<PAGE> 1
AIM AGGRESSIVE
GROWTH FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1997
<PAGE> 2
---------------------------------
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 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 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 small-company stocks.
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 Fellow Shareholder:
We have seen a great deal of change in the markets during
[PHOTO OF the past few months, change that has been unsettling even
Charles T. for experienced market watchers.
Bauer, In many instances the change has occurred suddenly as
Chairman of the markets have fluctuated widely during the past six
the Board of months. The popular Dow Jones Industrial Average of 30 large
THE FUND companies ranged from just over 7000 to just below 6400
APPEARS HERE] before strengthening once again and regaining its lost
ground. Both the Russell 2000 Index, judged to be the
benchmark for small-cap stocks, and the Dow recently have
set records.
The point we want to emphasize is that such volatility seems to be the
norm rather than the exception in the current market. Although most attention
has been on the large stocks in the S&P 500 index, the broad-based index
generally considered "the market," small-and mid-cap companies have been even
more volatile. Indexes for smaller companies were down as much as 20% before
their recent rebound. Similarly, bonds fluctuated widely as concerns mounted
over the possibility of rising interest rates.
What does all of this mean? In past reports, we suggested that the
20%-30% returns of 1995 and 1996 were unlikely to continue uninterrupted, and
we have seen that to be true so far in 1997. However, we are still experiencing
the longest bull market in history, now in its seventh year. For hundreds of
thousands of investors, this bull market is the only investment climate they
have ever known. If you have been invested in stocks only since 1990, your
experience has truly been extraordinary: the S&P 500 had an annual return of
30% in 1991, 38% in 1995, and 23% in 1996. And not one down year.
Of course, returns such as those we've enjoyed in this bull market are
well above the averages for stocks. That has led mutual fund managers,
financial consultants, and market experts to voice concern that some investors
may not be prepared for more modest returns that are in line with historical
averages. And, although we've seen nothing but advances in the S&P 500 since
1990, it is important to remember that the market has averaged a down year one
out of every three years since 1928.
KEEP REALISTIC EXPECTATIONS
What many investors may not realize is that periodic declines are inevitable.
In every market, there is always some segment, and some investment strategies,
that occasionally fall out of favor. Declines similar to what we have seen in
the small-cap and mid-cap sectors during the past six months often are more
severe than warranted; that is, they take good stocks down with the bad. Of
course, that lets us pick stocks just as prices for many attractive companies
are near their lowest for the year.
Not that we expect severe declines ahead. But it is important to maintain
realistic expectations about investment performance. Indeed, indications are
that stock performance may be returning to historic norms closer to 10% return
per year than 20%.
It's also a good idea to reassess your financial goals periodically with
your financial consultant. Managing your investments in changing markets can be
challenging. But your financial consultant knows a few time-tested investment
strategies that can help. Diversification can help you cushion the effects of
volatility.
---------------
In every market,
there is always some segment,
and some investment strategies,
that occasionally fall
out of favor.
---------------
Continued on next page
<PAGE> 4
The Chairman's Letter
---------------
It's also
a good idea
to reassess your financial goals
periodically with
your financial consultant
---------------
On the following pages, your Fund's portfolio management team offers a
complete discussion of recent market conditions and how the Fund was affected.
They also discuss the Fund's portfolio strategy: why they believe the portfolio
is well-positioned for growth, and why they are confident that the reasons for
investing in the Fund are as compelling as ever. These discussions will help
you better understand the relative performance of your Fund.
AIM AGGRESSIVE GROWTH FUND REOPENS
You might be aware that the Board of Directors voted to reopen AIM Aggressive
Growth Fund to new investors on June 4 and keep the Fund open until it reached
approximately $500 million in new sales. The Fund closed again on June 5. The
decision to reopen the Fund was based on the many buying opportunities we
believe are currently available in small-cap stocks.
AIM/INVESCO MERGER FINALIZED
We are pleased to announce that the merger of A I M Management Group Inc. and
INVESCO plc was concluded on February 28, 1997. AIM is now part of one of the
world's largest independent investment management groups with approximately
$170 billion in assets under management. The combined company, AMVESCAP plc,
has the financial strength necessary to meet your needs in an increasingly
competitive financial services environment, both in the United States and
worldwide. And, we will not change the portfolio management, investment style,
or name of any of the AIM funds you own. We have begun a new and promising era
for AIM, one we believe will yield exciting opportunities.
We appreciate the trust you have placed in us and we look forward to our
continued close association. If you have any questions or comments about this
report, we invite you to call Client Services at 800-959-4246 during normal
business hours. For automated account information 24 hours a day, call the AIM
Investor Line at 800-246-5463. We also invite you to visit AIM's Internet Web
site at www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
2
<PAGE> 5
The Managers' Overview
MARKET PRESSURE CONTINUES FOR SMALL-CAP STOCKS
- --------------------------------------------------------------------------------
A roundtable discussion with the Fund management team for AIM Aggressive Growth
Fund for the six-month period ended April 30, 1997.
Q. SMALL-COMPANY STOCKS CONTINUED TO BE OUTPACED BY LARGE COMPANY STOCKS
DURING THE REPORTING PERIOD. HOW DID THAT AFFECT THE PERFORMANCE OF AIM
AGGRESSIVE GROWTH FUND?
A. The Fund's average annual total return was -14.54% during the six
months covered by this report, reflecting the pressure on small-cap stocks in
general and the significant volatility in the technology sector, a
significant position in the Fund.
Keep in mind, six months is an extremely short measurement period for
small-cap stocks, particularly during periods of dramatic volatility.
Market cycles can shift abruptly. Since the reporting period ended
on 4/30/97, the Russell 2000 Index of small-cap stocks has rallied:
it has recovered all its 1997 decline and set three all-time highs in as
many sessions (as of 5/27/97). Interestingly, technology stocks led the
advance.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THIS PERIOD?
A. Three factors shaped a difficult market environment for the Fund:
o a capricious market that favored large-cap stocks over small-cap stocks,
o the narrowness of the market, and
o weakness in certain sectors where the Fund is heavily invested,
particularly technology.
Q. WHY DID SMALL-CAP STOCKS LAG THE PERFORMANCE OF LARGE-CAP STOCKS?
A. Dramatic market volatility, uneasiness about earnings trends, and concerns
about the pace of economic growth have driven investors to the relative
safety and liquidity of stocks in large, predictable companies. As a result,
large-company stocks continued to outperform smaller company stocks during
the reporting period.
It's a phenomenon often termed a "flight to quality." Historically,
small-cap stocks have offered excellent returns for investors, but they do
tend to be more volatile than stocks of large, better-known corporations.
Q. WHAT DO YOU MEAN BY "THE NARROWNESS OF THE MARKET?"
A. In a "narrow market," the performance of a market index is dominated
by a comparatively few stocks, most recently, a limited range of extremely
large company stocks. This unusual environment puts mutual funds at a
disadvantage because most tend to diversify holdings into a blend that may
include large, medium, and small companies to manage risk and optimize
return.
We use a similar approach--as of 4/30/97, the Fund had a total of 361
holdings primarily in small- and mid-cap stocks, with the largest position
less than 1% of the portfolio.
However, the average investor still fared better during the reporting
period in a diversified, professionally managed mutual fund than in
individual securities. Many stocks are down 50% or more from their 1996
peaks.
Q. HOW DID THE FUND'S PERFORMANCE COMPARE WITH ITS BENCHMARK, THE RUSSELL
2000 INDEX?
A. The Fund has a greater emphasis in some industry sectors, compared to the
Russell 2000 Index, that were not strong performers during much of the
reporting period. The technology sector--the Fund's largest weighting at 31%
of the portfolio--has experienced significant volatility since fall 1995,
when investors became unduly concerned that earnings growth would falter.
While many technology companies continue to report strong growth, some
companies have failed to meet expectations and the entire group has been
punished severely in the market.
The Fund's technology position is significantly higher than the 16%
weighting component in the Russell 2000 Index of small-company stocks, so the
impact to the Fund of that group's performance is greater.
Following technology, the Fund's largest weighting is in the health-care
sector. As seen in the technology sector, health-care stocks have been
extremely volatile as the group sorts out leaders and laggards. The
health-care sector represents about 18% of the Fund compared to 9%
of the Russell 2000 Index.
Q. GIVEN THEIR RECENT PERFORMANCE, HAVE YOU CHANGED YOUR OUTLOOK TOWARD
TECHNOLOGY AND HEALTH CARE?
A. Not at all. Despite some short-lived weakness in seasonal profits, we remain
committed to technology as a high-growth sector over the long-term.
Technology has been the chief engine of economic expansion the past few
years, generating up to one-third of all economic growth by some estimates.
