<PAGE> 1
[PHOTO APPEARS HERE]
AIM AGGRESSIVE GROWTH FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT OCTOBER 31, 1996
<PAGE> 2
[PHOTO APPEARS HERE]
AIM AGGRESSIVE GROWTH FUND
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 without a sales
charge. When sales charges are included, Fund performance reflects the
maximum 5.50% sales charge.
o During the year ended October 31, 1996, the Fund paid distributions of $0.97
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 The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Standard & Poor's Corporation (S&P) is a credit-rating agency. The unmanaged
Standard & Poor's Composite Index of 500 Stocks (S&P 500) is widely regarded
by investors as representative of the stock market in general.
o Lipper Analytical Services, Inc., is an independent mutual fund performance
monitor. The unmanaged Lipper Small Company Growth Fund Index represents an
average of the performance of the 30 largest small-capitalization growth
funds.
o The unmanaged Russell 2000 Index is generally representative of the
performance of the stocks of small-capitalization companies.
o An investment cannot be made in the indexes 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.
<PAGE> 3
The Chairman's Letter
Dear Shareholder:
As you may have heard in the financial news, A I M
[PHOTO OF Management Group Inc. recently announced a significant
CHARLES T. event in our company's history--an agreement to merge with
BAUER INVESCO PLC, one of the world's largest independent
Chairman of investment management groups.
the Board of AIM has long been known for its strategic planning and
the Fund forward thinking. In seeking this merger, AIM had specific
APPEARS HERE] goals in choosing a partner: to better AIM's position to
succeed in an increasingly competitive financial services
environment, both in the U.S. and globally; to ensure the continuation of AIM's
independent culture, investment philosophy, and dedication to our shareholders;
and to offer the broadest range of products and services to our shareholders.
A "MERGER OF EQUALS" THAT PRESERVES INDEPENDENCE
When the merger is completed, AIM and INVESCO will be combined under a new
holding company to be named AMVESCO, to reflect the strongly complementary
strengths of our two companies which together create a "merger of equals."
AMVESCO will have combined assets under management in excess of $150 billion.
Most importantly, the agreement enables AIM to preserve its independent
culture--which has been so essential to our company's success. The locations,
management, structure, and brand names of AIM and INVESCO will not change.
With INVESCO, AIM achieves a strategic combination with a partner that
offers complementary rather than overlapping strengths. AIM has delivered
impressive performance over the years as a domestic retail fund manager.
INVESCO brings to AIM its primary strengths as an institutional money manager,
and as a successful international investment manager with significant
operations in North America, Europe, and the Pacific region.
NO CHANGES IN YOUR AIM FUND OR ITS MANAGEMENT
While AIM certainly will be enriched through these added strengths, it will
retain those qualities that have produced two decades of successful
performance. The reputation of AIM funds has been built by its seasoned team of
portfolio managers who adhere to AIM's disciplined and successful investment
management process. AIM's central goal is to keep the current investment team
in place and our time-tested investment philosophy intact. Also, the names of
AIM funds will not change.
Moreover, because the merger will not result in any changes in the way AIM
does business, this transaction will be seamless--without any disruption of
service to you.
YOUR VOTE IS IMPORTANT
The merger is expected to be completed on or about February 28. As a result of
the merger, it is necessary for shareholders of AIM funds to approve a new
investment advisory agreement.
Recently, we mailed an announcement for the shareholder meeting planned on
February 7, along with a proxy card that describes proposals that relate to the
management and policies of your Fund. We encourage you to review and return
your proxy as soon as possible. Your Fund's Board of Directors carefully
considered and unanimously approved the proposals and recommends that you vote
in favor of each one. Your vote is important to us. If you haven't yet mailed
your proxy card, please send it today.
The AIM/INVESCO merger marks a new and promising era for AIM, and we
believe it will yield exciting opportunities for AIM shareholders. We
appreciate the trust you have placed in us.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
---------------------------
With INVESCO, AIM
achieves a strategic
combination with a
partner that offers comple-
mentary rather than
overlapping strengths.
---------------------------
<PAGE> 4
THE MANAGERS' OVERVIEW
1996 CHALLENGED SMALL-CAP STOCKS
A roundtable discussion with the fund management team for AIM Aggressive Growth
Fund for the fiscal year ended October 31, 1996.
- -------------------------------------------------------------------------------
Q. SMALL-COMPANY STOCKS HAVE BEEN OUTPACED BY LARGE-COMPANY STOCKS SINCE
OCTOBER 1995. HOW DID AIM AGGRESSIVE GROWTH FUND PERFORM DURING THE REPORTING
PERIOD?
A. Small-company stocks did lag large-company stocks during most of the past
year, as evidenced by the 16.61% total return posted for the Russell 2000 Index
of small-company stocks compared to the 24.08% return for the Standard & Poor's
Composite Index of 500 Stocks. The Fund's total return of 14.77% for the year
ended October 31, 1996, reflected the trend for small company stocks and the
significant volatility in the technology sector, particularly in the fall of
1995. From January 1, 1996, through October 31, 1996, the Fund's relative
performance was markedly improved--the Fund gained 13.60% compared to 9.03% for
the Russell 2000 Index.
MORNINGSTAR RATINGS
As of 10/31/96
FUNDS IN
DOMESTIC EQUITY
PERIOD RATING CATEGORY
------ ------ --------
Overall ***** NA
10 years ***** 575
5 years ***** 1,031
3 years **** 1,724
Morningstar's rating system of one (lowest) to five (highest) stars is based on
risk and return ratios for three-, five-, and 10-year periods and considers all
loads, fees, and expenses. Ratings compare funds with similar investment
objectives and represent past performance, which is no guarantee of comparable
future results.
Q. WHAT FACTORS HAVE PRESSURED THE PERFORMANCE OF SMALL-COMPANY STOCKS?
A. As the market leaders during 1995, small-company stocks were more vulnerable
to possible changes in the business cycle. There was an ongoing concern over
the pace of economic growth and the possibility of rising interest rates.
Higher interest rates increase borrowing costs, and that can have a stronger
impact on the profits of smaller companies.
While later reports indicated the economy had slowed to a moderate pace,
some economists anticipated that higher interest rates remained a possibility.
Investors also were concerned that corporate earnings would fall short of
the brisk pace of 1995, and small companies had posted stunning profits that
seemed hard to meet in 1996. That was particularly true for many technology
companies, and many stocks in the technology sector fell sharply in the fall
of 1995 and the summer of 1996.
Q. HOW DID INVESTORS REACT IN THAT ENVIRONMENT?
A. Uncertainty creates volatile markets, and investors gravitated to stocks in
larger companies with more predictable earnings. As a result, large-company
stocks generally have outperformed smaller company stocks. However, it has
become apparent recently that small-company stocks have grown more appealing as
earnings reports show surprisingly strong growth.
Q. HOW DID THESE FACTORS AFFECT THE FUND?
A. Due to its larger concentration in technology stocks, the Fund was
vulnerable when the technology sector suffered a broad-based decline in the
fall of 1995. Technology stocks comprised roughly 45% of the portfolio in
October 1995.
Q. WHAT STRATEGIES DID THE FUND USE TO STRENGTHEN ITS PERFORMANCE?
A. The Fund's strong rebound in 1996 was accomplished with a more broadly
diversified portfolio. By April 1996, the technology weighting had been pared
to approximately 37%, and then to 24% by the end of the reporting period.
The Fund also repositioned its emphasis from semiconductor producers to
computer software and networking companies. Through October 1996, software
companies handily outperformed semiconductor companies for the year; however,
market concerns for lower overall earnings continued to hamper the performance
for the group. The Fund increased its holdings in other sectors including
specialty retailers and medical services providers.
Q. WHAT'S THE OUTLOOK FOR THE TECHNOLOGY SECTOR?
A. Going forward, the Fund noted a number of positive factors that bode well
for selected
-----------------------------
The Fund's strong rebound
in 1996 was accomplished with
a more broadly
diversified portfolio.
-----------------------------
See important Fund & index diclosures inside front cover.
2
<PAGE> 5
PORTFOLIO COMPOSITION
as of October 31, 1996
<TABLE>
<CAPTION>
Top 10 Equity Holdings Top 10 Industries
<S> <C>
1. Cascade Communications Corp. 1. Computer Software/Services
2. PairGain Technologies, Inc. 2. Retail (Stores)
3. USA Waste Services, Inc. 3. Medical (Patient Services)
4. HealthSouth Corp. 4. Telecommunications
5. Ascend Communications, Inc. 5. Computer Networking
6. Andrew Corp. 6. Medical Instruments/Products
7. Tech Data Corp. 7. Finance (Consumer Credit)
8. ADC Telecommunications, Inc. 8. Electronic Components/Misc.
9. U.S. Robotics Corp. 9. Business Services
10. Money Store, Inc. (The) 10. Advertising/Broadcasting
</TABLE>
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
technology areas. PC makers benefit from the decline in prices of
semiconductors and other components. Microsoft's Windows NT has the potential
to launch another major upgrade cycle in spring 1997 that will benefit PC
makers and software developers alike.
