<PAGE> 1
AIM CAPITAL
DEVELOPMENT FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1998
<PAGE> 2
------------------------------------
AIM CAPITAL DEVELOPMENT FUND
For shareholders who seek
long-term growth through
investments in the
stocks of small- and
medium-size companies.
------------------------------------
ABOUT FUND PERFORMANCE DATA THROUGHOUT THIS REPORT:
o AIM Capital Development 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.
o The Fund's average annual total returns, including sales charges, for
periods ended 3/31/98, the most recent calendar quarter end, were as
follows: For Class A shares, one year, 52.11%; since inception (6/17/96),
28.72%. For Class B shares, one year, 54.82%; since inception (10/1/96),
26.37%. From their inception date (8/4/97) Class C shares produced
cumulative total return of 20.88%.
o When sales charges are included, the Class A share performance reflects the
5.50% maximum sales charge and Class B and C share performance reflects the
applicable contingent deferred sales charge (CDSC) for the period involved.
The CDSC on Class B shares declines from 5% at the time of purchase to 0% at
the beginning of the seventh year. The CDSC on Class C shares is 1% for the
first year after purchase. The performance of the Fund's Class B and Class C
shares will differ from that of Class A shares due to differing fees and
expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
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 The Russell 2000 Index is generally representative of the performance of
small-company stocks.
o Lipper Analytical Services, Inc. is an independent mutual fund performance
monitor. The unmanaged Lipper Small Cap Funds Index represents an average of
the performance of the 30 largest small-capitalization growth funds.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
When we last reported to you, for the fiscal year ended
[PHOTO OF October 31, 1997, equity markets worldwide had just been
Charles T. shaken by the currency crisis in Southeast Asia. By the
Bauer April 30, 1998, end of this six-month reporting period, most
Chairman of markets had recovered nicely, with domestic equities reaching
the Board of new highs and European markets outdoing even the U.S.'s heady
THE FUND pace. Only Asian markets remained in the doldrums. Bonds have
APPEARS HERE] turned in a solid performance with generous real returns,
though not as spectacular as some had predicted when the
Asian crisis first broke.
Good economic news has been arriving almost daily early
in 1998. Inflation and joblessness in the U.S. have been at
their lowest levels in decades, consumer confidence at its
highest. The economic fundamentals in the U.S. appear sound,
and we at AIM remain cautiously optimistic that the current
economic expansion, and the buoyant financial markets that
accompany it, will continue for the foreseeable future.
Nevertheless, by the close of this reporting period, many market
participants were uneasy. Some worried that economic growth was so robust and
labor markets so tight that the Federal Reserve Board would raise interest rates
to keep inflation at bay. Historically, it has been events such as a rise in
interest rates--or more ominous occurrences such as wars--that have ended bull
markets as experienced in this decade. Other participants fretted about signs of
speculative fever, particularly in U.S. stock markets, where equity prices
continued to rise despite evidence that earnings growth, especially for larger
companies, had slowed considerably. All were aware that the Asian story was not
yet completed, and no one was certain how serious its ultimate impact would be.
Of course, this bull market will end one day, and markets became less
ebullient shortly after this reporting period closed. In the face of
uncertainty, the best course for investors is to remain realistic and ready. The
market advances of the past three years have been unprecedented and may have
fostered unrealistic expectations among investors. We have never experienced two
years in a row of market returns above 30%, let alone three. Investors would do
well to remember that the long-term average return for equities is closer to 10%
per year.
A well-diversified portfolio is still one of the most effective tools for
coping with shifts in a market's direction because different asset classes and
different national markets tend to move independently of one another. Of course,
your financial consultant remains your best source of information about how to
allocate your investments based on your particular goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly after the close of this reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months, you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
In addition to making a more varied group of investments available to our
shareholders, this transaction helps strengthen AIM's position as a major
participant in the money-management industry worldwide. Such strength will
enable us to continue expanding both the scope of our fund offerings and our
menu of services for our shareholders.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
The Managers' Overview
SMALL-CAP RALLY HELPS FUND
TO POST SOLID RETURNS
A roundtable discussion with the Fund management team for AIM Capital
Development Fund for the six months ended April 30, 1998.
- --------------------------------------------------------------------------------
Q. AFTER SHAKING OFF THE EFFECTS OF THE ASIAN CURRENCY CRISIS, SMALL-CAP STOCKS
REBOUNDED IMPRESSIVELY. HOW DID AIM CAPITAL DEVELOPMENT FUND PERFORM?
A. Your Fund took full advantage of the rally in small-cap stocks and recorded
solid gains for the reporting period. For the six months ended April 30,
1998, cumulative total return was 14.34%, 13.97%, and 13.98% for Class A, B,
and C shares, respectively. That bested the 11.88% total return for the
Russell 2000 Index and the 10.21% total return for the Lipper Small Cap
Funds Index.
For the year ended April 30, 1998, your Fund's performance was even more
impressive. Total return was 63.17% for Class A shares and 62.05% for Class
B shares compared to 42.40% for the Russell 2000 Index and 42.38% for the
Lipper Small Cap Funds Index. Class C shares commenced sales on August 4,
1997, and had a cumulative total return of 22.18% through April 30, 1998.
During the reporting period, net assets in the Fund grew from $888
million to more than $1.4 billion.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
CLASS A AND CLASS B SHARES*
For the year ended 4/30/98
- --------------------------------------------------------------------------------
63.17% AIM CAPITAL DEVELOPMENT CLASS A
62.05% AIM CAPITAL DEVELOPMENT CLASS B
42.20% RUSSELL 2000 INDEX
42.38% LIPPER SMALL CAP FUND INDEX
================================================================================
*Class C Shares commenced sales on 8/4/97.
Q. WHAT WERE THE MAJOR TRENDS IN THE STOCK MARKET DURING THE REPORTING PERIOD?
A. For the first three months of the reporting period, the stock market was
still feeling the effects of the Asian currency crisis. Markets were slow to
recover from a significant drop in October, just before the reporting period
began, as investors were concerned about the impact of the Asian currency
devaluations on corporate profits worldwide.
However, in the U.S. and most other developed countries, the economic
fundamentals remained sound. While the economy grew at a brisk pace,
inflation and interest rates--two forces that could potentially undermine
corporate profits--continued to be low. In this environment, the Dow Jones
Industrial Average resumed its upward climb in late January and passed the
9000 point mark in April to set a record.
Q. HOW DID SMALL-CAP STOCKS FARE IN THIS ENVIRONMENT?
A. When markets skyrocketed in the second half of the reporting period,
large-cap stocks--particularly, the stocks of the very largest companies,
the so-called "mega caps"--led the charge. In the uncertain market
environment created by the Asian currency crisis, investors gravitated to
the stocks of large, well-known companies. Toward the end of the reporting
period, however, the market rally began to broaden to include the stocks of
smaller companies. Indeed, virtually all classes of stocks posted
respectable gains for the six months ended April 30, 1998.
Q. WHAT MADE SMALL-CAP STOCKS ATTRACTIVE TO INVESTORS?
A. Small-cap stocks were more reasonably priced than large-cap issues.
Moreover, while earnings growth projections for large companies were
declining from double to single digits, the corresponding figures for
smaller companies remained in the double-digit range. The cut in the capital
gains tax and the relative lack of exposure of smaller companies to troubled
Asian markets also contributed to the attractiveness of small-cap stocks.
Q. HOW WAS THE FUND POSITIONED AT THE END OF THE REPORTING PERIOD?
A. The Fund's top holdings were in the following sectors: technology, 24%;
retail, 12%; and health care, 10%. Since our last report six months ago, we
have maintained about the same exposure in technology and health care while
reducing our holdings in energy stocks, which were hurt by declining oil
prices.
Q. HOW DID TECHNOLOGY STOCKS FARE?
A. Technology stocks, which sustained losses toward the end of 1997 because of
the Asian crisis, rebounded early in 1998, even though several large
technology companies reported earnings disappointments. However, we remain
optimistic about this sector, which should benefit from ongoing efforts to
solve the so-called millennium problem--the critical need to reprogram older
computers to recognize the Year 2000. Moreover, we only select the stocks
See important fund and index disclosures inside front cover.
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of 4/30/98, based on total net assets
<TABLE>
<CAPTION>
========================================================================================================================
Top 10 Equity Holdings Top 10 Industries
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. SunGard Data Systems Inc. 0.95% 1. Computers (Software & Services) 9.10%
2. Forest Laboratories, Inc. 0.80 2. Retail (Specialty) 6.49
3. Metals USA 0.79 3. Oil & Gas (Drilling Equipment) 4.70
4. Medical Manager Corp. 0.77 4. Services (Commercial & Consumer) 4.09
5. Amresco, Inc. 0.72 5. Health Care (Medical Products & Instruments) 3.20
6. Stage Stores, Inc. 0.68 6. Health Care (Specialized Services) 3.10
7. Just for Feet, Inc. 0.67 7. Real Estate Investment Trust 2.97
8. Linens 'N Things, Inc. 0.66 8. Communications Equipment 2.61
9. Silgan Holdings, Inc. 0.57 9. Equipment (Semiconductor) 2.56
10. Atwood Oceanics, Inc. 0.57 10. Services (Data Processing) 2.38
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.
========================================================================================================================
</TABLE>
of technology companies that meet our earnings criteria.
Two technology stocks that performed well for the Fund were Medical
Manager Corp. and SunGard Data Systems, Inc. Medical Manager Corp. provides
software and data processing services for physicians' offices while SunGard
Data Systems, Inc., provides processing services for banks and mutual fund
companies.
Q. WHAT WAS BEHIND THE SOLID PERFORMANCE OF RETAIL STOCKS?
A. Declining unemployment, rising wages, and falling mortgage rates translated
into increased consumer spending, and that was good news for the nation's
retailers. At the same time, wholesale prices dropped--another positive
development for the retail sector.
Three of the Fund's top 10 holdings were retail stocks: Stage Stores,
Inc., Just for Feet, Inc., and Linens 'N Things, Inc. All three companies
benefited from favorable economic conditions. For example, as wages
increased and mortgage payments declined, more Americans spent money on
decorating their homes. That proved beneficial for Linen 'N Things, Inc., a
home goods retailer.
Q. WHAT MAKES THE STOCKS OF HEALTH-CARE COMPANIES ATTRACTIVE?
A. As the population ages, we expect the health-care industry to remain
vibrant. This sector, particularly major pharmaceutical manufacturers,
benefited from the introduction of a series of new products. For example,
Forest Laboratories, Inc., one of the Fund's top holdings, has developed a
new drug for the treatment of depression. Other health-care stocks in the
Fund included Advance Paradigm Inc. and Summit Holdings Southeast.
Q. WHAT IS YOUR OUTLOOK FOR THE NEAR-TERM FUTURE?
A. As 1998 nears its midpoint, conditions appear to be favorable for small-cap
stocks. The economy is growing at a healthy pace, and inflation and interest
rates remain low. And while the Federal Reserve Board left monetary policy
unchanged at its May meeting, it has hinted that it could raise interest
rates if economic growth remains strong. Such an increase in interest rates
could have a negative impact on corporate profits.