We believe the technology industry will be the dominant force of the decade,
much as consumer-related industries dominated the 1980s, and oil companies
in the 1970s.
See important Fund & index disclosures inside front cover.
3
<PAGE> 6
The Managers' Overview
Among our largest technology holdings as of 4/30/97 were Affiliated
Computer Services, Inc. and Lattice Semiconductor Corp.
Within the health-care sector, we have emphasized three major areas where
there appears to be attractive long-term potential for earnings growth:
hospitals, which are benefiting from ongoing consolidation efforts; assisted
living facilities, with their appeal to aging baby boomers; and health
maintenance organizations, which continue to lead the efficiency drive in this
industry. Some of our larger health-care sectors positions as of 4/30/97
included HealthSouth Corp. and Health Management Associates, Inc.
When market sentiment toward these sectors shifts to favorable, the Fund's
larger positions will be a decided advantage--the positive impact to the Fund's
performance will be significantly stronger compared to the Russell 2000 Index.
Q. GIVEN THE CURRENT MARKET ENVIRONMENT, WHAT IS YOUR INVESTMENT STRATEGY FOR
THE NEAR-TERM?
A. We remain committed to our investment discipline--a time-tested approach
that has served us well. The foundation of AIM's investment philosophy
is that earnings drive stock prices. Accordingly, we look for companies with
earnings that are accelerating. It's a company-by-company approach, and one
that's indifferent to daily market activity. Every stock in the Fund's
portfolio is there because it meets our strict criteria for earnings growth
potential.
Q. WHEN DO YOU ANTICIPATE A TURNAROUND FOR SMALL-CAP STOCKS?
A. The market has been distracted by concerns about the strength of the
economy and the possibility of higher interest rates. Once the market returns
its valuation focus to growth potential, stocks in faster-growing small
companies will appear especially attractive.
There are encouraging signs that the turnaround may be near. Corporate
earnings remain strong, and for a record 17 quarters in a row, corporate
earnings have outstripped analysts' forecasts. There is no immediate
indication of higher interest rates, and that helps small company profits
by keeping borrowing costs down. That means the potential for earnings
growth remains strong, just as many small-cap stocks are selling at bargain
prices.
Most major market averages have responded recently by retracing their 1997
declines. For the first time in a while, stocks of smaller companies
participated in the rally. Indeed, the Fund has gained 15.61% since the
reporting period ended, 4/30/97 to 5/31/97. It is too early to declare that
the corner has been turned, but it is possible that the narrow market has
at last begun to broaden.
Q. WHAT IS YOUR OUTLOOK FOR THE MARKET IN GENERAL NEAR TERM?
A. After two extraordinary years of double-digit returns on stocks, many
analysts were warning about the potential for a significant market decline,
with some making bearish forecasts for a market correction--a decline of 20%.
After approaching those estimates in early spring, the markets have
recovered swiftly and completely. And the optimism seems well grounded. The
economy continues to grow at a healthy, but manageable pace. Importantly,
there is no inflation, and that reduces the likelihood of higher interest
rates which could erode corporate profits.
Nonetheless, it is important that investors maintain realistic
expectations about investment performance. We have enjoyed recorded-breaking
returns from stocks in recent years, but indications are that stock
performance may be returning to historic norms that bear closer to 10% per
year than 20%.
================================================================================
TOP 10 EQUITY HOLDINGS
================================================================================
As of 4/30/97, based on total net assets
1. Brightpoint, Inc. 0.94%
2. Heftel Broadcasting Corp. 0.92
3. Sybron International Corp. 0.92
4. HealthSouth Corp. 0.91
5. Health Management Associates, Inc. 0.91
6. Energy Ventures, Inc. 0.77
7. Blyth Industries, Inc. 0.73
8. Affiliated Computer Services, Inc. 0.72
9. National-Oilwell, Inc. 0.71
10. The Money Store, Inc. 0.71
================================================================================
================================================================================
TOP 10 INDUSTRIES
================================================================================
As of 4/30/97, based on total net assets
1. Computer Software/Services 12.70%
2. Medical (Patient Services) 11.55
3. Retail (Stores) 9.15
4. Semiconductors 5.66
5. Telecommunications 5.47
6. Medical Instruments/Products 4.22
7. Finance (Consumer Credit) 4.14
8. Electronic Components/Misc. 4.13
9. Advertising/Broadcasting 3.10
10. Business Services 2.78
================================================================================
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.
See important Fund & index disclosures inside front cover.
4
<PAGE> 7
Long-Term Performance
AIM AGGRESSIVE GROWTH FUND VS. BENCHMARK INDEXES
The chart below compares your Fund to benchmark indexes. It is important to
understand differences between your Fund and these indexes. An index measures
the performance of hypothetical portfolios, in this case the Russell 2000 Index
and the Lipper Small Company Growth Fund Index. Unlike your Fund, these indexes
are not managed; therefore there are no sales charges, expenses, or fees. If
you could buy all the securities that make up a particular index, you would
incur expenses that would affect the return on your investment. Use of these
indexes is intended to give you a general idea of how your Fund performed
compared to these benchmarks.
================================================================================
AVERAGE ANNUAL TOTAL RETURN
As of 3/31/97, the most recent calendar quarter. Including sales charge.
10 Years 13.85%
5 Years 19.34
1 Year -13.57*
*-8.54% excluding sales charge.
================================================================================
GROWTH OF A $10,000 INVESTMENT
4/30/87--4/30/97
Past performance cannot guarantee comparable future results.
- --------------------------------------------------------------------------------
AIM Aggressive Lipper Small Company
Growth Fund Growth Fund Index Russell 2000 Index
- --------------------------------------------------------------------------------
(In thousands)
4/30/87 $9,448 $10,000 $10,000
4/88 8,119 9,569 9,209
4/89 8,871 11,116 10,626
4/90 9,150 11,396 10,393
4/91 11,644 12,656 11,452
4/92 14,238 14,800 13,405
4/93 17,783 16,687 15,519
4/94 24,170 19,283 17,813
4/95 30,650 21,216 19,101
4/96 47,085 29,745 25,402
4/97 37,900 26,612 25,415
================================================================================
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.
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-95.09%
ADVERTISING/BROADCASTING-3.10%
American Radio Systems Corp.(a) 100,000 $ 2,925,000
- ---------------------------------------------------------------
CKS Group, Inc.(a) 200,000 4,225,000
- ---------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 300,000 14,550,000
- ---------------------------------------------------------------
Evergreen Media Corp. -- Class
A(a) 200,000 6,475,000
- ---------------------------------------------------------------
Heftel Broadcasting Corp.(a) 401,400 20,070,000
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 352,800 9,922,500
- ---------------------------------------------------------------
Meredith Corp. 200,000 4,700,000
- ---------------------------------------------------------------
Telemundo Group, Inc.-Class A(a) 175,000 4,593,750
- ---------------------------------------------------------------
67,461,250
- ---------------------------------------------------------------
AEROSPACE/DEFENSE-0.56%
BE Aerospace, Inc.(a) 355,000 8,741,875
- ---------------------------------------------------------------
REMEC, Inc.(a) 150,000 3,450,000
- ---------------------------------------------------------------
12,191,875
- ---------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS &
TIRES-0.29%
Borg-Warner Automotive, Inc. 150,000 6,300,000
- ---------------------------------------------------------------
BANKING-0.77%
Bank United Corp.-Class A(a) 175,000 5,337,500
- ---------------------------------------------------------------
First Republic Bancorp, Inc.(a) 300,000 6,262,500
- ---------------------------------------------------------------
First Savings Bank of Washington
Bancorp, Inc. 250,000 5,250,000
- ---------------------------------------------------------------
16,850,000
- ---------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.26%
Cerner Corp.(a) 350,000 5,643,750
- ---------------------------------------------------------------
BUILDING MATERIALS-0.15%
Danaher Corp. 70,000 3,158,750
- ---------------------------------------------------------------
BUSINESS SERVICES-2.78%
AccuStaff, Inc.(a) 181,000 3,303,250
- ---------------------------------------------------------------
Cambridge Technology Partners,
Inc.(a) 225,000 5,990,625
- ---------------------------------------------------------------
Caribiner International, Inc.(a) 100,000 5,300,000
- ---------------------------------------------------------------
Claremont Technology Group,
Inc.(a) 76,600 1,034,100
- ---------------------------------------------------------------
Data Processing Resources
Corp.(a) 86,500 1,589,437
- ---------------------------------------------------------------
IntelliQuest Information Group,
Inc.(a) 375,000 6,093,750
- ---------------------------------------------------------------
MedQuist, Inc.(a) 175,000 4,418,750
- ---------------------------------------------------------------
NOVA Corp.(a) 175,000 3,150,000
- ---------------------------------------------------------------
Pharmaceutical Product
Development, Inc.(a) 175,000 2,931,250