Computer networking companies like Network General Corp. have been
consistently strong during the period as companies continue to upgrade data
communication capacity.
Q. HOW WAS THE FUND POSITIONED AT THE END OF THE FISCAL YEAR?
A. The Fund continued to hold a large number of stocks--approximately 370 as of
October 31, 1996, spread over 54 industry categories. The largest
concentrations were little changed from April 1996. Following technology, the
Fund maintained its weighting in health-care stocks at roughly 18%, and
increased its holdings in retail stores and consumer cyclicals to 23%.
Q. WHAT WERE SOME OF THE SIGNIFICANT CHANGES IN THE RETAIL SECTOR DURING THE
REPORTING PERIOD?
A. Earnings in the retail sector have been surprisingly strong, and they
continue to grow at an attractive pace. Consumer demand for goods has kept
store inventories low and fully priced, which benefits high-profile players
such as Tommy Hilfiger Corp. and Gymboree Corp. The Fund bolstered its
holdings in stronger, name-brand stores that dominate their market niche: Petco
Animal Supplies, Inc., Tech Data Corp., The Sports Authority, Inc., and Global
DirectMail Corp.
Q. YOU CONTINUE TO MAINTAIN A SIGNIFICANT EMPHASIS IN HEALTH-CARE COMPANIES.
WHAT DO YOU SEE AS THE MAIN THEMES?
A. Consolidation efforts continue in the health-care industry, and intense
competition has begun to drive out many of the smaller, less experienced
players, particularly in the physician practice management area. The Fund
focused on three major areas in the health-care segment where there appears to
be attractive potential for earnings growth: preventive maintenance, assisted
living, and hospital systems administration.
Among the Fund's strongest performers in those segments were Cardinal
Health, Inc., Healthcare and Retirement Corp., HealthSouth Corp., and Oxford
Health Plans, Inc. Also strong were medical instruments and products makers
Dentsply International, Inc. and Sybron International Corp.
Q. WHAT IS YOUR OUTLOOK FOR THE MARKET IN 1997?
A. Conditions appear favorable for stocks in general, and even better for
smaller company stocks. Recent reports show the economy slowed to a 2.0% annual
rate in the third quarter from 4.7% in the second quarter. The economy is
growing at a reasonable rate without rising inflation, and that reduces the
likelihood that interest rates may increase over the near term.
Still, the bull market has run longer than any other in history--October
marked its sixth year. As we have seen, that advance has not been without
considerable volatility. In 1996, circuit breaker mechanisms on the New York
Stock Exchange, which temporarily suspend trading, were triggered more than 90
times.
That's why we, as investors, should remain cautious and patient. In light of
the heady market performance that stocks have delivered for more than six
years, it's important to keep an eye on the big picture. Certainly, investors
have enjoyed successful performance in the stock market for some time. But
markets run in cycles--even the longest bull market in history.
--------------------------------
The economy is growing
at a reasonable rate
without rising inflation, and
that reduces the likelihood
that interest rates may increase
over the near term.
--------------------------------
See important Fund & index disclosures inside front cover.
3
<PAGE> 6
LONG-TERM PERFORMANCE
AIM AGGRESSIVE GROWTH FUND VS. BENCHMARK INDEXES
The chart below compares your Fund to benchmark indexes. It is intended to give
you a general idea of how your Fund performed compared to the stock market over
the 10 years ended 10/31/96. It is important to understand the difference
between your Fund and an index. Your Fund's total return is shown with a sales
charge and includes fund expenses and management fees. An index measures the
performance of a hypothetical portfolio, in this case the Russell 2000 Index
and the Lipper Small Company Growth Fund Index. Unlike your Fund, an index is
not managed; therefore there are no sales charges, expenses or fees. You cannot
invest in an index. But 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.
AVERAGE ANNUAL TOTAL RETURN
As of 10/31/96. Including sales charge.
10 Years 17.84%
5 Years 24.73
1 Year 8.46*
*14.77% excluding sales charge.
Growth of a $10,000 Investment
Past performance is no guarantee of comparable future results.
<TABLE>
<CAPTION>
AIM Aggressive Growth Fund Lipper Small Company Growth Fund Index Russell 2000 Stock Index
(In thousands)
<S> <C> <C> <C>
10/31/86 $9,452 $10,000 $10,000
10/87 7,609 9,046 8,630
10/88 9,171 11,107 10,981
10/89 10,822 13,417 12,694
10/90 8,647 10,424 9,232
10/91 16,166 16,266 14,645
10/92 17,718 17,412 16,035
10/93 26,738 22,544 21,233
10/94 31,808 23,015 21,157
10/95 44,994 28,441 25,040
10/96 51,640 33,316 29,197
</TABLE>
Your Fund's total return includes 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.
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE BONDS-0.53%
BUILDING MATERIALS-0.09%
Eagle Hardware & Garden, Inc.,
Conv. Sub. Deb.,
6.25%, 03/15/01 $ 1,665,000 $ 2,697,300
- -----------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.44%
Cityscape Financial Corp.,
Conv. Sub. Deb.,
6.00%, 05/01/06(a)
(Acquired 08/06/96; Cost
$1,326,624) 960,000 1,013,713
- -----------------------------------------------------------------
RAC Financial Group, Inc.,
Conv. Sub. Notes,
7.25%, 08/15/03(a)
(Acquired 09/06/96-09/30/96;
Cost $7,894,726) 6,160,000 10,964,800
- -----------------------------------------------------------------
11,978,513
- -----------------------------------------------------------------
Total Convertible Bonds 14,675,813
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS-92.35%
ADVERTISING/BROADCASTING-2.58%
American Radio Systems Corp.(b) 150,000 4,575,000
- -----------------------------------------------------------------
Chancellor Corp.-Class A(b) 250,000 8,062,500
- -----------------------------------------------------------------
Clear Channel Communications,
Inc.(b) 200,000 14,600,000
- -----------------------------------------------------------------
Evergreen Media Corp.-Class A(b) 250,000 6,750,000
- -----------------------------------------------------------------
Heftel Broadcasting Corp.(b) 275,000 9,968,750
- -----------------------------------------------------------------
Heritage Media Corp.(b) 300,000 4,575,000
- -----------------------------------------------------------------
Jacor Communications, Inc.(b) 400,000 11,200,000
- -----------------------------------------------------------------
Meredith Corp. 100,000 5,025,000
- -----------------------------------------------------------------
Paxson Communications Corp.(b) 335,000 2,973,125
- -----------------------------------------------------------------
SFX Broadcasting, Inc.-Class A(b) 75,000 3,225,000
- -----------------------------------------------------------------
70,954,375
- -----------------------------------------------------------------
AEROSPACE/DEFENSE-0.28%
BE Aerospace, Inc.(b) 355,000 7,721,250
- -----------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS &
TIRES-0.21%
Borg-Warner Automotive, Inc. 150,000 5,756,250
- -----------------------------------------------------------------
BANKING-0.22%
Cole Taylor Financial Group, Inc. 200,000 6,012,500
- -----------------------------------------------------------------
BUILDING MATERIALS-0.10%
Danaher Corp. 70,000 2,861,250
- -----------------------------------------------------------------
BUSINESS SERVICES-2.88%
APAC Teleservices, Inc.(b) 100,000 4,612,500
- -----------------------------------------------------------------
Cambridge Technology Partners,
Inc.(b) 225,000 7,425,000
- -----------------------------------------------------------------
Career Horizons, Inc.(b) 200,000 8,125,000
- -----------------------------------------------------------------
Claremont Technology Group,
Inc.(b) 101,300 3,089,650
- -----------------------------------------------------------------
Data Processing Resources
Corp.(b) 86,500 1,740,812
- -----------------------------------------------------------------
IntelliQuest Information Group,
Inc.(b)(c) 375,000 8,250,000
- -----------------------------------------------------------------
Leasing Solutions, Inc.(b) 146,600 4,617,900
- -----------------------------------------------------------------
Pharmaceutical Product
Development, Inc.(b) 377,700 7,223,512
- -----------------------------------------------------------------
RemedyTemp, Inc.-Class A(b) 165,000 3,300,000
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BUSINESS SERVICES-(CONTINUED)
Robert Half International,
Inc.(b) 300,000 $ 12,037,500
- -----------------------------------------------------------------
Romac International, Inc.(b) 200,000 5,750,000
- -----------------------------------------------------------------
RTW, Inc.(b) 275,000 4,262,500
- -----------------------------------------------------------------
Sterling Healthcare Group(b) 100,000 1,762,500
- -----------------------------------------------------------------
Superior Consultant Holdings
Corp.(b) 60,000 1,470,000
- -----------------------------------------------------------------
Vincam Group, Inc. (The)(b) 100,000 3,175,000
- -----------------------------------------------------------------
Whittman-Hart, Inc.(b) 50,000 2,375,000
- -----------------------------------------------------------------
79,216,874
- -----------------------------------------------------------------
CHEMICALS-0.18%
Agrium, Inc. (Canada) 363,800 4,865,825
- -----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.58%
Airgas, Inc.(b) 711,000 16,086,375
- -----------------------------------------------------------------
COMPUTER MINI/PCS-0.49%
Rational Software Corp.(b) 350,000 13,431,250
- -----------------------------------------------------------------
COMPUTER NETWORKING-4.45%
ACT Networks, Inc.(b) 376,200 12,884,850
- -----------------------------------------------------------------
Ascend Communications, Inc.(b) 337,200 22,044,450
- -----------------------------------------------------------------
Auspex Systems, Inc.(b) 300,000 3,075,000
- -----------------------------------------------------------------
Cascade Communications Corp.(b) 480,000 34,860,000
- -----------------------------------------------------------------
Coherent Communications Systems
Corp.(b) 267,200 5,177,000
- -----------------------------------------------------------------
Digital Systems International,
Inc.(b) 40,500 551,812
- -----------------------------------------------------------------
DSP Communications, Inc.(b) 125,000 4,750,000
- -----------------------------------------------------------------
FORE Systems, Inc.(b) 408,800 16,249,800
- -----------------------------------------------------------------
Ortel Corp.(b) 100,000 2,075,000
