<PAGE> 1
ANNUAL REPORT
[AIM LOGO APPEARS HERE] AIM AGGRESSIVE GROWTH FUND OCTOBER 31 1998
INVEST WITH DISCIPLINE--Registered Trademark--
<PAGE> 2
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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 DYNAMIC SUNFLOWER REFLECTS
THE ATTRIBUTES OF THE DIVERSE, RAPIDLY GROWING, AND FUNDAMENTALLY
STRONG COMPANIES WE SEEK TO OWN IN AIM AGGRESSIVE GROWTH FUND.
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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 management believes 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. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge. When sales charges are included, Fund performance
reflects the maximum 5.50% sales charge.
o AIM Aggressive Growth Fund's average annual total returns, including sales
charges, for periods ended 9/30/98, the most recent calendar quarter end,
were as follows: one year, -28.78 (-24.63 excluding sales charges); five
years, 11.95%; 10 years, 17.28%; inception (5/1/84), 13.80%.
o During the fiscal year ended 10/31/98 the Fund paid distributions of $1.779
per share.
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.
o Investing in smaller companies may involve greater risk and potential reward
than investing in more established companies.
o Past performance cannot guarantee comparable future results.
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.
o The unmanaged Russell 2000 Index is generally considered representative of
the performance of 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 The Standard & Poor's Composite Index of 500 Stocks (S&P500) is a group of
unmanaged securities widely regarded by investors to be representative of
the stock market in general. The Standard & Poor's 400 (S&P 400) Mid-Cap
Index is an unmanaged index comprising common stocks of approximately 400
mid-capitalization companies.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
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:
Throughout the fiscal year covered by this report, markets
[PHOTO OF vacillated between optimism that Asia's woes would be
Charles T. contained and worry that they would become a major drag on
Bauer, the U.S. and other economies. Changes in investor sentiment
Chairman of affected various financial markets differently. The stock
the Board of market was especially volatile. Uncertainty in stocks
THE FUND bolstered U.S. Treasury issues, whose safety attracts
APPEARS HERE] investors in doubtful times.
We understand how unnerving this year's level of volatility
can be. Undoubtedly, many of you were tempted to simply exit
the stock market. Our reaction, of course, is that you
should not. The abrupt reversals of sentiment this fiscal
year reinforce our conviction that markets are unpredictable
in the short term. Since even the best money managers cannot
know when to enter and exit a market, we think the wisest
strategy is to stay fully invested despite volatility and
short-term disappointment.
MARKET RECAP
Financial crises overseas and widespread decline in the rate of U.S. corporate
earnings growth helped foster uncertainty. During the summer of 1998, a
worldwide loss of confidence led to a major market correction for equities,
including the blue chips that had led the market. In August, the Dow Jones
Industrial Average (the Dow) had its worst-performing month in a decade.
Fortunately, the U.S. Federal Reserve Board (the Fed) intervened, cutting
interest rates twice, on September 29 and October 15, to pump liquidity and
confidence into the markets. As investors responded favorably, the fiscal year
closed with domestic equities rallying again and bonds in retreat--a complete
about-face from just a few weeks earlier. October 1998 ended up being the Dow's
best month in 11 years. (After the fiscal year closed, as this report was being
written, the Fed cut rates a third time.)
Some major stock indexes produced excellent total results for the fiscal
year, with the S&P 500 up more than 20%. But focusing on one market benchmark
may give you an incomplete view. The divergence between the S&P 500 and other
market segments was quite dramatic this fiscal year: the midcap S&P 400 rose
only 6.71%, while the Russell 2000 Index of small-company stocks declined
11.84%. Even within the S&P 500 itself, the bigger the company, the better the
performance.
However unsettling markets have been, the fundamental principles of investing
remain unchanged: long-term thinking, broad portfolio diversification, and
realistic expectations, recognizing the potential for downturns. Your financial
consultant is your best resource for helping you construct a diversified
portfolio and weather turbulent markets.
YOUR FUND MANAGERS' COMMENTS
We are pleased to send you this report on your Fund's fiscal year. On the pages
that follow, your Fund's management team offers more detailed discussion of how
markets behaved, how they managed the portfolio, and what they foresee for
markets and your Fund. We hope you find their discussion informative. If you
have any questions or comments, please contact our Client Services department at
800-959-4246, or e-mail your inquiry to us at [email protected]. You can
access information about your account through our AIM Investor Line at
800-246-5463 or at our Web site, www.aimfunds.com.
We often post market updates on our Web site.
We thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
--------------------------
THE ABRUPT
REVERSALS OF SENTIMENT
THIS FISCAL YEAR REINFORCE
OUR CONVICTION THAT
MARKETS ARE UNPREDICTABLE
IN THE SHORT TERM.
--------------------------
AIM AGGRESSIVE GROWTH FUND
<PAGE> 4
ANNUAL REPORT/MANAGER'S OVERVIEW
FUND CONTENDS WITH BEAR MARKET
IN SMALL-CAP STOCKS
Q. SMALL-CAP STOCKS WERE IN A BEAR MARKET FOR MUCH OF THE REPORTING PERIOD. HOW
DID AIM AGGRESSIVE GROWTH FUND PERFORM?
A. The sharp selloff in small-cap stocks from mid-April through early October
1998 took its toll on the Fund's performance. For the fiscal year ended
October 31, 1998, total return was -16.36%. By comparison, total return was
-11.84% for the Russell 2000 Index and -13.64% for the Lipper Small Cap
Funds Index.
The Fund rebounded strongly during the final weeks of the fiscal year,
posting a stunning 26.14% total return from the market low on October 8
through the end of the fiscal year. That beat the 21.96% total return of the
Russell 2000 Index and the 22.50% total return of the Lipper Small Cap Funds
Index for the same period.
Q. WHAT WERE MARKET CONDITIONS LIKE DURING THE FISCAL YEAR?
A. During the first half of the reporting period, markets shook off initial
concerns about the potential global impact of the economic turmoil in Asia
and soared to new heights in April. Although renewed fears about Asia's
impact halted the rally, large-cap stocks rebounded and the Dow Jones
Industrial Average (the Dow) set a record in July. The Dow then lost 16.82%
of its value between July 17 and October 8. Severe economic dislocations in
Russia and Latin America as well as Asia, combined with political
controversy in the U.S., prompted the selloff.
However, the market rebounded impressively in October as the Dow posted
its best percentage gains for a single month in more than 11 years. The
Federal Reserve Board (the Fed) cut interest rates at the end of September
and again in mid-October. These Fed moves, combined with encouraging
economic indicators, sparked the late rally in the stock market.
Q. HOW DID SMALL-CAP STOCKS FARE IN THIS ENVIRONMENT?
A. For much of the reporting period, small-cap stocks were in the grip of a
severe bear market, generally defined as a drop in value of at least 20%.
After hitting a record high on April 21, the Russell 2000 Index lost 36.49%
of its value by October 8, when it sank to its lowest level in more than two
years. In the unsettled market environment, investors favored more liquid
assets such as large-cap stocks and U.S. Treasury bonds.
During the last three weeks of the reporting period, however, small-cap
stocks rallied strongly, benefiting from the Fed's interest rate cuts.
Investors also found small-cap stocks attractive because earnings growth
projections for smaller companies remained in the double-digit range while
the corresponding figures for larger companies were gravitating toward the
single-digit level. Finally, small-cap stocks represented one of the best
bargains in the equity market as their prices relative to large-cap stocks
were at their lowest levels in decades.
Q. HOW DID YOU REACT TO THE BEAR MARKET IN SMALL-CAP STOCKS?
A. The market downturn provided an excellent opportunity to purchase the stocks
of attractive companies at low prices. We believe our disciplined,
earnings-driven stock selection process is strongest in a challenging market
environment. In choosing stocks, we look at the underlying fundamentals of
companies, not the overall market. We endeavor to own the best small-cap
companies because we are very optimistic about the long-term outlook for
small-cap stocks.
Q. WHY HAVE YOU REOPENED THE FUND TO NEW INVESTORS?
A. We reopened the Fund to new investors shortly after the reporting period
ended. We believe this is an excellent time to reopen the Fund because of
the historically low valuations of small-cap stocks. Reopening the Fund can
increase our capability to buy the stocks of attractive small-cap companies
at these low prices.
Q. WHAT CHANGES HAVE YOU MADE IN THE PORTFOLIO?
A. Since our last report six months ago, we have reduced the number of holdings
in the portfolio from about 400 to 300 as we sold the stocks of companies
that failed to meet our earnings criteria. Simultaneously, we enhanced our
positions in the stocks of companies we believe have solid, long-term growth
prospects.
With regard to specific sectors, we trimmed our holdings in energy
stocks, which were hurt by declining oil prices, from 7.0% to less than 1.5%
of the portfolio. At the same time, we moderately increased our holdings in
technology and consumer-cyclical stocks. As of October 31, 1998, technology
and consumer cyclical stocks composed 33% and 22% of the portfolio,
respectively.