- ---------------------------------------------------------------
RemedyTemp, Inc.-Class A(a) 165,000 2,516,250
- ---------------------------------------------------------------
Robert Half International,
Inc.(a) 300,000 11,775,000
- ---------------------------------------------------------------
Romac International, Inc.(a) 300,000 5,850,000
- ---------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 60,000 1,380,000
- ---------------------------------------------------------------
Vincam Group, Inc. (The)(a) 100,000 3,250,000
- ---------------------------------------------------------------
Whittman-Hart, Inc.(a) 100,000 1,900,000
- ---------------------------------------------------------------
60,482,412
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER MINI/PCS-0.22%
Stratus Computer, Inc.(a) 125,000 $ 4,859,375
- ---------------------------------------------------------------
COMPUTER NETWORKING-0.97%
Coherent Communications Systems
Corp.(a) 500,000 8,187,500
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 125,000 4,906,250
- ---------------------------------------------------------------
Digital Microwave Corp.(a) 150,000 3,862,500
- ---------------------------------------------------------------
International Network Services(a) 13,500 276,750
- ---------------------------------------------------------------
Network Appliance, Inc.(a) 75,000 2,184,375
- ---------------------------------------------------------------
VideoServer, Inc.(a) 100,000 1,687,500
- ---------------------------------------------------------------
21,104,875
- ---------------------------------------------------------------
COMPUTER PERIPHERALS-0.68%
Encad, Inc.(a) 200,000 7,350,000
- ---------------------------------------------------------------
MicroTouch Systems, Inc.(a) 350,000 7,481,250
- ---------------------------------------------------------------
14,831,250
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-12.70%
Affiliated Computer Services,
Inc.(a) 600,000 15,600,000
- ---------------------------------------------------------------
Analysts International Corp. 200,000 5,700,000
- ---------------------------------------------------------------
BDM International Inc.(a) 500,000 11,625,000
- ---------------------------------------------------------------
BISYS Group, Inc. (The)(a) 150,000 4,800,000
- ---------------------------------------------------------------
CBT Group PLC-ADR(a) (Ireland) 156,400 7,604,950
- ---------------------------------------------------------------
Centura Software Corp.(a) 14,930 29,860
- ---------------------------------------------------------------
Cognos, Inc.(a) (Canada) 250,000 6,343,750
- ---------------------------------------------------------------
Computer Data Systems, Inc. 181,300 3,943,275
- ---------------------------------------------------------------
Computer Horizons Corp.(a) 100,000 4,350,000
- ---------------------------------------------------------------
Computer Task Group, Inc. 100,000 4,312,500
- ---------------------------------------------------------------
Cooper & Chyan Technology,
Inc.(a) 367,000 8,899,750
- ---------------------------------------------------------------
CSG Systems International,
Inc.(a) 250,000 4,437,500
- ---------------------------------------------------------------
Documentum, Inc.(a) 100,000 1,850,000
- ---------------------------------------------------------------
Engineering Animation, Inc.(a)(b) 310,100 7,132,300
- ---------------------------------------------------------------
HBO & Co. 125,000 6,687,500
- ---------------------------------------------------------------
HPR, Inc.(a) 500,000 7,062,500
- ---------------------------------------------------------------
IDX Systems Corp.(a) 165,600 4,926,600
- ---------------------------------------------------------------
Imnet Systems, Inc.(a) 325,000 5,971,875
- ---------------------------------------------------------------
Indus Group, Inc.(a) 300,000 4,537,500
- ---------------------------------------------------------------
Integrated Measurement Systems,
Inc.(a) 300,000 3,975,000
- ---------------------------------------------------------------
Jack Henry & Associates 225,000 4,275,000
- ---------------------------------------------------------------
JDA Software Group, Inc.(a) 250,000 6,312,500
- ---------------------------------------------------------------
Keane, Inc.(a) 53,400 2,476,425
- ---------------------------------------------------------------
McAfee Associates, Inc.(a) 200,000 11,150,000
- ---------------------------------------------------------------
Midway Games Inc.(a) 200,000 3,600,000
- ---------------------------------------------------------------
National Data Corp. 200,000 7,500,000
- ---------------------------------------------------------------
National TechTeam, Inc.(a) 250,000 3,875,000
- ---------------------------------------------------------------
Network General Corp.(a) 485,800 6,679,750
- ---------------------------------------------------------------
Peerless Systems Corp.(a) 250,000 2,968,750
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(CONTINUED)
PeopleSoft, Inc.(a) 125,000 $ 5,187,500
- ---------------------------------------------------------------
Physician Computer Network,
Inc.(a) 398,000 2,114,375
- ---------------------------------------------------------------
RadiSys Corp.(a) 100,000 2,937,500
- ---------------------------------------------------------------
Raptor Systems, Inc.(a) 100,000 1,150,000
- ---------------------------------------------------------------
Renaissance Solutions, Inc.(a) 125,000 2,718,750
- ---------------------------------------------------------------
Saville Systems Ireland
PLC-ADR(a) (Ireland) 350,000 14,393,750
- ---------------------------------------------------------------
Scopus Technology, Inc.(a) 44,600 1,193,050
- ---------------------------------------------------------------
Security Dynamics Technologies,
Inc.(a) 300,000 7,575,000
- ---------------------------------------------------------------
SPSS, Inc.(a) 210,000 5,565,000
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 159,260 4,120,852
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 100,000 3,050,000
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 300,000 13,312,500
- ---------------------------------------------------------------
Sykes Enterprises, Inc.(a) 60,900 1,735,650
- ---------------------------------------------------------------
Technology Solutions Co.(a) 250,000 6,593,750
- ---------------------------------------------------------------
Transition Systems, Inc.(a) 373,200 4,478,400
- ---------------------------------------------------------------
Trusted Information System,
Inc.(a) 200,000 1,800,000
- ---------------------------------------------------------------
Vantive Corp.(a) 80,000 1,590,000
- ---------------------------------------------------------------
Veritas Software Corp.(a) 360,000 12,105,000
- ---------------------------------------------------------------
Viasoft, Inc.(a) 175,000 7,437,500
- ---------------------------------------------------------------
Wind River Systems(a) 187,500 4,312,500
- ---------------------------------------------------------------
Yahoo! Inc.(a) 127,500 4,350,938
- ---------------------------------------------------------------
276,349,300
- ---------------------------------------------------------------
CONSUMER NON-DURABLES-0.42%
Central Garden and Pet Co.(a) 275,000 5,482,812
- ---------------------------------------------------------------
Herbalife International, Inc. 233,300 3,761,963
- ---------------------------------------------------------------
9,244,775
- ---------------------------------------------------------------
CONTAINERS-0.14%
Apogee Enterprises, Inc. 200,000 3,000,000
- ---------------------------------------------------------------
COSMETICS & TOILETRIES-1.19%
Helen of Troy Ltd.(a) 550,000 12,787,500
- ---------------------------------------------------------------
NBTY, Inc.(a) 275,000 5,225,000
- ---------------------------------------------------------------
Rexall Sundown, Inc.(a) 400,000 7,950,000
- ---------------------------------------------------------------
25,962,500
- ---------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-4.13%
AMETEK, Inc. 200,000 4,475,000
- ---------------------------------------------------------------
ANADIGICS, Inc.(a) 246,300 6,957,975
- ---------------------------------------------------------------
ASE Test Ltd. 65,400 2,427,975
- ---------------------------------------------------------------
Benchmarq Microelectronics,
Inc.(a) 400,000 7,000,000
- ---------------------------------------------------------------
BMC Industries, Inc. 500,000 14,500,000
- ---------------------------------------------------------------
Cyberoptics Corp.(a) 200,000 3,225,000
- ---------------------------------------------------------------
Micro Linear Corp.(a) 200,000 3,175,000
- ---------------------------------------------------------------
Micron Electronics, Inc.(a) 365,000 7,436,875
- ---------------------------------------------------------------
Perceptron, Inc.(a) 200,000 5,650,000
- ---------------------------------------------------------------
Sawtek Inc.(a) 178,500 5,288,063
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 22,600 1,395,550
- ---------------------------------------------------------------
Sipex Corp.(a)(b) 420,000 10,080,000
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONIC
COMPONENTS/MISCELLANEOUS-(CONTINUED)
Symbol Technologies, Inc.(a) 300,000 $ 9,712,500
- ---------------------------------------------------------------
Technitrol, Inc. 300,000 6,037,500
- ---------------------------------------------------------------
ThermoQuest Corp.(a) 200,000 2,600,000
- ---------------------------------------------------------------
89,961,438
- ---------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.18%
Halter Marine Group, Inc.(a) 200,000 3,925,000
- ---------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.20%