- -----------------------------------------------------------------
Shiva Corp.(b) 100,000 4,100,000
- -----------------------------------------------------------------
Sync Research, Inc.(b) 200,000 2,650,000
- -----------------------------------------------------------------
VideoServer, Inc.(b) 200,000 9,475,000
- -----------------------------------------------------------------
Xircom, Inc.(b) 217,000 4,394,250
- -----------------------------------------------------------------
122,287,162
- -----------------------------------------------------------------
COMPUTER PERIPHERALS-0.97%
American Power Conversion
Corp.(b) 140,800 3,009,600
- -----------------------------------------------------------------
MicroTouch Systems, Inc.(b) 200,000 3,625,000
- -----------------------------------------------------------------
U.S. Robotics Corp.(b) 319,600 20,094,850
- -----------------------------------------------------------------
26,729,450
- -----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-14.97%
Affiliated Computer Services,
Inc.(b) 300,000 16,500,000
- -----------------------------------------------------------------
Amisys Managed Care Systems(b) 215,000 3,278,750
- -----------------------------------------------------------------
Analysts International Corp. 200,000 5,000,000
- -----------------------------------------------------------------
ANSYS, Inc.(b) 318,500 3,901,625
- -----------------------------------------------------------------
Applied Microsystems Corp.(b)(c) 200,000 2,175,000
- -----------------------------------------------------------------
Applix, Inc.(b) 198,500 4,813,625
- -----------------------------------------------------------------
Avant! Corp.(b) 150,684 4,558,191
- -----------------------------------------------------------------
BDM International Inc.(b) 14,700 738,675
- -----------------------------------------------------------------
Bell & Howell Co.(b) 250,000 6,687,500
- -----------------------------------------------------------------
BISYS Group, Inc. (The)(b) 150,000 5,587,500
- -----------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(CONTINUED)
CBT Group PLC-ADR(b) (Ireland) 153,900 $ 8,464,500
- -----------------------------------------------------------------
Cellular Technical Services
Co.(b) 350,000 5,643,750
- -----------------------------------------------------------------
CFI Proservices, Inc.(b)(c) 165,000 3,217,500
- -----------------------------------------------------------------
Citrix Systems, Inc.(b) 200,000 11,050,000
- -----------------------------------------------------------------
Clarify, Inc.(b) 10,400 501,800
- -----------------------------------------------------------------
Computer Data Systems, Inc. 6,700 180,900
- -----------------------------------------------------------------
Computer Task Group, Inc. 100,000 3,775,000
- -----------------------------------------------------------------
Cooper & Chyan Technology,
Inc.(b) 450,000 13,781,250
- -----------------------------------------------------------------
CSG Systems International,
Inc.(b) 185,200 3,102,100
- -----------------------------------------------------------------
CyberMedia, Inc.(b) 17,600 391,600
- -----------------------------------------------------------------
Dendrite International, Inc.(b) 250,000 6,656,250
- -----------------------------------------------------------------
Documentum, Inc.(b) 100,000 3,725,000
- -----------------------------------------------------------------
Engineering Animation, Inc.(b)(c) 310,100 7,597,450
- -----------------------------------------------------------------
Forte Software, Inc.(b) 100,000 3,775,000
- -----------------------------------------------------------------
GT Interactive Software Corp.(b) 143,900 2,752,087
- -----------------------------------------------------------------
HBO & Co. 200,000 12,025,000
- -----------------------------------------------------------------
HPR, Inc.(b) 500,000 7,000,000
- -----------------------------------------------------------------
IDX Systems Corp.(b) 65,600 1,935,200
- -----------------------------------------------------------------
Indus Group, Inc.(b) 250,000 5,062,500
- -----------------------------------------------------------------
Integrated Systems, Inc.(b) 390,000 10,530,000
- -----------------------------------------------------------------
Jack Henry & Associates 195,000 7,873,125
- -----------------------------------------------------------------
JDA Software Group, Inc.(b) 100,000 3,437,500
- -----------------------------------------------------------------
McAfee Associates, Inc.(b) 250,000 11,375,000
- -----------------------------------------------------------------
Medic Computer Systems, Inc.(b) 350,000 9,887,500
- -----------------------------------------------------------------
National Data Corp. 200,000 8,225,000
- -----------------------------------------------------------------
Network General Corp.(b) 600,000 14,475,000
- -----------------------------------------------------------------
OpenVision Technologies, Inc.(b) 300,000 3,225,000
- -----------------------------------------------------------------
Optika Imaging Systems, Inc.(b) 70,000 472,500
- -----------------------------------------------------------------
OrCAD, Inc.(b)(c) 320,000 3,280,000
- -----------------------------------------------------------------
Par Technology Corp.(b) 350,000 4,812,500
- -----------------------------------------------------------------
Peerless Systems Corp.(b) 200,000 2,125,000
- -----------------------------------------------------------------
PeopleSoft, Inc.(b) 100,000 8,975,000
- -----------------------------------------------------------------
Physician Computer Network,
Inc.(b) 600,000 5,362,500
- -----------------------------------------------------------------
Pure Atria Corp.(b) 595,307 16,222,116
- -----------------------------------------------------------------
Radius, Inc.(b) 151 208
- -----------------------------------------------------------------
Renaissance Solutions, Inc.(b) 250,000 10,062,500
- -----------------------------------------------------------------
S3 Inc.(b) 500,000 9,437,500
- -----------------------------------------------------------------
Sapient Corp.(b) 20,100 929,625
- -----------------------------------------------------------------
Saville Systems Ireland PLC-ADR
(Ireland)(b) 300,000 12,937,500
- -----------------------------------------------------------------
Scopus Technology, Inc.(b) 56,200 2,163,700
- -----------------------------------------------------------------
Segue Software, Inc.(b)(c) 100,000 1,337,500
- -----------------------------------------------------------------
SQA, Inc.(b) 180,400 4,938,450
- -----------------------------------------------------------------
Sterling Commerce, Inc.(b) 159,260 4,479,187
- -----------------------------------------------------------------
Sterling Software, Inc.(b) 100,000 3,250,000
- -----------------------------------------------------------------
SunGard Data Systems Inc.(b) 300,000 12,825,000
- -----------------------------------------------------------------
Sykes Enterprises, Inc.(b) 60,900 2,831,850
- -----------------------------------------------------------------
Synopsys, Inc.(b) 6,700 301,500
- -----------------------------------------------------------------
Systemsoft Corp.(b) 200,000 5,650,000
- -----------------------------------------------------------------
Technology Solutions Co.(b) 337,500 13,120,312
- -----------------------------------------------------------------
Transition Systems, Inc.(b) 19,600 186,200
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(CONTINUED)
Unify Corp.(b)(c) 500,000 $ 4,687,500
- -----------------------------------------------------------------
Vanstar Corp.(b) 300,000 7,125,000
- -----------------------------------------------------------------
Veritas Software Corp.(b) 360,000 18,180,000
- -----------------------------------------------------------------
Viasoft, Inc.(b) 175,000 8,618,750
- -----------------------------------------------------------------
Visio Corp.(b) 150,000 6,918,750
- -----------------------------------------------------------------
Wind River Systems(b) 250,000 10,625,000
- -----------------------------------------------------------------
Xylan Corp.(b) 175,000 7,000,000
- -----------------------------------------------------------------
411,761,526
- -----------------------------------------------------------------
CONSUMER NON-DURABLES-0.59%
Central Garden and Pet Co.(b) 275,000 6,496,875
- -----------------------------------------------------------------
Herbalife International, Inc. 152,000 3,021,000
- -----------------------------------------------------------------
USA Detergents, Inc.(b) 200,000 6,600,000
- -----------------------------------------------------------------
16,117,875
- -----------------------------------------------------------------
CONTAINERS-0.03%
Apogee Enterprises, Inc. 25,000 962,500
- -----------------------------------------------------------------
COSMETICS & TOILETRIES-0.69%
Helen of Troy Ltd.(b) 346,200 6,318,150
- -----------------------------------------------------------------
Nature's Sunshine Products, Inc. 250,000 5,531,250
- -----------------------------------------------------------------
NBTY, Inc.(b) 450,000 7,031,250
- -----------------------------------------------------------------
18,880,650
- -----------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-2.90%
AMETEK, Inc. 200,000 3,975,000
- -----------------------------------------------------------------
BMC Industries, Inc. 500,000 14,812,500
- -----------------------------------------------------------------
Checkpoint Systems, Inc.(b) 100,000 2,237,500
- -----------------------------------------------------------------
Harman International Industries,
Inc. 126,000 6,473,250
- -----------------------------------------------------------------
Methode Electronics, Inc.-Class A 187,500 3,656,250
- -----------------------------------------------------------------
Perceptron, Inc.(b) 300,000 7,425,000
- -----------------------------------------------------------------
Sawtek Inc.(b) 81,900 2,477,475
- -----------------------------------------------------------------
SCI Systems, Inc.(b) 125,000 6,218,750
- -----------------------------------------------------------------
Sipex Corp.(b)(c) 480,000 12,660,000
- -----------------------------------------------------------------
Symbol Technologies, Inc.(b) 200,000 8,975,000
- -----------------------------------------------------------------
Technitrol, Inc. 6,700 221,937
- -----------------------------------------------------------------
ThermoQuest Corp.(b) 200,000 2,625,000
- -----------------------------------------------------------------
Ultrak, Inc.(b) 300,000 7,912,500
- -----------------------------------------------------------------