Q. WHAT WERE SOME OF THE THEMES IN THE TECHNOLOGY SECTOR?
A. Despite volatility, technology stocks generally posted solid gains for the
fiscal year. Within this sector, we especially liked the stocks of computer
software and service companies. The computer glitch
------------------------------------
THE MARKET DOWNTURN PROVIDED
AN EXCELLENT OPPORTUNITY TO PURCHASE
THE STOCKS OF ATTRACTIVE COMPANIES
AT LOW PRICES.
------------------------------------
See important Fund and index disclosures inside front cover.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 5
ANNUAL REPORT/MANAGER'S OVERVIEW
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
========================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. CDW Computer Centers, Inc. 1.42% 1. Computers (Software & Services) 12.26%
2. CSG Systems International, Inc. 1.03 2. Electronics (Semiconductors) 5.62
3. Heftel Broadcasting Corp. 0.99 3. Health Care (Specialized Services) 4.34
4. Flextronics International Ltd 0.98 4. Services (Data Processing) 4.13
5. Allied Waste Industries, Inc. 0.95 5. Retail (Specialty) 3.75
6. Veritas Software Corp. 0.95 6. Health Care (Medical Products & Supplies) 3.62
7. Henry Schein, Inc. 0.88 7. Services (Commercial & Consumer) 3.32
8. Sipex Corp. 0.84 8. Retail (Specialty-Apparel) 2.96
9. Insight Enterprises, Inc. 0.82 9. Services (Computer Systems) 2.83
10. Affiliated Computer Services, Inc. 0.77 10. Banks (Regional) 2.80
Please keep in mind the Fund's portfolio is subject to change and there is no
assurance the Fund will continue to hold any particular security.
========================================================================================================
</TABLE>
that requires reprogramming older computers and software to recognize the
year 2000 continues to provide opportunities for these companies. The
worldwide cost of correcting this problem could total between $300 billion
and $600 billion, according to the Gartner Group, a technology research
firm. Computer expertise also is expected to be crucial to the gradual
conversion of European currencies to the euro starting in 1999.
Our technology holdings include some of the most successful companies in
the business. Veritas Software Corp. is one of the leading developers and
marketers of information storage systems while Sipex Corporation makes
high-performance analog integrated circuits for everything from computers
and cellular phones to thermostats and low-voltage power devices. The Fund
also benefited from owning the stocks of CSG Systems International, Inc.,
which offers processing and related services to direct broadcast satellite
providers; and Insight Enterprises, Inc., which markets computer hardware
and software products.
Over the long term, we are optimistic about the performance of
technology stocks. Computer systems and office technology make up one of the
largest portions of corporate capital expenditures. The Internet is expected
to remain an area of explosive growth over the next five to 10 years. The
trend toward out-sourcing also is expected to continue to give a boost to
information technology companies.
Q. HOW DID CONSUMER-CYCLICAL STOCKS PERFORM?
A. Consumer cyclicals is a broad category that includes advertising, airlines,
hotels, and certain retailers--all of which do well in a healthy economy.
Our focus in this sector was on retail stocks. For most of the fiscal year,
the nation's retailers benefited from healthy consumer spending, stemming
from low unemployment and rising wages. Toward the end of the period,
however, consumer confidence was shaken over concerns that troubles in
developing markets would result in an economic slowdown in the U.S. Although
the domestic economy remained healthy, consumers became more cautious in
their spending--a trend that benefited discount stores.
Retail stocks that performed well for the Fund included The Men's
Wearhouse, Inc., the leading discount men's business clothing chain in the
U.S.; Family Dollar Stores, Inc., which operates about 3,000 discount stores
in 38 states; and 99 Cents Only Stores, which has about 60 outlets in
Southern California.
Q. WHAT OTHER STOCKS POSTED IMPRESSIVE GAINS FOR THE FUND?
A. Other stocks that performed well for the Fund included Medicis
Pharmaceutical, which markets over-the-counter skin products, and Heftel
Broadcasting Corp., a Spanish-language broadcasting company which reported
strong earnings growth.
Q. WHAT IS YOUR OUTLOOK?
A. We believe there are several reasons to be optimistic about small-cap
stocks. In recent years, after the Fed has embarked on a series of interest
rate cuts, small-cap stocks have been among the top-performing equity
classes. While past performance cannot guarantee comparable future results,
we believe if the Fed continues to cut interest rates, it could bode well
for small-cap stocks.
Moreover, the valuations of small-cap stocks relative to large-cap
stocks are very compelling. And while profits for the largest companies are
dropping, they remain robust for smaller companies. Since smaller companies
conduct most of their business in the U.S., their earnings are less
susceptible to foreign economic downturns. We believe if these trends
continue, small-cap stocks could continue to attract investors.
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
AIM AGGRESSIVE GROWTH FUND VS. BENCHMARK INDEXES
5/1/84-10/31/98
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
AIM AGGRESSIVE RUSSELL 2000 LIPPER SMALL CAP
GROWTH FUND STOCK INDEX FUNDS INDEX
- -----------------------------------------------------------------------------------------------------------
in thousands
<S> <C> <C> <C>
5/1/84 $9,452 $10,000 $10,000
10/84 9,587 10,100 10,169
10/85 10,682 11,699 11,497
10/86 12,470 14,297 13,694
10/87 10,040 12,339 12,380
10/88 12,100 15,700 15,122
10/89 14,278 18,150 18,306
10/90 11,409 13,199 14,256
10/91 21,330 20,938 22,246
10/92 23,363 22,926 23,727
10/93 35,278 30,357 30,761
10/94 41,968 30,250 31,375
10/95 59,365 35,800 38,771
10/96 68,134 41,745 45,398
10/97 79,953 53,989 53,804
10/98 66,877 47,596 46,464
==========================================================================================================
Past performance cannot guarantee comparable future results.
Source: Towers Data Systems HYPO--Registered Trademark--
==========================================================================================================
</TABLE>
ABOUT THIS CHART
This chart compares your Fund to benchmark indexes. It is intended to give you a
general idea of how your Fund performed compared to these benchmarks over the
period 5/1/84-10/31/98. It is important to understand the difference between
your Fund and an index. An index measures the performance of a hypothetical
portfolio, in this case the Russell 2000 Index and the Lipper Small Cap Funds
Index. A market index such as the Russell 2000 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
AIM AGGRESSIVE GROWTH FUND
<PAGE> 7
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/98, including sales charges
CLASS A SHARES
Inception (5/1/84) 14.00%
10 Years 17.98
5 Years 12.37
1 Year -20.96*
*-16.36% excluding sales charges
===============================================================================
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.
Use of these indexes is intended to give you a general idea of how your Fund
performed compared to these benchmarks.
Your Fund's total return includes applicable sales charges, expenses, and
management fees. For Fund performance calculations and descriptions of indexes
cited on this page, please refer to the inside front cover.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 8
ANNUAL REPORT/FOR CONSIDERATION
TAKE A CLOSER LOOK AT MARKET INDEXES
You step into your car after work and hear the radio announcer say, "The
market was down 200 points today." Instantly you start to worry. But should you?
The question is, what exactly is "the market"? And how are your investments
going to be affected by it? You need the facts, and fast. Market indexes are a
good place to start. They can help you gauge how your investments are
performing.
"The market" actually is much broader than newspapers and television reports
make it out to be. The media often report movements in the Dow Jones Industrial
Average (the Dow) as indicative of the market as a whole. But the Dow is made up
of just 30 stocks; the U.S. market is made up of more than 12,000 stocks traded
on the New York Stock Exchange, regional exchanges, and over the counter. The
Dow only measures the performance of the largest American companies.
If you're like most investors, you've got a range of investments across
market segments, not just blue-chip stocks. The best way to compare your
investments to their peers in the marketplace is to find the right index. An
index measures the performance of a particular group of stocks. But keep in
mind, there is rarely a perfect match between the stocks in a mutual fund and
the stocks in an index.
Indexes and funds have different purposes. Mutual funds select stocks based
on their past performance or future potential. Indexes pick stocks based on
their ability to act as reliable measuring tools. For example, index makers for
the S&P 500 look for actively traded, widely owned stocks that reflect the
active stock market.
There are other important differences between a fund and an index. You cannot
invest directly in an index. Because indexes are unmanaged, they incur no sales
charges, expenses, or fees. Even if you bought all the securities making up an
index, your transaction expenses would lower your investment returns.
