<PAGE> 1
ANNUAL REPORT / DECEMBER 31 1999
AIM MID CAP EQUITY FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
TENDING THE GARDEN BY KONSTANTIN RODKO (1908-1995)
THIS CHARMING FOLK-ART PAINTING BY KONSTANTIN RODKO DEPICTS
AN ATTENTIVE GARDENER CARING FOR HER TIDY CROP. LIKE A GAR-
DENER, FUND MANAGERS LOOK FOR GROWING COMPANIES THAT MAY
ONE DAY BLOSSOM INTO MAJOR CORPORATIONS.
-------------------------------------
AIM Mid Cap Equity seeks long-term growth of capital by investing primarily in
the equity securities of mid-cap companies.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Mid Cap Equity Fund (formerly GT Global America Mid Cap Growth Fund)
performance figures are historical, and they reflect changes in net asset
value and the reinvestment of distributions.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B, Class C and Advisor Class shares will
differ from that of its Class A shares due to different sales-charge
structure and expenses.
o Because Class C shares have been offered for less than a year (since
5/3/99), all Class C performance figures reflect cumulative total returns
that have not yet been annualized.
o Beginning 3/1/99, Advisor Class shares were closed to new investors.
Effective 2/11/00, after the close of the fiscal year, Advisor Class shares
were converted to Class A shares.
o During the fiscal year ended 12/31/99, the fund paid distributions of $2.356
per Class A, Class B, Class C and Advisor Class share.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Mid-Cap Core Funds Index represents an average of the
performance of the 30 largest mid-cap core mutual funds tracked by Lipper
Inc., an independent mutual fund performance monitor.
o The Russell Midcap Index comprises the capitalization-weighted average price
of 800 selected common stocks of medium-size domestic companies.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is
generally considered representative of the stock market in general.
o An investment cannot be made in any index. Unless otherwise indicated, index
results include reinvested dividends and do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM MID CAP EQUITY FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report has reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on January 1, 1999, would have seen a market
THE FUND dominated by large-capitalization stocks and high-quality
APPEARS HERE] bonds, especially U.S. Treasuries. During 1998, two
well-known indexes of large-capitalization U.S. companies,
the S&P 500 and the Dow Jones Industrial Average, were up
28.60% and 18.15%, respectively. By contrast,
smaller-company stocks in the Russell 2000 had lost 2.55%.
Overseas, many markets were languishing, especially in Asia,
where so many financial difficulties had originated in 1997.
In bond markets as well, name-brand quality was the
place to be. The Lehman Government/Corporate Bond Index,
which follows sovereign issues and investment-grade debt, was up 9.47%, while
the Lehman High Yield Index, which tracks riskier "junk bonds," had risen only
1.60%.
It would be easy for an investor to conclude that blue-chip issues, whether
equity or fixed-income, were the place to be, that it was time to divest himself
of everything else and put all his eggs in the blue-chip basket. The investor,
of course, would be wrong.
MARKETS TURN
While large-capitalization stocks continued to do very well, during 1999 markets
broadened dramatically with many investment sectors performing a complete
turnaround. For example, the small-cap stocks in the Russell 2000 were up 21.26%
for calendar year 1999, and many Asian markets, particularly Japan, had staged a
comeback.
The same holds true of bonds. The higher-quality Lehman index was down 2.15%
during 1999 while the Lehman High Yield index was up 2.39%.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain. We also continue to remind you that the past few
years have seen extraordinary gains in some markets, and there is no assurance
that this trend will continue.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by multiple
signs of economic health in Europe and Asia, not to mention the prolonged U.S.
economic expansion. However, we are aware of how easily an investor could have
been misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio--and help ensure that when you do alter
your investments, there's a logical reason for doing so. AIM believes every
investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended December 31, how the markets behaved and
what they foresee for the near future. We trust you will find their discussion
informative. If you have any questions or comments, we invite you to contact us,
either at our Web site, aimfunds.com, or through our Client Services department
at 800-959-4246. Information about your account is also available through our
automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM MID CAP EQUITY FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
AIM MID CAP EQUITY FUND SHOWS
SIZZLING PERFORMANCE
HOW DID AIM MID CAP EQUITY FUND PERFORM OVER THE FISCAL YEAR?
The fund reported impressive results for the fiscal year ending December 31,
1999. Class A shares reported a total annual return of 37.13%; Class B shares,
36.25%; and Advisor Class shares, 37.59%. These returns are at net asset value
and exclude sales charges. Class C shares, introduced on May 3, 1999, reported a
cumulative return of 29.98%. The fund outperformed the Russell Midcap Index,
which returned 18.23% over the fiscal year.
WHAT WERE MARKETS LIKE DURING THE FISCAL YEAR?
The bull market in technology stocks sent the stock market to new heights in
1999, but this tide did not lift all boats. While the S&P 500 and other market
indexes reached new levels, many stocks suffered down or flat years. Among the
S&P 500 stocks, 256 declined, 241 rose and three were unchanged.
The best-performing stocks were those with the most perceived growth
potential: technology, telecommunications and broadcasting stocks. Computers,
e-commerce and the Internet are changing the way the world communicates and
conducts business, and investors sought to capitalize on this revolution.
Technology stocks dominated the market; in fact, while the S&P 500 as a whole
returned 21.03% in 1999, the index's technology sector returned 75.21%.