79,670,162
- -----------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.20%
Imperial Credit Industries,
Inc.(b) 300,000 5,437,500
- -----------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.90%
Aames Financial Corp. 185,000 8,255,625
- -----------------------------------------------------------------
AmeriCredit Corp.(b) 100,000 1,900,000
- -----------------------------------------------------------------
Amresco, Inc.(b) 330,000 6,971,250
- -----------------------------------------------------------------
Cityscape Financial Corp.(b) 90,700 2,335,525
- -----------------------------------------------------------------
CMAC Investment Corp. 150,000 10,368,750
- -----------------------------------------------------------------
Concord EFS, Inc.(b) 500,000 14,500,000
- -----------------------------------------------------------------
Consumer Portfolio Services,
Inc.(b) 105,000 1,286,250
- -----------------------------------------------------------------
Credit Acceptance Corp.(b) 282,400 7,624,800
- -----------------------------------------------------------------
First Alliance Corp.(b) 110,000 2,997,500
- -----------------------------------------------------------------
IMC Mortgage Co.(b) 100,000 3,750,000
- -----------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCE (CONSUMER
CREDIT)-(CONTINUED)
Metris Companies Inc.(b) 50,000 $ 1,187,500
- -----------------------------------------------------------------
Money Store, Inc. (The) 716,600 18,452,450
- -----------------------------------------------------------------
Olympic Financial Ltd.(b) 486,200 7,718,425
- -----------------------------------------------------------------
PMT Services, Inc.(b) 235,600 4,712,000
- -----------------------------------------------------------------
RAC Financial Group, Inc.(b) 161,000 9,660,000
- -----------------------------------------------------------------
Southern Pacific Funding Corp.(b) 147,800 4,655,700
- -----------------------------------------------------------------
WFS Financial, Inc.(b) 44,550 935,550
- -----------------------------------------------------------------
107,311,325
- -----------------------------------------------------------------
FINANCE (LEASING COMPANIES)-0.09%
Oxford Resources Corp.-Class A(b) 100,000 2,550,000
- -----------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.50%
Bay View Capital Corp. 200,000 7,900,000
- -----------------------------------------------------------------
TCF Financial Corp. 150,000 5,812,500
- -----------------------------------------------------------------
13,712,500
- -----------------------------------------------------------------
FOOD/PROCESSING-0.63%
Delta & Pine Land Co. 150,000 5,400,000
- -----------------------------------------------------------------
Richfood Holdings, Inc. 489,700 11,814,012
- -----------------------------------------------------------------
17,214,012
- -----------------------------------------------------------------
FUNERAL SERVICES-0.78%
Equity Corporation
International(b) 369,900 8,507,700
- -----------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 375,000 12,843,750
- -----------------------------------------------------------------
21,351,450
- -----------------------------------------------------------------
FURNITURE-0.30%
Ethan Allen Interiors, Inc. 234,400 8,379,800
- -----------------------------------------------------------------
GAMING-0.21%
Primadonna Resorts, Inc.(b) 350,000 5,643,750
- -----------------------------------------------------------------
HOMEBUILDING-0.32%
American Homestar Corp.(b) 150,000 3,187,500
- -----------------------------------------------------------------
Coachmen Industries, Inc. 200,000 5,600,000
- -----------------------------------------------------------------
8,787,500
- -----------------------------------------------------------------
HOTELS/MOTELS-0.37%
Prime Hospitality Corp.(b) 450,000 6,862,500
- -----------------------------------------------------------------
Suburban Lodges of America,
Inc.(b) 80,000 1,670,000
- -----------------------------------------------------------------
Wyndham Hotel Corp.(b) 83,300 1,582,700
- -----------------------------------------------------------------
10,115,200
- -----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.79%
Compdent Corp.(b) 200,000 6,875,000
- -----------------------------------------------------------------
CRA Managed Care, Inc.(b) 100,000 5,075,000
- -----------------------------------------------------------------
First Commonwealth, Inc.(b) 162,500 3,412,500
- -----------------------------------------------------------------
United Companies Financial Corp. 210,000 6,273,750
- -----------------------------------------------------------------
21,636,250
- -----------------------------------------------------------------
INSURANCE (MULTI-LINE
PROPERTY)-0.70%
CapMAC Holdings, Inc. 250,000 8,343,750
- -----------------------------------------------------------------
HCC Insurance Holdings, Inc. 250,000 6,375,000
- -----------------------------------------------------------------
Vesta Insurance Group, Inc. 178,500 4,574,063
- -----------------------------------------------------------------
19,292,813
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LEISURE & RECREATION-1.17%
Cannondale Corp.(b)(c) 400,000 $ 7,700,000
- -----------------------------------------------------------------
Lewis Galoob Toys, Inc.(b) 200,000 5,375,000
- -----------------------------------------------------------------
Penske Motorsports, Inc.(b) 100,000 3,425,000
- -----------------------------------------------------------------
Platinum Entertainment, Inc.(b) 200,000 2,050,000
- -----------------------------------------------------------------
West Marine, Inc.(b) 250,000 8,812,500
- -----------------------------------------------------------------
WMS Industries, Inc.(b) 200,000 4,900,000
- -----------------------------------------------------------------
32,262,500
- -----------------------------------------------------------------
MACHINE TOOLS-0.17%
Precision Castparts Corp. 100,000 4,675,000
- -----------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.08%
Greenwich Air Services,
Inc.-Class B(b) 125,000 2,109,375
- -----------------------------------------------------------------
MEDICAL (DRUGS)-2.15%
Arbor Drugs, Inc. 200,000 4,525,000
- -----------------------------------------------------------------
Biovail Corp. International(b)
(Canada) 250,000 7,312,500
- -----------------------------------------------------------------
Cardinal Health, Inc. 225,000 17,662,500
- -----------------------------------------------------------------
Curative Technologies, Inc.(b) 200,000 4,550,000
- -----------------------------------------------------------------
Dura Pharmaceuticals, Inc.(b) 200,000 6,900,000
- -----------------------------------------------------------------
Express Scripts, Inc.-Class A(b) 200,000 5,825,000
- -----------------------------------------------------------------
Medicis Pharmaceutical Corp.(b) 150,000 7,537,500
- -----------------------------------------------------------------
Parexel International Corp.(b) 100,000 4,900,000
- -----------------------------------------------------------------
59,212,500
- -----------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-10.87%
ABR Information Services, Inc.(b) 150,000 10,387,500
- -----------------------------------------------------------------
American HomePatient, Inc.(b) 337,350 8,012,062
- -----------------------------------------------------------------
American Medical Response,
Inc.(b) 250,000 7,500,000
- -----------------------------------------------------------------
American Oncology Resources,
Inc.(b) 71,900 575,200
- -----------------------------------------------------------------
Apria Healthcare Group, Inc.(b) 250,000 4,781,250
- -----------------------------------------------------------------
Arbor Health Care Co.(b)(c) 450,000 9,843,750
- -----------------------------------------------------------------
Atria Communities, Inc.(b) 250,000 3,156,250
- -----------------------------------------------------------------
ClinTrials Research Inc.(b) 62,500 2,320,313
- -----------------------------------------------------------------
EmCare Holdings, Inc.(b) 300,000 7,500,000
- -----------------------------------------------------------------
Enterprise Systems, Inc.(b) 125,000 2,015,625
- -----------------------------------------------------------------
Envoy Corp.(b) 350,000 12,862,500
- -----------------------------------------------------------------
FPA Medical Management, Inc.(b) 200,000 3,725,000
- -----------------------------------------------------------------
Genesis Health Ventures, Inc.(b) 250,000 5,718,750
- -----------------------------------------------------------------
Health Care and Retirement
Corp.(b) 525,000 12,928,125
- -----------------------------------------------------------------
Health Management Associates,
Inc.-Class A(b) 737,662 16,228,564
- -----------------------------------------------------------------
HEALTHSOUTH Corp. (b) 675,530 25,332,375
- -----------------------------------------------------------------
Hologic, Inc.(b) 183,000 4,163,250
- -----------------------------------------------------------------
Lincare Holdings, Inc.(b) 200,000 7,500,000
- -----------------------------------------------------------------
MedPartners, Inc.(b) 150,000 3,168,750
- -----------------------------------------------------------------
Multicare Co., Inc.(b) 375,000 6,750,000
- -----------------------------------------------------------------
Myriad Genetics, Inc.(b) 100,000 2,475,000
- -----------------------------------------------------------------
NCS HealthCare, Inc.-Class
A(b)(c) 200,000 6,075,000
- -----------------------------------------------------------------
OccuSystems, Inc.(b) 287,200 7,862,100
- -----------------------------------------------------------------
OrNda HealthCorp.(b) 400,000 10,900,000
- -----------------------------------------------------------------
Orthodontic Centers of America,
Inc.(b) 625,000 8,984,375
- -----------------------------------------------------------------
Oxford Health Plans, Inc.(b) 300,000 13,650,000
- -----------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES)-(CONTINUED)
Pediatrix Medical Group, Inc.(b) 220,000 $ 8,662,500
- -----------------------------------------------------------------
PhyCor, Inc.(b) 187,500 5,812,500
- -----------------------------------------------------------------
Physicians Resource Group,
Inc.(b) 303,200 8,186,400
- -----------------------------------------------------------------
Quorum Health Group, Inc.(b) 300,000 8,100,000
- -----------------------------------------------------------------
Renal Care Group, Inc.(b) 200,000 7,400,000
