
Hain Food Group, Inc. (The)(a) 500,000 12,531,250
- ---------------------------------------------------------------
FOOTWEAR-0.50%
Steven Madden, Ltd.(a) 500,000 6,125,000
- ---------------------------------------------------------------
Vans, Inc.(a)(b) 718,400 8,082,000
- ---------------------------------------------------------------
14,207,000
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.43%
Station Casinos, Inc.(a) 500,000 12,093,750
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.22%
Alpharma, Inc.-Class A 495,834 17,447,159
- ---------------------------------------------------------------
Biovail Corporation International
(Canada)(a) 175,000 9,657,813
- ---------------------------------------------------------------
Medicis Pharmaceutical
Corp.-Class A(a) 243,000 7,411,500
- ---------------------------------------------------------------
34,516,472
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.30%
Health Management Associates,
Inc.-Class A(a) 500,000 4,437,500
- ---------------------------------------------------------------
Province Healthcare Co.(a) 250,000 4,031,250
- ---------------------------------------------------------------
8,468,750
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.56%
Express Scripts, Inc.-Class A(a) 325,000 15,965,625
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.77%
ResMed, Inc.(a) 250,000 $ 8,656,250
- ---------------------------------------------------------------
Sybron International Corp.(a) 250,000 5,953,125
- ---------------------------------------------------------------
Syncor International Corp.(a) 132,000 4,834,500
- ---------------------------------------------------------------
VISX, Inc.(a) 250,000 15,640,625
- ---------------------------------------------------------------
Xomed Surgical Products, Inc.(a) 250,000 15,203,125
- ---------------------------------------------------------------
50,287,625
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-1.51%
Advance Paradigm, Inc.(a) 100,000 4,262,500
- ---------------------------------------------------------------
Hooper Holmes, Inc. 600,000 16,125,000
- ---------------------------------------------------------------
OEC Medical Systems, Inc.(a) 350,000 12,468,750
- ---------------------------------------------------------------
Res-Care, Inc.(a) 150,000 2,184,375
- ---------------------------------------------------------------
Techne Corp.(a) 200,000 7,875,000
- ---------------------------------------------------------------
42,915,625
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.52%
Hambrecht & Quist Group(a) 300,000 14,812,500
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.47%
Affiliated Managers Group,
Inc.(a) 100,000 2,675,000
- ---------------------------------------------------------------
Eaton Vance Corp. 316,100 10,806,669
- ---------------------------------------------------------------
13,481,669
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.66%
International Speedway
Corp.-Class A 195,100 10,072,038
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 200,000 8,725,000
- ---------------------------------------------------------------
18,797,038
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.92%
Kopin Corp.(a) 248,900 10,453,800
- ---------------------------------------------------------------
Pentair, Inc. 150,000 5,643,750
- ---------------------------------------------------------------
Spartech Corp. 350,000 10,018,750
- ---------------------------------------------------------------
26,116,300
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.45%
Astec Industries, Inc.(a) 300,000 7,031,250
- ---------------------------------------------------------------
Jore Corp.(a) 500,000 5,812,500
- ---------------------------------------------------------------
12,843,750
- ---------------------------------------------------------------
NATURAL GAS-0.46%
Kinder Morgan, Inc. 650,000 13,081,250
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-2.41%
Cal Dive International, Inc.(a) 200,000 6,725,000
- ---------------------------------------------------------------
Core Laboratories N.V.