As you follow the various indexes, you'll notice that their tracks often
diverge. When large-caps are up, small-caps or overseas stocks are down--and
THE USUAL INDEXES
THE DOW JONES INDUSTRIAL AVERAGE
WHAT IT IS: In its 102-year history, the Dow always has focused on the largest,
most successful U.S. companies. The types of firms in the index have changed
drastically over the years--from the cotton companies of the 19th century to the
computer icons of the 20th. The 30 stocks now in the Dow include household names
such as International Business Machines Corp., Boeing Co., McDonald's Corp., and
Walt Disney Co.
WHAT IT TELLS YOU: While stocks in the Dow make up about 20% of the value of all
U.S. stocks, the index leaves out many sectors of the market. For most mutual
fund investors, the Dow is an inadequate and often inappropriate measure of
comparison. Use it to check the pulse of American big business, but look
elsewhere for a more inclusive market view.
WHAT IT IS: The S&P 500 (Standard & Poor's Composite Index of 500 Stocks) is
often used as a gauge of the whole market. But it measures only 500 stocks in
the large-capitalization portion of the U.S. stock market. Included in the index
are Apple Computer, Hilton Hotels, NIKE Inc., and Pennzoil Co.
WHAT IT TELLS YOU: The S&P 500 is useful for evaluating a fund that invests in
large-capitalization U.S. stocks. It's a poor gauge for others funds, such as a
small-cap aggressive growth fund. Keep in mind that the S&P 500 is very
concentrated. The top 50 companies represent half the S&P 500's assets. For the
past few years, the total return of the S&P 500 has been unusually high, but
much of this performance can be attributed to just a few stocks in the index.
Most mutual funds are more diversified than this index.
NASDAQ COMPOSITE INDEX
WHAT IT IS: The NASDAQ (National Association of Securities Dealers Automated
Quotation system) Composite Index measures the performance of all NASDAQ
domestic and foreign stocks. Often associated with the over-the-counter market,
the index also includes some exchange-listed stocks. More than 5,300 stocks are
in the NASDAQ Composite Index.
WHAT IT TELLS YOU: Many consider NASDAQ a barometer for small- and mid-cap
stocks. However, the index is market-value weighted--each company's stock
affects the index in proportion to that company's market value. Large-cap
technology stocks such as Microsoft, Intel, and Dell Computer dominate it. The
NASDAQ is not a good measure of small- and mid-cap stock performance. It
basically tells you how large-cap technology stocks are doing. It is not a
suitable index for most mutual funds.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 9
vice versa. The chart at the right shows calendar-year returns for two domestic
and one foreign equity index for the decade 12/31/87 through 12/31/97. The
market segments often move out of synch, and performance leadership often
rotates from one segment to another.
By positioning your investments strategically in various market segments,
you're less likely to miss out on the peaks, and you'll be more protected from
the valleys. Remember, patience is the key. If you jump in and out of
investments, you could miss out on some of the market's best moments. See your
financial adviser to build a diversified portfolio suited to fluctuating
markets.
DIVERGING INDEXES
Total Return per Calendar Year
1987-1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
S&P 500 INDEX
WITH MONTHLY EUROPE-AUSTRALASIA-FAR RUSSELL 2000 STOCK INDEX
DIVIDENDS EAST INDEX WITH DIVIDENDS*
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
12/88 16.55% 25.02% 28.59%
12/89 31.64 16.26 10.8
12/90 -3.09 19.48 23.2
12/91 30.41 46.04 12.5
12/92 7.61 18.41 11.85
12/93 10.06 18.88 32.94
12/94 1.32 -1.82 8.06
12/95 37.54 28.45 11.55
12/96 22.95 16.49 6.36
12/97 33.35 22.36 2.06
=======================================================================================
Past performance is no guarantee of future investment results.
*International investing presents risks not associated with investing solely in the
United States. These include risks relating to fluctuation in the value of the U.S.
dollar, custody arrangements made for a Fund's foreign holdings, differences in
accounting, political risks, and the lesser degree of public information required to
be provided by non-U.S. companies.
=======================================================================================
</TABLE>
A FEW MORE INDEXES
S&P 400
WHAT IT IS: The Standard & Poor's 400 Mid-Cap Index is a relatively new index
that dates to 1981 and measures performance of 400 stocks in the
mid-capitalization sector of the domestic stock market. Companies in the index
include America Online, Inc., CompuWare Corp., Starbucks Corp., and Office
Depot. As of July 31, the median market capitalization in the S&P 400 was
approximately $1.8 billion, but some stocks in the index have capitalizations as
large as $5 billion.
WHAT IT TELLS YOU: If your fund invests primarily in mid-caps, this is one of
the best benchmarks to use. But keep in mind that the index may include
companies smaller or larger than the ones in your fund.
RUSSELL 2000 INDEX
WHAT IT IS: The Russell 2000 Index measures the performance of small-cap stocks.
A total of 2,000 U.S. companies are represented in the index, including such
well-known firms as Bally Total Fitness, Bethlehem Steel, Coca-Cola Bottling
Co., and Coors Brewing Co. The index, which is cap-weighted, represents about
10% of the U.S. stock market. More than 900 of the stocks in the Russell 2000
trade on either the New York Stock Exchange or the American Stock Exchange.
WHAT IT TELLS YOU: The Russell 2000 Index is a very good indicator of small-cap
stock performance. It is a true small-cap index with the market value of
companies represented in this index ranging from $171.7 million to $1.1 billion.
Many mutual funds investing in small-cap stocks use the Russell 2000 as their
benchmark index.
EUROPE, AUSTRALASIA, AND THE FAR EAST INDEX (EAFE --Registered Trademark--)
WHAT IT IS: The EAFE consists of approximately 1,600 foreign stocks tracked by
Morgan Stanley Capital International (MSCI). They are listed on stock exchanges
in 20 developed countries. Stocks are chosen to reflect 60% of the market
capitalization of each country and of each major industry group.
WHAT IT TELLS YOU: As international investing has grown, a need has arisen to
measure global stock-market performance. The EAFE fulfills this need for
developed markets in Europe, Australia and the Far East. It is frequently used
as a benchmark for mutual funds investing in stocks in these markets. MSCI also
has developed indexes for specific countries and regions and for emerging
markets. Since your fund's country allocation may be different from EAFE, you
may need to look at a more specific index.
An index is not an investment product available for purchase. An index measures
the performance of a hypothetical portfolio. An index is not managed, incurring
no sales charges, expenses, or fees. If you could buy all the securities that
make up a particular index, you would incur expenses that would affect the
return on your investment.