Stocks with no ties to information technology faced a volatile year.
Investors worried about interest rates throughout 1999. In June and August, the
Federal Reserve Board (the Fed) raised rates in two quarter-point moves. The Fed
chose to leave rates unchanged in October but increased them by another
quarter-point in November. In December, a Fed decision to leave rates unchanged
sparked a market rally.
As investors focused on growth in 1999, mid-cap stocks returned to favor
because they offered the growth of small-cap stocks with less risk, and they
sold at cheaper prices than large-cap stocks.
HOW DID YOU MANAGE THE FUND DURING THESE CONDITIONS?
We maintained our investment discipline of growth at a reasonable price, or
GARP.
For a stock to be included in our portfolio, it must meet the following
criteria:
o Earnings -- we believe earnings drive stock prices.
o Momentum -- we analyze a company's growth rate to determine whether it is
accelerating or slowing.
o Value -- we look for stocks with relatively low prices compared to earnings
and projected growth rates.
Many stocks offered growth in 1999, but did not sell at reasonable prices.
Some sold at low prices but didn't offer the growth we require. Since it was
more difficult to find suitable stocks, we pared the portfolio from 91 to 77
holdings over the fiscal year. Even with this narrow market, we found a number
of good buying opportunities in the mid-cap arena, especially in the technology
and energy sectors. We looked for undiscovered gems, stocks that may have been
overlooked by the markets because of restructuring, new products or management
changes.
WHAT AREAS OF TECHNOLOGY DID YOU FAVOR?
Industries such as semiconductors, communications equipment and computer
software and services have outperformed, and the fund has exposure in all three
areas. Chip makers have recovered after several years in the doldrums. The
increase is fueled by the proliferation of chips for communications and Internet
-------------------------------------
AS INVESTORS FOCUSED ON GROWTH IN
1999, MID-CAP STOCKS RETURNED TO
FAVOR BECAUSE THEY OFFERED THE
GROWTH OF SMALL-CAP STOCKS WITH
LESS RISK, AND THEY SOLD AT CHEAPER
PRICES THAN LARGE-CAP STOCKS.
-------------------------------------
FUND SHOWS DRAMATIC REBOUND
Total return excluding sales charges
================================================================================
Class Class
A shares B shares
- --------------------------------------------------------------------------------
Year ended December 31, 1999 37.13% 36.25%
Year ended December 31, 1998 -4.71% -5.41%
================================================================================
See important fund and index disclosures inside front cover.
AIM MID CAP EQUITY FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
[ARTWORK]
PORTFOLIO COMPOSITION
As of 12/31/99, based on total net assets
<TABLE>
<CAPTION>
=====================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Novell, Inc. 2.88% 1. Electronics (Semiconductors) 8.54%
2. Lattice Semiconductor Corp. 2.71 2. Computers (Software & Services) 8.29
3. Burr-Brown Corp. 2.35 3. Oil & Gas (Drilling & Equipment) 6.42
4. AMFM Inc. 2.24 4. Electrical Equipment 5.74
5. Molex, Inc.-Class A 1.83 5. Health Care (Drugs-Generic & Other) 4.05
6. Harman International Industries, Inc. 1.68 6. Foods 3.31
7. BEA Systems, Inc. 1.68 7. Communications Equipment 3.15
8. Teva Pharmaceutical Industries Inc. 1.57 8. Broadcasting (Television, Radio & Cable) 2.67
-ADR (Israel)
9. Young & Rubicam Inc. 1.55 9. Oil & Gas (Exploration & Production) 2.65
10. Corning, Inc. 1.55 10. Services (Advertising/Marketing) 2.57
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
=====================================================================================================
</TABLE>
infrastructure. Our top semiconductor holdings included Lattice Semiconductor
and Burr-Brown.
Computer software companies we liked included Novell and BEA Systems. After
problems in the mid-1990s, Novell has turned its business around. The company,
which makes software that connects PCs to corporate networks, has seen
tremendous growth based on the success of its Internet-related products. Another
software holding, BEA Systems, allows companies to bring their old mainframe
computers into network and Web-based computing. In this arena this company is
successfully competing against computer giant IBM.
We also owned companies that make the nuts-and-bolts of the Internet
infrastructure. Molex makes more than 100,000 kinds of electronic switches and
connectors for computers, telecommunications equipment and other products.
Corning makes fiber-optic cable necessary for high-speed electronic data
transmission.
WHAT OTHER STOCKS DID YOU LIKE?
The portfolio is fairly eclectic. When you're buying growth at a discount, you
have to be flexible because you never know where you're going to find it. Our
holdings included AMFM, the largest radio station owner in the United States;
Harman International, a high-end stereo component manufacturer; and Young &
Rubicam, one of the largest advertising firms in the world.
WHAT'S YOUR OUTLOOK?
Mid-cap stocks are still historically undervalued. We expect them to outperform
large-cap stocks over the next 12 months. Often overshadowed by well-known
large-caps and the sizzling dot-com small-caps, mid-cap companies offer unique
advantages. Their management is usually more seasoned than that of small-caps
and startups, and they often grow faster than large-cap companies.
Looking into 2000, many economists predict that the Fed will raise rates
again to keep inflation at bay. With this expectation, the market could remain
volatile for the near term. In this type of environment, it pays to maintain our
disciplined investment strategy. The fund will continue to look for buying
opportunities during market troughs and selling opportunities at peaks.