Indeed, while profits for the largest companies appear to be gravitating
toward the single-digit level, profits remain robust for smaller companies.
We believe that if this trend continues, it could make small-cap stocks
increasingly more attractive and vault them into a position of market
leadership. Such a development would be highly favorable for the Fund.
MERGERS AND ACQUISITIONS--AND "GRADUATES"
We weren't the only ones who found the companies represented in your Fund's
portfolio attractive. During the reporting period, 21 companies represented in
the portfolio were acquired by other firms. These companies included Stimulation
Sciences, a software company, and Bright Horizons, a provider of day-care
facilities within a corporate setting. The stocks of most of the acquired
companies appreciated significantly in value, enhancing the Fund's performance.
Since the Fund inception on June 17, 1996, through the end of the current
reporting period, 83 companies represented in the portfolio have been takeover
targets.
We also sold the stocks of companies when they exceeded $10 billion in
market valuation and could no longer be considered smaller companies. For the
four months ended April 30, 1998, there were 10 "graduates" from the Fund.
See important fund and index disclosures inside front cover.
3
<PAGE> 6
Fund Performance
AIM CAPITAL DEVELOPMENT FUND CLASS A SHARES VS. BENCHMARK INDEXES
The chart below compares your Fund's Class A shares to benchmark indexes. It is
intended to give you a general idea of how your Fund performed compared to the
stock market over the period 6/17/96-4/30/98. It is important to understand the
difference between your Fund and an index. An index measures the performance of
a hypothetical portfolio, in this case the Russell 2000 Index and the Lipper
Small Cap Funds Index. Unlike your Fund, an index is not managed; therefore,
there are no sales charges, expenses or fees. You cannot invest in an index. But
if you could buy all the securities that make up an index, you would incur
expenses that would affect the return on your investment.
GROWTH OF A $10,000 INVESTMENT
6/17/96 - 4/30/98
- -------------------------------------------------------------------------------
AIM CAPITAL
DEVELOPMENT FUND, RUSSELL 2000 LIPPER SMALL CAP
CLASS A SHARES STOCK INDEX FUNDS INDEX
- -------------------------------------------------------------------------------
(in thousands)
6/17/97 9,452 10,000 10,000
6/30/97 9,565 10,000 10,000
9/30/96 10,671 10,034 10,127
12/31/96 10,974 10,556 10,038
3/31/97 9,754 10,010 9,021
6/30/97 11,834 11,633 10,560
9/30/97 14,244 13,364 12,170
12/31/97 13,573 12,916 11,458
3/31/98 15,699 14,216 12,684
4/30/98 15,747 14,294 12,737
===============================================================================
Past Performance cannot guarantee comparable future results.
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 4/30/98, including sales charges
CLASS A SHARES
Inception (6/17/96) 27.51%
1 Year 54.26*
*63.17%, excluding sales charges
CLASS B SHARES
Inception (10/1/97) 25.08
1 Year 57.05**
**62.05%, excluding sales charges
CLASS C SHARES
Inception (8/4/97) 21.18***
***22.18%, excluding sales charges. Total return is cumulative total return that
has not been annualized.
================================================================================
Source: Towers Data Systems HYPO--Registered Trademark--. Your Fund's total
return includes sales charges, expenses, and management fees. The performance of
Class B and Class C shares of the Fund will differ from that of Class A shares
due to differing fees and expenses. For Fund performance calculations and
descriptions of indexes cited on this page, please refer to the inside front
cover.
4
<PAGE> 7
For Consideration
THE ROTH IRA: THE POWER TO KEEP MORE
Contribute After-Tax Dollars Now . . . So You Can Get Federally Tax-Free Savings
Later
A new and potentially more powerful type of IRA--the Roth IRA--became available
on January 1, 1998. What makes it more powerful? The Roth IRA gives you the
opportunity to keep more of what you earn.
Are you eligible to open a Roth IRA? The answer is yes if you or your spouse
has earned income for the tax year for which you want to make the contribution,
and your adjusted gross income is below $110,000 if you are a single tax filer,
$160,000 if you file jointly.
Two Key Roth IRA Benefits:
Tax-Free and Penalty-Free Withdrawals
o Of earnings after five years. Earnings on your Roth IRA are federally
tax-free if your Roth IRA account has been open for five years and you are at
least 59 1/2 years old, or in the case of death or disability. You may also use
up to $10,000 of your earnings to buy a first home (after five years).
o Of contributions at any time. For instance, if you make annual contributions
of $2,000 for the next three years, you may take out up to $6,000 and use that
money for any purpose.
HOW YOU MIGHT PUT BOTH BENEFITS TO WORK FOR YOU
Here's an example of how you may take full advantage of a Roth IRA. You are
39 1/2 years old. You contribute $2,000 after-tax annually in your Roth IRA
every year for 20 years, earning an average annual return of 10%. After 20
years, your account has grown to $126,005. Now at age 59 1/2 you can begin
taking withdrawals and pay no federal income tax or penalty on any of your
$126,005. Or you can keep your money invested and take it out whenever you
need it.
THE ROTH IRA: TO CONVERT OR NOT TO CONVERT
Can you convert your Traditional IRA to a Roth IRA? The answer is yes if you
meet these requirements:
You must pay taxes on the amount you convert. If you convert in 1998, you
can spread your tax payments over the next four years. This four-year allowance
will not be available after December 31, 1998.
You cannot convert to a Roth IRA if you are married and file your tax return
separately, or if your annual gross income is over $100,000.
SOME ROTH IRA CONVERSION GUIDELINES
If you can check most of these boxes, converting your Traditional IRA to a Roth
IRA may make sense for you.
- --------------------------------------------------------------------------------
o You have assets outside your retirement savings with which you can easily
afford to pay the taxes due when you convert.
o You have 10 years or more before you retire. The longer you invest tax-free,
the more you benefit.
o Your tax rate will probably be higher in retirement than it is now. If so,
you'll pay less taxes now to convert than you would pay at retirement if you
withdrew from a traditional IRA.
o You plan to convert in 1998. On January 1, 1999, the ability to spread tax
payments over four years disappears.
o You want to keep making contributions after age 70 1/2 and may wish to pass
your IRA assets on to your heirs after your death.
The Roth IRA Analyzer & Calculator at AIM's Internet Web site--
www.aimfunds.com-- can help you determine your IRA eligibility status and
whether it makes sense for you to convert an existing IRA into a Roth IRA.
MAKE YOUR IRA CONVERSION DECISION A TRULY INFORMED ONE
Talk to your financial consultant, who knows your specific needs and goals. You
may also wish to talk with a tax adviser.
This discussion does not constitute tax advice. Your tax adviser can provide
guidance concerning your particular situation.
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-90.81%
AEROSPACE/DEFENSE-0.38%
Aviation Sales Co.(a) 25,000 $ 890,625
- ---------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 50,000 2,096,875
- ---------------------------------------------------------------
Kroll-O'Gara Co. (The)(a) 76,000 1,619,750
- ---------------------------------------------------------------
Moog Inc.(a) 22,200 960,150
- ---------------------------------------------------------------
5,567,400
- ---------------------------------------------------------------
AIR FREIGHT-0.19%
AirNet Systems, Inc.(a) 70,000 1,890,000
- ---------------------------------------------------------------
Kitty Hawk, Inc.(a) 40,000 745,000
- ---------------------------------------------------------------
2,635,000
- ---------------------------------------------------------------
AIRLINES-0.33%
Midway Airlines, Corp.(a) 150,000 3,150,000
- ---------------------------------------------------------------
Ryanair Holdings PLC-ADR(a)
(Ireland) 37,200 1,427,550
- ---------------------------------------------------------------
4,577,550
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.61%
Aftermarket Technology Corp.(a) 134,300 2,618,850
- ---------------------------------------------------------------
Keystone Automotive Industries,
Inc.(a) 128,000 3,304,000
- ---------------------------------------------------------------
Stoneridge, Inc.(a) 126,300 2,636,512
- ---------------------------------------------------------------
8,559,362
- ---------------------------------------------------------------
BANKS (REGIONAL)-1.14%
AmSouth Bancorporation 9,000 561,375
- ---------------------------------------------------------------
Banknorth Group, Inc. 32,000 1,160,000
- ---------------------------------------------------------------
Bank United Corp.-Class A 70,000 3,622,500
- ---------------------------------------------------------------
Golden State Bancorp, Inc. 45,000 1,755,000
- ---------------------------------------------------------------
Hibernia Corp.-Class A 30,000 613,125
- ---------------------------------------------------------------
Independence Community Bank Corp. 178,600 3,270,612
- ---------------------------------------------------------------
Marshall & Ilsley Corp. 35,000 2,047,500
- ---------------------------------------------------------------
Republic Banking Corp. of Florida 110,000 1,938,750
- ---------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 25,000 1,000,000
- ---------------------------------------------------------------
15,968,862
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.74%
BioChem Pharma, Inc. (Canada)(a) 40,000 1,017,500
- ---------------------------------------------------------------
Genzyme Corp.(a) 50,000 1,546,875
- ---------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 185,000 4,093,125
- ---------------------------------------------------------------
Pharmaceutical Product
Development, Inc.(a) 150,000 3,759,375
- ---------------------------------------------------------------
10,416,875
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE)-1.85%
Chancellor Media Corp.(a) 78,182 $ 3,708,758
- ---------------------------------------------------------------
Clear Channel Communications, Inc.(a) 46,900 4,420,325
- ---------------------------------------------------------------
Cox Radio, Inc.-Class A(a) 85,000 4,111,875
- ---------------------------------------------------------------
Emmis Broadcasting Corp.-Class A(a) 20,000 1,035,000
- ---------------------------------------------------------------
Hearst-Argyle Television Inc.(a) 35,070 1,249,368
- ---------------------------------------------------------------
Heftel Broadcasting Corp.(a) 85,000 3,729,375
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 15,000 853,125
- ---------------------------------------------------------------
Metro Networks, Inc.(a) 55,000 2,186,250
- ---------------------------------------------------------------
Univision Communications, Inc.(a) 123,000 4,712,438
- ---------------------------------------------------------------
26,006,514
- ---------------------------------------------------------------
BUILDING MATERIALS-0.43%
Pameco Corp.(a) 110,000 2,145,000
- ---------------------------------------------------------------
Pentacon, Inc.(a) 69,500 920,875
- ---------------------------------------------------------------
White Cap Industries, Inc.(a) 140,000 3,045,000
- ---------------------------------------------------------------
6,110,875
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-2.61%
ADC Telecommunications, Inc.(a) 60,000 1,796,250
- ---------------------------------------------------------------
Andrew Corp.(a) 110,000 2,516,250
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 100,000 4,737,500
- ---------------------------------------------------------------
Corsair Communications, Inc.(a) 86,500 1,600,250
- ---------------------------------------------------------------
Digital Microwave Corp.(a) 120,000 1,365,000
- ---------------------------------------------------------------
Excel Switching Corp.(a) 17,500 374,063
- ---------------------------------------------------------------