- -----------------------------------------------------------------
Renal Treatment Centers, Inc.(b) 200,000 5,350,000
- -----------------------------------------------------------------
RoTech Medical Corp.(b) 650,000 10,400,000
- -----------------------------------------------------------------
Sunrise Assisted Living, Inc.(b) 94,800 2,180,400
- -----------------------------------------------------------------
Total Renal Care Holdings,
Inc.(b) 150,000 5,850,000
- -----------------------------------------------------------------
Universal Health Services,
Inc.-Class B(b) 400,000 10,000,000
- -----------------------------------------------------------------
UroCor, Inc.(b) 142,800 1,677,900
- -----------------------------------------------------------------
Vencor, Inc.(b) 400,000 11,850,000
- -----------------------------------------------------------------
Veterinary Centers of America,
Inc.(b) 500,000 9,187,500
- -----------------------------------------------------------------
299,072,939
- -----------------------------------------------------------------
MEDICAL
INSTRUMENTS/PRODUCTS-4.35%
Advanced Technology Laboratories,
Inc.(b) 150,000 4,575,000
- -----------------------------------------------------------------
Boston Scientific Corp.(b) 47,115 2,561,878
- -----------------------------------------------------------------
Capstone Pharmacy Services,
Inc.(b) 350,000 4,090,625
- -----------------------------------------------------------------
CardioThoracic Systems, Inc.(b) 125,000 2,375,000
- -----------------------------------------------------------------
Dentsply International, Inc. 300,000 12,637,500
- -----------------------------------------------------------------
ESC Medical Systems Ltd.(b)
(Israel) 47,850 1,321,856
- -----------------------------------------------------------------
General Surgical Innovations,
Inc.(b) 301,900 2,188,775
- -----------------------------------------------------------------
Gulf South Medical Supply,
Inc.(b) 317,200 6,978,400
- -----------------------------------------------------------------
Henry Schein, Inc.(b) 200,000 7,950,000
- -----------------------------------------------------------------
IRIDEX Corp.(b)(c) 150,000 1,200,000
- -----------------------------------------------------------------
Lunar Corp.(b) 100,000 3,112,500
- -----------------------------------------------------------------
Mentor Corp. 200,000 4,425,000
- -----------------------------------------------------------------
MiniMed, Inc.(b) 150,000 3,937,500
- -----------------------------------------------------------------
National Dentex Corp.(b)(c) 185,000 3,491,875
- -----------------------------------------------------------------
Omnicare, Inc. 400,000 10,900,000
- -----------------------------------------------------------------
Patterson Dental Co.(b) 400,000 11,200,000
- -----------------------------------------------------------------
Physician Sales & Service,
Inc.(b) 200,000 4,250,000
- -----------------------------------------------------------------
ResMed, Inc.(b) 275,000 4,606,250
- -----------------------------------------------------------------
Suburban Ostomy Supply Co.,
Inc.(b)(c) 556,900 6,787,219
- -----------------------------------------------------------------
Sybron International Corp.(b) 600,000 17,475,000
- -----------------------------------------------------------------
Target Therapeutics, Inc.(b) 100,000 3,700,000
- -----------------------------------------------------------------
119,764,378
- -----------------------------------------------------------------
METALS-0.39%
Oregon Metallurgical Corp.(b) 150,000 4,725,000
- -----------------------------------------------------------------
Rental Service Corp.(b) 103,600 2,382,800
- -----------------------------------------------------------------
Shaw Group, Inc.(b) 150,000 3,693,750
- -----------------------------------------------------------------
10,801,550
- -----------------------------------------------------------------
OFFICE AUTOMATION-0.34%
Danka Business Systems PLC-ADR
(United Kingdom) 237,900 9,426,788
- -----------------------------------------------------------------
OFFICE PRODUCTS-0.55%
Daisytek International
Corp.(b)(c) 394,700 15,097,275
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)-0.75%
Benton Oil & Gas Co.(b) 325,000 $ 7,962,500
- -----------------------------------------------------------------
Devon Energy Corp. 300,000 10,462,500
- -----------------------------------------------------------------
Forasol-Foramer N.V.(b) (France) 125,000 2,156,250
- -----------------------------------------------------------------
20,581,250
- -----------------------------------------------------------------
OIL & GAS (SERVICES)-1.15%
Camco International, Inc. 225,000 8,718,750
- -----------------------------------------------------------------
Energy Ventures, Inc.(b) 261,000 11,484,000
- -----------------------------------------------------------------
SEACOR Holdings Inc.(b) 100,000 5,400,000
- -----------------------------------------------------------------
Veritas DGC, Inc.(b) 300,000 6,150,000
- -----------------------------------------------------------------
31,752,750
- -----------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.41%
Marine Drilling Co., Inc.(b) 458,300 6,358,913
- -----------------------------------------------------------------
Varco International, Inc.(b) 250,000 4,937,500
- -----------------------------------------------------------------
11,296,413
- -----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.14%
Schweitzer-Mauduit International,
Inc. 125,000 3,843,750
- -----------------------------------------------------------------
POLLUTION CONTROL-2.19%
ATC Environmental, Inc.(b) 300,000 3,262,500
- -----------------------------------------------------------------
GTS Duratek, Inc.(b) 150,000 1,743,750
- -----------------------------------------------------------------
United Waste Systems, Inc.(b) 398,700 13,705,313
- -----------------------------------------------------------------
US Filter Corp.(b) 450,000 15,525,000
- -----------------------------------------------------------------
USA Waste Services, Inc.(b) 810,000 25,920,000
- -----------------------------------------------------------------
60,156,563
- -----------------------------------------------------------------
PUBLISHING-0.53%
Gartner Group, Inc.(b) 253,600 7,798,200
- -----------------------------------------------------------------
World Color Press, Inc.(b) 300,000 6,712,500
- -----------------------------------------------------------------
14,510,700
- -----------------------------------------------------------------
RESTAURANTS-1.97%
Apple South, Inc. 499,962 5,874,554
- -----------------------------------------------------------------
Foodmaker, Inc.(b) 600,000 5,850,000
- -----------------------------------------------------------------
Landry's Seafood Restaurants,
Inc.(b) 275,000 5,637,500
- -----------------------------------------------------------------
Lone Star Steakhouse & Saloon,
Inc.(b) 175,000 4,484,375
- -----------------------------------------------------------------
Papa John's International,
Inc.(b) 150,000 7,462,500
- -----------------------------------------------------------------
Planet Hollywood International,
Inc.-Class A(b) 200,000 4,150,000
- -----------------------------------------------------------------
Showbiz Pizza Time, Inc.(b) 274,600 5,080,100
- -----------------------------------------------------------------
Sonic Corp.(b) 400,000 9,100,000
- -----------------------------------------------------------------
Starbucks Corp.(b) 200,000 6,500,000
- -----------------------------------------------------------------
54,139,029
- -----------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.26%
Quality Food Centers, Inc.(b) 200,000 7,300,000
- -----------------------------------------------------------------
RETAIL (STORES)-11.45%
Barnett, Inc.(b) 82,200 1,941,975
- -----------------------------------------------------------------
Bed Bath & Beyond, Inc.(b) 200,000 5,050,000
- -----------------------------------------------------------------
Blyth Industries, Inc.(b) 329,700 12,817,088
- -----------------------------------------------------------------
Buckle, Inc. (The)(b) 170,000 4,335,000
- -----------------------------------------------------------------
CDW Computer Centers, Inc.(b) 150,000 9,440,625
- -----------------------------------------------------------------
Claire's Stores, Inc. 250,000 4,250,000
- -----------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (STORES)-(CONTINUED)
Compucom Systems, Inc.(b) 800,000 $ 7,800,000
- -----------------------------------------------------------------
CompUSA, Inc.(b) 250,000 11,562,500
- -----------------------------------------------------------------
Corporate Express, Inc.(b) 200,000 6,525,000
- -----------------------------------------------------------------
Dollar Tree Stores, Inc.(b) 175,000 6,606,250
- -----------------------------------------------------------------
Duty Free International, Inc. 400,000 6,400,000
- -----------------------------------------------------------------
Eagle Hardware & Garden, Inc.(b) 300,000 8,587,500
- -----------------------------------------------------------------
Fila Holding S.p.A.-ADR (Italy) 115,000 8,280,000
- -----------------------------------------------------------------
Finish Line, Inc. (The)-Class
A(b) 161,400 6,859,500
- -----------------------------------------------------------------
Gadzooks, Inc.(b) 200,050 5,801,450
- -----------------------------------------------------------------
Gargoyles, Inc.(b) 100,000 1,325,000
- -----------------------------------------------------------------
Global DirectMail Corp.(b) 250,000 12,312,500
- -----------------------------------------------------------------
Gymboree Corp.(b) 391,000 12,218,750
- -----------------------------------------------------------------
Inacom Corp.(b) 200,000 6,325,000
- -----------------------------------------------------------------
Just for Feet, Inc.(b) 300,000 7,762,500
- -----------------------------------------------------------------
Loehmann's Holdings, Inc.(b)(c) 500,000 13,437,500
- -----------------------------------------------------------------
Marks Bros. Jewelers, Inc.(b)(c) 275,000 6,393,750
- -----------------------------------------------------------------
Men's Wearhouse, Inc. (The)(b) 321,000 6,620,625
- -----------------------------------------------------------------
Meyer (Fred), Inc.(b) 200,000 7,025,000
- -----------------------------------------------------------------
Micro Warehouse, Inc.(b) 500,000 11,500,000
- -----------------------------------------------------------------
MSC Industrial Direct Co.,
Inc.-Class A(b) 200,000 7,400,000
- -----------------------------------------------------------------
Neiman Marcus Group, Inc.