Imperial Credit Industries,
Inc.(a) 300,000 4,368,750
- ---------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-4.14%
Aames Financial Corp. 214,650 3,300,241
- ---------------------------------------------------------------
AmeriCredit Corp.(a) 300,000 4,312,500
- ---------------------------------------------------------------
Amresco, Inc.(a) 400,000 5,825,000
- ---------------------------------------------------------------
Cityscape Financial Corp.(a) 225,000 3,009,375
- ---------------------------------------------------------------
CMAC Investment Corp. 300,000 11,400,000
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 600,000 11,850,000
- ---------------------------------------------------------------
Consumer Portfolio Services,
Inc.(a) 350,000 2,712,500
- ---------------------------------------------------------------
Delta Financial Corp.(a) 250,000 3,375,000
- ---------------------------------------------------------------
First Alliance Corp.(a) 200,000 4,100,000
- ---------------------------------------------------------------
FIRSTPLUS Financial Group,
Inc.(a) 450,000 9,956,250
- ---------------------------------------------------------------
IMC Mortgage Co.(a) 300,000 3,375,000
- ---------------------------------------------------------------
Metris Companies Inc.(a) 125,000 3,125,000
- ---------------------------------------------------------------
Money Store, Inc. (The) 716,600 15,496,475
- ---------------------------------------------------------------
PMT Services, Inc.(a) 300,000 3,562,500
- ---------------------------------------------------------------
Southern Pacific Funding Corp.(a) 250,000 2,656,250
- ---------------------------------------------------------------
Union Acceptance Corp.(a) 200,000 2,100,000
- ---------------------------------------------------------------
90,156,091
- ---------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.70%
Bay View Capital Corp. 150,000 7,284,375
- ---------------------------------------------------------------
Ocwen Financial Corp.(a) 120,000 3,780,000
- ---------------------------------------------------------------
TCF Financial Corp. 100,000 4,087,500
- ---------------------------------------------------------------
15,151,875
- ---------------------------------------------------------------
FOOD/PROCESSING-0.37%
Delta & Pine Land Co. 133,333 3,333,325
- ---------------------------------------------------------------
Smithfield Foods, Inc.(a) 100,000 4,612,500
- ---------------------------------------------------------------
7,945,825
- ---------------------------------------------------------------
FUNERAL SERVICES-1.01%
Equity Corp. International(a) 450,000 9,675,000
- ---------------------------------------------------------------
Stewart Enterprises, Inc.- Class
A 375,000 12,375,000
- ---------------------------------------------------------------
22,050,000
- ---------------------------------------------------------------
FURNITURE-0.48%
Ethan Allen Interiors, Inc. 125,000 5,531,250
- ---------------------------------------------------------------
Herman Miller, Inc. 150,000 4,856,250
- ---------------------------------------------------------------
10,387,500
- ---------------------------------------------------------------
GAMING-0.17%
Primadonna Resorts, Inc.(a) 200,000 3,750,000
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOME BUILDING-0.09%
American Homestar Corp.(a) 125,000 $ 2,031,250
- ---------------------------------------------------------------
HOTELS/MOTELS-0.51%
Prime Hospitality Corp.(a) 450,000 7,481,250
- ---------------------------------------------------------------
Suburban Lodges of America,
Inc.(a) 80,000 1,290,000
- ---------------------------------------------------------------
Wyndham Hotel Corp.(a) 83,300 2,301,163
- ---------------------------------------------------------------
11,072,413
- ---------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.49%
Compdent Corp.(a) 66,500 1,072,313
- ---------------------------------------------------------------
CRA Managed Care, Inc.(a) 100,000 3,525,000
- ---------------------------------------------------------------
First Commonwealth, Inc.(a) 162,500 1,990,625
- ---------------------------------------------------------------
Penn Treaty American Corp.(a) 150,000 4,050,000
- ---------------------------------------------------------------
10,637,938
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE
PROPERTY)-0.93%
CapMAC Holdings, Inc. 250,000 6,500,000
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 250,000 6,281,250
- ---------------------------------------------------------------
Vesta Insurance Group, Inc. 178,500 7,452,375
- ---------------------------------------------------------------
20,233,625
- ---------------------------------------------------------------
LEISURE & RECREATION-1.15%
Avid Technology, Inc.(a) 200,000 3,875,000
- ---------------------------------------------------------------
Cannondale Corp.(a) 200,000 3,900,000
- ---------------------------------------------------------------
North Face, Inc.(a) 200,000 2,825,000
- ---------------------------------------------------------------
Penske Motorsports, Inc.(a) 100,000 2,937,500
- ---------------------------------------------------------------
Royal Caribbean Cruises Ltd. 200,000 6,375,000
- ---------------------------------------------------------------
West Marine, Inc.(a) 200,000 5,200,000
- ---------------------------------------------------------------
25,112,500
- ---------------------------------------------------------------
MACHINE TOOLS-0.25%
Precision Castparts Corp. 100,000 5,350,000
- ---------------------------------------------------------------
MACHINERY (HEAVY)-0.09%
Rental Service Corp.(a) 103,600 1,916,600
- ---------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.53%
Kulicke & Soffa Industries,
Inc.(a) 250,000 6,984,375
- ---------------------------------------------------------------
Prime Service, Inc.(a) 200,000 4,475,000
- ---------------------------------------------------------------
11,459,375
- ---------------------------------------------------------------
MEDICAL (DRUGS)-2.66%
Arbor Drugs, Inc. 300,000 5,512,500
- ---------------------------------------------------------------
Biovail Corporation
International(a) (Canada) 300,000 7,500,000
- ---------------------------------------------------------------
Cardinal Health, Inc. 278,700 14,840,775
- ---------------------------------------------------------------
Curative Technologies, Inc.(a) 150,000 3,543,750
- ---------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 207,000 6,003,000
- ---------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 125,000 4,593,750
- ---------------------------------------------------------------
Medicis Pharmaceutical Corp.(a) 405,000 9,922,500
- ---------------------------------------------------------------
Parexel International Corp.(a) 214,800 6,014,400
- ---------------------------------------------------------------
57,930,675
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES)-11.55%
ABR Information Services, Inc.(a) 240,000 $ 4,830,000
- ---------------------------------------------------------------
ADAC Laboratories 250,000 5,781,250
- ---------------------------------------------------------------
American HomePatient, Inc.(a) 337,350 6,493,988
- ---------------------------------------------------------------
American Medserve Corp.(a) 191,700 2,084,738
- ---------------------------------------------------------------
Arbor Health Care Co.(a)(b) 450,000 11,025,000
- ---------------------------------------------------------------
Atria Communities, Inc.(a) 250,000 2,812,500
- ---------------------------------------------------------------
CareMatrix Corp.(a) 350,000 6,956,250
- ---------------------------------------------------------------
EmCare Holdings, Inc.(a) 200,000 5,625,000
- ---------------------------------------------------------------
Envoy Corp.(a) 300,000 6,262,500
- ---------------------------------------------------------------
FPA Medical Management, Inc.(a) 375,000 6,093,750
- ---------------------------------------------------------------
Genesis Health Ventures, Inc.(a) 150,000 4,481,250
- ---------------------------------------------------------------
Health Care and Retirement
Corp.(a) 300,000 9,487,500
- ---------------------------------------------------------------
Health Management Associates,
Inc.-Class A(a) 737,662 19,732,458
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 1,000,000 19,750,000
- ---------------------------------------------------------------
Hologic, Inc.(a) 300,000 6,225,000
- ---------------------------------------------------------------
Integrated Health Services,
Inc.(a) 225,000 7,228,125
- ---------------------------------------------------------------
Lincare Holdings, Inc.(a) 200,000 7,850,000
- ---------------------------------------------------------------
MedPartners, Inc.(a) 150,000 2,737,500
- ---------------------------------------------------------------
Multicare Companies, Inc.(a) 375,000 6,984,375
- ---------------------------------------------------------------
NCS HealthCare, Inc.-Class A(a) 125,000 2,843,750
- ---------------------------------------------------------------
NovaCare, Inc.(a) 300,000 3,412,500
- ---------------------------------------------------------------
OccuSystems, Inc.(a) 287,200 5,923,500
- ---------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 625,000 7,500,000
- ---------------------------------------------------------------
Oxford Health Plans, Inc.(a) 100,000 6,587,500
- ---------------------------------------------------------------
Pediatrix Medical Group, Inc.(a) 150,000 4,950,000
- ---------------------------------------------------------------
PhyCor, Inc.(a) 187,500 4,992,187
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 250,000 7,781,250
- ---------------------------------------------------------------
Renal Care Group, Inc.(a) 200,000 6,000,000