-------------------------------------
THE PORTFOLIO IS FAIRLY ECLECTIC.
WHEN YOU'RE BUYING GROWTH AT
A DISCOUNT, YOU HAVE TO BE FLEXIBLE
BECAUSE YOU NEVER KNOW WHERE
YOU'RE GOING TO FIND IT.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM MID CAP EQUITY FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM MID CAP EQUITY FUND VS. BENCHMARK INDEX
6/9/87-12/31/99
in thousands
=============================================================
AIM Mid Cap Russell
Equity Fund Midcap
Class A shares Index
- -------------------------------------------------------------
5/31/87 10406.6
6/9/87 9452
12/31/87 8091 8525.9
12/31/88 8992 10214.2
12/31/89 13917 12897.6
12/31/90 12887 11414.8
12/31/91 15373 16153.3
12/31/92 20253 18792.8
12/31/93 21943 21480.4
12/31/94 25385 21030.9
12/31/95 31281 28277.0
12/31/96 36177 33649.6
12/31/97 41260 43411.4
12/31/98 39317 47793.8
12/31/99 53916 56507.4
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
=============================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/99, including sales charges
=============================================================
CLASS A SHARES
Inception (6/9/87) 14.35%
10 years 13.86
5 years 14.95
1 year 29.62*
*37.13% excluding sales charges
CLASS B SHARES
Inception (4/1/93) 16.12%
5 years 15.25
1 year 31.25*
*36.25% excluding CDSC
CLASS C SHARES
Inception (5/03/99) 28.98%*
*cumulative return; 29.98% excluding CDSC
ADVISOR CLASS SHARES*
Inception (6/1/95) 14.07
1 year 37.59
*Advisor Class shares were closed to new investors on 3/1/99.
=============================================================
Your fund's total return includes sales charges, expenses, and management fees.
The performance of the fund's Class B, Class C and Advisor Class shares will
differ from that of its Class A shares due to differing fees and expenses. For
fund performance calculations and description of the index cited on this page,
please see the inside front cover.
ABOUT THIS CHART
The chart compares your fund's Class A shares to a benchmark index. It is
intended to give you a general idea of how your fund performed compared to this
index over the period 6/9/87-12/31/99. (Data for the index is for the period
5/31/87-12/31/99.) It is important to understand the differences between your
fund and an index. An index measures the performance of a hypothetical
portfolio. A market index such as the Russell Midcap Index is not managed,
incurring no sales charges, expenses or fees. If you could buy all the
securities that make up a market index, you would incur expenses that would
affect the return on your investment.
AIM MID CAP EQUITY FUND
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
EVERY INVESTMENT PORTFOLIO
CAN BENEFIT FROM REGULAR CHECKUPS
[PHOTO]
CONSULTATION CHECKLIST
WHAT TO BRING:
o A list of all your assets, including real estate, life insurance, stocks and
bonds, and mutual funds
o A list of all your expenses, including likely future expenses
o A timetable of your financial goals, including an estimate of when you want
to retire
WHAT TO ASK:
o How can I estimate what my goals will cost?
o How much money do I need to invest, and how often?
o How many different kinds of investments do I need?
o How do I determine my risk tolerance?
o What are the possible risks of the investments you've suggested?
o What effect will these investments have on my taxes? What forms will I need
to file?
o How often do I need to revise my plan?
o How will I know how my investments are doing?
o How can I make changes to my plan?
o What kinds of communication will I get from you?
o Where can I get more information on what we've talked about?
o What do I need to do after this meeting?
Once a year, you and your financial advisor should meet to look ahead, review
investments and take another look at your goals, according to the Forum for
Investor Advice, a nonprofit association that educates investors about the role
and value of professional financial advisors.
Financial advisors can help you with every kind of financial goal, whether
that's saving up for a house, eliminating debt or saving for a comfortable
retirement. An advisor who knows you well and understands your needs can make
all the difference in your financial future. He or she can
o evaluate your total financial situation and help you formulate a
comprehensive financial plan;
o explain different types of investments, as well as their potential risks and
benefits;
o suggest an investment portfolio that can handle changing market conditions;
and
o help you make clear-headed decisions during market volatility.
GETTING THE MOST FROM YOUR PLANNING SESSION
Your advisor needs a complete picture of your financial status to prepare a
workable plan. Come prepared to talk about your financial situation, your goals
and your feelings about risk. And don't be afraid to ask lots of questions. Good
financial advisors take investor education seriously, so take advantage of their
store of knowledge and materials.
The Forum for Investor Advice suggests that you discuss the following with
your financial advisor:
o changes in the financial markets
o changes in your goals and current situation
o retirement plans
o estate planning
o outlook for the markets
Take along our checklist (left) to get you started on the path to good
planning. And don't forget to stay in touch. Maintaining regular contact with
your financial advisor can keep you moving toward your goals, especially when
your life circumstances or financial needs change.
