<PAGE> 1
AIM BLUE CHIP FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT OCTOBER 31, 1997
<PAGE> 2
----------------------------------------
AIM BLUE CHIP FUND
For shareholders
who seek a relatively conservative
investment portfolio that contains
the stocks of top-performing
companies within designated
business sectors.
----------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Blue Chip Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge.
o When sales charges are included in performance figures, Class A performance
reflects the maximum 5.50% sales charge, and Class B share performance
reflects the applicable contingent deferred sales charge (CDSC). The CDSC on
Class B shares declines from 5% beginning at the time of purchase to 0% at
the beginning of the seventh year. The performance of the Fund's Class B and
C shares will differ from Class A shares due to differing fees and expenses.
o Class C shares commenced sales August 4, 1997.
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 unmanaged Lipper Growth Fund Index represents an average of the
performance of the 30 largest growth mutual funds tracked by Lipper
Analytical Services, Inc., an independent mutual funds performance monitor.
o The Dow Jones Industrial Average (DJIA) is an unmanaged composite of the
performance of 30 large-company stocks.
o The Russell 1000 Index measures the performance of 1000 large-company
stocks.
o Standard & Poor's Corporation (S&P) is a credit-rating agency. The Standard
& Poor's Composite Index of 500 Stocks (S&P 500) is a group of unmanaged
securities widely regarded by investors to be representative of the stock
market in general. Results shown assume the reinvestment of dividends.
o The Europe, Australia, Far East (EAFE) Index is a group of unmanaged
securities. The index is compiled by Morgan Stanley Capital International.
o The NASDAQ (National Association of Securities Dealers Automated Quotation
system) Composite Index is a group of more than 4,500 unmanaged
over-the-counter securities widely regarded by investors to be
representative of the small- and medium-sized company stock universe.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested interest 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:
The fiscal year ended October 31, 1997 experienced no let-up
[PHOTO OF in the volatility in equity markets, and it closed on an
Charles T. unsettling note. In late October, in the wake of a currency
Bauer, crisis in Southeast Asia, the stock market experienced its
Chairman of first 10% correction since 1991. On Monday, October 27, the
the Board of New York Stock Exchange closed to deal with market volatility
THE FUND for the first time in its history when the Dow Jones
APPEARS HERE] Industrial Average fell 554 points, the index's largest point
decline ever. It is important to note that in percentage
terms, this was a drop of 7.18%, far smaller than the 22.61%
decline that occurred October 19, 1987. Fortunately, this
time the market snapped back, and the Dow regained 337 points
the next day. As of this writing, markets continue to
recover.
Many investment managers, including AIM, had cautioned
that a correction was inevitable, that the relentless rise
in benchmarks like the Dow could not continue. In less than
12 months, the Dow had climbed from 6010 on October 14,
1996, to reach its all-time high of 8259 on August 6, 1997.
When markets become overvalued, no one knows what will precipitate a
decline. No one foresaw that a currency devaluation by Thailand beginning during
the summer would lead to worldwide stock market turmoil.
Despite recent activities, the fiscal year ended October 31 brought
domestic equity investors excellent returns: The Dow was up almost 26%; the
broader S&P 500, more than 32%; the NASDAQ small-cap index, 30.46%.
International investments, while positive, weren't as robust; the EAFE Index
rose 4.63%. On the following pages, your Fund managers discuss how your Fund
performed in this market context and their outlook for the future.
REALISTIC EXPECTATIONS
The 1100-point decline in the Dow between early August and late October was the
latest in a series of market breaks. Between mid-March and mid-April of this
year, for example, the Dow dropped almost 10%.
Many investors, including professional fund managers, have become
accustomed to buying on these market breaks because the market has bounced back
quickly. From its 1997 low of 6391 on April 11, the Dow took less than four
months to rise almost 2000 points to its all-time high.
However, this time could be different. Many investors have developed two
unrealistic expectations: first, a belief that stocks can rise more than 20% a
year indefinitely; and second, confidence that the market always rebounds
swiftly from a decline.
Neither notion is historically correct. History tells us that over the long
term, average annual total return for stocks is about 10%, not 20%. And those of
us who have been in this business for many years remember the bear market of the
1970s, when the market experienced a series of declines and recovery was very
slow.