- ---------------------------------------------------------------
Renal Treatment Centers, Inc.(a) 200,000 4,325,000
- ---------------------------------------------------------------
RoTech Medical Corp.(a) 500,000 7,875,000
- ---------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 94,800 2,287,050
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 540,000 14,040,000
- ---------------------------------------------------------------
Total Renal Care Holdings,
Inc.(a) 150,000 4,818,750
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 400,000 15,150,000
- ---------------------------------------------------------------
Vencor, Inc.(a) 250,000 10,406,250
- ---------------------------------------------------------------
251,333,921
- ---------------------------------------------------------------
MEDICAL
INSTRUMENTS/PRODUCTS-4.22%
Acuson Corp.(a) 250,000 6,062,500
- ---------------------------------------------------------------
Arterial Vascular Engineering,
Inc.(a) 150,000 2,231,250
- ---------------------------------------------------------------
Capstone Pharmacy Services,
Inc.(a) 105,000 885,937
- ---------------------------------------------------------------
CardioThoracic Systems, Inc.(a) 100,000 1,587,500
- ---------------------------------------------------------------
Dentsply International, Inc. 250,000 12,375,000
- ---------------------------------------------------------------
ESC Medical Systems Ltd.(a)
(Israel) 47,850 1,285,969
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 200,000 5,550,000
- ---------------------------------------------------------------
MiniMed, Inc.(a) 150,000 3,712,500
- ---------------------------------------------------------------
National Dentex Corp.(a)(b) 185,000 3,156,563
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL INSTRUMENTS/PRODUCTS-(CONTINUED)
Omnicare, Inc. 500,000 $ 12,187,500
- ---------------------------------------------------------------
Patterson Dental Co.(a) 300,000 10,050,000
- ---------------------------------------------------------------
Physician Sales & Service, Inc.(a) 200,000 2,900,000
- ---------------------------------------------------------------
ResMed, Inc.(a) 275,000 4,812,500
- ---------------------------------------------------------------
Suburban Ostomy Supply Co.,
Inc.(a)(b) 556,900 5,012,100
- ---------------------------------------------------------------
Sybron International Corp.(a) 600,000 19,950,000
- ---------------------------------------------------------------
91,759,319
- ---------------------------------------------------------------
METALS-0.13%
Northwest Pipe Co.(a) 150,000 2,400,000
- ---------------------------------------------------------------
Shaw Group, Inc.(a) 36,700 495,450
- ---------------------------------------------------------------
2,895,450
- ---------------------------------------------------------------
OFFICE AUTOMATION-0.35%
Danka Business Systems PLC-ADR
(United Kingdom) 250,000 7,640,625
- ---------------------------------------------------------------
OFFICE PRODUCTS-0.49%
Daisytek International Corp.(a)(b) 393,000 10,709,250
- ---------------------------------------------------------------
OIL & GAS (DRILLING)-0.80%
Cliffs Drilling Co.(a) 145,000 8,845,000
- ---------------------------------------------------------------
Patterson Energy, Inc.(a) 120,000 3,450,000
- ---------------------------------------------------------------
Precision Drilling Corp.(a)
(Canada) 150,000 5,212,500
- ---------------------------------------------------------------
17,507,500
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.60%
Devon Energy Corp.(a) 225,000 7,425,000
- ---------------------------------------------------------------
Edge Petroleum Corp.(a) 225,000 3,065,625
- ---------------------------------------------------------------
St. Mary Land & Exploration Co. 100,000 2,600,000
- ---------------------------------------------------------------
13,090,625
- ---------------------------------------------------------------
OIL & GAS (SERVICES)-2.13%
Camco International, Inc. 225,000 9,984,375
- ---------------------------------------------------------------
Energy Ventures, Inc.(a) 250,000 16,718,750
- ---------------------------------------------------------------
Global Industries Ltd.(a) 250,000 5,250,000
- ---------------------------------------------------------------
Newpark Resources, Inc.(a) 100,000 4,487,500
- ---------------------------------------------------------------
SEACOR Holdings Inc.(a) 50,000 2,150,000
- ---------------------------------------------------------------
Veritas DGC, Inc.(a) 400,000 7,700,000
- ---------------------------------------------------------------
46,290,625
- ---------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-1.39%
Marine Drilling Companies, Inc.(a) 377,600 5,947,200
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 400,000 15,550,000
- ---------------------------------------------------------------
Pride Petroleum Services, Inc.(a) 169,200 2,918,700
- ---------------------------------------------------------------
Varco International, Inc.(a) 250,000 5,750,000
- ---------------------------------------------------------------
30,165,900
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.19%
Schweitzer-Mauduit International,
Inc. 125,000 4,078,125
- ---------------------------------------------------------------
POLLUTION CONTROL-2.00%
Philip Environmental, Inc.(a)
(Canada) 475,000 7,481,250
- ---------------------------------------------------------------
Tetra Technologies, Inc.(a) 265,000 6,161,250
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
POLLUTION CONTROL-(CONTINUED)
United Waste Systems, Inc.(a) 100,000 $ 3,375,000
- ---------------------------------------------------------------
US Filter Corp.(a) 450,000 13,668,750
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 390,000 12,772,500
- ---------------------------------------------------------------
43,458,750
- ---------------------------------------------------------------
PUBLISHING-0.22%
World Color Press, Inc.(a) 200,000 4,800,000
- ---------------------------------------------------------------
RESTAURANTS-1.64%
Apple South, Inc. 499,962 6,499,506
- ---------------------------------------------------------------
CKE Restaurants, Inc. 225,000 4,415,625
- ---------------------------------------------------------------
Foodmaker, Inc.(a) 770,000 8,373,750
- ---------------------------------------------------------------
Landry's Seafood Restaurants,
Inc.(a) 275,000 3,862,891
- ---------------------------------------------------------------
NPC International Inc.(a) 52,500 577,500
- ---------------------------------------------------------------
Papa John's International, Inc.(a) 200,000 5,150,000
- ---------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 200,000 3,850,000
- ---------------------------------------------------------------
Starbucks Corp.(a) 100,000 2,987,500
- ---------------------------------------------------------------
35,716,772
- ---------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.87%
Quality Food Centers, Inc.(a) 350,000 14,043,750
- ---------------------------------------------------------------
Twinlab Corp.(a) 375,000 4,968,750
- ---------------------------------------------------------------
19,012,500
- ---------------------------------------------------------------
RETAIL (STORES)-9.15%
Blyth Industries, Inc.(a) 400,000 15,800,000
- ---------------------------------------------------------------
Buckle, Inc. (The)(a) 340,000 5,015,000
- ---------------------------------------------------------------
CDW Computer Centers, Inc.(a) 162,500 7,800,000
- ---------------------------------------------------------------
CompUSA, Inc.(a) 600,000 11,550,000
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 175,000 6,912,500
- ---------------------------------------------------------------
Duty Free International, Inc. 400,000 5,650,000
- ---------------------------------------------------------------
Eagle Hardware & Garden, Inc.(a) 550,000 10,312,500
- ---------------------------------------------------------------
Finish Line, Inc. (The)-Class A(a) 322,800 3,328,875
- ---------------------------------------------------------------
Footstar, Inc.(a) 125,000 2,593,750
- ---------------------------------------------------------------
Gadzooks, Inc.(a) 100,000 2,787,500
- ---------------------------------------------------------------
Hollywood Entertainment Corp.(a) 300,000 6,412,500
- ---------------------------------------------------------------
Inacom Corp.(a) 150,000 3,318,750
- ---------------------------------------------------------------
Insight Enterprises, Inc.(a) 350,000 8,312,500
- ---------------------------------------------------------------
Just for Feet, Inc.(a) 400,000 6,350,000
- ---------------------------------------------------------------
Loehmann's Holdings, Inc.(a)(b) 125,000 859,375
- ---------------------------------------------------------------
Marks Bros. Jewelers, Inc.(a) 200,000 2,225,000
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 325,000 8,084,375
- ---------------------------------------------------------------
Meyer (Fred), Inc.(a) 100,000 4,112,500
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 200,000 3,850,000
- ---------------------------------------------------------------
Micro Warehouse, Inc.(a) 200,000 3,450,000
- ---------------------------------------------------------------
MicroAge, Inc. 350,000 4,418,750
- ---------------------------------------------------------------
MSC Industrial Direct Co., Inc.-
Class A(a) 125,000 3,843,750
- ---------------------------------------------------------------
99 Cents Only Stores(a) 100,000 2,162,500
- ---------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 200,000 7,000,000
- ---------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 450,000 9,618,750
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (STORES)-(CONTINUED)
Pier 1 Imports, Inc. 600,000 $ 11,850,000