AIM MID CAP EQUITY FUND
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-77.11%
BANKS (REGIONAL)-1.40%
Bank United Corp.-Class A 92,000 $ 2,507,000
- --------------------------------------------------------------
UnionBanCal Corp. 55,000 2,169,062
- --------------------------------------------------------------
4,676,062
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.94%
Adolph Coors Co. 60,000 3,150,000
- --------------------------------------------------------------
BIOTECHNOLOGY-0.78%
CV Therapeutics, Inc.(a) 100,000 2,606,250
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.67%
Ackerley Group, Inc. (The) 80,000 1,450,000
- --------------------------------------------------------------
AMFM Inc.(a) 95,500 7,472,875
- --------------------------------------------------------------
8,922,875
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.90%
Sigma-Aldrich Corp. 120,000 3,607,500
- --------------------------------------------------------------
Valspar Corp. (The) 65,000 2,721,875
- --------------------------------------------------------------
6,329,375
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.15%
ANTEC Corp.(a) 40,000 1,460,000
- --------------------------------------------------------------
Corning, Inc. 40,000 5,157,500
- --------------------------------------------------------------
PairGain Technologies, Inc.(a) 275,000 3,901,562
- --------------------------------------------------------------
10,519,062
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-8.29%
BEA Systems, Inc.(a) 80,000 5,595,000
- --------------------------------------------------------------
C-bridge Internet Solutions,
Inc.(a) 28,300 1,376,087
- --------------------------------------------------------------
IONA Technologies PLC-ADR
(Ireland)(a) 45,000 2,452,500
- --------------------------------------------------------------
Netegrity, Inc.(a) 40,000 2,277,500
- --------------------------------------------------------------
Novell, Inc.(a) 240,700 9,612,956
- --------------------------------------------------------------
Parametric Technology Co.(a) 160,000 4,330,000
- --------------------------------------------------------------
Synopsys, Inc.(a) 30,000 2,002,500
- --------------------------------------------------------------
27,646,543
- --------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-1.43%
Martin Marietta Materials, Inc. 70,000 2,870,000
- --------------------------------------------------------------
Southdown, Inc. 37,000 1,910,125
- --------------------------------------------------------------
4,780,125
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.73%
US Foodservice, Inc.(a) 145,200 2,432,100
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-5.74%
American Power Conversion Corp.(a) 150,000 $ 3,956,250
- --------------------------------------------------------------
Harman International Industries,
Inc. 100,000 5,612,500
- --------------------------------------------------------------
Molex, Inc.-Class A 135,100 6,113,275
- --------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 110,000 3,478,750
- --------------------------------------------------------------
19,160,775
- --------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-1.79%
Agilent Technologies, Inc.(a) 43,500 3,363,094
- --------------------------------------------------------------
Avnet, Inc. 43,000 2,601,500
- --------------------------------------------------------------
5,964,594
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-1.26%
PE Corp-PE Biosystems Group 35,000 4,210,937
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-8.54%
Altera Corp.(a) 30,000 1,486,875
- --------------------------------------------------------------
Amkor Technology, Inc.(a) 80,000 2,260,000
- --------------------------------------------------------------
Atmel Corp.(a) 76,000 2,246,750
- --------------------------------------------------------------
Burr-Brown Corp.(a) 217,500 7,857,187
- --------------------------------------------------------------
Cypress Semiconductor Corp.(a) 75,000 2,428,125
- --------------------------------------------------------------
Dallas Semiconductor Corp. 49,000 3,157,437
- --------------------------------------------------------------
Lattice Semiconductor Corp.(a) 192,000 9,048,000
- --------------------------------------------------------------
28,484,374
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.53%
Rudolph Technologies, Inc.(a) 98,000 3,283,000
- --------------------------------------------------------------
Teradyne, Inc.(a) 78,000 5,148,000
- --------------------------------------------------------------
8,431,000
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.55%
Ambac Financial Group, Inc. 35,000 1,826,562
- --------------------------------------------------------------
FOODS-3.31%
Earthgrains Co. (The) 122,000 1,967,250
- --------------------------------------------------------------
International Home Foods, Inc.(a) 150,000 2,606,250
- --------------------------------------------------------------
Keebler Foods Co.(a) 110,000 3,093,750
- --------------------------------------------------------------
Suiza Foods Corp.(a) 85,000 3,368,125
- --------------------------------------------------------------
11,035,375
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-0.95%
Mallinckrodt, Inc. 100,000 3,181,250
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-4.05%
Biovail Corp. International
(Canada)(a) 50,000 4,687,500
- --------------------------------------------------------------
Jones Pharma, Inc. 83,100 3,609,656
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-(CONTINUED)
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 73,000 $ 5,233,187
- --------------------------------------------------------------
13,530,343
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.41%
Sybron International Corp.(a) 190,000 4,690,625
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.91%
Dial Corp. (The) 125,000 3,039,063
- --------------------------------------------------------------
HOUSEWARES-0.99%
Fortune Brands, Inc. 100,000 3,306,250
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.30%
Mattel, Inc. 76,000 997,500
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.19%
Applied Power, Inc.-Class A 108,100 3,972,675
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.69%
Pentair, Inc. 60,000 2,310,000
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.79%
Mettler-Toledo International,
Inc.(a) 65,000 2,482,188
- --------------------------------------------------------------
Millipore Corp. 90,000 3,476,250
- --------------------------------------------------------------
5,958,438
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-6.42%
BJ Services Co.(a) 109,900 4,595,194
- --------------------------------------------------------------
Cooper Cameron Corp.(a) 75,800 3,709,463
- --------------------------------------------------------------
Rowan Companies, Inc.(a) 194,000 4,207,375
- --------------------------------------------------------------
Santa Fe International Corp. 149,000 3,855,375