Nevertheless, there is reason for optimism, including sound fiscal policy
steadily shrinking the federal deficit, stable interest rates, and a strong
economy unharmed by inflation. Despite recent events in Asia, it is difficult to
be pessimistic about the U.S. economy and, indeed, about most of the developed
economies in the world.
We are pleased to send you this report on your Fund. Please contact our
Client Services department at 800-959-4246 if you have any questions or
comments. Don't forget that automated information about your AIM account is
available 24 hours a day on the AIM Investor Line, 800-246-5463. Or visit our
Web site, at www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
----------------------------------
Despite recent activities,
the fiscal year ended October 31
brought domestic equity investors
excellent returns.
----------------------------------
<PAGE> 4
The Managers' Overview
BLUE CHIP FUND THRIVES IN CHANGEABLE MARKETS
A roundtable discussion with the Fund management team for AIM Blue Chip Fund for
the year ended October 31, 1997.
- --------------------------------------------------------------------------------
Q. IT WAS A NERVE-JANGLING YEAR IN THE STOCK MARKET. HOW DID AIM BLUE CHIP
FUND PERFORM?
A. Despite an extremely volatile market and a shift in the market leadership
from large- to small-cap stocks, your Fund continued to provide excellent
returns.
For the fiscal year ended October 31, 1997, the Fund posted a total
return of 29.68% and 28.81% for Class A and Class B shares, respectively,
besting the 28.42% total return for the Lipper Growth Fund Index. Class C
shares commenced sales August 4, 1997, and had a total return of -3.06% for
the period ended October 31, 1997.
The Fund's performance was particularly strong in the second half of
the year, even after small-cap stocks emerged as market leaders. From April
30, 1997 through the end of the reporting period, total return for Class A
shares was 17.10% while total return for Class B shares was 16.65%. By
comparison, the Standard & Poor's Index of 500 Stocks (S&P 500) and the
Russell 1000 had returns of 15.13% and 16.59%, respectively.
During the fiscal year, net assets in the Fund skyrocketed from $129
million to more than $766 million.
Q. WHAT WERE THE MAJOR TRENDS IN THE STOCK MARKET DURING THE FISCAL YEAR?
A. Although the Dow Jones Industrial Average (DJIA) soared to record heights,
the market experienced three major declines, including one in December 1996
and another from mid-March to mid-April 1997.
However, the first two selloffs were overshadowed by the third, which
occurred from early August to late October 1997 as the decline culminated
in the stunning events of October 27, when the DJIA lost 554 points or 7.2%
of its value in a single day.
Q. WHAT TRIGGERED THE EVENTS OF OCTOBER 27-28, 1997?
A. Currency devaluations in Southeast Asia touched off a major selloff in the
Hong Kong market which had worldwide repercussions. However, the sharp drop
in the DJIA on October 27 was followed by an impressive turnaround the
following day as the industrial average rose 337 points--a 4.7% increase.
Investors rushed to buy stocks at lower prices, causing the market to
recover a good portion of its losses.
Q. HOW DID BLUE-CHIP STOCKS FARE?
A. For most of the year, large-company stocks--the type primarily found in
your Fund's portfolio--were market leaders. Concerned that rapid economic
growth might lead to inflation and higher interest rates that could erode
corporate profits, investors were attracted to large-company stocks with
more predictable earnings.
However, during the second half of the fiscal year, inflation
continued to be tame and borrowing costs actually declined. Consequently,
investors gravitated to the less expensive stocks of mid- and small-sized
companies with greater earnings potential.
Q. HOW DID THE FUND PERFORM WHEN THE MARKET EMPHASIS SHIFTED TO SMALL-CAP
STOCKS?
A. Your Fund continued to produce solid returns even after small-cap stocks
became the primary focus of investors. In the third quarter of 1997, for
example, Class A and B shares posted a total return of 9.47% and 9.27%,
respectively, besting the 8.73% total return of the Russell 1000 Index and
the 7.49% total return of the Standard & Poor's Composite Index of 500
Stocks (S&P 500).
Q. WHY DID BLUE CHIP FUND OUTPERFORM THE RUSSELL 1000 AND THE S&P 500 IN THE
BROADER MARKET ENVIRONMENT?