AIM AGGRESSIVE GROWTH FUND
<PAGE> 10
SCHEDULE OF INVESTMENTS
October 31, 1998
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-90.80%
AEROSPACE/DEFENSE-0.63%
AAR Corp. 500,000 $ 11,562,500
- ---------------------------------------------------------------
Aviation Sales Co.(a) 150,000 4,987,500
- ---------------------------------------------------------------
16,550,000
- ---------------------------------------------------------------
AIR FREIGHT-0.19%
Expeditors International of
Washington, Inc. 150,000 5,081,250
- ---------------------------------------------------------------
AIRLINES-0.88%
Alaska Air Group, Inc.(a) 100,000 3,593,750
- ---------------------------------------------------------------
ASA Holdings, Inc. 115,000 4,125,625
- ---------------------------------------------------------------
Atlantic Coast Airlines Holdings(a) 400,000 9,600,000
- ---------------------------------------------------------------
Ryanair Holdings plc-ADR(a)(Ireland) 200,000 5,875,000
- ---------------------------------------------------------------
23,194,375
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-1.01%
Danaher Corp. 200,000 7,987,500
- ---------------------------------------------------------------
Gentex Corp.(a) 500,000 7,343,750
- ---------------------------------------------------------------
Keystone Automotive Industries,
Inc.(a) 250,000 4,671,875
- ---------------------------------------------------------------
Tower Automotive, Inc.(a) 300,000 6,675,000
- ---------------------------------------------------------------
26,678,125
- ---------------------------------------------------------------
BANKS (REGIONAL)-2.80%
Bank United Corp.-Class A 200,000 7,968,750
- ---------------------------------------------------------------
Centennial Bancorp(a) 131,700 2,164,814
- ---------------------------------------------------------------
Centura Banks, Inc. 100,000 6,900,000
- ---------------------------------------------------------------
Community First Bankshares, Inc. 500,000 9,937,500
- ---------------------------------------------------------------
First Republic Bank(a) 300,000 7,425,000
- ---------------------------------------------------------------
First Washington Bancorp, Inc. 165,000 3,630,000
- ---------------------------------------------------------------
Provident Bankshares Corp. 210,000 5,355,000
- ---------------------------------------------------------------
Silicon Valley Bancshares(a) 75,000 1,537,500
- ---------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 500,000 7,656,250
- ---------------------------------------------------------------
Sterling Bancshares, Inc. 225,000 3,206,250
- ---------------------------------------------------------------
Trustmark Corp. 72,700 1,394,931
- ---------------------------------------------------------------
Westamerica Bancorp. 225,000 7,481,250
- ---------------------------------------------------------------
Zions Bancorp. 175,000 9,285,938
- ---------------------------------------------------------------
73,943,183
- ---------------------------------------------------------------
BIOTECHNOLOGY-1.13%
Curative Health Services, Inc.(a) 300,000 8,175,000
- ---------------------------------------------------------------
ICON plc-ADR(a) (United Kingdom) 50,000 1,400,000
- ---------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 500,000 11,406,250
- ---------------------------------------------------------------
PathoGenesis Corp.(a) 100,000 4,000,000
- ---------------------------------------------------------------
Pharmaceutical Product Development,
Inc.(a) 175,000 4,725,000
- ---------------------------------------------------------------
29,706,250
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE)-1.28%
Chancellor Media Corp.(a) 200,000 $ 7,675,000
- ---------------------------------------------------------------
Heftel Broadcasting Corp.(a) 633,400 26,048,575
- ---------------------------------------------------------------
33,723,575
- ---------------------------------------------------------------
BUILDING MATERIALS-0.31%
Group Maintenance America Corp.(a) 110,400 1,428,300
- ---------------------------------------------------------------
NCI Building Systems, Inc.(a) 200,000 4,325,000
- ---------------------------------------------------------------
Pameco Corp.(a) 178,300 2,496,200
- ---------------------------------------------------------------
8,249,500
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.25%
OM Group, Inc. 200,000 6,525,000
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.78%
Brightpoint, Inc.(a) 1,500,000 18,375,000
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 400,000 18,400,000
- ---------------------------------------------------------------
Dycom Industries, Inc.(a) 200,000 7,012,500
- ---------------------------------------------------------------
VideoServer, Inc.(a) 250,000 3,109,375
- ---------------------------------------------------------------
46,896,875
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.37%
Brooktrout Technology, Inc.(a) 250,000 3,671,875
- ---------------------------------------------------------------
IDX Systems Corp.(a) 189,000 8,008,875
- ---------------------------------------------------------------
Micron Electronics, Inc.(a) 538,500 11,274,844
- ---------------------------------------------------------------
National Instruments Corp.(a) 275,000 7,528,125
- ---------------------------------------------------------------
Visual Networks, Inc.(a) 200,000 5,700,000
- ---------------------------------------------------------------
36,183,719
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.71%
Broadcom Corp.(a) 150,000 12,440,625
- ---------------------------------------------------------------
International Network Services(a) 150,000 6,375,000
- ---------------------------------------------------------------
18,815,625
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.63%
Cybex Computer Products Corp.(a) 45,700 1,450,975
- ---------------------------------------------------------------
Jabil Circuit, Inc.(a) 125,000 5,789,063
- ---------------------------------------------------------------
Network Appliance, Inc.(a) 300,000 16,425,000
- ---------------------------------------------------------------
QLogic Corp.(a) 50,000 4,618,750
- ---------------------------------------------------------------
SMART Modular Technologies, Inc.(a) 325,000 6,825,000
- ---------------------------------------------------------------
Xircom, Inc.(a) 264,400 7,799,800
- ---------------------------------------------------------------
42,908,588
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-12.26%
American Management Systems, Inc.(a) 32,500 997,344
- ---------------------------------------------------------------
Aspect Development, Inc.(a) 187,700 5,930,147
- ---------------------------------------------------------------
Avant! Corp.(a) 300,000 5,118,750
- ---------------------------------------------------------------
AVT Corp.(a) 375,000 8,203,125
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
AXENT Technologies, Inc.(a) 350,000 $ 8,793,750
- ---------------------------------------------------------------
BroadVision, Inc.(a) 150,000 2,250,000
- ---------------------------------------------------------------
Business Objects S.A.-ADR(a)(France) 250,000 4,203,125
- ---------------------------------------------------------------
Check Point Software
Technologies Ltd.(a) (Israel) 225,000 5,118,750
- ---------------------------------------------------------------
Citrix Systems, Inc.(a) 250,000 17,718,750
- ---------------------------------------------------------------
Computer Management Sciences, Inc.(a) 400,000 7,400,000
- ---------------------------------------------------------------
Concord Communications, Inc.(a) 75,000 2,784,375
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 700,000 19,950,000
- ---------------------------------------------------------------
Documentum, Inc.(a) 155,300 5,280,200
- ---------------------------------------------------------------
Eclipsys Corp.(a) 142,200 3,208,388
- ---------------------------------------------------------------
Electronics for Imaging, Inc.(a) 300,000 7,218,750
- ---------------------------------------------------------------
Engineering Animation, Inc.(a) 325,000 14,239,063
- ---------------------------------------------------------------
Gemstar International Group Ltd.(a) 150,000 8,193,750
- ---------------------------------------------------------------
HNC Software, Inc.(a) 225,000 7,565,625
- ---------------------------------------------------------------
Hyperion Solutions Corp.(a) 427,500 12,825,000
- ---------------------------------------------------------------
ISS Group, Inc.(a) 23,000 633,938
- ---------------------------------------------------------------
Jack Henry & Associates 125,000 5,703,125
- ---------------------------------------------------------------
Learning Company, Inc. (The)(a) 250,000 6,453,125
- ---------------------------------------------------------------
Legato Systems, Inc.(a) 200,000 7,825,000
- ---------------------------------------------------------------
Lycos, Inc.(a) 400,000 16,250,000
- ---------------------------------------------------------------
Macromedia(a) 225,000 4,500,000
- ---------------------------------------------------------------
Medical Manager Corp.(a) 500,000 12,437,500
- ---------------------------------------------------------------
Mercury Interactive Corp.(a) 150,000 6,225,000
- ---------------------------------------------------------------
Mobius Management Systems, Inc.(a) 250,000 2,906,250
- ---------------------------------------------------------------
PC Connection, Inc.(a) 280,300 4,274,575
- ---------------------------------------------------------------
Platinum Technology, Inc.(a) 200,000 3,287,500
- ---------------------------------------------------------------
QRS Corp.(a) 101,700 3,864,600
- ---------------------------------------------------------------
QuadraMed Corp.(a) 325,000 6,662,500
- ---------------------------------------------------------------
Rational Software Corp.(a) 625,000 13,984,375
- ---------------------------------------------------------------
RWD Technologies, Inc.(a) 67,800 1,279,725
- ---------------------------------------------------------------
Sapient Corp.(a) 76,000 3,424,750
- ---------------------------------------------------------------
ScanSource, Inc.(a) 200,000 3,875,000
- ---------------------------------------------------------------
Secure Computing Corp.(a) 350,000 4,243,750
- ---------------------------------------------------------------
Siebel Systems, Inc.(a) 50,000 1,021,875
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 200,000 5,237,500
- ---------------------------------------------------------------
Technisource, Inc.(a) 100,000 875,000
- ---------------------------------------------------------------
Transaction Systems Architects, Inc.