- --------------------------------------------------------------
Transocean Sedco Forex Inc. 45,600 1,536,150
- --------------------------------------------------------------
Weatherford International, Inc.(a) 88,400 3,530,475
- --------------------------------------------------------------
21,434,032
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-2.65%
Apache Corp. 50,000 1,846,875
- --------------------------------------------------------------
Burlington Resources, Inc. 63,000 2,082,938
- --------------------------------------------------------------
Devon Energy Corp. 50,000 1,643,750
- --------------------------------------------------------------
EOG Resources, Inc. 125,000 2,195,313
- --------------------------------------------------------------
Noble Affiliates, Inc. 50,000 1,071,875
- --------------------------------------------------------------
8,840,751
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PUBLISHING-1.06%
Meredith Corp. 85,000 $ 3,543,438
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.37%
New York Times Co. (The)-Class A 25,000 1,228,125
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.43%
Ames Department Stores, Inc.(a) 120,000 3,457,500
- --------------------------------------------------------------
Consolidated Stores Corp.(a) 80,000 1,300,000
- --------------------------------------------------------------
4,757,500
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.44%
Abercrombie & Fitch Co.-Class A(a) 55,000 1,467,813
- --------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-2.57%
Infinity Broadcasting Corp.-Class
A(a) 93,975 3,400,720
- --------------------------------------------------------------
Young & Rubicam Inc. 73,000 5,164,750
- --------------------------------------------------------------
8,565,470
- --------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-1.38%
Convergys Corp.(a) 150,000 4,612,500
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.49%
Broadwing Inc.(a) 134,875 4,973,516
- --------------------------------------------------------------
TELEPHONE-1.14%
CenturyTel, Inc. 80,000 3,790,000
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.57%
Jones Apparel Group, Inc.(a) 70,000 1,898,750
- --------------------------------------------------------------
WASTE MANAGEMENT-0.30%
Republic Services, Inc.(a) 70,000 1,006,250
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$177,698,491) 257,280,298
- --------------------------------------------------------------
MONEY MARKET FUNDS-22.88%
STIC Liquid Assets Portfolio(b) 38,181,760 38,181,760
- --------------------------------------------------------------
STIC Prime Portfolio(b) 38,181,760 38,181,760
- --------------------------------------------------------------
Total Money Market Funds (Cost
$76,363,520) 76,363,520
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.99% (Cost
$254,062,011) 333,643,818
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.01% 24,463
- --------------------------------------------------------------
NET ASSETS-100.00% $333,668,281
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$254,062,011) $333,643,818
- ---------------------------------------------------------
Receivables for:
Fund shares sold 829,319
- ---------------------------------------------------------
Dividends and interest 468,876
- ---------------------------------------------------------
Due from advisor 8,097
- ---------------------------------------------------------
Other assets 24,619
- ---------------------------------------------------------
Total assets 334,974,729
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 612,291
- ---------------------------------------------------------
Accrued advisory fees 192,137
- ---------------------------------------------------------
Accrued distribution fees 311,051
- ---------------------------------------------------------
Accrued transfer agent fees 87,356
- ---------------------------------------------------------
Accrued operating expenses 103,613
- ---------------------------------------------------------
Total liabilities 1,306,448
- ---------------------------------------------------------
Net assets applicable to shares outstanding $333,668,281
=========================================================
NET ASSETS:
Class A $178,550,386
=========================================================
Class B $151,391,453
=========================================================
Class C $ 1,564,451
=========================================================
Advisor Class $ 2,161,991
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 7,604,868
=========================================================
Class B 6,815,706
=========================================================
Class C 70,488
=========================================================
Advisor Class 91,136
=========================================================
Class A:
Net asset value and redemption price per
share $ 23.48
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $23.48 divided
by 94.50%) $ 24.85
=========================================================
Class B:
Net asset value and offering price per
share $ 22.21
=========================================================
Class C:
Net asset value and offering price per
share $ 22.19
=========================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 23.72
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $4,699 foreign withholding
tax) $ 1,675,118
- ---------------------------------------------------------
Interest 2,203,902
- ---------------------------------------------------------
Security lending income 168,057
- ---------------------------------------------------------
Total investment income 4,047,077
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 2,111,743
- ---------------------------------------------------------
Accounting service fees 86,264
- ---------------------------------------------------------
Trustees fees 13,743
- ---------------------------------------------------------
Distribution fees -- Class A 541,241
- ---------------------------------------------------------
Distribution fees -- Class B 1,348,273
- ---------------------------------------------------------
Distribution fees -- Class C 3,130
- ---------------------------------------------------------
Transfer agent fees 799,789
- ---------------------------------------------------------
Other 226,098
- ---------------------------------------------------------
Total expenses 5,130,281
- ---------------------------------------------------------
Less: Expenses paid indirectly (5,433)
- ---------------------------------------------------------
Net expenses 5,124,848
- ---------------------------------------------------------
Net investment income (loss) (1,077,771)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT
SECURITIES AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 72,380,220
- ---------------------------------------------------------
Options contracts written 147,118
- ---------------------------------------------------------
72,527,338