Innova Corp.(a) 100,000 1,712,500
- ---------------------------------------------------------------
Intelect Communications, Inc.(a) 300,000 1,950,000
- ---------------------------------------------------------------
IWL Communications, Inc.(a) 30,000 570,000
- ---------------------------------------------------------------
NEXTLINK Communications,
Inc.-Class A(a) 60,000 1,800,000
- ---------------------------------------------------------------
NICE-Systems Ltd.-ADR(a) (Israel) 80,000 3,440,000
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a) 240,800 4,439,750
- ---------------------------------------------------------------
P-COM, Inc.(a) 125,000 2,460,938
- ---------------------------------------------------------------
Scientific-Atlanta, Inc.(a) 70,000 1,671,250
- ---------------------------------------------------------------
Tekelec (a) 120,000 6,030,000
- ---------------------------------------------------------------
Transcrypt International, Inc.(a) 55,000 194,219
- ---------------------------------------------------------------
36,657,970
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-0.33%
Bell & Howell Co.(a) 75,000 2,071,875
- ---------------------------------------------------------------
IDX Systems Corp.(a) 14,600 636,012
- ---------------------------------------------------------------
National Instruments Corp.(a) 55,000 1,952,500
- ---------------------------------------------------------------
4,660,387
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (NETWORKING)-0.97%
Ascend Communications, Inc.(a) 75,000 $ 3,267,188
- ---------------------------------------------------------------
Bay Networks, Inc.(a) 90,000 2,109,375
- ---------------------------------------------------------------
First Virtual Corp. 40,000 630,000
- ---------------------------------------------------------------
FORE Systems, Inc.(a) 85,000 1,944,376
- ---------------------------------------------------------------
MMC Networks, Inc.(a) 70,000 1,566,250
- ---------------------------------------------------------------
Premiere Technologies, Inc.(a) 128,100 4,083,188
- ---------------------------------------------------------------
13,600,377
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.79%
Actel Corp.(a) 100,000 1,487,500
- ---------------------------------------------------------------
Creative Technology Ltd.(a)
(Singapore) 75,000 1,537,500
- ---------------------------------------------------------------
Printronix, Inc.(a) 90,000 1,440,000
- ---------------------------------------------------------------
Quantum Corp.(a) 145,000 3,407,500
- ---------------------------------------------------------------
Read-Rite Corp.(a) 140,000 1,933,750
- ---------------------------------------------------------------
STB Systems, Inc.(a) 95,000 1,359,687
- ---------------------------------------------------------------
11,165,937
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-9.10%
Activision, Inc. 305,000 3,316,875
- ---------------------------------------------------------------
Advanced Fibre Communications,
Inc.(a) 150,000 6,356,250
- ---------------------------------------------------------------
Aspen Technologies, Inc.(a) 40,000 1,955,000
- ---------------------------------------------------------------
Autodesk, Inc. 35,000 1,645,000
- ---------------------------------------------------------------
Avant! Corp.(a) 60,419 1,752,151
- ---------------------------------------------------------------
Best Software, Inc.(a) 375,000 7,218,750
- ---------------------------------------------------------------
BrightStar Information
Technology Group, Inc.(a) 46,900 732,813
- ---------------------------------------------------------------
Broderbund Software, Inc.(a) 240,000 4,290,000
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 42,440 1,541,102
- ---------------------------------------------------------------
Check Point Software
Technologies Ltd.(a) (Israel) 25,000 734,376
- ---------------------------------------------------------------
Compuware Corp.(a) 40,000 1,955,000
- ---------------------------------------------------------------
Concord Communications, Inc.(a) 100,000 2,475,000
- ---------------------------------------------------------------
DA Consulting Group, Inc.(a) 10,800 190,350
- ---------------------------------------------------------------
DAOU Systems, Inc.(a) 100,000 1,800,000
- ---------------------------------------------------------------
Dassault Systemes S.A.-ADR (France) 20,000 772,500
- ---------------------------------------------------------------
Dendrite International, Inc.(a) 140,000 4,471,250
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 85,000 3,931,250
- ---------------------------------------------------------------
FlexiInternational Software, Inc.(a) 100,000 1,262,500
- ---------------------------------------------------------------
Great Plains Software, Inc.(a) 15,000 558,750
- ---------------------------------------------------------------
Harbinger Corp.(a) 60,000 2,182,500
- ---------------------------------------------------------------
Icon CMT Corp.(a) 130,000 2,713,750
- ---------------------------------------------------------------
IDT Corp.(a) 70,000 2,148,125
- ---------------------------------------------------------------
Intuit, Inc.(a) 15,000 797,812
- ---------------------------------------------------------------
J.D. Edwards & Co.(a) 60,000 2,137,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
JDA Software Group, Inc.(a) 45,000 $ 2,275,312
- ---------------------------------------------------------------
Learning Company, Inc. (The)(a) 200,000 5,725,000
- ---------------------------------------------------------------
Manhattan Associates, Inc.(a) 28,200 638,025
- ---------------------------------------------------------------
Mastech Corp.(a) 180,000 4,770,000
- ---------------------------------------------------------------
Mechanical Dynamics, Inc.(a) 100,000 1,162,500
- ---------------------------------------------------------------
Medical Manager Corp.(a) 365,000 10,790,313
- ---------------------------------------------------------------
Memco Software Ltd.(a) (Israel) 67,700 2,031,000
- ---------------------------------------------------------------
Mercury Interactive Corp.(a) 85,000 3,442,500
- ---------------------------------------------------------------
Midway Games Inc.(a) 100,000 1,850,000
- ---------------------------------------------------------------
Mobius Management Systems, Inc.(a) 13,300 246,050
- ---------------------------------------------------------------
Natural Microsystems Corp.(a) 55,000 1,773,750
- ---------------------------------------------------------------
Network Associates, Inc.(a) 106,674 7,307,169
- ---------------------------------------------------------------
Network Solutions, Inc.-Class A(a) 60,000 3,180,000
- ---------------------------------------------------------------
Platinum Software Corp.(a) 65,000 1,454,375
- ---------------------------------------------------------------
Platinum Technology, Inc.(a) 303,350 7,735,425
- ---------------------------------------------------------------
Radiant Systems, Inc. (a) 50,000 1,125,000
- ---------------------------------------------------------------
Siebel Systems, Inc.(a) 60,166 1,556,795
- ---------------------------------------------------------------
Simulation Sciences, Inc.(a) 130,000 1,295,938
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 37,500 1,596,096
- ---------------------------------------------------------------
Synopsys, Inc.(a) 26,084 1,121,612
- ---------------------------------------------------------------
USWeb Corp.(a) 205,000 4,676,563
- ---------------------------------------------------------------
Vantive Corp.(a) 110,000 3,520,000
- ---------------------------------------------------------------
ViaGrafix Corp.(a) 151,000 1,698,750
- ---------------------------------------------------------------
127,910,777
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.56%
Blyth Industries, Inc.(a) 155,000 5,686,565
- ---------------------------------------------------------------
Lancaster Colony Corp. 22,500 869,062
- ---------------------------------------------------------------
Signet Group PLC(a) (United Kingdom) 60,000 1,275,000
- ---------------------------------------------------------------
7,830,627
- ---------------------------------------------------------------
CONSUMER FINANCE-0.29%
American Capital Strategies, Ltd. 35,100 794,137
- ---------------------------------------------------------------
Investors Financial Services Corp. 10,000 538,750
- ---------------------------------------------------------------
United Panam Financial Corp.(a) 202,500 2,683,125
- ---------------------------------------------------------------
4,016,012
- ---------------------------------------------------------------
CONTAINERS (METAL & GLASS)-0.71%
Peak International Ltd.(a) 85,000 1,976,250
- ---------------------------------------------------------------
Silgan Holdings, Inc.(a) 230,000 8,050,000
- ---------------------------------------------------------------
10,026,250
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.35%
AmeriSource Health Corp.-Class A(a) 25,000 1,362,500
- ---------------------------------------------------------------
McKesson Corp. 56,000 3,958,500
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD & HEALTH)-(CONTINUED)
Owens & Minor, Inc. Holding Co 40,200 $ 716,062
- ---------------------------------------------------------------
Performance Food Group Co.(a) 150,000 3,037,500
- ---------------------------------------------------------------
JP Foodservice, Inc.(a) 100,750 3,557,734
- ---------------------------------------------------------------
Weider Nutrition International, Inc. 450,000 6,384,375
- ---------------------------------------------------------------
19,016,671
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.58%
American Power Conversion Corp.(a) 75,000 2,414,062
- ---------------------------------------------------------------
Berg Electronics Corp.(a) 120,000 2,857,500
- ---------------------------------------------------------------
Black Box Corp.(a) 30,000 997,500
- ---------------------------------------------------------------
Checkpoint Systems, Inc.(a) 100,000 1,868,750
- ---------------------------------------------------------------
MagneTek, Inc.(a) 115,000 2,264,062
- ---------------------------------------------------------------
PCD, Inc.(a) 150,000 3,009,375
- ---------------------------------------------------------------
Pinnacle Systems, Inc.(a) 100,000 4,025,000
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 115,000 4,736,563
- ---------------------------------------------------------------
22,172,812
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.09%
Power-One, Inc.(a) 100,000 1,256,250
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.83%
CellStar Corp.(a) 200,000 6,525,000
- ---------------------------------------------------------------
Quanta Services, Inc.(a) 350,300 5,145,031
- ---------------------------------------------------------------
11,670,031
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.95%
ASM Lithography Holding N.V.(a)
(Netherlands) 18,000 1,649,250
- ---------------------------------------------------------------
Apex PC Solutions, Inc.(a) 115,000 3,435,625
- ---------------------------------------------------------------
Galileo Technology Ltd. (Israel) 35,000 1,128,750
- ---------------------------------------------------------------
General Scanning, Inc.(a) 30,000 684,375
- ---------------------------------------------------------------
Unitrode Corp.(a) 135,000 2,160,000
- ---------------------------------------------------------------
Xilinx, Inc.(a) 95,000 4,346,250
- ---------------------------------------------------------------
13,404,250
- ---------------------------------------------------------------
ENTERTAINMENT-0.60%
Alliance Communications
Corp.-Class B(a) (Canada) 60,000 1,110,000
- ---------------------------------------------------------------
Metro-Goldwyn-Mayer Inc.(a) 63,500 1,531,940
- ---------------------------------------------------------------
Metromedia International Group,
Inc.(a) 200,000 3,325,000
- ---------------------------------------------------------------
Sports Club Co., Inc. (The)(a) 302,300 2,437,293
- ---------------------------------------------------------------
8,404,233
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.56%