-Class A(a) 200,000 7,218,750
- ---------------------------------------------------------------
USWeb Corp.(a) 300,000 4,312,500
- ---------------------------------------------------------------
Verio, Inc.(a) 100,200 1,390,275
- ---------------------------------------------------------------
Veritas Software Corp.(a) 500,000 25,062,500
- ---------------------------------------------------------------
Visio Corp.(a) 325,000 8,653,125
- ---------------------------------------------------------------
Whittman-Hart, Inc.(a) 200,000 3,975,000
- ---------------------------------------------------------------
Wind River Systems(a) 250,000 10,953,125
- ---------------------------------------------------------------
323,529,255
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.70%
Action Performance Companies, Inc.(a) 250,000 $ 7,468,750
- ---------------------------------------------------------------
Blyth Industries, Inc.(a) 400,000 11,050,000
- ---------------------------------------------------------------
18,518,750
- ---------------------------------------------------------------
CONSUMER FINANCE-0.30%
AmeriCredit Corp.(a) 600,000 8,025,000
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.47%
Patterson Dental Co.(a) 300,000 12,375,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.32%
AFC Cable Systems, Inc.(a) 150,000 3,693,750
- ---------------------------------------------------------------
Hadco Corp.(a) 150,000 4,725,000
- ---------------------------------------------------------------
Oak Industries, Inc.(a) 200,000 5,412,500
- ---------------------------------------------------------------
Sanmina Corp.(a) 300,000 12,300,000
- ---------------------------------------------------------------
Symbol Technologies, Inc. 450,000 20,137,500
- ---------------------------------------------------------------
Uniphase Corp.(a) 200,000 9,900,000
- ---------------------------------------------------------------
Watsco, Inc. 300,000 5,081,250
- ---------------------------------------------------------------
61,250,000
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.17%
Anicom, Inc.(a) 500,000 4,468,750
- ---------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.25%
Aeroflex, Inc.(a) 575,000 6,468,750
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.63%
Sawtek, Inc.(a) 88,200 1,780,574
- ---------------------------------------------------------------
Waters Corp.(a) 200,000 14,700,000
- ---------------------------------------------------------------
16,480,574
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-5.62%
Apex PC Solutions, Inc.(a) 150,000 3,918,750
- ---------------------------------------------------------------
Applied Micro Circuits Corp.(a) 300,000 7,200,000
- ---------------------------------------------------------------
Artisan Components, Inc.(a) 555,000 4,058,438
- ---------------------------------------------------------------
Dallas Semiconductor Corp. 175,000 6,475,000
- ---------------------------------------------------------------
Flextronics International Ltd.(a) 500,000 25,968,750
- ---------------------------------------------------------------
Level One Communications, Inc.(a) 500,000 13,156,250
- ---------------------------------------------------------------
Micrel, Inc.(a) 100,000 3,287,500
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 600,000 16,237,500
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 200,000 8,975,000
- ---------------------------------------------------------------
Semtech Corp.(a) 300,000 7,143,750
- ---------------------------------------------------------------
Sipex Corp.(a)(b) 800,000 22,200,000
- ---------------------------------------------------------------
TranSwitch Corp.(a) 400,000 9,750,000
- ---------------------------------------------------------------
Unitrode Corp.(a) 300,000 3,768,750
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 500,000 16,125,000
- ---------------------------------------------------------------
148,264,688
- ---------------------------------------------------------------
ENTERTAINMENT-0.70%
Cinar Films Inc.-Class B(a)(Canada) 121,000 2,556,125
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ENTERTAINMENT-(CONTINUED)
SFX Entertainment, Inc.-Class A(a) 500,000 $ 15,812,500
- ---------------------------------------------------------------
18,368,625
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.06%
Insignia/ESG Holdings, Inc.(a) 266,666 3,399,992
- ---------------------------------------------------------------
NCO Group, Inc.(a) 250,000 7,875,000
- ---------------------------------------------------------------
SEI Investments Co. 200,000 16,575,000
- ---------------------------------------------------------------
27,849,992
- ---------------------------------------------------------------
FOODS-1.27%
American Italian Pasta Co.-Class A(a) 100,000 2,300,000
- ---------------------------------------------------------------
Earthgrains Co. (The) 250,000 7,500,000
- ---------------------------------------------------------------
Fresh Del Monte Produce, Inc.(a) 150,000 2,681,250
- ---------------------------------------------------------------
Hain Food Group, Inc. (The)(a) 300,000 6,037,500
- ---------------------------------------------------------------
International Home Foods, Inc.(a) 200,000 3,550,000
- ---------------------------------------------------------------
Michael Foods, Inc. 50,000 1,200,000
- ---------------------------------------------------------------
Pilgrim's Pride Corp.-Class B 75,500 1,741,219
- ---------------------------------------------------------------
United Natural Foods, Inc.(a) 300,000 8,362,500
- ---------------------------------------------------------------
33,372,469
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.80%
Alpharma, Inc.-Class A 495,834 13,728,404
- ---------------------------------------------------------------
Biovail Corporation International(a)
(Canada) 100,000 3,118,750
- ---------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 400,000 4,825,000
- ---------------------------------------------------------------
Medicis Pharmaceutical-Class A(a) 405,000 20,300,625
- ---------------------------------------------------------------
Parexel International Corp.(a) 250,000 5,515,625
- ---------------------------------------------------------------
47,488,404
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-1.62%
Health Management Associates, Inc.
-Class A(a) 750,000 13,359,375
- ---------------------------------------------------------------
New American Healthcare Corp.(a) 450,000 4,781,250
- ---------------------------------------------------------------
Province Healthcare Co.(a) 299,200 7,816,600
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 325,000 16,676,563
- ---------------------------------------------------------------
42,633,788
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.66%
Assisted Living Concepts, Inc.(a) 700,000 9,450,000
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 300,000 3,637,500
- ---------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 100,000 4,306,250
- ---------------------------------------------------------------
17,393,750
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.46%
Express Scripts, Inc.-Class A(a) 125,000 12,210,938
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-3.62%
ADAC Laboratories(a) 350,000 10,368,750
- ---------------------------------------------------------------
Arterial Vascular Engineering,
Inc.(a) 200,000 6,150,000
- ---------------------------------------------------------------
Haemonetics Corp.(a) 83,200 1,793,976
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 600,000 23,212,500
- ---------------------------------------------------------------
MiniMed, Inc.(a) 150,000 8,325,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-(CONTINUED)
Osteotech, Inc.(a) 171,500 $ 4,319,656
- ---------------------------------------------------------------
ResMed, Inc.(a) 100,000 5,100,000
- ---------------------------------------------------------------
Safeskin Corp.(a) 50,000 1,106,250
- ---------------------------------------------------------------
Serologicals Corp.(a) 29,200 660,650
- ---------------------------------------------------------------
Sybron International Corp.(a) 800,000 19,800,000
- ---------------------------------------------------------------
VISX, Inc.(a) 200,000 10,025,000
- ---------------------------------------------------------------
Xomed Surgical Products, Inc.(a) 100,000 4,493,750
- ---------------------------------------------------------------
95,355,532
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-4.34%
Advance Paradigm, Inc.(a) 225,000 7,425,000
- ---------------------------------------------------------------
BioReliance Corp.(a) 200,000 1,600,000
- ---------------------------------------------------------------
Boron, LePore & Associates, Inc.(a) 300,000 8,100,000
- ---------------------------------------------------------------
Covance, Inc.(a) 200,000 5,575,000
- ---------------------------------------------------------------
First Consulting Group, Inc.(a) 150,000 2,465,625
- ---------------------------------------------------------------
Hooper Holmes, Inc. 300,000 7,143,750
- ---------------------------------------------------------------
Lincare Holdings, Inc.(a) 150,000 5,990,625
- ---------------------------------------------------------------
NCS HealthCare, Inc.-Class A(a) 500,000 8,812,500
- ---------------------------------------------------------------
Ocular Sciences, Inc.(a) 300,000 7,537,500
- ---------------------------------------------------------------
Omnicare, Inc. 500,000 17,281,250
- ---------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 625,000 11,835,938
- ---------------------------------------------------------------
Res-Care, Inc.(a) 150,000 3,318,750
- ---------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 300,000 11,100,000
- ---------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 300,000 7,350,000
- ---------------------------------------------------------------
Veterinary Centers of America,
Inc.(a) 500,000 8,875,000
- ---------------------------------------------------------------
114,410,938
- ---------------------------------------------------------------
HOMEBUILDING-0.37%
American Homestar Corp.(a) 600,000 9,825,000
- ---------------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES-0.20%
International Comfort Products Corp.