- ---------------------------------------------------------------
Sports Authority, Inc. (The)(a) 300,000 5,325,000
- ---------------------------------------------------------------
Stein Mart, Inc.(a) 200,000 5,800,000
- ---------------------------------------------------------------
Tech Data Corp.(a) 545,000 13,352,500
- ---------------------------------------------------------------
Wet Seal, Inc.-Class A(a) 225,000 5,568,750
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 175,000 5,425,000
- ---------------------------------------------------------------
Wilmar Industries, Inc.(a) 150,000 2,475,000
- ---------------------------------------------------------------
Zale Corp.(a) 200,000 3,700,000
- ---------------------------------------------------------------
199,265,125
- ---------------------------------------------------------------
SCHOOLS-0.27%
Children's Comprehensive
Services, Inc.(a) 275,000 3,231,250
- ---------------------------------------------------------------
Strayer Education, Inc. 100,000 2,575,000
- ---------------------------------------------------------------
5,806,250
- ---------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.49%
Datum, Inc.(a) 133,300 3,099,225
- ---------------------------------------------------------------
Dynatech Corp.(a) 100,000 3,475,000
- ---------------------------------------------------------------
Thermo Optek Corp.(a) 350,000 4,068,750
- ---------------------------------------------------------------
10,642,975
- ---------------------------------------------------------------
SECURITY & SAFETY SERVICES-0.22%
Cornell Corrections, Inc.(a) 200,000 1,875,000
- ---------------------------------------------------------------
Rural/Metro Corp.(a) 100,000 2,875,000
- ---------------------------------------------------------------
4,750,000
- ---------------------------------------------------------------
SEMICONDUCTORS-5.66%
Actel Corp.(a) 100,000 1,787,500
- ---------------------------------------------------------------
Burr-Brown Corp.(a) 100,000 2,950,000
- ---------------------------------------------------------------
Computer Products, Inc.(a) 550,000 9,418,750
- ---------------------------------------------------------------
Cymer, Inc.(a) 150,000 6,168,750
- ---------------------------------------------------------------
Dallas Semiconductor Corp.(a) 250,000 9,125,000
- ---------------------------------------------------------------
DuPont Photomasks, Inc.(a) 150,000 7,181,250
- ---------------------------------------------------------------
GaSonics International Corp.(a) 123,200 1,047,200
- ---------------------------------------------------------------
HADCO Corp.(a) 230,000 9,832,500
- ---------------------------------------------------------------
Integrated Device Technology, Inc.(a) 450,000 5,287,500
- ---------------------------------------------------------------
Kemet Corp.(a) 300,000 5,850,000
- ---------------------------------------------------------------
Lattice Semiconductor Corp.(a) 275,000 15,365,625
- ---------------------------------------------------------------
MEMC Electronic Materials, Inc.(a) 235,700 6,452,288
- ---------------------------------------------------------------
Photronics, Inc.(a) 200,000 6,925,000
- ---------------------------------------------------------------
Sanmina Corp.(a) 150,000 7,500,000
- ---------------------------------------------------------------
Sierra Semiconductor Corp.(a) 400,000 6,750,000
- ---------------------------------------------------------------
Silicon Valley Group, Inc.(a) 250,000 5,140,625
- ---------------------------------------------------------------
Tower Semiconductor Ltd. 350,000 4,375,000
- ---------------------------------------------------------------
Triquint Semiconductor, Inc.(a) 235,000 6,991,250
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 162,500 5,118,750
- ---------------------------------------------------------------
123,266,988
- ---------------------------------------------------------------
SHOES & RELATED APPAREL-1.70%
Converse, Inc.(a) 500,000 7,500,000
- ---------------------------------------------------------------
Genesco Inc.(a) 200,000 2,325,000
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SHOES & RELATED APPAREL-(CONTINUED)
Pacific Sunwear of California(a) 200,000 $ 6,250,000
- ---------------------------------------------------------------
Stride Rite Corp. 250,000 3,437,500
- ---------------------------------------------------------------
Vans, Inc.(a) 250,000 2,406,250
- ---------------------------------------------------------------
Wolverine World Wide, Inc. 375,000 15,093,750
- ---------------------------------------------------------------
37,012,500
- ---------------------------------------------------------------
STEEL-0.52%
Maverick Tube Corp.(a) 279,100 6,105,313
- ---------------------------------------------------------------
Tubos de Acero de Mexico S.A.(a)
(Mexico) 325,000 5,321,875
- ---------------------------------------------------------------
11,427,188
- ---------------------------------------------------------------
TELECOMMUNICATIONS-5.47%
ADC Telecommunications, Inc.(a) 552,200 14,426,225
- ---------------------------------------------------------------
Adtran, Inc.(a) 100,000 2,962,500
- ---------------------------------------------------------------
Advanced Fibre Communications,
Inc.(a) 125,000 4,984,375
- ---------------------------------------------------------------
Andrew Corp.(a) 201,600 4,989,600
- ---------------------------------------------------------------
Anicom, Inc.(a) 400,000 3,300,000
- ---------------------------------------------------------------
Aspect Telecommunications Corp.(a) 250,000 4,437,500
- ---------------------------------------------------------------
Billing Information Concepts(a) 350,000 8,356,250
- ---------------------------------------------------------------
Brightpoint, Inc.(a)(b) 937,406 20,505,762
- ---------------------------------------------------------------
CellStar Corp.(a) 275,000 6,600,000
- ---------------------------------------------------------------
Davox Corp.(a) 150,000 4,950,000
- ---------------------------------------------------------------
MasTec, Inc.(a) 150,000 4,350,000
- ---------------------------------------------------------------
NACT Telecommunications, Inc.(a) 100,000 687,500
- ---------------------------------------------------------------
P-COM, Inc.(a) 100,000 2,862,500
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a) 189,600 4,929,600
- ---------------------------------------------------------------
Precision Response Corp.(a) 50,000 818,750
- ---------------------------------------------------------------
Premiere Technologies, Inc.(a) 250,000 5,968,750
- ---------------------------------------------------------------
Proxim, Inc.(a) 100,000 2,012,500
- ---------------------------------------------------------------
Tel-Save Holdings, Inc.(a) 200,000 2,800,000
- ---------------------------------------------------------------
Tellabs, Inc.(a) 200,000 7,975,000
- ---------------------------------------------------------------
Tollgrade Communications, Inc.(a) 200,000 3,950,000
- ---------------------------------------------------------------
U.S. Long Distance Corp.(a) 350,000 4,243,750
- ---------------------------------------------------------------
Xpedite Systems, Inc.(a) 100,000 2,012,500
- ---------------------------------------------------------------
Yurie Systems, Inc.(a) 100,000 962,500
- ---------------------------------------------------------------
119,085,562
- ---------------------------------------------------------------
TEXTILES-2.14%
G & K Services, Inc.-Class A(a) 200,000 5,800,000
- ---------------------------------------------------------------
Mohawk Industries, Inc.(a) 250,000 5,593,750
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 390,000 8,628,750
- ---------------------------------------------------------------
Quicksilver, Inc.(a) 150,000 3,262,500
- ---------------------------------------------------------------
St. John Knits, Inc. 250,000 9,593,750
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 150,000 5,962,500
- ---------------------------------------------------------------
WestPoint Stevens, Inc.(a) 200,000 7,825,000
- ---------------------------------------------------------------
46,666,250
- ---------------------------------------------------------------
TRANSPORTATION-0.45%
Hub Group, Inc.(a) 200,000 5,300,000
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TRANSPORTATION-(CONTINUED)
Trico Marine Services, Inc.(a) 125,000 $ 4,437,500
- ---------------------------------------------------------------
9,737,500
- ---------------------------------------------------------------
TRUCKING-0.13%
Swift Transportation Co., Inc.(a) 100,000 2,850,000
- ---------------------------------------------------------------
Total Common Stocks 2,069,850,667
- ---------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS-0.41%
ADVERTISING/BROADCASTING-0.07%
Jacor Communications Inc.,
Conv. Sr. LYON,
5.50%, 06/12/11(c) $ 3,200,000 1,480,000
- ---------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.34%
Aames Financial Corp.,
Conv. Sub. Deb.,
5.50%, 03/15/06 1,560,000 1,386,294
- ---------------------------------------------------------------
Cityscape Financial Corp.,
Conv. Sub. Deb.,
6.00%, 05/01/06(d)
(Acquired 08/06/96; Cost
$1,326,624) 960,000 636,758
- ---------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FINANCE (CONSUMER CREDIT)-(CONTINUED)
Southern Pacific Funding Corp.,
Conv. Sub. Notes,
6.75%, 10/15/06 $ 6,750,000 $ 5,332,500
- ---------------------------------------------------------------
7,355,552
- ---------------------------------------------------------------
Total Convertible Corporate
Bonds 8,835,552
- ---------------------------------------------------------------
U.S. TREASURY SECURITIES-1.87%
U.S. Treasury Bills-1.87%(e)
5.10%, 06/26/97(f) 41,160,000 40,828,458
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-1.89%(g)
HSBC Securities, Inc.