(Netherlands)(a) 750,000 13,781,250
- ---------------------------------------------------------------
Global Industries Ltd.(a) 400,000 3,200,000
- ---------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 600,000 9,712,500
- ---------------------------------------------------------------
Maverick Tube Corp.(a)(b) 1,000,000 18,500,000
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 250,000 3,390,625
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Patterson Energy, Inc.(a) 1,000,000 $ 12,812,500
- ---------------------------------------------------------------
Varco International, Inc.(a) 28,300 298,919
- ---------------------------------------------------------------
68,420,794
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.20%
Cabot Oil & Gas Corp.-Class A 250,000 4,031,250
- ---------------------------------------------------------------
Evergreen Resources, Inc.(a) 375,000 8,109,375
- ---------------------------------------------------------------
Newfield Exploration Co.(a) 500,000 14,718,750
- ---------------------------------------------------------------
Stone Energy Corp.(a) 150,000 7,293,750
- ---------------------------------------------------------------
34,153,125
- ---------------------------------------------------------------
PERSONAL CARE-0.11%
Steiner Leisure Ltd.(a) 162,500 3,077,344
- ---------------------------------------------------------------
PUBLISHING-0.38%
IDG Books Worldwide, Inc.-Class
A(a) 400,000 7,150,000
- ---------------------------------------------------------------
Meredith Corp. 100,000 3,568,750
- ---------------------------------------------------------------
10,718,750
- ---------------------------------------------------------------
RAILROADS-0.21%
MotivePower Industries, Inc.(a) 500,000 5,968,750
- ---------------------------------------------------------------
RESTAURANTS-2.28%
CEC Entertainment, Inc.(a) 800,000 25,650,000
- ---------------------------------------------------------------
Jack in the Box, Inc.(a) 600,000 14,437,500
- ---------------------------------------------------------------
Papa John's International, Inc.(a) 100,000 3,737,500
- ---------------------------------------------------------------
Sonic Corp.(a) 750,000 21,000,000
- ---------------------------------------------------------------
64,825,000
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.63%
CDW Computer Centers, Inc.(a) 750,000 46,312,500
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.43%
99 Cents Only Stores(a) 411,381 12,290,007
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.62%
Wild Oats Markets, Inc.(a) 500,000 17,625,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-4.12%
BOWLIN Outdoor Advertising &
Travel Centers Inc.(a) 179,200 851,200
- ---------------------------------------------------------------
Cost Plus, Inc.(a) 375,000 13,687,500
- ---------------------------------------------------------------
Footstar, Inc.(a) 150,000 5,250,000
- ---------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 200,000 3,187,500
- ---------------------------------------------------------------
Linens 'n Things, Inc.(a) 450,000 17,887,500
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 600,000 20,137,500
- ---------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 750,000 32,718,750
- ---------------------------------------------------------------
Sunglass Hut International, Inc.(a) 353,200 4,260,475
- ---------------------------------------------------------------
Tuesday Morning Corp.(a) 150,000 3,450,000
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-(CONTINUED)
Zale Corp.(a) 375,000 $ 15,703,125
- ---------------------------------------------------------------
117,133,550
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-5.56%
American Eagle Outfitters, Inc.(a) 749,350 32,081,547
- ---------------------------------------------------------------
AnnTaylor Stores Corp.(a) 450,000 19,153,125
- ---------------------------------------------------------------
Buckle, Inc. (The)(a) 750,000 12,375,000
- ---------------------------------------------------------------
Children's Place Retail Stores,
Inc. (The)(a) 500,000 13,031,250
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 1,500,000 32,906,250
- ---------------------------------------------------------------
Pacific Sunwear of California(a) 600,000 18,112,500
- ---------------------------------------------------------------
Talbots, Inc. (The) 350,000 16,471,875
- ---------------------------------------------------------------
Too Inc.(a) 870,400 13,926,400
- ---------------------------------------------------------------
158,057,947
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.33%
Queens County Bancorp, Inc. 300,000 9,431,250
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.30%
Metris Companies, Inc. 250,000 8,609,375
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.61%
Championship Auto Racing Teams,
Inc.(a) 100,000 2,293,750
- ---------------------------------------------------------------
Copart, Inc.(a) 300,000 6,900,000
- ---------------------------------------------------------------
G & K Services, Inc.-Class A 250,000 9,390,625
- ---------------------------------------------------------------
Iron Mountain, Inc.(a) 200,000 6,050,000
- ---------------------------------------------------------------
Provant, Inc.(a) 250,000 4,406,250
- ---------------------------------------------------------------
Regis Corp. 595,000 11,044,688
- ---------------------------------------------------------------
Ritchie Bros. Auctioneers, Inc.