(The)(b) 150,000 4,893,750
- -----------------------------------------------------------------
99 Cents Only Stores(b) 100,000 1,475,000
- -----------------------------------------------------------------
O'Reilly Automotive, Inc.(b) 200,000 7,075,000
- -----------------------------------------------------------------
Oakley, Inc.(b) 700,000 10,412,500
- -----------------------------------------------------------------
Performance Food Group Co.(b)(c) 458,750 7,053,281
- -----------------------------------------------------------------
Petco Animal Supplies, Inc.(b) 427,500 10,046,250
- -----------------------------------------------------------------
Pier 1 Imports, Inc. 525,000 7,350,000
- -----------------------------------------------------------------
Rexall Sundown, Inc.(b) 150,000 4,068,750
- -----------------------------------------------------------------
Sports Authority, Inc. (The)(b) 492,500 11,943,125
- -----------------------------------------------------------------
Stein Mart, Inc.(b) 200,000 3,575,000
- -----------------------------------------------------------------
Sunglass Hut International,
Inc.(b) 132,200 1,173,275
- -----------------------------------------------------------------
Tech Data Corp.(b) 800,000 20,600,000
- -----------------------------------------------------------------
Wet Seal, Inc.-Class A(b) 265,000 8,347,500
- -----------------------------------------------------------------
Williams-Sonoma, Inc.(b) 250,000 6,875,000
- -----------------------------------------------------------------
Wilmar Industries, Inc.(b) 150,000 3,225,000
- -----------------------------------------------------------------
Zale Corp.(b) 425,000 8,234,375
- -----------------------------------------------------------------
314,925,319
- -----------------------------------------------------------------
SCHOOLS-0.08%
Children's Comprehensive
Services, Inc.(b) 150,000 2,212,500
- -----------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.71%
Dynatech Corp.(b) 71,800 3,549,613
- -----------------------------------------------------------------
Input/Output, Inc.(b) 400,000 11,900,000
- -----------------------------------------------------------------
Thermo Optek Corp.(b) 350,000 4,200,000
- -----------------------------------------------------------------
19,649,613
- -----------------------------------------------------------------
SECURITY & SAFETY SERVICES-0.08%
Cornell Corrections, Inc.(b) 200,000 2,100,000
- -----------------------------------------------------------------
SEMICONDUCTORS-1.83%
Actel Corp.(b) 166,700 2,979,763
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SEMICONDUCTORS-(CONTINUED)
Chips & Technologies, Inc.(b) 400,000 $ 7,950,000
- -----------------------------------------------------------------
Computer Products, Inc.(b) 550,000 10,862,500
- -----------------------------------------------------------------
HADCO Corp.(b) 230,000 6,986,250
- -----------------------------------------------------------------
Sanmina Corp.(b) 250,000 11,437,500
- -----------------------------------------------------------------
Vitesse Semiconductor Corp.(b) 75,000 2,390,625
- -----------------------------------------------------------------
VLSI Technology, Inc.(b) 450,000 7,762,500
- -----------------------------------------------------------------
50,369,138
- -----------------------------------------------------------------
SHOES & RELATED APPAREL-0.70%
Vans, Inc.(b) 600,000 9,975,000
- -----------------------------------------------------------------
Wolverine World Wide, Inc. 375,000 9,281,250
- -----------------------------------------------------------------
19,256,250
- -----------------------------------------------------------------
TELECOMMUNICATIONS-6.18%
ADC Telecommunications, Inc.(b) 300,000 20,512,500
- -----------------------------------------------------------------
Allen Group, Inc. 132,000 2,095,500
- -----------------------------------------------------------------
Andrew Corp.(b) 450,000 21,937,500
- -----------------------------------------------------------------
Anicom, Inc.(b) 400,000 3,600,000
- -----------------------------------------------------------------
Aspect Telecommunications
Corp.(b) 125,000 7,437,500
- -----------------------------------------------------------------
Billing Information Concepts(b) 350,000 9,143,750
- -----------------------------------------------------------------
Brightpoint, Inc.(b)(c) 499,950 12,498,750
- -----------------------------------------------------------------
LCI International, Inc.(b) 300,000 9,562,500
- -----------------------------------------------------------------
P-COM, Inc.(b) 100,000 2,200,000
- -----------------------------------------------------------------
PairGain Technologies, Inc.(b) 386,500 26,620,187
- -----------------------------------------------------------------
Precision Response Corp.(b) 50,000 1,787,500
- -----------------------------------------------------------------
Premiere Technologies, Inc.(b) 50,200 815,750
- -----------------------------------------------------------------
Premisys Communications, Inc.(b) 200,000 10,000,000
- -----------------------------------------------------------------
Proxim, Inc.(b) 100,000 2,275,000
- -----------------------------------------------------------------
Tellabs, Inc.(b) 100,000 8,512,500
- -----------------------------------------------------------------
Teltrend, Inc.(b) 300,000 9,900,000
- -----------------------------------------------------------------
TESSCO Technologies, Inc.(b)(c) 300,000 11,850,000
- -----------------------------------------------------------------
Tollgrade Communications, Inc.(b) 99,000 2,574,000
- -----------------------------------------------------------------
U.S. Long Distance Corp.(b) 307,500 2,575,313
- -----------------------------------------------------------------
United States Satellite
Broadcasting Co., Inc.(b) 123,600 1,993,050
- -----------------------------------------------------------------
Xpedite Systems, Inc.(b) 100,000 2,050,000
- -----------------------------------------------------------------
169,941,300
- -----------------------------------------------------------------
TEXTILES-2.43%
Designer Holdings Ltd.(b) 350,000 6,693,750
- -----------------------------------------------------------------
Mohawk Industries, Inc.(b) 350,000 8,487,500
- -----------------------------------------------------------------
Nautica Enterprises, Inc.(b) 450,000 13,837,500
- -----------------------------------------------------------------
Springs Industries, Inc.-Class A 150,000 6,768,750
- -----------------------------------------------------------------
St. John Knits, Inc. 250,000 11,437,500
- -----------------------------------------------------------------
Tommy Hilfiger Corp.(b) 250,000 13,000,000
- -----------------------------------------------------------------
WestPoint Stevens, Inc.(b) 250,000 6,656,250
- -----------------------------------------------------------------
66,881,250
- -----------------------------------------------------------------
TRANSPORTATION-0.51%
Hub Group, Inc.(b)(c) 400,000 8,900,000
- -----------------------------------------------------------------
Rural/Metro Corp.(b) 100,000 3,650,000
- -----------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TRANSPORTATION-(CONTINUED)
Trico Marine Services, Inc.(b) 40,800 $ 1,438,200
- -----------------------------------------------------------------
13,988,200
- -----------------------------------------------------------------
Total Common Stocks 2,540,073,704
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-1.98%
U.S. TREASURY BILLS(d)
5.046%, 01/02/97(e) $ 55,000,000 54,550,650
- -----------------------------------------------------------------
Total U.S. Treasury
Securities 54,550,650
- -----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-5.39%(f)
Daiwa Securities America, Inc.,
5.53% 11/01/96(g) $ 222,124 $ 222,124
- -----------------------------------------------------------------
Dresdner Securities (USA), Inc.,
5.54% 11/01/96(h) 47,000,000 47,000,000
- -----------------------------------------------------------------
SBC Capital Markets, Inc., 5.55%
11/01/96(i) 101,000,000 101,000,000
- -----------------------------------------------------------------
Total Repurchase Agreements 148,222,124
- -----------------------------------------------------------------
TOTAL INVESTMENTS-100.25% 2,757,522,291
- -----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(0.25%) (6,958,348)
- -----------------------------------------------------------------
NET ASSETS-100.00% $ 2,750,563,943
=================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Sub. - Subordinated
Notes to Schedule of Investments:
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at October 31,1996 was
$11,978,513 which represented 0.44% of the Fund's net assets.