Credence Systems Corp.(a) 155,000 4,272,187
- ---------------------------------------------------------------
DuPont Photomasks, Inc.(a) 85,000 4,611,250
- ---------------------------------------------------------------
Etec Systems, Inc.(a) 45,000 2,553,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
EQUIPMENT (SEMICONDUCTOR)-(CONTINUED)
Integrated Process Equipment
Corp.(a) 100,000 $ 1,818,750
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 85,000 3,426,565
- ---------------------------------------------------------------
Kulicke & Soffa Industries, Inc.(a) 100,000 2,150,000
- ---------------------------------------------------------------
Novellus Systems, Inc.(a) 35,000 1,675,625
- ---------------------------------------------------------------
Photronics, Inc.(a) 60,000 2,212,500
- ---------------------------------------------------------------
PRI Automation, Inc.(a) 175,000 4,681,250
- ---------------------------------------------------------------
Speedfam International, Inc.(a) 145,000 4,205,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 120,000 4,380,000
- ---------------------------------------------------------------
35,986,877
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.18%
Amresco, Inc.(a) 280,000 10,150,000
- ---------------------------------------------------------------
ARM Financial Group, Inc.-Class A 51,400 1,101,887
- ---------------------------------------------------------------
BNC Mortgage, Inc.(a) 75,000 946,875
- ---------------------------------------------------------------
Hamilton Bancorp, Inc.(a) 100,000 3,350,000
- ---------------------------------------------------------------
Insignia Financial Group,
Inc.-Class A(a) 45,000 1,198,125
- ---------------------------------------------------------------
MGIC Investment Corp. 20,000 1,260,000
- ---------------------------------------------------------------
Mutual Risk Management Ltd. 30,000 1,016,250
- ---------------------------------------------------------------
PMI Group, Inc. (The) 39,000 3,168,750
- ---------------------------------------------------------------
SEI Corp. 85,000 6,279,375
- ---------------------------------------------------------------
T&W Financial Corp.(a) 75,000 2,137,500
- ---------------------------------------------------------------
30,608,762
- ---------------------------------------------------------------
FOODS-0.88%
American Italian Pasta Co.-Class
A(a) 190,000 5,890,000
- ---------------------------------------------------------------
International Home Foods, Inc.(a) 155,000 4,650,000
- ---------------------------------------------------------------
Keebler Foods Co.(a) 65,500 1,866,750
- ---------------------------------------------------------------
12,406,750
- ---------------------------------------------------------------
FOOTWEAR-0.13%
Samsonite Corp.(a) 65,000 1,868,750
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.32%
International Game Technology 135,000 3,754,687
- ---------------------------------------------------------------
Powerhouse Technologies, Inc.(a) 80,000 790,000
- ---------------------------------------------------------------
4,544,687
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-0.29%
Allergan, Inc. 40,000 1,662,500
- ---------------------------------------------------------------
IVAX Corp.(a) 250,000 2,437,500
- ---------------------------------------------------------------
4,100,000
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.96%
Algos Pharmaceutical Corp.(a) 15,000 493,125
- ---------------------------------------------------------------
Barr Laboratories, Inc.(a) 65,900 2,673,069
- ---------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 50,000 1,325,000
- ---------------------------------------------------------------
Forest Laboratories, Inc.(a) 310,000 11,218,125
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-(CONTINUED)
Jones Medical Industries, Inc.(a) 57,000 $ 1,681,500
- ---------------------------------------------------------------
Mylan Laboratories, Inc. 30,000 813,750
- ---------------------------------------------------------------
North American Vaccine, Inc.(a) 60,000 975,000
- ---------------------------------------------------------------
OSI Pharmaceuticals, Inc.(a) 50,000 309,376
- ---------------------------------------------------------------
Parexel International Corp.(a) 75,000 2,512,500
- ---------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 33,000 1,410,750
- ---------------------------------------------------------------
Warner Chilcott Laboratories-SP
ADR(a) (Ireland) 135,000 1,552,500
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 60,000 2,580,000
- ---------------------------------------------------------------
27,544,695
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-0.04%
Applied Analytical Industries, Inc.(a) 40,000 535,000
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.05%
Health Management Associates,
Inc.-Class A(a) 22,500 708,750
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.56%
Horizon Health Corp.(a) 25,500 605,625
- ---------------------------------------------------------------
Integrated Health Services, Inc. 40,000 1,542,500
- ---------------------------------------------------------------
National Surgery Centers, Inc.(a) 12,500 354,687
- ---------------------------------------------------------------
NovaCare, Inc.(a) 175,000 2,439,062
- ---------------------------------------------------------------
Paragon Health Network, Inc.(a) 70,000 1,308,125
- ---------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 35,000 1,568,438
- ---------------------------------------------------------------
7,818,437
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.70%
Alternative Living Services, Inc.(a) 85,000 2,975,000
- ---------------------------------------------------------------
American Oncology Resources, Inc.(a) 80,000 1,200,000
- ---------------------------------------------------------------
Concentra Managed Care, Inc.(a) 40,000 1,245,000
- ---------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 10,000 800,000
- ---------------------------------------------------------------
First Health Group Corp.(a) 20,000 1,180,000
- ---------------------------------------------------------------
HealthPlan Services Corp. 55,000 1,340,625
- ---------------------------------------------------------------
Monarch Dental Corp.(a) 63,000 1,031,625
- ---------------------------------------------------------------
9,772,250
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-3.20%
Bard (C.R.), Inc. 55,000 1,969,688
- ---------------------------------------------------------------
Biomet, Inc. 65,000 1,950,000
- ---------------------------------------------------------------
Cyberonics, Inc.(a) 60,000 1,440,000
- ---------------------------------------------------------------
DENTSPLY International Inc. 70,000 2,301,250
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 120,000 4,680,000
- ---------------------------------------------------------------
Horizon Medical Products, Inc.(a) 236,000 3,510,500
- ---------------------------------------------------------------
Lifecore Biomedical, Inc.(a) 70,000 1,373,750
- ---------------------------------------------------------------
Marquette Medical Systems-Class A(a) 55,000 1,485,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-(CONTINUED)
Maxxim Medical, Inc.(a) 80,000 $ 2,090,000
- ---------------------------------------------------------------
MiniMed, Inc.(a) 70,000 3,500,000
- ---------------------------------------------------------------
SangStat Medical Corp.(a) 25,000 845,313
- ---------------------------------------------------------------
Schick Technologies, Inc.(a) 115,000 2,472,500
- ---------------------------------------------------------------
Sofamor Danek Group, Inc.(a) 30,000 2,632,500
- ---------------------------------------------------------------
Somnus Medical Technologies, Inc.(a) 100,000 1,200,000
- ---------------------------------------------------------------
St. Jude Medical, Inc.(a) 65,000 2,303,437
- ---------------------------------------------------------------
Steris Corp.(a) 75,000 4,410,937
- ---------------------------------------------------------------
Sybron International Corp.(a) 170,000 4,505,000
- ---------------------------------------------------------------
Trex Medical Corp.(a) 125,000 2,375,000
- ---------------------------------------------------------------
45,044,875
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-3.10%
Advance ParadigM, Inc.(a) 145,000 5,781,875
- ---------------------------------------------------------------
AmeriPath, Inc.(a) 150,000 2,456,250
- ---------------------------------------------------------------
BioReliance Corp.(a) 75,000 1,162,500
- ---------------------------------------------------------------
Boron, LePore & Associates, Inc.(a) 35,000 1,312,500
- ---------------------------------------------------------------
Capital Senior Living Corp.(a) 195,500 2,920,281
- ---------------------------------------------------------------
Cohr, Inc.(a) 140,000 1,093,750
- ---------------------------------------------------------------
Covance, Inc.(a) 60,000 1,286,250
- ---------------------------------------------------------------
First Consulting Group, Inc.(a) 30,100 722,400
- ---------------------------------------------------------------
FPA Medical Management, Inc.(a) 57,000 712,500
- ---------------------------------------------------------------
Intensiva Healthcare Corp.(a) 70,000 568,750
- ---------------------------------------------------------------
MAXIMUS, Inc.(a) 39,000 1,228,500
- ---------------------------------------------------------------
Ocular Sciences, Inc.(a) 131,100 3,670,800
- ---------------------------------------------------------------
PharMerica, Inc.(a) 365,000 5,064,375
- ---------------------------------------------------------------
Prime Medical Services, Inc.(a) 40,000 425,000
- ---------------------------------------------------------------
Renex Corp.(a) 200,000 1,200,000
- ---------------------------------------------------------------
Summit Holding Southeast Inc.(a) 220,000 5,445,000
- ---------------------------------------------------------------
Superior Consultant Holdings Corp.(a) 80,000 3,085,000
- ---------------------------------------------------------------
Ventana Medical Systems, Inc.(a) 200,000 5,475,000
- ---------------------------------------------------------------
43,610,731
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.14%
Kimball International, Inc.-Class B 40,000 942,500
- ---------------------------------------------------------------
Service Experts, Inc.(a) 29,900 994,175
- ---------------------------------------------------------------
1,936,675
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.18%
Dial Corp. (The) 105,000 2,559,375
- ---------------------------------------------------------------
HOUSEWARES-0.59%
Central Garden and Pet Co.(a) 205,000 7,021,250
- ---------------------------------------------------------------
Helen of Troy Ltd.(a) 60,000 1,230,000
- ---------------------------------------------------------------
8,251,250
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (LIFE/HEALTH)-0.93%
AmerUs Life Holdings, Inc.-Class A(a) 42,400 $ 1,356,800
- ---------------------------------------------------------------
ESG Re Ltd. (United Kingdom) 57,700 1,485,775
- ---------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 140,000 6,072,500
- ---------------------------------------------------------------
PAULA Financial 71,500 1,716,000
- ---------------------------------------------------------------
Penncorp Financial Group, Inc. 60,000 1,560,000
- ---------------------------------------------------------------
Stirling Cooke Brown Holdings
Ltd. (United Kingdom) 32,600 920,950
- ---------------------------------------------------------------
13,112,025
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.07%
Ace, Ltd. 12,000 454,500
- ---------------------------------------------------------------
Horace Mann Educators Corp. 16,000 550,000
- ---------------------------------------------------------------
1,004,500
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-1.92%
Amerin Corp.(a) 220,000 6,998,750
- ---------------------------------------------------------------
Capital Re Corp. 10,000 738,125
- ---------------------------------------------------------------