A. Your Fund outperformed the S&P 500 and Russell 1000 because it is more
diversified than these benchmark indexes. The S&P 500 and the Russell 1000
are weighted in favor of larger-company stocks. As a result, the
performance of these indexes tends to reflect that of the larger-cap stocks.
By contrast, Blue Chip Fund's portfolio is more equally weighted in
terms of stock holdings. Consequently, when the market focus shifted to
smaller company stocks, it was in a better position to take advantage of
this trend.
================================================================================
FUND VS. INDEX
- --------------------------------------------------------------------------------
Year ended 10/31/97
Lipper Growth Fund Index 28.42%
Class B Shares 28.81%
Class A Shares 29.68%
================================================================================
See important fund and index disclosures on inside front cover.
2
<PAGE> 5
The Managers' Overview
TOP 10 HOLDINGS
As of 10/31/97, based on total net assets
<TABLE>
<CAPTION>
===================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Philip Morris Companies, Inc. 1.65% 1. Health Care (Diversified) 4.08%
2. Microsoft Corp. 1.44 2. Health Care (Drugs--Major Pharmaceuticals) 3.75
3. Pfizer, Inc. 1.38 3. Computers (Hardware) 3.69
4. General Electric Co. 1.35 4. Financial (Diversified) 3.51
5. WorldCom, Inc. 1.32 5. Manufacturing (Diversified) 3.48
6. Merck & Co., Inc. 1.28 6. Oil (International Integrated) 3.19
7. Coca-Cola Co. (The) 1.25 7. Insurance (Multi-Line) 2.82
8. Chase Manhattan Corp. 1.20 8. Electric Companies 2.61
9. Exxon Corp. 1.20 9. Telephone 2.41
10. Service Corp. International 1.19 10. Services (Data Processing) 2.33
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>
Q. HOW WAS THE FUND POSITIONED AS OF OCTOBER 31, 1997?
A. Among the Fund's top sector holdings were: financial, 20%; technology, 16%;
and health care, 12%. In the past six months, we have reduced our
technology and health-care holdings slightly while moderately increasing
our exposure in the financial sector.
Q. WHAT'S BEHIND THE SOLID PERFORMANCE OF FINANCIAL-COMPANY STOCKS?
A. Earnings remained strong in the financial sector as companies benefited
from declining interest rates, low inflation, and a continuing wave of
mergers and acquisitions. For example, Travelers Group, Inc., one of the
stocks in the portfolio, acquired Salomon Brothers, a leading investment
banking firm, in September. Travelers' earnings for the third quarter of
1997 were 18% higher than for the same period in 1996.
The Fund also benefited from owning the stocks of Franklin Resources,
Inc., American International, and MGIC Investment Corp.
Q. HOW DID TECHNOLOGY STOCKS PERFORM?
A. While technology stocks continued to be volatile, we remain optimistic
about the long-term prospects for this sector. The largest portion of
corporate and global capital expenditures is being channeled into the
technology area.
Within the technology sector, we seek to invest in companies that have
been the beneficiaries of these corporate spending trends and that have
shown positive earnings growth. Texas Instruments, one of the stocks in the
portfolio, reported third-quarter earnings that exceeded analysts'
expectations as the company benefited from a strong demand for
semiconductors, especially its newest microchips.
The Fund also benefited from owning the stocks of Compaq Computer
Corp., Dell Computer Corp., and Hewlett-Packard Co. These three companies
emerged as third-quarter leaders in computer sales.
Q. WHAT MAKES HEALTH-CARE STOCKS ATTRACTIVE?
A. As the population ages, we expect the health-care industry to remain
vibrant. At the end of the fiscal year, the Fund's health-care holdings
primarily were in pharmaceutical manufacturers and diversified companies
such as Warner-Lambert.
For the third quarter of 1997, Warner-Lambert reported a 30% increase
in earnings over the same period for the previous year. The company's
earnings were given a boost by the introduction of several new product
lines, including a cholesterol-reducing agent.
Other health-care stocks in the portfolio included Pfizer Inc. and Eli
Lilly Co. Both companies reported strong third-quarter earnings, bolstered
by new-product sales.