- ---------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 17,911,472
- ---------------------------------------------------------
Option contracts written 2,084,709
- ---------------------------------------------------------
19,996,181
- ---------------------------------------------------------
Net gain from investment securities and
option contracts 92,523,519
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $91,445,748
=========================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,077,771) $ (6,126,755)
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts 72,527,338 (7,289,125)
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and option contracts 19,996,181 (5,896,122)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 91,445,748 (19,312,002)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (16,323,689) (8,638,559)
- ---------------------------------------------------------------------------------------------
Class B (14,494,421) (8,762,197)
- ---------------------------------------------------------------------------------------------
Class C (129,452)
- ---------------------------------------------------------------------------------------------
Advisor Class (193,799) (46,305)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A (34,855,409) (59,340,039)
- ---------------------------------------------------------------------------------------------
Class B (40,751,032) (69,635,070)
- ---------------------------------------------------------------------------------------------
Class C 1,442,045 --
- ---------------------------------------------------------------------------------------------
Advisor Class 909,831 70,469
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (12,950,178) (165,663,703)
=============================================================================================
NET ASSETS:
Beginning of period 346,618,459 512,282,162
- ---------------------------------------------------------------------------------------------
End of period $333,668,281 $ 346,618,459
- ---------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $222,894,326 $ 295,648,297
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and option contracts 31,192,148 (8,615,464)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
option contracts 79,581,807 59,585,626
- ---------------------------------------------------------------------------------------------
$333,668,281 $ 346,618,459
=============================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Equity Fund (the "Fund") is a separate series of AIM Growth Series
(the "Trust"). The Trust is organized as a Delaware business trust and is
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 series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares are sold
without a sales charge. Effective March 1, 1999, the Fund discontinued sales of
the Advisor Class to new investors. Matters affecting each portfolio or class
will be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was increased by
$1,077,771, undistributed net realized gains decreased by $1,578,365 and
paid-in capital increased by $500,594 as a result of differing book/tax
treatment of foreign currency transactions and other reclassifications. Net
assets of the Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current
10
<PAGE> 13
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.
F. Put Options -- The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, the
Fund pays an option premium. The option's underlying instrument may be a
security or a futures contract. Put options may be used by the Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or a
portion of the Fund's resulting losses. At the same time, because the maximum
the Fund has at risk is the cost of the option, purchasing put options does
not eliminate the potential for the Fund to profit from an increase in the
value of the securities hedged.
G. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. The Fund pays AIM investment management and administration
fees at an annual rate of 0.725% on the first $500 million of the Fund's average
daily net assets, plus 0.70% on the next $500 million of the Fund's average
daily net assets, plus 0.675% on the next $500 million of the Fund's average
daily net assets, plus 0.65% on the Fund's average daily net assets exceeding
$1.5 billion. AIM has contractually agreed to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 1.75%, 2.40%, 2.40% and 1.40% of the average daily
net assets of the Fund's Class A, Class B, Class C and Advisor Class shares,
respectively.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
calculated at the rate of 0.03% of the first $5 billion of assets and 0.02% to
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets. For the year ended
December 31, 1999, AIM was paid $86,264 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $705,008 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, Class B or Class C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $541,241, $1,348,273 and
$3,130, respectively, as compensation under the Plans.
AIM Distributors received commissions of $40,399 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM
11
<PAGE> 14
Distributors received $684 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $5,433 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$5,433 during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period. Prior to May 28, 1999, the Fund, along with certain
other funds advised and/or administered by AIM, had a line of credit with
BankBoston and State Street Bank & Trust Company. The arrangements with the
banks allowed the Fund and certain other funds to borrow, on a first come, first
served basis, an aggregate maximum amount of $250,000,000.
NOTE 5-PORTFOLIO SECURITIES LOANED
At December 31, 1999, securities with an aggregate value of $10,500,888 were on
loan to brokers. The loans were secured by cash collateral of $10,710,957
received by the Portfolio. For the year ended December 31, 1999, the Portfolio
received fees of $168,057 for securities lending.
For international securities, cash collateral is received by the fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. The collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Fund against loaned securities in the amount at least equal to
102% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. The cash collateral is
invested in a securities lending trust which consists of a portfolio of high
quality short duration securities whose average effective duration is restricted
to 120 days or less.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$214,006,640 and $364,205,155, respectively.
The amount of unrealized appreciation of investment securities, for tax
purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $85,698,986
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (7,113,627)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $78,585,359
=========================================================
</TABLE>
Cost of investments for tax purposes is $255,058,459.