(Canada)(a) 155,100 5,564,213
- ---------------------------------------------------------------
45,649,526
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.67%
Insight Enterprises, Inc.(a) 1,000,000 37,375,000
- ---------------------------------------------------------------
Sykes Enterprises, Inc.(a) 322,400 9,954,100
- ---------------------------------------------------------------
47,329,100
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-4.65%
Affiliated Computer Services,
Inc.-Class A(a) 500,000 19,000,000
- ---------------------------------------------------------------
CheckFree Holdings Corp.(a) 250,000 9,343,750
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 2,000,000 54,125,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (DATA PROCESSING)-(CONTINUED)
FactSet Research Systems, Inc. 87,250 $ 5,796,672
- ---------------------------------------------------------------
MedQuist, Inc.(a) 300,000 9,600,000
- ---------------------------------------------------------------
National Computer Systems, Inc. 550,000 20,796,875
- ---------------------------------------------------------------
NOVA Corp.(a) 514,500 13,377,000
- ---------------------------------------------------------------
132,039,297
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.30%
Select Appointments Holdings
PLC-ADR (United Kingdom)(a) 250,000 8,500,000
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.08%
Tetra Tech, Inc.(a) 150,000 2,381,250
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.23%
Valassis Communications, Inc.(a) 150,000 6,450,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-1.86%
Powerwave Technologies, Inc.(a) 650,000 42,290,625
- ---------------------------------------------------------------
Western Wireless Corp.-Class A(a) 200,000 10,575,000
- ---------------------------------------------------------------
52,865,625
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.50%
Quicksilver, Inc.(a) 1,000,000 14,125,000
- ---------------------------------------------------------------
TRUCKERS-0.45%
M.S. Carriers, Inc.(a) 100,000 2,825,000
- ---------------------------------------------------------------
Swift Transportation Co., Inc.(a) 565,050 9,853,059
- ---------------------------------------------------------------
12,678,059
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$1,689,695,716) 2,755,849,427
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MONEY MARKET FUNDS-3.06%
STIC Liquid Assets Portfolio(c) 43,505,394 43,505,394
- ---------------------------------------------------------------
STIC Prime Portfolio(c) 43,505,394 43,505,394
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $87,010,788) 87,010,788
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.09% 2,842,860,215
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.09%) (2,688,333)
- ---------------------------------------------------------------
NET ASSETS-100.00% $2,840,171,882
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Funds's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has not owned enough of the outstanding voting securities of any issuer
to have control (as defined in the Investment Co. Act of 1940) of that
issuer. The aggregate market value of affiliated issuers as of 10/31/99 was
$26,582,000 which represented 0.94% of the Fund's net assets.
(c) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,776,706,504) $2,842,860,215
- --------------------------------------------------------
Receivables for:
Investments sold 17,937,284
- --------------------------------------------------------
Capital stock sold 2,011,926
- --------------------------------------------------------
Dividends and interest 830,933
- --------------------------------------------------------
Investment for deferred compensation
plan 59,470
- --------------------------------------------------------
Other assets 10,582
- --------------------------------------------------------
Total assets 2,863,710,410
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 14,775,635
- --------------------------------------------------------
Capital stock reacquired 5,415,822
- --------------------------------------------------------
Deferred compensation 59,470
- --------------------------------------------------------
Accrued advisory fees 1,481,082
- --------------------------------------------------------
Accrued administrative services fees 15,920
- --------------------------------------------------------
Accrued distribution fees 857,774
- --------------------------------------------------------
Accrued directors' fees 2,918
- --------------------------------------------------------
Accrued transfer agent fees 398,490
- --------------------------------------------------------
Accrued operating expenses 531,417
- --------------------------------------------------------
Total liabilities 23,538,528
- --------------------------------------------------------
Net assets applicable to shares
outstanding $2,840,171,882
========================================================
NET ASSETS:
Class A $2,808,450,928
- --------------------------------------------------------
Class B $ 24,913,645
- --------------------------------------------------------
Class C $ 6,807,309
- --------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Class A:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 50,506,475
========================================================
Class B:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 450,958
========================================================
Class C:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 123,217
========================================================
Class A:
Net asset value and redemption price
per share $ 55.61
- --------------------------------------------------------
Offering price per share:
(Net asset value of $55.61
divided by 94.50%) $ 58.85
========================================================
Class B:
Net asset value and offering price per