(Canada)(a) 300,000 2,718,750
- ---------------------------------------------------------------
Service Experts, Inc.(a) 86,200 2,602,163
- ---------------------------------------------------------------
5,320,913
- ---------------------------------------------------------------
HOUSEWARES-0.56%
Helen of Troy Ltd.(a) 1,000,000 14,875,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.19%
Penn Treaty American Corp.(a) 244,200 5,143,465
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.12%
Century Business Services, Inc.(a) 225,000 3,135,938
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.66%
CMAC Investment Corp. 300,000 12,562,500
- ---------------------------------------------------------------
Fidelity National Financial, Inc. 100,000 3,075,000
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 100,000 1,793,750
- ---------------------------------------------------------------
17,431,250
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT MANAGEMENT-0.39%
Eaton Vance Corp. 316,100 $ 7,072,738
- ---------------------------------------------------------------
Knight/Trimark Group, Inc.-Class A(a) 400,000 3,250,000
- ---------------------------------------------------------------
10,322,738
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.20%
International Speedway Corp.-Class A 103,100 3,183,213
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 100,000 2,100,000
- ---------------------------------------------------------------
5,283,213
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.26%
Applied Power, Inc.-Class A 250,000 6,890,625
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.27%
Matthews International Corp.-Class A 130,000 3,591,250
- ---------------------------------------------------------------
Spartech Corp. 200,000 3,600,000
- ---------------------------------------------------------------
7,191,250
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.50%
JLG Industries, Inc. 500,000 8,281,250
- ---------------------------------------------------------------
Zebra Technologies Corp.(a) 150,000 4,912,500
- ---------------------------------------------------------------
13,193,750
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-1.13%
Daisytek International Corp.(a)(b) 900,000 13,556,250
- ---------------------------------------------------------------
Herman Miller, Inc. 500,000 11,031,250
- ---------------------------------------------------------------
United Stationers, Inc.(a) 200,000 5,300,000
- ---------------------------------------------------------------
29,887,500
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.74%
Cal Dive International, Inc.(a) 125,000 2,671,875
- ---------------------------------------------------------------
CE Franklin Ltd.(a) 74,100 189,881
- ---------------------------------------------------------------
Core Laboratories N.V.(a)
(Netherlands) 500,000 11,281,250
- ---------------------------------------------------------------
Global Industries Ltd.(a) 550,000 5,293,750
- ---------------------------------------------------------------
19,436,756
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.47%
Cabot Oil & Gas Corp.-Class A 250,000 4,250,000
- ---------------------------------------------------------------
Evergreen Resources, Inc.(a) 150,000 3,393,750
- ---------------------------------------------------------------
Stone Energy Corp.(a) 150,000 4,818,750
- ---------------------------------------------------------------
12,462,500
- ---------------------------------------------------------------
PERSONAL CARE-1.22%
Rexall Sundown, Inc.(a) 700,000 12,556,250
- ---------------------------------------------------------------
Steiner Leisure Ltd.(a) 400,500 9,762,188
- ---------------------------------------------------------------
Twinlab Corp.(a) 450,000 9,984,375
- ---------------------------------------------------------------
32,302,813
- ---------------------------------------------------------------
PUBLISHING-0.52%
IDG Books Worldwide, Inc.-Class A(a) 400,000 6,200,000
- ---------------------------------------------------------------
Meredith Corp. 200,000 7,400,000
- ---------------------------------------------------------------
13,600,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RAILROADS-0.39%
MotivePower Industries, Inc.(a) 400,000 $ 10,175,000
- ---------------------------------------------------------------
RESTAURANTS-1.20%
Buffets, Inc.(a) 350,000 3,784,375
- ---------------------------------------------------------------
CEC Entertainment, Inc.(a) 300,000 8,475,000
- ---------------------------------------------------------------
Papa John's International, Inc.(a) 275,000 10,441,406
- ---------------------------------------------------------------
Sonic Corp.(a) 475,000 9,025,000
- ---------------------------------------------------------------
31,725,781
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-2.01%
Best Buy Co., Inc.(a) 100,000 4,800,000
- ---------------------------------------------------------------
CDW Computer Centers, Inc.(a) 500,000 37,468,750
- ---------------------------------------------------------------
Tech Data Corp.(a) 275,000 10,828,125
- ---------------------------------------------------------------
53,096,875
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.49%
Burlington Coat Factory Warehouse
Corp. 400,000 6,000,000
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 330,750 12,754,547
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 500,000 9,062,500
- ---------------------------------------------------------------
99 Cents Only Stores(a) 249,025 11,517,406
- ---------------------------------------------------------------
39,334,453
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.25%
Casey's General Stores 31,600 442,400
- ---------------------------------------------------------------
Wild Oats Markets, Inc.(a) 251,700 6,198,113
- ---------------------------------------------------------------
6,640,513
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.45%
Fred Meyer, Inc.(a) 225,000 11,995,313
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.12%
DM Management Company(a) 300,000 3,262,500
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-3.75%
BOWLIN Outdoor Advertising &
Travel Centers, Inc.(a)(b) 250,000 1,218,750
- ---------------------------------------------------------------
Cost Plus, Inc.(a) 113,200 3,396,000
- ---------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a)(b) 400,000 10,825,000
- ---------------------------------------------------------------
Inacom Corp.(a) 350,000 6,781,250
- ---------------------------------------------------------------
Linens 'N Things, Inc.(a) 400,000 12,375,000
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 575,000 11,500,000
- ---------------------------------------------------------------
Musicland Stores Corp.(a) 250,000 3,296,875
- ---------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 250,000 9,781,250
- ---------------------------------------------------------------
PETsMART, Inc.(a) 400,000 2,875,000
- ---------------------------------------------------------------
Rent-Way, Inc.(a) 193,700 4,576,163
- ---------------------------------------------------------------
Renters Choice, Inc.(a) 500,000 12,406,250
- ---------------------------------------------------------------
Trans World Entertainment Corp.(a) 600,000 12,375,000
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 200,000 5,450,000
- ---------------------------------------------------------------
Zale Corp.(a) 89,500 2,120,037
- ---------------------------------------------------------------
98,976,575
- ---------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-2.96%
Abercrombie & Fitch Co.-Class A(a) 300,000 $ 11,906,250
- ---------------------------------------------------------------
American Eagle Outfitters, Inc.(a) 217,475 8,807,738
- ---------------------------------------------------------------
AnnTaylor Stores Corp.(a) 300,000 8,700,000
- ---------------------------------------------------------------
Buckle, Inc. (The)(a) 650,000 11,781,250
- ---------------------------------------------------------------
Goody's Family Clothing, Inc.(a) 1,000,000 10,687,500
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 550,000 13,337,500
- ---------------------------------------------------------------
Pacific Sunwear of California(a) 596,700 12,903,638
- ---------------------------------------------------------------
78,123,876
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-1.43%
Abacus Direct Corp.(a) 100,000 4,875,000
- ---------------------------------------------------------------
Acxiom Corp.(a) 350,000 8,793,750
- ---------------------------------------------------------------
ADVO, Inc.(a) 100,000 2,543,750
- ---------------------------------------------------------------
Market Facts, Inc.(a) 375,000 8,765,625
- ---------------------------------------------------------------
Metris Companies, Inc. 225,000 7,396,875
- ---------------------------------------------------------------
Professional Detailing, Inc.(a) 100,000 2,337,500
- ---------------------------------------------------------------
TMP Worldwide, Inc.(a) 100,000 3,000,000
- ---------------------------------------------------------------
37,712,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-3.32%
Bright Horizons Family Solutions,
Inc.(a) 150,000 2,775,000
- ---------------------------------------------------------------
Cerner Corp.(a) 325,000 7,271,875
- ---------------------------------------------------------------
Championship Auto Racing Teams,
Inc.(a) 100,000 2,487,500
- ---------------------------------------------------------------
Equity Corp. International(a) 185,100 4,592,794
- ---------------------------------------------------------------
G & K Services, Inc.-Class A 300,000 13,725,000
- ---------------------------------------------------------------
INSpire Insurance Solutions, Inc.(a) 225,000 5,625,000
- ---------------------------------------------------------------
Iron Mountain, Inc.(a) 150,000 4,584,375
- ---------------------------------------------------------------
MSC Industrial Direct Co., Inc.
-Class A(a) 250,000 5,312,500
- ---------------------------------------------------------------
Regis Corp. 225,000 6,904,688
- ---------------------------------------------------------------
Ritchie Bros. Auctioneers Inc.(a)
(Canada) 155,100 3,877,500
- ---------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 800,000 18,450,000
- ---------------------------------------------------------------
Strayer Education, Inc. 350,000 11,900,000
- ---------------------------------------------------------------
87,506,232
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-2.83%
Analysts International Corp. 250,000 4,390,625
- ---------------------------------------------------------------
Ciber, Inc.(a) 150,000 2,943,750
- ---------------------------------------------------------------
Computer Task Group, Inc. 500,000 15,312,500
- ---------------------------------------------------------------
Insight Enterprises, Inc.(a) 750,000 21,750,000
- ---------------------------------------------------------------
Keane, Inc.(a) 200,000 6,650,000
- ---------------------------------------------------------------
Safeguard Scientifics, Inc.(a) 125,300 3,359,606
- ---------------------------------------------------------------
SunGard Data Systems, Inc.(a) 600,000 20,250,000
- ---------------------------------------------------------------
74,656,481
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-4.13%
Affiliated Computer Services, Inc.(a) 550,000 20,350,000
- ---------------------------------------------------------------
Billing Concepts Corp.(a) 1,000,000 14,125,000
- ---------------------------------------------------------------
Computer Horizons Corp.(a) 200,000 4,600,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (DATA PROCESSING)-(CONTINUED)
CSG Systems International, Inc.(a) 500,000 $ 27,250,000
- ---------------------------------------------------------------
FactSet Research Systems, Inc.(a) 190,800 5,724,000
- ---------------------------------------------------------------
MedQuist, Inc.(a) 350,000 9,428,125
- ---------------------------------------------------------------
National Computer Systems, Inc. 450,000 12,600,000
- ---------------------------------------------------------------
NOVA Corp.(a) 514,500 14,856,188
- ---------------------------------------------------------------
108,933,313
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.92%
On Assignment, Inc.(a) 75,000 2,550,000
- ---------------------------------------------------------------
RCM Technologies, Inc.(a) 200,000 3,012,500
- ---------------------------------------------------------------
Robert Half International, Inc.(a) 250,000 10,031,250
- ---------------------------------------------------------------
Romac International, Inc.(a) 500,000 8,750,000
- ---------------------------------------------------------------
24,343,750
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.47%
Cornell Corrections, Inc.(a) 450,000 7,368,750
- ---------------------------------------------------------------
Tetra Tech, Inc.(a) 250,000 5,078,125
- ---------------------------------------------------------------
12,446,875
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.89%
Consolidated Graphics, Inc.(a) 200,000 9,487,500
- ---------------------------------------------------------------
Valassis Communications, Inc.(a) 200,000 7,975,000
- ---------------------------------------------------------------
World Color Press, Inc.(a) 200,000 6,075,000
- ---------------------------------------------------------------
23,537,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.36%
Amdocs Limited(a) 275,000 3,575,000
- ---------------------------------------------------------------
International Telecommunication
Data Systems, Inc.(a) 245,050 5,850,569
- ---------------------------------------------------------------
9,425,569
- ---------------------------------------------------------------
TELEPHONE-0.30%
GeoTel Communications Corp.(a) 300,000 7,800,000
- ---------------------------------------------------------------
TEXTILES (APPAREL)-1.00%
Nautica Enterprises, Inc.(a) 200,000 4,137,500
- ---------------------------------------------------------------
Quicksilver, Inc.(a) 650,000 13,446,875
- ---------------------------------------------------------------
Russell Corp. 125,000 3,070,313
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 125,000 5,804,688
- ---------------------------------------------------------------
26,459,376
- ---------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.43%
Mohawk Industries, Inc.(a) 375,000 11,320,313
- ---------------------------------------------------------------
TRUCKERS-0.40%
M.S. Carriers, Inc.(a) 100,000 2,150,000
- ---------------------------------------------------------------
Swift Transportation Co., Inc.(a) 376,700 8,322,716
- ---------------------------------------------------------------
10,472,716
- ---------------------------------------------------------------
TRUCKS & PARTS-0.34%
Wabash National Corp. 500,000 8,875,000
- ---------------------------------------------------------------
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-1.34%
Allied Waste Industries, Inc.(a) 1,160,000 $ 25,085,000
- ---------------------------------------------------------------
KTI, Inc.(a)(b) 495,000 10,395,000
- ---------------------------------------------------------------
35,480,000
- ---------------------------------------------------------------
Total Common Stocks
(Cost $1,846,469,621) 2,395,524,490
- ---------------------------------------------------------------
PREFERRED STOCKS-0.40%
LODGING-HOTELS-0.40%
Royal Caribbean Cruises Ltd.-
$3.63 Conv. Pfd.