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of year 11,068 $2,262,028
- ------------------------------ -------- ----------
Written 1,828 245,858
- ------------------------------ -------- ----------
Closed (1,847) (123,476)
- ------------------------------ -------- ----------
Exercised (10,049) (2,311,412)
- ------------------------------ -------- ----------
Expired (1,000) (72,998)
- ------------------------------ -------- ----------
End of year -- --
============================== ======== ==========
</TABLE>
12
<PAGE> 15
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 2,331,884 $ 45,474,921 23,952,734 $ 505,999,810
- ---------------------------------------------------------------------------------------------------------------------
Class B 743,118 14,758,662 5,833,056 120,542,669
- ---------------------------------------------------------------------------------------------------------------------
Class C* 67,678 1,380,504 -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class 49,583 1,032,846 887,277 18,970,978
- ---------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 685,215 14,958,133 448,265 7,998,160
- ---------------------------------------------------------------------------------------------------------------------
Class B 648,821 13,404,549 471,450 8,052,203
- ---------------------------------------------------------------------------------------------------------------------
Class C* 5,521 114,003 -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class 8,785 193,799 2,579 46,305
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (4,913,896) (95,288,463) (27,068,413) (573,338,009)
- ---------------------------------------------------------------------------------------------------------------------
Class B (3,686,690) (68,914,243) (9,774,765) (198,229,942)
- ---------------------------------------------------------------------------------------------------------------------
Class C* (2,711) (52,462) -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class (15,098) (316,814) (896,015) (18,946,814)
- ---------------------------------------------------------------------------------------------------------------------
(4,077,790) $(73,254,565) (6,143,832) $(128,904,640)
=====================================================================================================================
</TABLE>
* Class C Shares Commenced sales on May 3, 1999.
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
outstanding during each of the years in the five-year period ended December 31,
1999, for a share of Class C outstanding during the period May 3, 1999 (date
sales commenced) through December 31, 1999 and for a share of Advisor Class
outstanding each of the years in four-year period ended December 31, 1999 and
the period June 1, 1995 (date sales commenced) through December 31, 1995.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------
1999(a) 1998(a) 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.97 $ 21.01 $ 20.77 $ 19.07 $ 17.69
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.01) (0.24) (0.20) 0.03 0.24
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 6.88 (0.81) 3.00 2.96 3.93
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 6.87 (1.05) 2.80 2.99 4.17
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- -- (0.21)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (2.36) (0.99) (2.56) (1.29) (2.79)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 23.48 $ 18.97 $ 21.01 $ 20.77 $ 19.07
============================================================ ======== ======== ======== ======== ========
Total return(b) 37.13% (4.71)% 14.05% 15.65% 23.23%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $178,550 $180,258 $255,674 $343,427 $396,291
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets:
With fee waivers 1.46%(c) 1.56% 1.37% 1.36% 1.46%
============================================================ ======== ======== ======== ======== ========
Without fee waivers 1.46%(c) 1.57% 1.48% 1.41% --
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average net assets:
With fee waivers (0.07)%(c) (1.09)% (0.90)% 0.12% 1.24%
============================================================ ======== ======== ======== ======== ========
Without fee waivers (0.07)%(c) (1.10)% (1.01)% 0.07% --
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 90% 168% 190% 253% 71%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $154,640,295.
<TABLE>
<CAPTION>
Class C
------------
May 3, 1999
Class B through
------------------------------------------------------- December 31,
1999(a) 1998(a) 1997 1996 1995 1999(a)
-------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.16 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $19.02
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Income from investment operations:
Net investment income (loss) (0.14) (0.38) (0.34) (0.11) 0.10 (0.10)
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Net gains (losses) on securities (both
realized and unrealized) 6.55 (0.78) 2.93 2.91 3.87 5.63
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Total from investment operations 6.41 (1.16) 2.59 2.80 3.97 5.53
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Less distributions:
Dividends from net investment income -- -- -- -- (0.12) --
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58) (2.36)
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Total distributions (2.36) (0.99) (2.56) (1.29) (2.70) (2.36)
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Net asset value, end of period $ 22.21 $ 18.16 $ 20.31 $ 20.28 $ 18.77 $22.19
=============================================== ======== ======== ======== ======== ======== ======
Total return(b) 36.25% (5.41)% 13.35% 14.82% 22.42% 29.98%
=============================================== ======== ======== ======== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $151,392 $165,447 $255,468 $334,590 $348,435 $1,564
=============================================== ======== ======== ======== ======== ======== ======
Ratio of expenses to average net assets:
With fee waivers 2.11%(c) 2.21% 2.02% 2.01% 2.11% 2.11%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Without fee waivers 2.11%(c) 2.22% 2.13% 2.06% -- 2.11%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Ratio of net investment income (loss) to
average net assets:
With fee waivers (0.72)%(c) (1.74)% (1.55)% (0.53)% 0.59% (0.72)%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Without fee waivers (0.72)%(c) (1.75)% (1.66)% (0.58)% -- (0.72)%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Portfolio turnover rate 90% 168% 190% 253% 71% 90%
=============================================== ======== ======== ======== ======== ======== ======
<CAPTION>
Advisor Class
---------------------------------------------
1999(a) 1998(a) 1997 1996 1995
------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.08 $21.10 $20.76 $19.05 $20.61
- ----------------------------------------------- ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) 0.06 (0.17) (0.15) 0.09 0.21
- ----------------------------------------------- ------ ------ ------ ------ ------
Net gains (losses) on securities (both
realized and unrealized) 6.94 (0.86) 3.05 2.91 1.09
- ----------------------------------------------- ------ ------ ------ ------ ------
Total from investment operations 7.00 (1.03) 2.90 3.00 1.30
- ----------------------------------------------- ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income -- -- -- -- (0.28)
- ----------------------------------------------- ------ ------ ------ ------ ------
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58)
- ----------------------------------------------- ------ ------ ------ ------ ------
Total distributions (2.36) (0.99) (2.56) (1.29) (2.86)
- ----------------------------------------------- ------ ------ ------ ------ ------
Net asset value, end of period $23.72 $19.08 $21.10 $20.76 $19.05
=============================================== ====== ====== ====== ====== ======
Total return(b) 37.59% (4.59)% 14.54% 15.72% 6.01%
=============================================== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,162 $913 $1,140 $1,986 $1,394
=============================================== ====== ====== ====== ====== ======
Ratio of expenses to average net assets:
With fee waivers 1.11%(c) 1.21% 1.02% 1.01% 1.11%
=============================================== ====== ====== ====== ====== ======
Without fee waivers 1.11%(c) 1.22% 1.13% 1.06% --
=============================================== ====== ====== ====== ====== ======
Ratio of net investment income (loss) to
average net assets:
With fee waivers 0.28%(c) (0.74)% 0.55% 0.47% 1.59%(d)
=============================================== ====== ====== ====== ====== ======
Without fee waivers 0.28%(c) (0.75)% (0.66)% 0.42% --
=============================================== ====== ====== ====== ====== ======
Portfolio turnover rate 90% 168% 190% 253% 71%
=============================================== ====== ====== ====== ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $134,827,348, $470,111 and
$1,494,316 for Class B, Class C and Advisor Class, respectively.