CMAC Investment Corp. 73,000 4,713,063
- ---------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 56,000 2,310,000
- ---------------------------------------------------------------
Executive Risk Inc. 5,000 333,437
- ---------------------------------------------------------------
EXEL Ltd. 11,200 836,500
- ---------------------------------------------------------------
Fidelity National Financial, Inc. 90,000 3,318,750
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 40,000 870,000
- ---------------------------------------------------------------
NAC Re Corp. 8,000 400,000
- ---------------------------------------------------------------
Penn-America Group, Inc. 160,000 3,300,000
- ---------------------------------------------------------------
Reliance Group Holdings, Inc. 50,000 865,625
- ---------------------------------------------------------------
Transatlantic Holdings, Inc. 10,000 768,125
- ---------------------------------------------------------------
Vesta Insurance Group, Inc. 10,000 566,250
- ---------------------------------------------------------------
W. R. Berkley Corp. 20,000 932,500
- ---------------------------------------------------------------
26,951,125
- ---------------------------------------------------------------
INSURANCE BROKERS-0.15%
Annuity and Life Re, Ltd.(a) 87,400 2,086,675
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.05%
Freedom Securities Corp.(a) 29,200 647,875
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.96%
Affiliated Managers Group, Inc.(a) 150,000 5,568,750
- ---------------------------------------------------------------
Charles River Associates Inc. 14,500 348,000
- ---------------------------------------------------------------
Conning Corp.(a) 70,000 1,435,000
- ---------------------------------------------------------------
Waddell & Reed Financial, Inc. 250,000 6,187,500
- ---------------------------------------------------------------
13,539,250
- ---------------------------------------------------------------
INVESTMENTS-0.08%
Security Capital Group
Inc.-Class B(a) 36,700 1,110,175
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
IRON & STEEL-0.22%
Ispat International N.V.-New York
Registered Shares(a) (Netherlands) 24,900 $ 697,200
- ---------------------------------------------------------------
Oregon Steel Mills, Inc.(a) 100,000 2,375,000
- ---------------------------------------------------------------
3,072,200
- ---------------------------------------------------------------
LAND DEVELOPMENT-0.34%
Silverleaf Resorts, Inc.(a) 203,000 4,821,250
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.09%
Coleman Co., Inc.(a) 65,000 1,332,500
- ---------------------------------------------------------------
Galoob Toys, Inc.(a) 400,000 4,325,000
- ---------------------------------------------------------------
GTECH Holdings Corp.(a) 55,000 1,973,125
- ---------------------------------------------------------------
Hasbro, Inc. 60,000 2,208,750
- ---------------------------------------------------------------
The North Face, Inc.(a) 165,000 3,702,187
- ---------------------------------------------------------------
Toy Biz, Inc.(a) 90,000 939,375
- ---------------------------------------------------------------
Travis Boats & Motors, Inc.(a) 30,000 810,000
- ---------------------------------------------------------------
15,290,937
- ---------------------------------------------------------------
LODGING-HOTELS-0.80%
American Skiing Co.(a) 220,000 3,410,000
- ---------------------------------------------------------------
CapStar Hotel Co.(a) 85,000 2,730,625
- ---------------------------------------------------------------
Four Seasons Hotels, Inc. (Canada) 53,000 1,805,312
- ---------------------------------------------------------------
Vail Resorts Inc.(a) 111,700 3,267,225
- ---------------------------------------------------------------
11,213,162
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.07%
OmniQuip International, Inc.(a) 40,000 935,000
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.13%
Daniel Industries 30,000 586,875
- ---------------------------------------------------------------
Figgie International Inc.-Class A(a) 30,000 406,875
- ---------------------------------------------------------------
Industrial Distribution Group, Inc.(a) 45,100 854,081
- ---------------------------------------------------------------
1,847,831
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-2.09%
Amor Holdings, Inc.(a) 100,000 1,100,000
- ---------------------------------------------------------------
Cognex Corp.(a) 115,000 2,781,564
- ---------------------------------------------------------------
DONCASTERS PLC-ADR(a) (United
Kingdom) 24,700 759,525
- ---------------------------------------------------------------
Dril-Quip, Inc.(a) 25,000 898,437
- ---------------------------------------------------------------
First Years, Inc. 200,000 6,300,000
- ---------------------------------------------------------------
Howmet International Inc.(a) 265,000 4,372,500
- ---------------------------------------------------------------
Mettler-Toledo International Inc.(a) 176,000 3,542,000
- ---------------------------------------------------------------
Novel Denim Holdings Ltd.(a)
(Hong Kong) 27,500 694,375
- ---------------------------------------------------------------
Regal-Beloit Corp. 20,000 615,000
- ---------------------------------------------------------------
Tefron Ltd.(a) (Israel) 140,000 3,753,750
- ---------------------------------------------------------------
U.S.A. Floral Products, Inc.(a) 80,000 1,660,000
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-(CONTINUED)
US Filter Corp.(a) 90,000 $ 2,936,250
- ---------------------------------------------------------------
29,413,401
- ---------------------------------------------------------------
METAL FABRICATORS-0.79%
Metals USA(a) 570,000 11,115,000
- ---------------------------------------------------------------
NATURAL GAS-0.39%
KN Energy, Inc. 75,000 4,401,562
- ---------------------------------------------------------------
NGC Corp. 75,000 1,106,250
- ---------------------------------------------------------------
5,507,812
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-1.26%
Boise Cascade Office Products Corp.(a) 119,700 2,296,744
- ---------------------------------------------------------------
Daisytek International Corp.(a) 230,000 5,577,500
- ---------------------------------------------------------------
Danka Business Systems PLC-ADR
(United Kingdom) 125,000 2,500,000
- ---------------------------------------------------------------
Steelcase Inc.(a) 112,800 3,905,700
- ---------------------------------------------------------------
Unisource Worldwide, Inc. 275,000 3,489,062
- ---------------------------------------------------------------
17,769,006
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-4.70%
Atwood Oceanics, Inc.(a) 147,000 8,039,062
- ---------------------------------------------------------------
Baker Hughes, Inc. 65,000 2,632,500
- ---------------------------------------------------------------
BJ Services Co.(a) 40,000 1,500,000
- ---------------------------------------------------------------
Cal Dive International, Inc.(a) 125,000 4,125,000
- ---------------------------------------------------------------
Camco International, Inc. 20,000 1,357,500
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 21,000 1,395,187
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 40,000 2,025,000
- ---------------------------------------------------------------
ENSCO International, Inc. 90,000 2,542,500
- ---------------------------------------------------------------
EVI, Inc.(a) 110,002 5,857,606
- ---------------------------------------------------------------
Gulfmark Offshore Inc.(a) 75,000 2,325,000
- ---------------------------------------------------------------
Hanover Compressor Co.(a) 70,000 1,811,250
- ---------------------------------------------------------------
Input/Output, Inc.(a) 42,400 1,054,700
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 100,000 3,793,750
- ---------------------------------------------------------------
Noble Drilling Corp.(a) 135,000 4,362,188
- ---------------------------------------------------------------
Oceaneering International, Inc.(a) 50,000 1,146,875
- ---------------------------------------------------------------
Offshore Logistics, Inc.(a) 25,000 590,625
- ---------------------------------------------------------------
Petroleum Geo-Services ASA-ADR
(a) (Norway) 18,300 1,203,225
- ---------------------------------------------------------------
Precision Drilling Corp. (Canada) 20,000 477,500
- ---------------------------------------------------------------
Pride International, Inc.(a) 160,000 3,890,000
- ---------------------------------------------------------------
R&B Falcon Corp.(a) 150,000 4,809,375
- ---------------------------------------------------------------
Santa Fe International Corp. 20,000 783,750
- ---------------------------------------------------------------
Smith International, Inc.(a) 35,000 2,056,250
- ---------------------------------------------------------------
Transocean Offshore Inc. 40,000 2,235,000
- ---------------------------------------------------------------
Tuboscope Vetco International
Corp.(a) 130,000 3,079,375
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Veritas DGC, Inc.(a) 19,000 $ 1,029,563
- ---------------------------------------------------------------
Western Atlas Inc.(a) 25,000 1,975,000
- ---------------------------------------------------------------
66,097,781
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.87%
Benton Oil & Gas Co.(a) 185,000 2,254,687
- ---------------------------------------------------------------
Cabot Oil & Gas Corp.-Class A(a) 70,000 1,640,625
- ---------------------------------------------------------------
Cross Timbers Oil Co. 102,500 1,960,312
- ---------------------------------------------------------------
Eagle Geophysical, Inc.(a) 100,000 1,862,500
- ---------------------------------------------------------------
Houston Exploration Co. (The)(a) 80,000 1,870,000
- ---------------------------------------------------------------
Newfield Exploration Co.(a) 50,000 1,212,500
- ---------------------------------------------------------------
Noble Affiliates, Inc. 20,000 862,500
- ---------------------------------------------------------------
Nuevo Energy Co.(a) 33,300 1,186,313
- ---------------------------------------------------------------
Ocean Energy, Inc.(a) 152,100 3,726,450
- ---------------------------------------------------------------
Pogo Producing Co. 35,000 1,122,187
- ---------------------------------------------------------------
Snyder Oil Corp. 95,000 2,024,688
- ---------------------------------------------------------------
Stolt Comex Seaway, S.A.(a)
(United Kingdom) 200,000 6,500,000
- ---------------------------------------------------------------
26,222,762
- ---------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-0.17%
Gulf Indonesia Resources Ltd.(a)
(Indonesia) 70,000 1,076,250
- ---------------------------------------------------------------
Rutherford-Moran Oil Corp.(a) 50,000 1,250,000
- ---------------------------------------------------------------
2,326,250
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.40%
Pope & Talbot, Inc. 225,000 3,501,562
- ---------------------------------------------------------------
Wausau-Mosinee Paper Corp. 100,000 2,118,750
- ---------------------------------------------------------------
5,620,312
- ---------------------------------------------------------------
PERSONAL CARE-0.63%
French Fragrances, Inc.(a) 40,000 680,000
- ---------------------------------------------------------------
Perrigo Co.(a) 50,000 646,875
- ---------------------------------------------------------------
Rexall Sundown, Inc.(a) 50,000 1,596,875
- ---------------------------------------------------------------
Twinlab Corp.(a) 150,000 5,887,500
- ---------------------------------------------------------------
8,811,250
- ---------------------------------------------------------------
PUBLISHING-0.53%
CMP Media Inc.-Class A(a) 93,300 2,157,562
- ---------------------------------------------------------------
Cunningham Graphics
International, Inc.(a) 42,000 792,750
- ---------------------------------------------------------------
Petersen Companies, Inc.