(b) Non-income producing security.
(c) Affiliated issuers are those in which the Fund'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 Company Act of 1940) of
that issuer. The aggregate market value of these securities as of October
31, 1996 was $153,533,350 which represented 5.58% of the Fund's net assets.
(d) U.S. Treasury bills are traded on discount basis. In such cases the interest
rate shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(e) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 6.
(f) 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 as being 102 percent 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.
(g) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$750,115,208. Collateralized by $733,115,000 U.S. Treasury obligations, 0%
to 10.375% due 11/15/96 to 08/15/23.
(h) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$200,030,778. Collateralized by $198,651,000 U.S. Treasury obligations,
4.75% to 9.25% due 11/30/97 to 06/30/99.
(i) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$700,107,917. Collateralized by $691,506,000 U.S. Treasury obligations, 0%
to 9.125% due 11/30/96 to 10/31/01.
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$2,102,644,643) $2,757,522,291
- ---------------------------------------------------------
Cash 391,114
- ---------------------------------------------------------
Receivables for:
Investments sold 13,844,684
- ---------------------------------------------------------
Capital stock sold 13,253,569
- ---------------------------------------------------------
Dividends and interest 222,317
- ---------------------------------------------------------
Variation margin 568,550
- ---------------------------------------------------------
Investment for deferred compensation
plan 23,229
- ---------------------------------------------------------
Other assets 130,315
- ---------------------------------------------------------
Total assets 2,785,956,069
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 25,232,620
- ---------------------------------------------------------
Capital stock reacquired 7,170,183
- ---------------------------------------------------------
Deferred compensation 23,229
- ---------------------------------------------------------
Accrued advisory fees 1,548,580
- ---------------------------------------------------------
Accrued administrative service fees 8,365
- ---------------------------------------------------------
Accrued distribution fees 608,714
- ---------------------------------------------------------
Accrued directors fees 1,339
- ---------------------------------------------------------
Accrued transfer agent fees 509,702
- ---------------------------------------------------------
Accrued operating expenses 289,394
- ---------------------------------------------------------
Total liabilities 35,392,126
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $2,750,563,943
- ---------------------------------------------------------
Capital stock, $.001 par value per
share:
Authorized 750,000,000
- ---------------------------------------------------------
Outstanding 61,224,358
- ---------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 44.93
- ---------------------------------------------------------
OFFERING PRICE PER SHARE:
(Net asset value of $44.93 divided by
94.50%) $ 47.54
- ---------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 6,964,425
- --------------------------------------------------------
Dividends (net of $26,363 foreign
withholding tax) 1,998,154
- --------------------------------------------------------
Total investment income 8,962,579
- --------------------------------------------------------
EXPENSES:
Advisory fees 16,492,564
- --------------------------------------------------------
Custodian fees 244,961
- --------------------------------------------------------
Directors' fees 21,529
- --------------------------------------------------------
Distribution fees 6,492,025
- --------------------------------------------------------
Administrative services fees 97,857
- --------------------------------------------------------
Transfer agent fees 4,108,892
- --------------------------------------------------------
Other 1,248,996
- --------------------------------------------------------
Total expenses 28,706,824
- --------------------------------------------------------
Less: Expenses paid indirectly (40,269)
- --------------------------------------------------------
Net expenses 28,666,555
- --------------------------------------------------------
Net investment income (loss) (19,703,976)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FUTURES
CONTRACTS AND FOREIGN CURRENCIES:
Net realized gain on sales of:
Investment securities 124,457,350
- --------------------------------------------------------
Futures contracts 17,081,337
- --------------------------------------------------------
141,538,687
- --------------------------------------------------------
Unrealized appreciation (depreciation)
of:
Investment securities 214,736,369
- --------------------------------------------------------
Futures contracts (3,538,650)
- --------------------------------------------------------
Foreign currencies (42)
- --------------------------------------------------------
211,197,677
- --------------------------------------------------------
Net gain on investment securities,
futures contracts and foreign
currencies 352,736,364
- --------------------------------------------------------
Net increase in net assets resulting from
operations $333,032,388
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (19,703,976) $ (2,318,274)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities, futures contracts and foreign
currencies 141,538,687 52,290,438
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities, futures contracts and foreign
currencies 211,197,677 314,756,271
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 333,032,388 364,728,435
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on investment securities (54,512,548) --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase from capital stock transactions 226,490,173 1,193,587,768
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 505,010,013 1,558,316,203
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,245,553,930 687,237,727
- ---------------------------------------------------------------------------------------------------------------------------
End of period $2,750,563,943 $2,245,553,930
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,957,915,109 $1,748,790,238
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (44,163) (16,714)
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment securities, futures contracts
and foreign currencies 133,729,499 49,014,585
- ---------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, futures contracts and foreign
currencies 658,963,498 447,765,821
- ---------------------------------------------------------------------------------------------------------------------------
$2,750,563,943 $2,245,553,930
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
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 diversified
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 Fund has temporarily
discontinued public sales of its shares to new investors. The Fund is a
diversified portfolio which seeks 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 assets, liabilities and operations of each portfolio are
accounted for separately.
Information presented in these financial statements pertains only to the Fund.
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--Except as provided in the next sentence, a security
listed or traded on an exchange 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. Exchange listed convertible bonds are valued at
the mean between the closing bid and asked prices obtained from a
broker-dealer. 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. 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 that are issued or guaranteed by the U.S. Treasury
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 substantially completed each day
at various times
12
<PAGE> 15
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 will 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, 1996,
$2,311,225 was reclassified from paid-in capital to undistributed net
realized gains as a result of differing book/tax treatments. In addition,
$19,676,527 was reclassified from undistributed net investment income (loss)
to paid-in capital as a result of a net operating tax loss. Net assets of the
Fund were unaffected by the reclassifications 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 forward 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 forward 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.
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.
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, 1996, AIM was
reimbursed $97,857 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, 1996,
AFS was paid $2,047,282 for such services.
The Fund received reductions in transfer agency fees of $37,293 from dividends
received on balances in cash management accounts. In addition, the Fund incurred
expenses of $2,976 from pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $40,269 during the year ended October
31, 1996.
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, 1996, the Fund paid AIM Distributors $6,492,025 as compensation
under the Plan.
AIM Distributors received commissions of $2,111,788 from sales of shares of
the Fund's capital stock during the year ended October 31, 1996. 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, 1996, AIM Distributors received $31,306 in contingent
13
<PAGE> 16
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, 1996, the Fund paid legal fees of $12,003
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-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) $325,000,000 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 July 19, 1996, the Fund was
limited to borrowing $14,900,000. During the year ended October 31, 1996, 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 0.08% 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 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1996 were $2,207,324,806
and $1,964,387,494, respectively.
The amount of unrealized appreciation (depreciation) of investment securities as
of October 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $740,464,004
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (86,292,810)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $654,171,194
==========================================================
Cost of investment for tax purposes is
$2,103,351,097.
</TABLE>
NOTE 5-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 6-FUTURES CONTRACTS
On October 31, 1996, $2,306,000 par value U.S. Treasury obligations were pledged
as collateral to cover margin requirements for futures contracts.
Futures contracts outstanding at October 31, 1996:
(Contracts -- $500 times index/delivery month/commitment)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
-------------
<S> <C>
S&P 500 Index/166 Contracts/Dec 96/Buy $4,085,850
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold 30,538,437 $ 1,334,476,880 53,971,580 $1,912,251,434
- --------------------------------------------------------------------
Issued as
reinvestment
of
dividends 1,291,013 49,897,557 -- --
- --------------------------------------------------------------------
Reacquired (26,568,998) (1,157,884,264) (22,228,120) (718,663,666)
- --------------------------------------------------------------------
5,260,452 $ 226,490,173 31,743,460 $1,193,587,768
====================================================================
</TABLE>
14
<PAGE> 17
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the three-year period ended October 31,
1996, the ten month period ended October 31, 1993 and each of the years in the
six-year period ended December 31, 1992.