(d) Annualized.
NOTE 10-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
14
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Growth Series and Shareholders of
AIM Mid Cap Equity Fund
(formerly AIM Mid Cap Growth Fund):
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
Mid Cap Equity Fund (hereafter referred to as the "Fund")
at December 31, 1999, the results of its operations, the
changes in its net assets and the financial highlights
for each of the periods indicated therein, in conformity
with accounting principles generally accepted in the
United States. These financial statements and financial
highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with auditing standards generally accepted in
the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting
principles used and significant estimates made by
management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1999
by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
15
<PAGE> 18
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
Senior Managing Partner, Plantagenet Capital Chairman and President Suite 100
Management, LLC (an investment Houston, TX 77046
partnership); Chief Executive Officer, Dana R. Sutton
Plantagenet Holdings, Ltd. Vice President and Treasurer INVESTMENT MANAGER
(an investment banking firm)
Samuel D. Sirko A I M Advisors, Inc.
Frank S. Bayley Vice President and Secretary 11 Greenway Plaza
Partner, law firm of Suite 100
Baker & McKenzie Melville B. Cox Houston, TX 77046
Vice President
Robert H. Graham TRANSFER AGENT
President and Chief Executive Officer, Mary J. Benson
A I M Management Group Inc. Assistant Vice President and A I M Fund Services, Inc.
Assistant Treasurer P.O. Box 4739
Ruth H. Quigley Houston, TX 77210-4739
Private Investor Sheri Morris
Assistant Vice President and CUSTODIAN
Assistant Treasurer
State Street Bank and Trust Company
Gary T. Crum 225 Franklin Street
Vice President Boston, MA 02110
Carol F. Relihan COUNSEL TO THE FUND
Vice President
Kirkpatrick & Lockhart LLP
Nancy L. Martin 1800 Massachusetts Avenue, N.W.
Assistant Secretary Washington, D.C. 20036-1800
Ofelia M. Mayo COUNSEL TO THE TRUSTEES
Assistant Secretary
Paul, Hastings, Janofsky & Walker LLP
Kathleen J. Pflueger Twenty Third Floor
Assistant Secretary 555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
160 Federal St.
Boston, MA 02110
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
AIM Mid Cap Equity Fund paid ordinary dividends in the amount of $1.8765 per
share to shareholders during its tax year ended December 31, 1999. Of these
amounts 3.00% is eligible for the dividends received deduction for corporations.
The Fund also distributed long-term capital gains of $6,839,175 for the Fund's
tax year ended December 31, 1999. Of long-term capital gains distributed, 100%
is 20% rate gain.
16
<PAGE> 19
-------------------------------------
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AIM MID CAP EQUITY FUND
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided leadership
AIM Aggressive Growth Fund AIM Money Market Fund in the mutual fund industry since 1976 and managed
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AIM Capital Development Fund 6.6 million shareholders, including individual
AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS investors, corporate clients and financial
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund institutions, as of December 31, 1999.
AIM Large Cap Growth Fund AIM Asian Growth Fund The AIM Family of Funds--Registered Trademark--
AIM Mid Cap Equity Fund AIM Developing Markets Fund is distributed nationwide, and AIM today is the
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) eighth-largest mutual fund complex in the United
AIM Mid Cap Opportunities Fund AIM European Development Fund States in assets under management, according to
AIM Select Growth Fund AIM International Equity Fund Strategic Insight, an independent mutual fund
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</TABLE>
(1) Effective December 1, 1999, AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations. (2) AIM Small
Cap Growth Fund closed to new investors on November 8, 1999. (3) AIM Small Cap
Opportunities Fund closed to new investors on November 4, 1999. (4) On September
1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund. Previously
the fund invested in all size companies in most areas of Europe. The fund now
seeks to invest at least 65% of its assets in large-cap companies within
countries using the euro as their currency (EMU-member countries). (5) On June
1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (6) Effective August 27, 1999, AIM
Global Trends Fund was restructured to operate as a traditional mutual fund.
Before that date, the fund operated as a fund of funds. For more complete
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your financial advisor or securities dealer for a free prospectus(es). Please
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current Quarterly Review of Performance for AIM Funds.
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