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. As 1997 draws to a close, the environment seems favorable for the stock
market. The economy is growing at a healthy pace, corporate profits are
strong, and inflation is low. The Federal Reserve Board (the Fed), after
tightening monetary policy in March 1997, has left interest rates
unchanged.
However, volatility could continue to be a factor in the market. The
periodic release of key economic data, which could provide some indication
on the direction of inflation--and the Fed's likely response--could cause
the market to fluctuate dramatically. Also, as the events of October 27
illustrated, offshore developments, such as the Hong Kong stock-market
tumble, could have an impact on the market.
Finally, investors would be well advised to be realistic in their
expectations. Stock returns, which have exceeded 20% in recent years, could
be gravitating back to their more historic levels of approximately 10%.
See important fund and index disclosures on inside front cover.
3
<PAGE> 6
Long-Term Performance
BLUE CHIP FUND VS. BENCHMARK INDEX
The chart below compares your Fund to a benchmark index. It is intended to give
you a general idea of how your Fund performed compared to the stock market over
the period 10/31/87-10/31/97. 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 1000 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 of
your investment.
GROWTH OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AIM BLUE CHIP
FUND CLASS
A SHARES RUSSELL 1000 INDEX
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
10/31/87 $ 9,448 $10,000
10/31/88 $10,249 $11,563
10/31/89 $12,287 $14,657
10/31/90 $12,483 $13,185
10/31/91 $15,999 $18,009
10/31/92 $17,590 $19,947
10/31/937 $18,460 $23,096
10/31/94 $19,979 $23,812
10/31/95 $24,728 $30,242
10/31/96 $31,127 $37,173
10/31/97 $40,367 $49,009
================================================================================
</TABLE>
Past performance cannot guarantee comparable future results.
================================================================================
AVERAGE ANNUAL TOTAL RETURN
As of 10/31/97 including sales charges
CLASS A SHARES
1 Year 22.54%
5 Years 16.74
10 Years 14.97
CLASS B SHARES
1 Year 23.81
Inception (10/1/96) 23.82
CLASS C SHARES
Inception (8/4/97) -4.03
================================================================================
Your Fund's total return includes sales charges, expenses, and management fees.
For Fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-92.62%
AIR FREIGHT-0.48%
Federal Express Corp.(a) 55,000 $ 3,671,250
- --------------------------------------------------------------
AIRLINES-0.50%
Delta Air Lines, Inc. 38,000 3,828,500
- --------------------------------------------------------------
ALUMINUM-0.52%
Aluminum Company of America 55,000 4,015,000
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.48%
Fifth Third Bancorp 56,700 3,635,888
- --------------------------------------------------------------
NationsBank Corp. 64,000 3,832,000
- --------------------------------------------------------------
Norwest Corp. 120,000 3,847,500
- --------------------------------------------------------------
11,315,388
- --------------------------------------------------------------
BANKS (MONEY CENTER)-2.10%
Chase Manhattan Corp. 80,000 9,230,000
- --------------------------------------------------------------
Citicorp 55,000 6,878,438
- --------------------------------------------------------------
16,108,438
- --------------------------------------------------------------
BANKS (REGIONAL)-0.65%
State Street Corp. 90,000 5,017,500
- --------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-1.49%
Coca-Cola Co. (The) 170,000 9,605,000
- --------------------------------------------------------------
PepsiCo, Inc. 50,000 1,840,625
- --------------------------------------------------------------
11,445,625
- --------------------------------------------------------------
CHEMICALS-1.27%
Du Pont (E.I.) de Nemours & Co. 100,000 5,687,500
- --------------------------------------------------------------
Monsanto Co. 95,000 4,061,250
- --------------------------------------------------------------
9,748,750
- --------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.44%
Goodrich (B.F.) Co. 75,000 3,342,188
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.84%
Lucent Technologies, Inc. 70,000 5,770,625
- --------------------------------------------------------------
Motorola, Inc. 55,000 3,396,250
- --------------------------------------------------------------
Northern Telecom Ltd. (Canada) 55,000 4,932,813
- --------------------------------------------------------------
14,099,688
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-3.69%
Compaq Computer Corp.(a) 118,000 7,522,500
- --------------------------------------------------------------
Dell Computer Corp.(a) 81,600 6,538,200
- --------------------------------------------------------------
Hewlett-Packard Co. 60,000 3,701,250
- --------------------------------------------------------------
International Business Machines
Corp. 55,000 5,393,438