share $ 55.25
========================================================
Class C:
Net asset value and offering price per
share $ 55.25
========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $6,700 foreign
withholding tax) $ 3,562,554
- -------------------------------------------------------
Interest 7,254,618
- -------------------------------------------------------
Total investment income 10,817,172
- -------------------------------------------------------
EXPENSES:
Advisory fees 17,085,022
- -------------------------------------------------------
Administrative services fees 126,956
- -------------------------------------------------------
Custodian fees 254,206
- -------------------------------------------------------
Directors' fees 25,194
- -------------------------------------------------------
Distribution fees-Class A 6,704,485
- -------------------------------------------------------
Distribution fees-Class B 79,099
- -------------------------------------------------------
Distribution fees-Class C 21,997
- -------------------------------------------------------
Transfer agent fees-Class A 4,294,353
- -------------------------------------------------------
Transfer agent fees-Class B 26,683
- -------------------------------------------------------
Transfer agent fees-Class C 6,528
- -------------------------------------------------------
Other 931,386
- -------------------------------------------------------
Total expenses 29,555,909
- -------------------------------------------------------
Less: Expenses paid indirectly (57,022)
- -------------------------------------------------------
Net expenses 29,498,887
- -------------------------------------------------------
Net investment income (loss) (18,681,715)
- -------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM
INVESTMENT SECURITIES:
Net realized gain from investment
securities 401,315,614
- -------------------------------------------------------
Change in net unrealized appreciation of
investment securities 514,158,866
- -------------------------------------------------------
Net gain from investment
securities 915,474,480
- -------------------------------------------------------
Net increase in net assets resulting from
operations $896,792,765
=======================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment (loss) $ (18,681,715) $ (21,818,881)
- ---------------------------------------------------------------------------------------------
Net realized gain from investment securities, futures and
option contracts 401,315,614 22,492,829
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, futures and option contracts 514,158,866 (542,787,104)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 896,792,765 (542,113,156)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains-Class
A (25,067,232) (135,730,479)
- ---------------------------------------------------------------------------------------------
Share transactions--net:
Class A (697,955,629) (548,376,018)
- ---------------------------------------------------------------------------------------------
Class B 22,307,605 --
- ---------------------------------------------------------------------------------------------
Class C 6,056,717 --
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 202,134,226 (1,226,219,653)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,638,037,656 3,864,257,309
- ---------------------------------------------------------------------------------------------
End of period $2,840,171,882 $2,638,037,656
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,384,638,292 $2,060,980,954
- ---------------------------------------------------------------------------------------------
Undistributed net investment (loss) (148,328) (117,968)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, futures and option contracts 389,528,207 25,179,825
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, futures
and option contracts 1,066,153,711 551,994,845
- ---------------------------------------------------------------------------------------------
$2,840,171,882 $2,638,037,656
=============================================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of ten separate
portfolios. The Fund currently offers three different classes of shares: Class A
shares, Class B shares and Class C shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is to achieve long-term growth of
capital by investing primarily in common stocks of companies whose earnings the
Fund's portfolio managers expect to grow more than 15% per year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in the
case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and options
contracts generally will be valued 15 minutes after the close of trading of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date. On October 31,
1999, undistributed net investment income increased by $18,651,355,
undistributed net realized gains decreased by $11,900,000 and paid in
capital decreased $6,751,355 as a result of equalization credits and net
operating loss reclassifications in order to comply with the requirements of
the American Institute of Certified Public Accountants Statement of Position
93-2. Net assets of the Fund were unaffected by the reclassification
discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% 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.
12
<PAGE> 15
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. During the year ended October 31, 1999, AIM was
paid $126,956 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 year ended October 31, 1999, AFS
was paid $2,216,555 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted a plan
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
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. During the year ended October 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $6,704,485,
$79,099 and $21,997, respectively, as compensation under the Plans.