(The)-Class A(a) 110,000 2,860,000
- ---------------------------------------------------------------
Scholastic Corp.(a) 45,000 1,676,250
- ---------------------------------------------------------------
7,486,562
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-2.97%
Anthracite Mortgage Capital Inc.(a) 210,000 2,940,000
- ---------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST-(CONTINUED)
Apartment Investment & Management Co. 100,000 $ 3,737,500
- ---------------------------------------------------------------
CarrAmerica Realty Corp. 120,000 3,510,000
- ---------------------------------------------------------------
CCA Prison Realty Trust 50,000 1,771,875
- ---------------------------------------------------------------
Colonial Properties Trust 100,000 2,968,750
- ---------------------------------------------------------------
Corporate Office Properties
Trust, Inc. 380,000 4,013,750
- ---------------------------------------------------------------
Correctional Properties Trust 42,400 977,850
- ---------------------------------------------------------------
Crescent Real Estate Equities, Co. 85,000 2,900,625
- ---------------------------------------------------------------
Equity Office Properties Trust 108,000 3,071,250
- ---------------------------------------------------------------
Great Lakes REIT, Inc. 80,000 1,465,000
- ---------------------------------------------------------------
Imperial Credit Commercial
Mortgage Investment Corp. 221,100 3,192,131
- ---------------------------------------------------------------
Kilroy Realty Corp. 150,000 3,975,000
- ---------------------------------------------------------------
Manufactured Home Communities, Inc. 130,000 3,282,500
- ---------------------------------------------------------------
Patriot American Hospitality, Inc. 119,047 3,005,937
- ---------------------------------------------------------------
Weeks Corp. 31,200 982,800
- ---------------------------------------------------------------
41,794,968
- ---------------------------------------------------------------
RESTAURANTS-1.26%
Brinker International, Inc.(a) 50,000 1,200,000
- ---------------------------------------------------------------
CKE Restaurants, Inc. 90,000 3,116,250
- ---------------------------------------------------------------
Landry's Seafood Restaurants, Inc.(a) 20,000 570,000
- ---------------------------------------------------------------
Logan's Roadhouse, Inc.(a) 40,000 1,035,000
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(a) 10,000 381,250
- ---------------------------------------------------------------
Rainforest Cafe, Inc.(a) 150,000 2,273,437
- ---------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 140,000 5,407,500
- ---------------------------------------------------------------
Starbucks Corp.(a) 77,000 3,705,625
- ---------------------------------------------------------------
17,689,062
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.44%
CompUSA, Inc.(a) 100,000 1,856,250
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 30,300 1,382,437
- ---------------------------------------------------------------
Tech Data Corp.(a) 60,000 2,992,500
- ---------------------------------------------------------------
6,231,187
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.10%
Neiman Marcus Group, Inc. (The)(a) 40,000 1,467,500
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.69%
Consolidated Stores Corp.(a) 56,400 2,256,000
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 19,500 1,057,875
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 141,800 4,821,200
- ---------------------------------------------------------------
Fred's, Inc. 62,500 1,562,500
- ---------------------------------------------------------------
9,697,575
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.27%
Rite Aid Corp. 120,000 3,855,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (FOOD CHAINS)-1.27%
American Stores Co. 140,000 $ 3,360,000
- ---------------------------------------------------------------
Dominick's Supermarkets, Inc.(a) 100,000 4,006,250
- ---------------------------------------------------------------
Whole Foods Market, Inc.(a)(b) 55,000 3,403,125
- ---------------------------------------------------------------
Wild Oats Markets Inc.(a) 225,000 7,101,562
- ---------------------------------------------------------------
17,870,937
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.02%
Signet Group PLC (United Kingdom) 320,000 227,460
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-6.49%
Bed Bath & Beyond, Inc.(a) 50,000 2,462,500
- ---------------------------------------------------------------
Brookstone, Inc.(a) 35,000 503,125
- ---------------------------------------------------------------
Casey's General Stores, Inc. 80,000 1,310,000
- ---------------------------------------------------------------
Coldwater Creek Inc.(a) 80,000 1,580,000
- ---------------------------------------------------------------
Cole National Corp.-Class A(a) 40,000 1,487,500
- ---------------------------------------------------------------
Corporate Express, Inc.(a) 50,000 503,125
- ---------------------------------------------------------------
CSK Auto Corp.(a) 147,400 3,979,800
- ---------------------------------------------------------------
Finish Line, Inc. (The)-Class A(a) 180,000 4,455,000
- ---------------------------------------------------------------
Garden Ridge Corp.(a) 115,000 2,199,375
- ---------------------------------------------------------------
General Nutrition Companies, Inc.(a) 130,000 4,663,750
- ---------------------------------------------------------------
Genesco Inc.(a) 50,000 846,875
- ---------------------------------------------------------------
Group 1 Automotive, Inc.(a) 140,000 2,100,000
- ---------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 50,000 1,675,000
- ---------------------------------------------------------------
Hot Topic, Inc.(a) 90,000 2,598,750
- ---------------------------------------------------------------
Just for Feet, Inc.(a) 425,000 9,350,000
- ---------------------------------------------------------------
Linens 'N Things, Inc.(a) 155,000 9,338,750
- ---------------------------------------------------------------
Lithia Motors, Inc.-Class A(a) 80,000 1,200,000
- ---------------------------------------------------------------
Musicland Stores Corp.(a) 120,000 1,470,000
- ---------------------------------------------------------------
Nutraceutical International Corp.(a) 151,600 2,728,800
- ---------------------------------------------------------------
OfficeMax, Inc.(a) 40,000 752,500
- ---------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 117,000 2,310,750
- ---------------------------------------------------------------
PETsMART, Inc.(a) 675,000 7,931,250
- ---------------------------------------------------------------
Pier 1 Imports, Inc. 105,000 2,769,375
- ---------------------------------------------------------------
Polo Ralph Lauren Corp.(a) 190,000 5,343,750
- ---------------------------------------------------------------
RDO Equipment Co.-Class A(a) 70,000 1,155,000
- ---------------------------------------------------------------
Sports Authority, Inc. (The)(a) 50,000 878,125
- ---------------------------------------------------------------
Tiffany & Co 25,000 1,137,500
- ---------------------------------------------------------------
U.S. Office Products Co.(a) 95,000 1,680,312
- ---------------------------------------------------------------
Viking Office Products, Inc.(a) 80,000 1,935,000
- ---------------------------------------------------------------
West Marine, Inc.(a) 95,000 2,380,937
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 55,000 3,021,563
- ---------------------------------------------------------------
Zale Corp.(a) 180,000 5,422,500
- ---------------------------------------------------------------
91,170,912
- ---------------------------------------------------------------
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-1.42%
Abercrombie & Fitch Co.-Class A(a) 125,000 $ 5,562,500
- ---------------------------------------------------------------
dELiA*s Inc.(a) 50,000 1,262,500
- ---------------------------------------------------------------
Gadzooks, Inc.(a) 40,000 1,050,000
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 60,000 2,527,500
- ---------------------------------------------------------------
Stage Stores, Inc.(a) 185,000 9,515,938
- ---------------------------------------------------------------
19,918,438
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.41%
Allied Capital Corp. 125,000 3,250,000
- ---------------------------------------------------------------
Charter One Financial, Inc. 37,000 2,504,437
- ---------------------------------------------------------------
5,754,437
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-1.57%
Abacus Direct Corp.(a) 85,000 4,834,375
- ---------------------------------------------------------------
Cognizant Corp. 13,000 668,688
- ---------------------------------------------------------------
Forrester Research, Inc.(a) 40,000 1,500,000
- ---------------------------------------------------------------
Getty Images, Inc.(a) (United
Kingdom) 30,000 686,250
- ---------------------------------------------------------------
Hagler Bailly, Inc.(a) 55,000 1,457,500
- ---------------------------------------------------------------
Information Resources, Inc.(a) 55,000 1,027,812
- ---------------------------------------------------------------
JLK Direct Distribution Inc.-
Class A(a) 40,700 1,332,925
- ---------------------------------------------------------------
Lamar Advertising Co.(a) 225,000 7,762,500
- ---------------------------------------------------------------
Snyder Communications, Inc.(a) 65,000 2,762,500
- ---------------------------------------------------------------
22,032,550
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-4.09%
Advantage Learning Systems, Inc.(a) 32,500 1,023,750
- ---------------------------------------------------------------
Avis Rent A Car, Inc.(a) 90,400 2,367,350
- ---------------------------------------------------------------
BA Merchant Services, Inc.-Class A(a) 100,000 1,500,000
- ---------------------------------------------------------------
Bright Horizons, Inc.(a) 60,000 1,762,500
- ---------------------------------------------------------------
Career Education Corp.(a) 51,700 1,176,175
- ---------------------------------------------------------------
Cerner Corp.(a) 80,000 2,385,000
- ---------------------------------------------------------------
Computer Learning Centers, Inc.(a) 125,000 1,500,000
- ---------------------------------------------------------------
CorporateFamily Solutions, Inc. 33,000 878,625
- ---------------------------------------------------------------
Equity Corp. International(a) 100,000 2,481,250
- ---------------------------------------------------------------
G & K Services, Inc.-Class A 53,500 2,153,375
- ---------------------------------------------------------------
Galileo International, Inc. 71,700 2,894,887
- ---------------------------------------------------------------
Hertz Corp.-Class A 60,000 2,460,000
- ---------------------------------------------------------------
INSpire Insurance Solutions, Inc.(a) 115,000 3,866,875
- ---------------------------------------------------------------
Iron Mountain, Inc.(a) 100,000 4,200,000
- ---------------------------------------------------------------
LaSalle Partners, Inc.(a) 83,600 2,873,750
- ---------------------------------------------------------------
MemberWorks, Inc.(a) 40,000 1,230,000
- ---------------------------------------------------------------
Metzler Group, Inc.(a) 165,000 5,713,125
- ---------------------------------------------------------------
PalEx, Inc.(a) 25,000 287,500
- ---------------------------------------------------------------
Pegasus Systems, Inc.(a) 50,000 1,337,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)-(CONTINUED)
Pittston Brink's Group 35,000 $ 1,369,375
- ---------------------------------------------------------------
Protection One, Inc. 225,000 2,749,219
- ---------------------------------------------------------------
Rental Service Corp.(a) 60,000 1,743,750
- ---------------------------------------------------------------
Sotheby's Holdings, Inc.-Class A 55,000 1,268,437
- ---------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 30,000 1,481,250
- ---------------------------------------------------------------
Trammell Crow Co.(a) 46,600 1,234,900
- ---------------------------------------------------------------
Travel Services International, Inc.(a) 60,000 2,212,500
- ---------------------------------------------------------------
U.S. Rentals, Inc.(a) 110,000 3,272,500
- ---------------------------------------------------------------
57,423,593
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.44%
Cotelligent Group, Inc.(a) 102,500 2,645,781
- ---------------------------------------------------------------
Gartner Group, Inc.-Class A(a) 35,000 1,159,375
- ---------------------------------------------------------------
Shared Medical Systems Corp. 8,000 583,500
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 375,000 13,359,375
- ---------------------------------------------------------------
Sykes Enterprises, Inc.(a) 120,000 2,512,500
- ---------------------------------------------------------------
20,260,531
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.38%
Billing Information Concepts Corp.(a) 40,000 1,120,000
- ---------------------------------------------------------------
BISYS Group, Inc.(a) 170,000 6,715,000
- ---------------------------------------------------------------
CCC Information Services Group(a) 240,000 5,760,000
- ---------------------------------------------------------------
CSG Systems International, Inc.(a) 10,000 455,000
- ---------------------------------------------------------------
DST Systems, Inc.(a) 45,000 2,480,625
- ---------------------------------------------------------------
Hyperion Software Corp.(a) 110,000 4,771,250
- ---------------------------------------------------------------
Lason Holdings, Inc.(a) 66,400 2,589,600
- ---------------------------------------------------------------
Learning Tree International, Inc.(a) 30,000 718,125
- ---------------------------------------------------------------
May & Speh, Inc.(a) 245,000 3,644,375
- ---------------------------------------------------------------
Medaphis Corp.(a) 121,300 1,114,443
- ---------------------------------------------------------------
MedQuist, Inc.(a) 30,000 1,462,500
- ---------------------------------------------------------------
Saville Systems Ireland PLC-ADR(a)
(Ireland) 40,000 1,995,000
- ---------------------------------------------------------------
Transaction Network Services, Inc.(a) 30,000 611,250
- ---------------------------------------------------------------
33,437,168
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.21%