5.05%, 05/01/97(h) 4,935,390 4,935,390
- ---------------------------------------------------------------
5.49%, 05/01/97(i) 36,238,378 36,238,378
- ---------------------------------------------------------------
Total Repurchase Agreements 41,173,768
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.26% 2,160,688,445
- ---------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.74% 16,030,352
- ---------------------------------------------------------------
NET ASSETS -100.00% $2,176,718,797
===============================================================
</TABLE>
Investment Abbreviations:
ADR -- American Depository Receipt
Conv. -- Convertible
Deb. -- Debentures
LYON -- Liquid Yield Option Notes
Sr. -- Senior
Sub. -- Subordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) 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 at 04/30/97 was
$63,287,088 which represented 2.91% of the Fund's net assets.
(c) Zero coupon bond. Interest rate shown represents the rate of original issue
discount.
(d) Restricted security. May be resold to qualified buyers in accordance with
the provisions of Rule 144A under the Securities Act of 1933, as amended.
The valuation of this security has been determined in accordance with
procedures established by the Board of Directors. The market value of this
security at 04/30/97 was $636,758 which represented 0.03% of the Fund's net
assets.
(e) 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.
(f) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 6.
(g) 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% 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.
(h) Joint repurchase agreement entered into 04/30/97 with a maturing value of
$100,014,028. Collateralized by $96,950,000 U.S. Treasury obligations, 7.50%
to 7.875% due 10/31/99 to 12/31/99 with an aggregate market value at
04/30/97 of $102,002,050.
(i) Joint repurchase agreement entered into 04/30/97 with a maturing value of
$200,030,500. Collateralized by $116,271,000 U.S. Treasury obligations,
5.875% to 7.875% due 06/30/01 to 08/15/05 and $85,760,000 U.S. Government
agency obligations, 0% to 7.15% due 07/18/97 to 02/14/06 with an aggregate
market value at 04/30/97 of $204,003,650.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,826,531,956) $2,160,688,445
- --------------------------------------------------------
Receivables for:
Investments sold 27,207,337
- --------------------------------------------------------
Capital stock sold 3,108,203
- --------------------------------------------------------
Dividends and interest 218,165
- --------------------------------------------------------
Variation margin 150,000
- --------------------------------------------------------
Investment for deferred compensation
plan 26,760
- --------------------------------------------------------
Other assets 94,307
- --------------------------------------------------------
Total assets 2,191,493,217
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 6,161,450
- --------------------------------------------------------
Capital stock reacquired 5,970,653
- --------------------------------------------------------
Deferred compensation 26,760
- --------------------------------------------------------
Accrued advisory fees 1,139,436
- --------------------------------------------------------
Accrued administrative services fees 8,183
- --------------------------------------------------------
Accrued distribution fees 791,602
- --------------------------------------------------------
Accrued directors fees 5,714
- --------------------------------------------------------
Accrued transfer agent fees 462,405
- --------------------------------------------------------
Accrued operating expenses 208,217
- --------------------------------------------------------
Total liabilities 14,774,420
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $2,176,718,797
========================================================
Capital stock, $.001 par value per share:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 59,821,734
========================================================
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 36.39
- --------------------------------------------------------
OFFERING PRICE PER SHARE:
(Net asset value of $36.39
divided by 94.50%) $ 38.51
========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 2,462,377
- --------------------------------------------------------
Dividends (net of $7,376 foreign
withholding tax) 1,233,237
- --------------------------------------------------------
Total investment income 3,695,614
- --------------------------------------------------------
EXPENSES:
Advisory fees 8,135,710
- --------------------------------------------------------
Custodian fees 72,204
- --------------------------------------------------------
Directors' fees 11,408
- --------------------------------------------------------
Distribution fees 3,203,882
- --------------------------------------------------------
Administrative services fees 51,740
- --------------------------------------------------------
Transfer agent fees 1,728,703
- --------------------------------------------------------
Other 330,251
- --------------------------------------------------------
Total expenses 13,533,898
- --------------------------------------------------------
Less: Expenses paid indirectly (21,810)
- --------------------------------------------------------
Net expenses 13,512,088
- --------------------------------------------------------
Net investment income (loss) (9,816,474)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities (54,620,324)
- --------------------------------------------------------
Futures contracts 10,934,911
- --------------------------------------------------------
(43,685,413)
- --------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities (320,721,159)
- --------------------------------------------------------
Futures contracts (4,932,050)
- --------------------------------------------------------
(325,653,209)
- --------------------------------------------------------
Net gain (loss) on investment
securities and futures contracts (369,338,622)
- --------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(379,155,096)
========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND THE YEAR ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (9,816,474) $ (19,703,976)
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities
and futures contracts (43,685,413) 141,538,687
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities and futures contracts (325,653,209) 211,197,677
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (379,155,096) 333,032,388
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities (138,552,307) (54,512,548)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (56,137,743) 226,490,173
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (573,845,146) 505,010,013
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,750,563,943 2,245,553,930
- ---------------------------------------------------------------------------------------------
End of period $2,176,718,797 $2,750,563,943
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,901,777,366 $1,957,915,109
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,860,637) (44,163)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities and futures contracts (48,508,221) 133,729,499
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
futures contracts 333,310,289 658,963,498
- ---------------------------------------------------------------------------------------------
$2,176,718,797 $2,750,563,943
=============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED)
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 assets, liabilities and
operations of each portfolio are accounted for separately. 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.
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--A security listed or traded on an exchange (except
convertible bonds) is valued at its last price on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices
on that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. If a mean is not available,
as is the case in some foreign markets, the closing bid will be used absent
a last sales price. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date or absent a
last sales price, at the mean of the closing bid and asked prices. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Company's officers in a manner
specifically authorized by the Board of Directors of the Company. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times.
Foreign currency exchange rates are also generally determined prior to the
close of the New York Stock Exchange. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the
times at which they are determined and the close of the New York Stock
Exchange which will not
13
<PAGE> 16
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.
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 six months ended April 30, 1997, AIM
was reimbursed $51,740 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 six months ended April 30,
1997, AFS was paid $932,435 for such services.
The Fund received reductions in transfer agency fees of $20,308 from dividends
received on balances in cash management accounts. In addition, the Fund incurred
expenses of $1,502 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 $21,810 during the six months ended
April 30, 1997.
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 six months
ended April 30, 1997, the Fund paid AIM Distributors $3,203,882 as compensation
under the Plan.
AIM Distributors received commissions of $464,530 from sales of shares of the
Fund's capital stock during the six months ended April 30, 1997. 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 six months
ended April 30, 1997, AIM Distributors received $60,656 in contingent deferred
sales charges imposed on redemptions of the Fund's capital stock. Certain
officers and directors of the Company are officers and directors of AIM, AFS and
AIM Distributors.
During the six months ended April 30, 1997, the Fund paid legal fees of $8,010
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.
During the six months ended April 30, 1997, 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.
14
<PAGE> 17
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the six months ended April 30, 1997 were $895,057,405
and $995,995,419, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 463,850,725
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (130,204,448)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $ 333,646,277
==========================================================
</TABLE>
Cost of investment for tax purposes is $1,827,042,168.
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 April 30, 1997, $1,668,000 par value U.S. Treasury obligations were pledged
as collateral to cover margin requirements for futures contracts.
Futures contracts outstanding at April 30, 1997:
(Contracts -- $500 times index/delivery month/commitment)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
--------------
<S> <C>
S&P 500 Index/100 Contracts/June
97/Buy $(846,200)
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the six months ended April 30, 1997
and the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1997 OCTOBER 31, 1996
--------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold 11,500,320 $ 483,235,051 30,538,437 $ 1,334,476,880
- ------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 3,068,744 127,935,858 1,291,013 49,897,557
- ------------------------------------------------------------------------------------------------------------------------
Reacquired (15,971,688) (667,308,652) (26,568,998) (1,157,884,264)
- ------------------------------------------------------------------------------------------------------------------------
(1,402,624) $ (56,137,743) 5,260,452 $ 226,490,173
========================================================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during the six months ended April 30, 1997, 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 five-year period ended December 31, 1992.