(Cost $7,582,525) 115,000 10,522,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-9.80%(c)
Bear Stearns & Co., Inc.,
5.60%(d) $150,000,000 $ 150,000,000
- ---------------------------------------------------------------
Chase Securities Inc., 5.55%,
11/02/98(e) 38,478,507 $ 38,478,507
- ---------------------------------------------------------------
Deutsche Bank Sec. Corp.,
5.55%(f) 25,000,000 25,000,000
- ---------------------------------------------------------------
Salomon Smith Barney, Inc.,
5.55%(g) 45,000,000 45,000,000
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $258,478,507) 258,478,507
- ---------------------------------------------------------------
TOTAL INVESTMENTS-101.00% 2,664,525,497
- ---------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(1.00%) (26,487,841)
- ---------------------------------------------------------------
NET ASSETS-100.00% $2,638,037,656
===============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
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 never 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 10/31/98
was $35,995,000 which represented 1.36% of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Open joint repurchase agreement entered into 10/30/98. Either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $873,414,203 U.S. Government
obligations, 0% to 9.50% due 08/01/01 to 04/01/34 with an aggregate market
value at 10/31/98 of $468,333,240.
(e) Joint repurchase agreement entered into 10/30/98 with a maturing value of
$200,092,500. Collateralized by $254,478,951 U.S. Government obligations,
5.00% to 16.00% due 05/20/02 to 10/15/28 with an aggregate market value at
10/31/98 of $204,000,718.
(f) Open joint repurchase agreement entered into 10/30/98. Either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $189,108,000 U.S. Government
obligations, 6.00% to 6.21% due 05/15/08 to 08/06/38 with an aggregate
market value at 10/31/98 of $204,000,108.
(g) Open joint repurchase agreement entered into 10/30/98. Either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $1,159,504,000 U.S. Government
obligations, 0% to 10.70% due 11/01/98 to 07/15/45 with an aggregate market
value at 10/31/98 of $1,020,000,062.
See Notes to Financial Statements.
13
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$2,112,530,653) $2,664,525,497
- --------------------------------------------------------
Receivables for:
Investments sold 16,167,520
- --------------------------------------------------------
Capital stock sold 2,209,327
- --------------------------------------------------------
Dividends and interest 370,125
- --------------------------------------------------------
Investment for deferred compensation
plan 48,416
- --------------------------------------------------------
Other assets 61,443
- --------------------------------------------------------
Total assets 2,683,382,328
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 34,199,874
- --------------------------------------------------------
Capital stock reacquired 8,197,399
- --------------------------------------------------------
Deferred compensation 48,416
- --------------------------------------------------------
Accrued advisory fees 1,310,118
- --------------------------------------------------------
Accrued administrative services fees 9,386
- --------------------------------------------------------
Accrued distribution fees 873,518
- --------------------------------------------------------
Accrued directors' fees 2,175
- --------------------------------------------------------
Accrued transfer agent fees 422,288
- --------------------------------------------------------
Accrued operating expenses 281,498
- --------------------------------------------------------
Total liabilities 45,344,672
- --------------------------------------------------------
Net assets applicable to shares
outstanding $2,638,037,656
========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 65,707,162
========================================================
Net asset value and redemption price per
share $ 40.15
========================================================
Offering price per share:
(Net asset value of $40.15
divided by 94.50%) $ 42.49
========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $25,661 foreign
withholding tax) $ 3,761,020
- --------------------------------------------------------
Interest 10,737,672
- --------------------------------------------------------
Total investment income 14,498,692
- --------------------------------------------------------
EXPENSES:
Advisory fees 21,617,925
- --------------------------------------------------------
Administrative services fees 108,996
- --------------------------------------------------------
Custodian fees 269,048
- --------------------------------------------------------
Directors' fees 30,960
- --------------------------------------------------------
Distribution fees 8,542,170
- --------------------------------------------------------
Transfer agent fees 4,822,116
- --------------------------------------------------------
Other 1,028,881
- --------------------------------------------------------
Total expenses 36,420,096
- --------------------------------------------------------
Less: Expenses paid indirectly (102,523)
- --------------------------------------------------------
Net expenses 36,317,573
- --------------------------------------------------------
Net investment income (loss) (21,818,881)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FUTURES AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 28,934,402
- --------------------------------------------------------
Futures contracts (6,640,895)
- --------------------------------------------------------
Option contracts written 199,322
- --------------------------------------------------------
22,492,829
- --------------------------------------------------------
Net unrealized appreciation
(depreciation) of:
Investment securities (548,025,194)
- --------------------------------------------------------
Futures contracts 5,238,090
- --------------------------------------------------------
(542,787,104)
- --------------------------------------------------------
Net gain (loss) from investment
securities, futures and option
contracts (520,294,275)
- --------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(542,113,156)
========================================================
</TABLE>
See Notes to Financial Statements.
14
<PAGE> 17
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (21,818,881) $ (19,740,330)
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities, futures and
option contracts 22,492,829 143,240,683
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities and futures contracts (542,787,104) 435,818,451
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (542,113,156) 559,318,804
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains (135,730,479) (138,552,707)
- ----------------------------------------------------------------------------------------------
Share transactions--net (548,376,018) 692,927,269
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,226,219,653) 1,113,693,366
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,864,257,309 2,750,563,943
- ----------------------------------------------------------------------------------------------
End of period $ 2,638,037,656 $3,864,257,309
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 2,060,980,954 $2,631,139,285
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (117,968) (81,400)
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, futures and option contracts 25,179,825 138,417,475
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
futures contracts 551,994,845 1,094,781,949
- ----------------------------------------------------------------------------------------------
$ 2,638,037,656 $3,864,257,309
==============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
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 six separate
portfolios: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten
Fund. 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, convertible bonds, convertible preferred stocks and warrants of
companies which in the opinion of the Fund's investment advisor are expected to
achieve earnings growth over time at a rate in excess of 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 price on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices
on that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. If a mean is not available,
as is the case in some foreign markets, the closing bid will be used absent
a last sales price. 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 mean of the closing bid and asked prices. 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 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. Generally, trading in foreign securities is
15
<PAGE> 18
substantially completed each day at various times prior to the close of the
New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock Exchange 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 recorded 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 and distributions to
shareholders are recorded on the ex-dividend date. On October 31, 1998,
$21,782,313 was reclassified from undistributed net investment income (loss)
to paid in capital as a result of a net operating tax loss 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. Stock Index Futures Contracts--The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and that a change in the value of contracts may not correlate with
changes in the value of the securities being hedged.
E. Foreign Currency Transactions--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.
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 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.