AIM Distributors received commissions of $711,447 from sales of the
Class A shares of the Fund during the year ended October 31, 1999. Such
commissions are not an expense of the Fund. They are deducted from, and are
not included in, the proceeds from sales of Class A shares. During the year
ended October 31, 1999, AIM Distributors received $45,944 in contingent
deferred sales charges imposed on redemptions of Fund shares. Certain officers
and directors of the Company are officers and directors of AIM, AFS and AIM
Distributors. During the year ended October 31, 1999, the Fund paid legal fees
of $8,655 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-INDIRECT EXPENSES
During the year ended October 31, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$32,326 and $24,696, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $57,022 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1999 was
$1,887,305,705 and $2,452,977,749, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,126,699,833
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (62,026,958)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $1,064,672,875
==========================================================
</TABLE>
Cost of investments for tax purposes is $1,778,187,340.
13
<PAGE> 16
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold:
Class A 20,202,014 $ 945,046,848 40,244,020 $1,856,544,416
- --------------------------------------------------------------------------------------------------------------------------
Class B* 515,321 25,493,142 -- --
- --------------------------------------------------------------------------------------------------------------------------
Class C* 137,866 6,796,692 -- --
- --------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 522,585 23,265,335 2,928,346 126,973,169
- --------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (35,925,286) (1,666,267,812) (54,802,587) (2,531,893,603)
- --------------------------------------------------------------------------------------------------------------------------
Class B* (64,363) (3,185,537) -- --
- --------------------------------------------------------------------------------------------------------------------------
Class C* (14,649) (739,975) -- --
- --------------------------------------------------------------------------------------------------------------------------
(14,626,512) $ (669,591,307) (11,630,221) $ (548,376,018)
==========================================================================================================================
</TABLE>
* Class B shares and Class C shares commenced sales on March 1, 1999.
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the five-year period ended October 31,
1999 and for a share of Class B and Class C capital stock outstanding during the
period March 1, 1999 (date sales commenced) through October 31, 1999.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.15 $ 49.97 $ 44.93 $ 40.13 $ 28.37
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) (0.37) (0.33) (0.26) (0.32) (0.04)
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net gains (losses) on securities (both realized and
unrealized) 16.22 (7.71) 7.60 6.09 11.80
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 15.85 (8.04) 7.34 5.77 11.76
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Distributions from net realized gains (0.39) (1.78) (2.30) (0.97) --
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 55.61 $ 40.15 $ 49.97 $ 44.93 $ 40.13
=========================================================== ========== ========== ========== ========== ==========
Total return(a) 39.73% (16.36)% 17.35% 14.77% 41.45%
=========================================================== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,808,451 $2,638,038 $3,864,257 $2,750,564 $2,245,554
=========================================================== ========== ========== ========== ========== ==========
Ratio of expenses to average net assets(b) 1.09%(c) 1.06% 1.06% 1.11% 1.08%
=========================================================== ========== ========== ========== ========== ==========
Ratio of net investment income (loss) to average net
assets(d) (0.69)%(c) (0.64)% (0.65)% (0.76)% (0.19)%
=========================================================== ========== ========== ========== ========== ==========
Portfolio turnover rate 75% 69% 73% 79% 52%
=========================================================== ========== ========== ========== ========== ==========
</TABLE>
(a) Does not deduct sales charges.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.15% for 1995.
(c) Ratios are based on average net assets of $2,681,793,909.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements was (0.26)% for 1995.