Metamor Worldwide, Inc.(a) 50,000 1,912,500
- ---------------------------------------------------------------
Syntel, Inc.(a) 30,000 975,000
- ---------------------------------------------------------------
2,887,500
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.56%
Casella Waste Systems, Inc.(a) 150,000 4,668,750
- ---------------------------------------------------------------
Wackenhut Corrections Corp.(a) 125,000 3,265,625
- ---------------------------------------------------------------
7,934,375
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.10%
Deluxe Corp. 40,000 1,340,000
- ---------------------------------------------------------------
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.68%
Gilat Communications Ltd.(a) (Israel) 90,000 $ 866,250
- ---------------------------------------------------------------
International Telecommunication
Data Systems, Inc.(a) 60,000 1,815,000
- ---------------------------------------------------------------
LCC International, Inc.-Class A(a) 140,000 2,870,000
- ---------------------------------------------------------------
Metromedia Fiber Network, Inc.(a) 100,000 3,087,500
- ---------------------------------------------------------------
Powerwave Technologies, Inc.(a) 50,000 943,750
- ---------------------------------------------------------------
9,582,500
- ---------------------------------------------------------------
TELEPHONE-0.16%
SmarTalk Teleservices Inc.(a) 110,000 2,186,250
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.45%
Ashworth, Inc.(a) 65,000 1,088,750
- ---------------------------------------------------------------
Columbia Sportswear Co.(a) 95,000 2,018,750
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 50,000 1,243,750
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 32,500 1,982,500
- ---------------------------------------------------------------
6,333,750
- ---------------------------------------------------------------
TRUCKERS-0.38%
C.H. Robinson Worldwide, Inc.(a) 133,600 3,056,100
- ---------------------------------------------------------------
Jevic Transportation, Inc.(a) 150,000 2,325,000
- ---------------------------------------------------------------
5,381,100
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-0.50%
ITEQ, Inc.(a) 110,000 $ 1,402,500
- ---------------------------------------------------------------
Philip Services Corp.(a) (Canada) 275,000 2,079,687
- ---------------------------------------------------------------
Tetra Technologies, Inc.(a) 70,000 1,675,625
- ---------------------------------------------------------------
Waste Industries, Inc.(a) 92,500 1,890,469
- ---------------------------------------------------------------
7,048,281
- ---------------------------------------------------------------
Total Common Stocks (Cost
$937,588,800) 1,276,460,101
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENTS-8.88%(c)
Dean Witter Reynolds, Inc.,
5.55%, 05/01/98(d) $ 12,474,856 12,474,856
- ---------------------------------------------------------------
Goldman, Sachs & Co., 5.53%,
05/01/98(e) 112,300,000 112,300,000
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $124,774,856) 124,774,856
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.69% 1,401,234,957
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.31% 4,343,858
- ---------------------------------------------------------------
NET ASSETS-100.00% $1,405,578,815
===============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sale price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Joint repurchase agreement entered into 04/30/98 with a maturing value
$500,076,806. Collateralized by $495,889,000 U.S. Government obligations, 0%
to 7.75% due 07/23/98 to 01/15/08 with an aggregate market value at 04/30/98
of $510,500,080.
(e) Joint repurchase agreement entered into 04/30/98 with maturing value of
$300,046,250. Collateralized by $307,111,000 U.S. Government obligations, 0%
to 9.40% due 06/10/98 to 09/26/98 with an aggregate market value at 04/30/98
of $306,000,308.
See Notes to Financial Statements.
14
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,062,363,656) $1,401,234,957
- ------------------------------------------------------------
Receivables for:
Investments sold 3,400,432
- ------------------------------------------------------------
Capital stock sold 15,834,071
- ------------------------------------------------------------
Dividends and interest 249,737
- ------------------------------------------------------------
Investment for deferred compensation plan 8,073
- ------------------------------------------------------------
Other assets 175,231
- ------------------------------------------------------------
Total assets 1,420,902,501
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,841,620
- ------------------------------------------------------------
Capital stock reacquired 10,512,514
- ------------------------------------------------------------
Deferred compensation 8,073
- ------------------------------------------------------------
Options written 22,500
- ------------------------------------------------------------
Accrued advisory fees 727,233
- ------------------------------------------------------------
Accrued administrative services fees 6,577
- ------------------------------------------------------------
Accrued directors' fees 1,100
- ------------------------------------------------------------
Accrued distribution fees 671,985
- ------------------------------------------------------------
Accrued transfer agent fees 343,557
- ------------------------------------------------------------
Accrued operating expenses 188,527
- ------------------------------------------------------------
Total liabilities 15,323,686
- ------------------------------------------------------------
Net assets applicable to shares outstanding $1,405,578,815
============================================================
NET ASSETS:
Class A $ 844,490,571
============================================================
Class B $ 522,457,801
============================================================
Class C $ 38,630,443
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 50,676,912
============================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 31,709,398
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 2,345,224
============================================================
Class A:
Net asset value and redemption price per
share $ 16.66
============================================================
Offering price per share:
(Net assets value of $16.66
divided by 94.50%) $ 17.63
============================================================
Class B:
Net asset value and offering price per
share $ 16.48
============================================================
Class C:
Net asset value and offering price per
share $ 16.47
============================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $2,185 foreign withholding
tax) $ 2,716,236
- -----------------------------------------------------------
Interest 2,255,351
- -----------------------------------------------------------
Total investment income 4,971,587
- -----------------------------------------------------------
EXPENSES:
Advisory fees 3,555,197
- -----------------------------------------------------------
Administrative services fees 38,160
- -----------------------------------------------------------
Custodian fees 56,614
- -----------------------------------------------------------
Directors' fees 5,596
- -----------------------------------------------------------
Distribution fees-Class A 1,162,288
- -----------------------------------------------------------
Distribution fees-Class B 1,909,627
- -----------------------------------------------------------
Distribution fees-Class C 110,742
- -----------------------------------------------------------
Transfer agent fees-Class A 683,109
- -----------------------------------------------------------
Transfer agent fees-Class B 540,347
- -----------------------------------------------------------
Transfer agent fees-Class C 31,402
- -----------------------------------------------------------
Other 264,541
- -----------------------------------------------------------
Total expenses 8,357,623
- -----------------------------------------------------------
Less: Expenses paid indirectly (19,722)
- -----------------------------------------------------------
Net expenses 8,337,901
- -----------------------------------------------------------
Net investment income (loss) (3,366,314)
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 15,239,761
- -----------------------------------------------------------
Foreign currencies (27,567)
- -----------------------------------------------------------
Futures contracts (261,825)
- -----------------------------------------------------------
Options contracts 150,146
- -----------------------------------------------------------
15,100,515
- -----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 146,628,356
- -----------------------------------------------------------
Futures contracts (315,275)
- -----------------------------------------------------------
Option contracts 2,199
- -----------------------------------------------------------
146,315,280
- -----------------------------------------------------------
Net gain from investment securities,
foreign currencies, futures and option
contracts 161,415,795
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $158,049,481
===========================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 1998 AND THE YEAR ENDED OCTOBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (3,366,314) $ (5,256,151)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities,
foreign currencies, futures and option contracts 15,100,515 (6,205,853)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 146,315,280 159,137,915
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 158,049,481 147,675,911
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 168,366,608 218,214,845
- -------------------------------------------------------------------------------------------
Class B 168,737,656 235,598,112
- -------------------------------------------------------------------------------------------
Class C 22,921,251 12,327,342
- -------------------------------------------------------------------------------------------
Net increase in net assets 518,074,996 613,816,210
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 887,503,819 273,687,609
- -------------------------------------------------------------------------------------------
End of period $1,405,578,815 $887,503,819
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,066,569,101 $706,543,586
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (3,377,310) (10,996)
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities, foreign currencies, futures and
option contracts 3,513,524 (11,586,991)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 338,873,500 192,558,220
- -------------------------------------------------------------------------------------------
$1,405,578,815 $887,503,819
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Capital Development Fund (the "Fund") is a series portfolio of AIM Equity
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of six separate
portfolios: AIM Capital Development Fund, AIM Aggressive Growth Fund, AIM Blue
Chip Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund. The
Fund currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term capital appreciation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the 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. 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.
16
<PAGE> 19
B. Securities Transactions, Investment Income and Distributions--Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income, dividend expense on
short sales and distributions to shareholders are recorded on the
ex-dividend date.
C. 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 value of the contracts may not correlate with
changes in the value of the securities being hedged.
D. Accounting for Securities Sold Short--When the Fund sells common stock
short, an amount equal to the proceeds of the sales is recorded as an
asset. This asset is offset by a liability (representing the borrowed
security) recorded on the books of the Fund at the market value of the
common stock determined each day in accordance with the procedures for
security valuations discussed in "A" above. The Fund's risk is that the
value of the security will increase rather than decline and thus an
unrealized loss will be recorded. When the Fund closes out a short position
by delivering the stock sold short, the Fund will realize a gain or loss
and the liability related to such short position will be eliminated. The
Fund will attempt to hedge against market risk by entering into short sales
of securities that it currently owns or has the right to acquire through
the conversion or exchange of other securities that it owns. Such short
sales may protect the Fund against the risk of losses in the value of its
portfolio securities because any unrealized losses with respect to such
securities may be wholly or partially offset by a corresponding gain in the
short position. However, any potential gains in such portfolio may be
wholly or partially offset by a corresponding loss in the short position.
E. 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. The Fund has a capital loss
carryforward of $9,504,404 (which may be carried forward to offset future
taxable gains, if any) which expires, if not previously utilized, in the
year 2005.
F. Covered Call Options--The Fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received. A call option gives the purchaser of
such option the right to buy, and the writer (the Fund) the obligation to
sell, the underlying security at the stated exercise price during the option
period. The purchaser of a call option has the right to acquire the security
which is the subject of the call option at any time during the option
period. During the option period, in return for the premium paid by the
purchaser of the option, the Fund has given up the opportunity for capital
appreciation above the exercise price should the market price of the
underlying security increase, but has retained the risk of loss should the
price of the underlying security decline. During the option period, the Fund
may be required at any time to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time at which the Fund
effects a closing purchase transaction by purchasing (at a price which may
be higher than that received when the call option was written) a call option
identical to the one originally written.
G. Foreign Currency Translation--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.
H. Foreign Currency Contracts--A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract 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.
I. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
are allocated among the classes.