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
APRIL 30, ------------------------------------------------ --------------------
1997 1996 1995 1994 1993 1992(a) 1991
---------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06 $ 11.85
- ------------------------------------ ---------- ---------- ---------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.16) (0.32) (0.04) (0.05) (0.02) (0.03) (0.04)
- ------------------------------------ ---------- ---------- ---------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (6.08) 6.09 11.80 4.57 5.35 3.41 7.29
- ------------------------------------ ---------- ---------- ---------- -------- -------- -------- --------
Total from investment
operations (6.24) 5.77 11.76 4.52 5.33 3.38 7.25
- ------------------------------------ ---------- ---------- ---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income -- -- -- -- -- -- --
- ------------------------------------ ---------- ---------- ---------- -------- -------- -------- --------
Distributions from capital gains (2.30) (0.97) -- -- -- (0.92) (3.04)
- ------------------------------------ ---------- ---------- ---------- -------- -------- -------- --------
Total distributions (2.30) (0.97) -- -- -- (0.92) (3.04)
- ------------------------------------ ---------- ---------- ---------- -------- -------- -------- --------
Net asset value, end of period $ 36.39 $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06
==================================== ========== ========== ========== ======== ======== ======== ========
Total return(b) (14.54)% 14.77% 41.45% 18.96% 28.78% 21.34% 63.90%
==================================== ========== ========== ========== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $2,176,719 $2,750,564 $2,245,554 $687,238 $217,256 $ 38,238 $ 16,218
==================================== ========== ========== ========== ======== ======== ======== ========
Ratio of expenses to average net
assets(c) 1.06%(d)(e) 1.11% 1.08% 1.07% 1.00%(g) 1.25% 1.25%
==================================== ========== ========== ========== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets(f) (0.77)%(d) (0.76)% (0.19)% (0.26)% (0.24)%(g) (0.59)% (0.31)%
==================================== ========== ========== ========== ======== ======== ======== ========
Portfolio turnover rate 36% 79% 52% 75% 61% 164% 165%
==================================== ========== ========== ========== ======== ======== ======== ========
Average broker commission rate
paid(h) $ 0.0539 $ 0.0545 N/A N/A N/A N/A N/A
==================================== ========== ========== ========== ======== ======== ======== ========
<CAPTION>
DECEMBER 31,
--------------------------------
1990 1989 1988
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.30 $ 11.07 $ 9.86
- ------------------------------------ ------- -------- --------
Income from investment operations:
Net investment income (loss) 0.08 0.03 0.05
- ------------------------------------ ------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.95) 2.28 1.21
- ------------------------------------ ------- -------- --------
Total from investment
operations (0.87) 2.31 1.26
- ------------------------------------ ------- -------- --------
Less distributions:
Dividends from net investment
income (0.09) (0.03) (0.05)
- ------------------------------------ ------- -------- --------
Distributions from capital gains (0.49) (0.05) --
- ------------------------------------ ------- -------- --------
Total distributions (0.58) (0.08) (0.05)
- ------------------------------------ ------- -------- --------
Net asset value, end of period $ 11.85 $ 13.30 $ 11.07
- ------------------------------------ ======= ======== ========
Total return(b) (6.50)% 20.89% 12.77%
- ------------------------------------ ======= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 9,234 $ 11,712 $ 12,793
- ------------------------------------ ======= ======== ========
Ratio of expenses to average net
assets(c) 1.25% 1.25% 1.22%
- ------------------------------------ ======= ======== ========
Ratio of net investment income
(loss) to average net assets(f) 0.62% 0.24% 0.38%
- ------------------------------------ ======= ======== ========
Portfolio turnover rate 137% 69% 56%
- ------------------------------------ ======= ======== ========
Average broker commission rate
paid(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% and 1.56% for 1995-88, respectively.
(d) Ratios are annualized and based on average net assets of $2,584,346,866.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.05%.
(f) 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)% and 0.04%
for 1995-88, respectively.
(g) Annualized.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
NOTE 9-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.
NOTE 10-FUND REOPENING AND CLOSING
The Fund was reopened to new investors on June 4, 1997 and subsequently closed
to new investors effective as of the close of business June 5, 1997.
15
<PAGE> 18
SUPPLEMENTAL PROXY INFORMATION
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of the AIM Equity Funds, Inc. (the "Company")
was held on February 7, 1997 at the offices of A I M Management Group Inc., 11
Greenway Plaza, Houston, Texas. The meeting was held for the following purposes:
(1) To elect Directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson and Louis S. Sklar.
(2) To approve a new Master Investment Advisory Agreement between the AIM
Aggressive Growth Fund (the "Fund") and A I M Advisors, Inc.
(3) To approve the elimination of the fundamental investment policy prohibiting
the Fund from investing in other investment companies.
(4) To ratify the selection of KPMG Peat Marwick LLP as independent accountants
for the Fund for the Company's fiscal year ending October 31, 1997.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Votes
Director/Matter Votes For Against Abstentions
--------------- --------- ------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 618,811,245 0 19,923,485
Bruce L. Crockett........................................... 619,427,685 0 19,307,045
Owen Daly II................................................ 618,919,919 0 19,814,811
Carl Frischling............................................. 619,275,356 0 19,459,374
Robert H. Graham............................................ 619,431,576 0 19,303,154
John F. Kroeger............................................. 618,878,096 0 19,856,634
Lewis F. Pennock............................................ 619,272,998 0 19,461,732
Ian W. Robinson............................................. 618,944,840 0 19,789,890
Louis S. Sklar.............................................. 619,462,714 0 19,272,016
(2) Approval of Master Investment Advisory Agreement............ 31,114,791 731,317 1,218,650
Elimination of policy prohibiting investments in other
(3) investment companies........................................ 23,839,643 1,595,508 1,270,078
(4) KPMG Peat Marwick LLP....................................... 609,690,634 5,519,782 23,524,314
</TABLE>
16
<PAGE> 19
Directors & Officers
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President
Formerly Director, President, and INVESTMENT ADVISOR
Chief Executive Officer John J. Arthur
COMSAT Corporation Senior Vice President and Treasurer A I M Advisors, Inc.
11 Greenway Plaza
Owen Daly II Carol F. Relihan Suite 100
Director Senior Vice President Houston, TX 77046
Cortland Trust Inc. and Secretary
TRANSFER AGENT
Jack Fields Gary T. Crum
Formerly Member of the Senior Vice President A I M Fund Services, Inc.
U.S. House of Representatives P.O. Box 4739
Scott G. Lucas Houston, TX 77210-4739
Carl Frischling Senior Vice President
Partner
Kramer, Levin, Naftalis & Frankel Jonathan C. Schoolar CUSTODIAN
Senior Vice President
Robert H. Graham State Street Bank & Trust
President and Chief Executive Officer Dana R. Sutton 225 Franklin Street
A I M Management Group Inc. Vice President and Assistant Treasurer Boston, MA 02110
John F. Kroeger Melville B. Cox
Formerly Consultant Vice President COUNSEL TO THE FUND
Wendell & Stockel Associates, Inc.
P. Michelle Grace Ballard Spahr
Lewis F. Pennock Assistant Secretary Andrews & Ingersoll
Attorney 1735 Market Street
David L. Kite Philadelphia, PA 19103
Ian W. Robinson Assistant Secretary
Consultant; Formerly Executive
Vice President and Nancy L. Martin COUNSEL TO THE DIRECTORS
Chief Financial Officer Assistant Secretary
Bell Atlantic Management Kramer, Levin, Naftalis
Services, Inc. Ofelia M. Mayo & Frankel
Assistant Secretary 919 Third Avenue
Louis S. Sklar New York, NY 10022
Executive Vice President Kathleen J. P#ueger
Hines Interests Assistant Secretary
Limited Partnership DISTRIBUTOR
Samuel D. Sirko
Assistant Secretary A I M Distributors, Inc.
11 Greenway Plaza
Stephen I. Winer Suite 100
Assistant Secretary Houston, TX 77046
Mary J. Benson
Assistant Treasurer
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THE AIM FAMILY OF FUNDS -- REGISTERED TRADEMARK --
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
[Photo of GROWTH
11 Greenway Plaza AIM Blue Chip Fund
appears here] 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
A I M Management Group Inc. has provided leadership STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
in the mutual fund industry since 1976 and managed AIM Tax-Exempt Cash Fund
approximately $73 billion in assets for more than 3.5
million shareholders, including individual investors,
corporate clients, and financial institutions as of *AIM Aggressive Growth Fund was closed to new investors
May 23, 1997. The AIM Family of Funds -- Registered on June 5, 1997. For more complete information about any
Trademark -- is distributed nationwide, and AIM AIM Fund(s), including sales charges and expenses,
today ranks among the nation's top 15 mutual fund ask your financial consultant or securities dealer for
companies in assets under management, according a free prospectus(es). Please read the prospectus(es)
to Lipper Analytical Services, Inc. carefully before you invest or send money.
[AIM Logo appears here] ---------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 100 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
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