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
--------------------------------------------------- ------------------------------
1996 1995 1994 1993 1992(a) 1991 1990
---------- ---------- -------- -------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06 $ 11.85 $ 13.30
- ------------------------------------ ---------- ---------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.32) (0.04) (0.05) (0.02) (0.03) (0.04) 0.08
---------- ---------- -------- -------- ------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 6.09 11.80 4.57 5.35 3.41 7.29 (0.95)
---------- ---------- -------- -------- ------- ------- -------
Total from investment
operations 5.77 11.76 4.52 5.33 3.38 7.25 (0.87)
---------- ---------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net investment
income -- -- -- -- -- -- (0.09)
---------- ---------- -------- -------- ------- ------- -------
Distributions from capital gains (0.97) -- -- -- (0.92) (3.04) (0.49)
---------- ---------- -------- -------- ------- ------- -------
Total distributions (0.97) -- -- -- (0.92) (3.04) (0.58)
---------- ---------- -------- -------- ------- ------- -------
Net asset value, end of period $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06 $ 11.85
========== ========== ======== ======== ======= ======= =======
Total return(b) 14.77% 41.45% 18.96% 28.78% 21.34% 63.90% (6.50)%
========== ========== ======== ======== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $2,750,564 $2,245,554 $687,238 $217,256 $38,238 $16,218 $ 9,234
========== ========== ======== ======== ======= ======= =======
Ratio of expenses to average
net assets(c) 1.11 (e)(f) 1.08% 1.07% 1.00%(g) 1.25% 1.25% 1.25%
========== ========== ======== ======== ======= ======= =======
Ratio of net investment income (loss)
to average net assets(d) (0.76)%(e) (0.19)% (0.26)% (0.24)%(g) (0.59)% (0.31)% 0.62%
========== ========== ======== ======== ======= ======= =======
Portfolio turnover rate 79% 52% 75% 61% 164% 165% 137%
========== ========== ======== ======== ======= ======= =======
Average broker commission rate(h) $ 0.0545 N/A N/A N/A N/A N/A N/A
========== ========== ======== ======== ======= ======= =======
<CAPTION>
1989 1988 1987
------- ------- -------
<S> <C<C> <C> <C>
Net asset value, beginning of period $ 11.07 $ 9.86 $ 12.10
- ------------------------------------ ------- ------- -------
Income from investment operations:
Net investment income (loss) 0.03 0.05 --
------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 2.28 1.21 (1.38)
------- ------- -------
Total from investment
operations 2.31 1.26 (1.38)
------- ------- -------
Less distributions:
Dividends from net investment
income (0.03) (0.05) --
------- ------- -------
Distributions from capital gains (0.05) -- (0.86)
------- ------- -------
Total distributions (0.08) (0.05) (0.86)
------- ------- -------
Net asset value, end of period $ 13.30 $ 11.07 $ 9.86
======= ======= =======
Total return(b) 20.89% 12.77% (11.52)%
======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $11,712 $12,793 $13,991
======= ======= =======
Ratio of expenses to average
net assets(c) 1.25% 1.22% 1.20%
======= ======= =======
Ratio of net investment income (loss)
to average net assets(d) 0.24% 0.38% 0.01%
======= ======= =======
Portfolio turnover rate 69% 56% 118%
======= ======= =======
Average broker commission rate(h) N/A N/A N/A
======= ======= =======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios of expenses to average net assets prior to reduction of advisory fees
and expense reimbursements were 1.15%, 1.09%, 1.17% (annualized), 1.65%,
1.83%, 1.99%, 1.80%, 1.56% and 1.29% for 1995-87, respectively.
(d) Ratios of net investment income (loss) to average net assets prior to
reduction of advisory fees and expense reimbursements were (0.26)%, (0.28)%,
(0.41)% (annualized), (0.99)%, (0.89)%, (0.11)%, (0.31)%, 0.04% and (0.08)%
for 1995-87, respectively.
(e) Ratios are based on average net assets of $2,596,810,191.
(f) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been 1.10%.
(g) Annualized.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
NOTE 9-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and
INVESCO PLC announced the execution of an agreement and plan of merger pursuant
to which AIM Management will be merged with and into a direct wholly-owned
subsidiary of INVESCO PLC. AIM Management is the parent company of the Fund's
advisor. The merger is conditional on, among other things, approval by the
shareholders of INVESCO PLC and AIM Management and the shareholders of the AIM
funds and the mutual funds managed by INVESCO PLC, and is expected to take place
during the first quarter of 1997.
NOTE 10-LEGAL PROCEEDINGS
A claim, Saltzberg v. AIM Equity Funds, Inc., et al., was filed in Southern
District Court in Texas in October 1996 against AIM and certain other
subsidiaries of AIM Management. The claim was instituted under section 36(b) of
the Investment Company Act of 1940 and seeks to recover damages allegedly
suffered by the Fund in connection with fees paid for marketing and shareholder
services after the Fund was closed to new investors. AIM Management is
investigating whether there is any basis at all for this claim and intends to
defend it vigorously.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Aggressive Growth Fund:
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, 1996, 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 three-year period then ended and the ten month
period ended October 31, 1993. 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, 1996, 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, 1996, 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 three-year period then ended and the ten month period ended October 31,
1993, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 6, 1996
16
<PAGE> 19
DIRECTORS & OFFICERS
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
11 Greenway Plaza
Charles T. Bauer Charles T. Bauer Suite 1919
Chairman and Chief Executive Officer Chairman Houston, TX 77046
A I M Management Group Inc.
Robert H. Graham INVESTMENT ADVISOR
Bruce L. Crockett President A I M Advisors, Inc.
Formerly Director, President, and 11 Greenway Plaza
Chief Executive Officer John J. Arthur Suite 1919
COMSAT Corporation Senior Vice President and Treasurer Houston, TX 77046
Owen Daly II Carol F. Relihan TRANSFER AGENT
Director Senior Vice President and Secretary A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Gary T. Crum Houston, TX 77210-4739
Carl Frischling Senior Vice President
Partner CUSTODIAN
Kramer, Levin, Naftalis & Frankel Scott G. Lucas State Street Bank & Trust
Senior Vice President 225 Franklin Street
Robert H. Graham Boston, MA 02110
President and Chief Operating Officer Jonathan C. Schoolar
A I M Management Group Inc. Senior Vice President COUNSEL TO THE FUND
Ballard Spahr
John F. Kroeger Dana R. Sutton Andrews & Ingersoll
Formerly Consultant Vice President and Assistant Treasurer 1735 Market Street
Wendell & Stockel Associates, Inc. Philadelphia, PA 19103
Melville B. Cox
Lewis F. Pennock Vice President COUNSEL TO THE DIRECTORS
Attorney Kramer, Levin, Naftalis & Frankel
P. Michelle Grace 919 Third Avenue
Ian W. Robinson Assistant Secretary New York, NY 10022
Consultant; Formerly Executive Vice President and
Chief Financial Officer David L. Kite DISTRIBUTOR
Bell Atlantic Management Assistant Secretary A I M Distributors, Inc.
Services, Inc. 11 Greenway Plaza
Nancy L. Martin Suite 1919
Louis S. Sklar Assistant Secretary Houston, TX 77046
Executive Vice President
Hines Interests Ofelia M. Mayo AUDITORS
Limited Partnership Assistant Secretary KPMG Peat Marwick LLP
700 Louisiana
Kathleen J. Pflueger NationsBank Bldg.
Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Aggressive Growth Fund distributed long-term capital gains of $0.97 per
share during its tax year ended October 31, 1996.
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
[Photo of AGGRESSIVE GROWTH
11 Greenway Plaza AIM Aggressive Growth Fund*
appears here] AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
HIGH DEGREE OF SAFETY AND CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has *AIM Aggressive Growth Fund was closed
provided leadership in the mutual fund to new investors on July 18, 1995. For
industry since 1976 and currently more complete information about any AIM
manages approximately $60 billion in Fund(s), including sales charges and
assets for more than 3.5 million expenses, ask your financial consultant
shareholders, including individual or securities dealer for a free
investors, corporate clients, and prospectus(es). Please read the
financial institutions. The AIM Family prospectus(es) carefully before you
of Funds--Registered Trademark-- is invest or send money.
distributed nationwide, and AIM today
ranks among the nation's top 15 mutual
fund companies in assets under
management, according to Lipper
Analytical Services, Inc.
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[AIM LOGO APPEARS HERE] ---------------
A I M Distributors, Inc. BULK RATE
11 Greenway Plaza, Suite 1919 U.S. POSTAGE
Houston, TX 77046 PAID
HOUSTON, TX
Permit No. 1919
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