17
<PAGE> 20
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 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. AIM has agreed to
waive advisory fees paid by the Fund to AIM to the extent necessary to keep the
annual expense ratio for Class A shares at 1.34% for two years commencing August
12, 1996.
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, 1998, AIM
was reimbursed $38,160 for such services.
The Fund, pursuant to a transfer agency and services agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the six months ended April 30, 1998, AFS was paid
$694,118 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.35% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of Class C shares. The Fund pursuant
to the Class B Plan, pays AIM Distributors compensation at an annual rate of
1.00% of the average daily net assets attributable to the Class B shares. Of
these amounts, the Fund may pay a service fee of 0.25% of the average daily net
assets of the Class A, Class B or C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an asset-
based sales charge. The Plans also impose a cap on the total sales charges,
including asset-based sales charges that may be paid by the respective classes.
AIM Distributors may, from time to time, assign, transfer, or pledge to one or
more designees, its rights to all or a designated portion of (a) compensation
received by AIM Distributors from the Fund pursuant to the Class B Plan (but not
AIM Distributors' duties and obligations pursuant to the Class B Plan) and (b)
any contingent deferred sales charges received by AIM Distributors related to
the Class B shares. During the six months ended April 30, 1998, the Class A,
Class B and Class C shares paid AIM Distributors $1,162,288, $1,909,627 and
$110,742, respectively, as compensation under the Plans.
AIM Distributors received commissions of $920,178 from Class A capital stock
transactions during the six months ended April 30, 1998. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A capital stock. During the six months ended April
30, 1998, AIM Distributors received $19,640 in contingent deferred sales charges
imposed on redemptions of capital stock. Certain officers and directors of the
Company are officers and directors of AIM, AIM Distributors and AFS.
During the six months ended April 30, 1998, the Fund paid legal fees of $1,815
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
During the six months ended April 30, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $6,129 and $13,593, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $19,722 during the six months ended April 30, 1998.
NOTE 4-DIRECTOR'S FEES
Director's fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 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, 1998, the Fund did not borrow under the
line of credit agreement. The funds which are party to the line of credit are
charged a commitment fee of 0.05% on the unused balance of the committed line.
The commitment fee is allocated among the funds based on their respective
average net assets for the period.
Pursuant to an amendment to the line of credit agreement effective May 1,
1998, the Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the
limits set by the prospectus for borrowings.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1998 was
$583,298,286 and $267,933,582, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1998, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $364,326,398
- ------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (25,657,804)
- ------------------------------------------------------
Net unrealized appreciation of
investment securities $338,668,594
======================================================
</TABLE>
Cost of investments for tax purposes is $1,062,566,363.
18
<PAGE> 21
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1998
are summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Beginning of period 0 $ 0
- -----------------------------------------------------------------
Written 700 204,945
- -----------------------------------------------------------------
Closed (450) (142,570)
- -----------------------------------------------------------------
Expired (150) (37,676)
- -----------------------------------------------------------------
End of period 100 $ 24,699
=================================================================
</TABLE>
Open call option contracts written at April 30, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30,
CONTRACT STRIKE NUMBER OF PREMIUM 1998 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- -------- ------ --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Whole Foods Market,
Inc. June/98 70 100 $24,699 $22,500 $2,199
============================================================================================
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in the capital stock outstanding during the six months ended April 30,
1998 and the year ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1998 OCTOBER 31, 1997
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 45,567,247 $ 695,935,911 33,846,855 $ 430,979,375
- ---------------------------------------------------------------------------------
Class B 13,403,480 202,915,101 20,627,807 261,084,351
- ---------------------------------------------------------------------------------
Class C* 1,618,682 24,684,894 850,531 12,426,338
- ---------------------------------------------------------------------------------
Reacquired:
Class A (34,549,652) (527,569,303) (16,847,317) (212,764,530)
- ---------------------------------------------------------------------------------
Class B (2,283,685) (34,177,445) (2,062,227) (25,486,239)
- ---------------------------------------------------------------------------------
Class C* (117,238) (1,763,643) (6,751) (98,996)
- ---------------------------------------------------------------------------------
$23,638,834 $ 360,025,515 36,408,898 $ 466,140,299
=================================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the six months ended April 30, 1998, the year ended October
31, 1997 and the period June 17, 1996 (date operations commenced) through
October 31, 1996, for a share of Class B capital stock outstanding during the
six months ended April 30, 1998, the year ended October 31, 1997 and the period
October 1, 1996 (date sales commenced) through October 31, 1996 and for a share
of Class C capital stock outstanding during the six months ended April 30, 1998
and the period August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------- ----------------------------------
OCTOBER 31, OCTOBER 31,
APRIL 30, -------------------- APRIL 30, --------------------
1998 1997 1996 1998 1997 1996
--------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.57 $ 11.09 $ 10.00 $ 14.46 $ 11.08 $ 11.26
- ------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss)(a) (0.03) (0.10) (0.01) (0.08) (0.20) (0.01)
- ------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 2.12 3.58 1.10 2.10 3.58 (0.17)
- ------------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations $ 2.09 3.48 1.09 $ 2.02 3.38 (0.18)
- ------------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 16.66 $ 14.57 $ 11.09 $ 16.48 $ 14.46 $ 11.08
========================================== ======== ======== ======== ======== ======== ========
Total return(b) 14.34% 31.38% 10.90% 13.97% 30.51% (1.60)%
========================================== ======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $844,491 $577,685 $251,253 $522,458 $297,623 $ 22,435
========================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets(c) 1.29%(d)(e) 1.33% 1.35%(f) 2.02%(d)(e) 2.09% 1.89%(f)
========================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss) to
average net assets(g) (0.35)%(d) (0.83)% (0.29)%(f) (1.09)%(d) (1.59)% (0.83)%(f)
========================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 27% 41% 13% 27% 41% 13%
========================================== ======== ======== ======== ======== ======== ========
Average brokerage commission rate(h) $ 0.0510 $ 0.0534 $ 0.0550 $ 0.0510 $ 0.0534 $ 0.0550
========================================== ======== ======== ======== ======== ======== ========
<CAPTION>
CLASS C CLASS C
--------- -----------
APRIL 30, OCTOBER 31,
1998 1997
--------- -----------
<S> <C> <C>
Net asset value, beginning of period $ 14.45 $ 13.48
- ------------------------------------------ -------- --------
Income from investment operations:
Net investment income (loss)(a) (0.08) (0.06)
- ------------------------------------------ -------- --------
Net gains (losses) on securities (both
realized and unrealized) 2.10 1.03
- ------------------------------------------ -------- --------
Total from investment operations 2.02 0.97
- ------------------------------------------ -------- --------
Net asset value, end of period $ 16.47 $ 14.45
========================================== ======== ========
Total return(b) 13.98% 7.20%
========================================== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $ 38,630 $ 12,195
========================================== ======== ========
Ratio of expenses to average net assets(c) 2.02%(d)(e) 2.14%(f)
========================================== ======== ========
Ratio of net investment income (loss) to
average net assets(g) (1.09)%(d) (1.64)%(f)
========================================== ======== ========
Portfolio turnover rate 27% 41%
========================================== ======== ========
Average brokerage commission rate(h) $ 0.0510 $ 0.0534
========================================== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and are not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of
expenses to average net assets prior to fee waivers and/or
expense reimbursements were 1.38% and 1.60% (annualized) for
1997-1996, for Class A, 2.14% and 2.28% (annualized) for
1997-1996 for Class B and 2.19% (annualized) for 1997 for
Class C.
(d) Ratios are annualized and based on average net assets of
$669,668,732, $385,090,541 and $22,331,912 for Class A,
Class B and Class C, respectively.
(e) Ratios include indirectly paid expenses. Excluding
indirectly paid expenses, ratios of expenses to average net
assets would have been 1.28% (annualized) for Class A, Class
B and Class C would have remained the same.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of
net investment income (loss) to average net assets prior to
fee waivers and/or expense reimbursements were (0.88)% and
(0.54)% (annualized) for 1997-1996 for Class A, (1.64)% and
(1.22)% (annualized) for 1997-1996 for Class B and (1.69)%
(annualized) for 1997 for Class C.
(h) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of
securities for the period divided by the total number of
related shares purchased and sold.
19
<PAGE> 22
Directors & Officers
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Jonathan C. Schoolar Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Senior Vice President
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Dana R. Sutton
President, Mercantile Bankshares Vice President and Assistant Treasurer State Street Bank and Trust Company
225 Franklin Street
Jack Fields Melville B. Cox Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Renee A. Bamford
of the U.S. House of Representatives Assistant Secretary Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling P. Michelle Grace 1735 Market Street
Partner Assistant Secretary Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel
Jeffrey H. Kupor COUNSEL TO THE DIRECTORS
Robert H. Graham Assistant Secretary
President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Nancy L. Martin 919 Third Avenue
Assistant Secretary New York, NY 10022
John F. Kroeger
Formerly Consultant Ofelia M. Mayo DISTRIBUTOR
Wendell & Stockel Associates, Inc. Assistant Secretary
A I M Distributors, Inc.
Lewis F. Pennock Lisa A. Moss 11 Greenway Plaza
Attorney Assistant Secretary Suite 100
Houston, TX 77046
Ian W. Robinson Kathleen J. Pflueger
Consultant; Formerly Executive Assistant Secretary
Vice President and
Chief Financial Officer Samuel D. Sirko
Bell Atlantic Management Assistant Secretary
Services, Inc.
Stephen I. Winer
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Mary J. Benson
Limited Partnership Assistant Treasurer
</TABLE>
2
<PAGE> 23
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o WWW.AIMFUNDS.COM. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
---------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
--------------------
<PAGE> 24
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
FOR AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
[PHOTO OF AIM Capital Development Fund
11 GREENWAY PLAZA AIM Constellation Fund
APPEARS HERE] AIM European Development Fund
AIM Global Aggressive Growth Fund
FOR GROWTH OF CAPITAL
AIM Advisor International Value Fund
AIM Blue Chip Fund
AIM Global Growth Fund
AIM International Equity Fund
AIM Select Growth Fund**
AIM Value Fund
AIM Weingarten Fund
FOR GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
FOR HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
FOR CURRENT TAX-FREE INCOME
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
FOR CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided *AIM Aggressive Growth Fund was closed to new investors on
leadership in the mutual fund industry since 1976 June 5, 1997. **On May 1, 1998 AIM Growth Fund was renamed
and managed approximately $89 billion in assets AIM Select Growth Fund. For more complete information about
for more than 4.4 million shareholders, including any AIM Fund(s), including sales charges and expenses, ask
individual investors, corporate clients, and your financial consultant or securities dealer for a free
financial institutions, as of March 31, 1998. The prospectus(es). Please read the prospectus(es) carefully
AIM Family of Funds--Registered Trademark-- is before you invest or send money.
distributed nationwide, and AIM today ranks among
the nation's top 15 mutual fund companies in
assets under management, according to Lipper
Analytical Services, Inc.
INVEST WITH DISCIPLINE(SM)
</TABLE>