<TABLE>
<CAPTION>
CLASS B CLASS C
------- -------
1999 1999
------- -------
<S> <C> <C>
Net asset value, beginning of period $ 43.41 $ 43.41
- ------------------------------------------------------------ ------- -------
Income from investment operations:
Net investment income (loss) (0.28) (0.28)
- ------------------------------------------------------------ ------- -------
Net gains (losses) on securities (both realized and
unrealized) 12.12 12.12
- ------------------------------------------------------------ ------- -------
Total from investment operations 11.84 11.84
- ------------------------------------------------------------ ------- -------
Net asset value, end of period $ 55.25 $ 55.25
============================================================ ======= =======
Total return(a) 27.27% 27.27%
============================================================ ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,914 $ 6,807
============================================================ ======= =======
Ratio of expenses to average net assets 2.08%(b) 2.08%(b)
============================================================ ======= =======
Ratio of net investment income (loss) to average net assets (1.68)%(b) (1.68)%(b)
============================================================ ======= =======
Portfolio turnover rate 75% 75%
============================================================ ======= =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $11,337,167 and
$3,277,217 for Class B and Class C, respectively.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Equity Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM Aggressive Growth Fund (a portfolio of
AIM Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1999, the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended, and the financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Aggressive Growth Fund as of October 31, 1999, the
results of its operations for the year then ended, the
changes in its net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the five-year period then ended,
in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
------------
KPMG LLP
December 3, 1999
Houston, Texas
15
<PAGE> 18
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Jonathan C. Schoolar
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Edgar M. Larsen Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Senior Vice President
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Dana R. Sutton
President, Mercantile Bankshares Vice President and Treasurer State Street Bank and Trust Company
225 Franklin Street
Jack Fields Melville B. Cox Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Mary J. Benson
of the U.S. House of Representatives Assistant Vice President and Ballard Spahr
Assistant Treasurer Andrews & Ingersoll, LLP
Carl Frischling 1735 Market Street
Partner Sheri Morris Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel LLP Assistant Vice President and
Assistant Treasurer COUNSEL TO THE DIRECTORS
Robert H. Graham
President and Chief Executive Officer Renee A. Friedli Kramer, Levin, Naftalis & Frankel LLP
A I M Management Group Inc. Assistant Secretary 919 Third Avenue
New York, NY 10022
Prema Mathai-Davis P. Michelle Grace
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary DISTRIBUTOR
Commissioner, New York City Dept. for the
Aging; and member of the Board of Directors, Nancy L. Martin A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
Ofelia M. Mayo Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney AUDITOR
Lisa A. Moss
Louis S. Sklar Assistant Secretary KPMG LLP
Executive Vice President 700 Louisiana
Hines Interests Kathleen J. Pflueger Houston, TX 77002
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Aggressive Growth Fund distributed long-term capital gains of $36,952,000
during its tax year ended October 31, 1999.
16
<PAGE> 19
-------------------------------------
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<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided leadership
AIM Aggressive Growth Fund(1) AIM Money Market Fund in the mutual fund industry since 1976 and managed
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund approximately $120 billion in assets for more than
AIM Capital Development Fund 6.4 million shareholders, including individual
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS investors, corporate clients and financial
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund institutions, as of September 30, 1999.
AIM Large Cap Growth Fund AIM Asian Growth Fund The AIM Family of Funds--Registered Trademark--
AIM Mid Cap Equity Fund AIM Developing Markets Fund is distributed nationwide, and AIM today is the
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) 10th-largest mutual fund complex in the United
AIM Mid Cap Opportunities Fund AIM European Development Fund States in assets under management, according to
AIM Select Growth Fund AIM International Equity Fund Strategic Insight, an independent mutual fund
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund monitor.
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund
AIM Value Fund AIM New Pacific Growth Fund
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GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund
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TAX-FREE INCOME FUNDS AIM Global Health Care Fund
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AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors on November 16, 1998.
(2) AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (3)
AIM Small Cap Opportunities Fund closed to new investors on November 4, 1999.
(4) On September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth
Fund. Previously the fund invested in all size companies in most areas of
Europe. The fund now seeks to invest at least 65% of its assets in large-cap
companies within countries using the euro as their currency (EMU-member
countries). (5) On June 1, 1999, AIM Global Telecommunications Fund was renamed
AIM Global Telecommunications and Technology Fund. (6) Effective August 27,
1999, AIM Global Trends Fund was restructured to operate as a traditional mutual
fund. Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after January 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds.
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--Registered Trademark--
AGRO-AR-1
A I M Distributors, Inc.