G. Covered Call Options--The Fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time at which the Fund effects a closing purchase transaction by
purchasing (at a price which may be higher than that received when the call
option was written) a call option identical to the one originally written.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The 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.
16
<PAGE> 19
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1998, AIM was
reimbursed $108,996 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Fund. During the year ended October 31, 1998,
AFS was paid $2,494,291 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund. The Company has adopted a plan pursuant to rule 12b-1 under the 1940 Act
(the "Plan"), whereby the Fund pays to AIM Distributors an annual rate of 0.25%
of the Fund's average daily net assets as compensation for services related to
the sales and distribution of the Fund's shares. The Plan provides that payments
to dealers and financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions, may be characterized as
a service fee. Any amounts not paid as a service fee under the Plan would
constitute an assets-based sales charge. The Plan also imposes a cap on the
total amount of sales charges, including asset-based sales charges, that may be
paid by the Company with respect to the Fund's shares. During the year ended
October 31, 1998, the Fund paid AIM Distributors $8,542,170 as compensation
under the Plan.
AIM Distributors received commissions of $763,601 from sales of shares of the
Fund's capital stock during the year ended October 31, 1998. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of capital stock. During the year ended October 31,
1998, AIM Distributors received $86,211 in contingent deferred sales charges
imposed on redemptions of the Fund's capital stock. Certain officers and
directors of the Company are officers and directors of AIM, AFS and AIM
Distributors.
During the year ended October 31, 1998, the Fund paid legal fees of $10,572
for services rendered by Kramer, Levin, Naftalis & Frankel 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, 1998 the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$35,949 and $66,574, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $102,523 during the year ended October 31, 1998.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest 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. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on May 1, 1998, the Fund was limited
to borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the year ended October 31, 1998, 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 0.05% on the unused balance of
the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1998 were $2,149,715,327
and $2,921,465,631, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 667,335,730
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (127,114,794)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $ 540,220,936
==========================================================
</TABLE>
Cost of investment for tax purposes is $2,124,304,561.
NOTE 7-CALL OPTIONS CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1998 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Beginning of period -- --
- --------------------------------- --------- ---------
Written 741 $ 205,435
- --------------------------------- --------- ---------
Closed (741) (205,435)
- --------------------------------- --------- ---------
End of period -- --
================================= ========= =========
</TABLE>
17
<PAGE> 20
NOTE 8-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1998 and
1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold 40,244,020 $ 1,856,544,416 41,558,826 $ 1,826,781,148
- ---------------------------------------------------------- ----------- --------------- ----------- ---------------
Issued as reinvestment of dividends 2,928,346 126,973,169 3,068,800 127,938,198
- ---------------------------------------------------------- ----------- --------------- ----------- ---------------
Reacquired (54,802,587) (2,531,893,603) (28,514,602) (1,261,792,077)
- ---------------------------------------------------------- ----------- --------------- ----------- ---------------
(11,630,221) $ (548,376,018) 16,113,024 $ 692,927,269
========================================================== =========== =============== =========== ===============
</TABLE>
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the five-year period ended October 31,
1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 49.97 $ 44.93 $ 40.13 $ 28.37 $ 23.85
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income (loss) (0.33) (0.26) (0.32) (0.04) (0.05)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Net gains (losses) on securities (both realized and
unrealized) (7.71) 7.60 6.09 11.80 4.57
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Total from investment operations (8.04) 7.34 5.77 11.76 4.52
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Less distributions:
Distributions from net realized gains (1.78) (2.30) (0.97) -- --
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Net asset value, end of period $ 40.15 $ 49.97 $ 44.93 $ 40.13 $ 28.37
============================================================ ========== ========== ========== ========== ========
Total return(a) (16.36)% 17.35% 14.77% 41.45% 18.96%
============================================================ ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,638,038 $3,864,257 $2,750,564 $2,245,554 $687,238
============================================================ ========== ========== ========== ========== ========
Ratio of expenses to average net assets(b) 1.06%(c) 1.06% 1.11% 1.08% 1.07%
============================================================ ========== ========== ========== ========== ========
Ratio of net investment income (loss) to average net
assets(d) (0.64)%(c) (0.65)% (0.76)% (0.19)% (0.26)%
============================================================ ========== ========== ========== ========== ========
Portfolio turnover rate 69% 73% 79% 52% 75%
============================================================ ========== ========== ========== ========== ========
</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 were
1.15% and 1.09% for 1995-1994.
(c) Ratios are based on average net assets of $3,416,868,071.
(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 were (0.26)% and (0.28)% for 1995-1994.
18
<PAGE> 21
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, 1998, 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, 1998, 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, 1998, 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.
KPMG Peat Marwick LLP
Houston, Texas
December 4, 1998
19
<PAGE> 22
BOARD OF DIRECTORS
Charles T. Bauer
Chairman
A I M Management Group Inc.
Bruce L. Crockett
Director
ACE Limited;
Formerly Director, President, and
Chief Executive Officer
COMSAT Corporation
Owen Daly II
Director
Cortland Trust Inc.
Edward K. Dunn Jr.
Chairman, Mercantile Mortgage Corp.;
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares
Jack Fields
Chief Executive Officer
Texana Global, Inc.;
Formerly Member
of the U.S. House of Representatives
Carl Frischling
Partner
Kramer, Levin, Naftalis & Frankel
Robert H. Graham
President and Chief Executive Officer
A I M Management Group Inc.
Prema Mathai-Davis
Chief Executive Officer, YWCA of the U.S.A.;
Commissioner, New York City Dept. for the
Aging; and member of the Board of Directors,
Metropolitan Transportation Authority of
New York State
Lewis F. Pennock
Attorney
Ian W. Robinson
Consultant; Formerly Executive
Vice President and
Chief Financial Officer
Bell Atlantic Management
Services, Inc.
Louis S. Sklar
Executive Vice President
Hines Interests
Limited Partnership
OFFICERS
Charles T. Bauer
Chairman
Robert H. Graham
President
John J. Arthur
Senior Vice President and Treasurer
Carol F. Relihan
Senior Vice President and Secretary
Gary T. Crum
Senior Vice President
Jonathan C. Schoolar
Senior Vice President
Dana R. Sutton
Vice President and Assistant Treasurer
Melville B. Cox
Vice President
Renee A. Friedli
Assistant Secretary
P. Michelle Grace
Assistant Secretary
Jeffrey H. Kupor
Assistant Secretary
Nancy L. Martin
Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
OFFICE OF THE FUND
11 Greenway Plaza
Suite 100
Houston, TX 77046
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
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 DIRECTORS
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
KPMG Peat Marwick LLP
700 Louisiana
Houston, TX 77002
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Aggressive Growth Fund distributed long-term capital gains of $1.941 per
share during its tax year ended October 31, 1998.
20
<PAGE> 23
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time,
the power of compounding can significantly increase the value of your
assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may
be more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of an AIM fund for your
Individual Retirement Account (IRA), Roth IRA, or any other type of
retirement plan, and earn tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o www.aimfunds.com. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
----------------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
----------------------------
<PAGE> 24
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Asian Growth Fund since 1976 and managed approximately $91
AIM Capital Development Fund AIM Developing Markets Fund(2) billion in assets for more than 5.5 million
AIM Constellation Fund AIM Emerging Markets Fund(2) shareholders, including individual investors,
AIM Mid Cap Equity Fund(2), (A) AIM Europe Growth Fund(2) corporate clients, and financial institutions,
AIM Select Growth Fund(3) AIM European Development Fund as of September 30, 1998.
AIM Small Cap Growth Fund(2), (B) AIM International Equity Fund The AIM Family of Funds--Registered Trademark--
AIM Small Cap Opportunities Fund AIM International Growth Fund(2) is distributed nationwide, and AIM today is the
AIM Value Fund AIM Japan Growth Fund(2) 11th-largest mutual fund complex in the U.S. in
AIM Weingarten Fund AIM Latin American Growth Fund(2) assets under management, according to Strategic
AIM New Pacific Growth Fund(2) Insight, an independent mutual fund monitor.
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor MultiFlex Fund AIM Global Growth Fund
AIM Advisor Real Estate Fund AIM Worldwide Growth Fund(2)
AIM Balanced Fund
AIM Basic Value Fund(2), (C) GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
INCOME FUNDS
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund AIM Emerging Markets Debt Fund(2), (D)
AIM High Yield Fund II AIM Global Government Income Fund(2)
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund(2)
AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund(2)
AIM High Income Municipal Fund AIM Global Financial Services Fund(2)
AIM Municipal Bond Fund AIM Global Health Care Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Infrastructure Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
MONEY MARKET FUNDS AIM Global Trends Fund(2), (E)
AIM Dollar Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (2)
Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E) On September 8, 1998, AIM
New Dimension Fund was renamed AIM Global Trends Fund. For more complete
information about any AIM Fund(s), including sales charges and expenses, ask
your financial consultant or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money.