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-(CONTINUED)
Sun Microsystems, Inc.(a) 150,000 $ 5,137,500
- --------------------------------------------------------------
28,292,888
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.86%
Cisco Systems, Inc.(a) 80,000 6,562,500
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-1.98%
Computer Associates International,
Inc. 55,000 4,100,938
- --------------------------------------------------------------
Microsoft Corp.(a) 85,000 11,050,000
- --------------------------------------------------------------
15,150,938
- --------------------------------------------------------------
CONSUMER FINANCE-1.13%
Household International, Inc. 35,000 3,963,750
- --------------------------------------------------------------
SLM Holding Corp. 33,300 4,674,488
- --------------------------------------------------------------
8,638,238
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.77%
Cardinal Health, Inc. 80,000 5,940,000
- --------------------------------------------------------------
ELECTRIC COMPANIES-2.61%
Allegheny Energy, Inc. 185,000 5,226,250
- --------------------------------------------------------------
American Electric Power Co. 120,000 5,670,000
- --------------------------------------------------------------
CINergy Corp. 140,000 4,620,000
- --------------------------------------------------------------
Edison International 175,000 4,484,375
- --------------------------------------------------------------
20,000,625
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.14%
Emerson Electric Co. 71,000 3,723,063
- --------------------------------------------------------------
General Electric Co. 160,000 10,330,000
- --------------------------------------------------------------
Honeywell, Inc. 34,000 2,314,125
- --------------------------------------------------------------
16,367,188
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.37%
Perkin-Elmer Corp. 45,000 2,812,500
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-2.31%
Altera Corp.(a) 70,000 3,106,250
- --------------------------------------------------------------
Intel Corp. 95,000 7,315,000
- --------------------------------------------------------------
Texas Instruments, Inc. 68,000 7,254,750
- --------------------------------------------------------------
17,676,000
- --------------------------------------------------------------
ENTERTAINMENT-0.80%
Walt Disney Co. (The) 75,000 6,168,750
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS)-0.77%
Applied Materials, Inc.(a) 176,000 5,874,000
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-3.51%
Federal Home Loan Mortgage Corp. 110,000 $ 4,166,250
- --------------------------------------------------------------
Federal National Mortgage Association 125,000 6,054,688
- --------------------------------------------------------------
MGIC Investment Corp. 135,000 8,142,187
- --------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 175,000 8,575,000
- --------------------------------------------------------------
26,938,125
- --------------------------------------------------------------
FOODS-1.45%
ConAgra, Inc. 210,000 6,326,250
- --------------------------------------------------------------
Sara Lee Corp. 93,000 4,754,625
- --------------------------------------------------------------
11,080,875
- --------------------------------------------------------------
FOOTWEAR-0.57%
Adidas A.G. (Germany) 30,000 4,345,807
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-4.08%
Abbott Laboratories 65,000 3,985,313
- --------------------------------------------------------------
American Home Products Corp. 110,000 8,153,750
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 60,000 5,265,000
- --------------------------------------------------------------
Johnson & Johnson 105,000 6,024,375
- --------------------------------------------------------------
Warner-Lambert Co. 55,000 7,875,313
- --------------------------------------------------------------
31,303,751
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-3.75%
Lilly (Eli) & Co. 125,000 8,359,375
- --------------------------------------------------------------
Merck & Co., Inc. 110,000 9,817,500
- --------------------------------------------------------------
Pfizer, Inc. 150,000 10,612,500
- --------------------------------------------------------------
28,789,375
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.75%
HEALTHSOUTH Corp.(a) 225,000 5,751,562
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.24%
Baxter International Inc. 75,000 3,468,750
- --------------------------------------------------------------
Boston Scientific Corp.(a) 60,000 2,730,000
- --------------------------------------------------------------
Guidant Corp. 90,000 5,175,000
- --------------------------------------------------------------
Medtronic, Inc. 85,000 3,697,500
- --------------------------------------------------------------
Sybron International Corp.(a) 51,600 2,070,450
- --------------------------------------------------------------
17,141,700
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-2.02%
Colgate-Palmolive Co. 80,000 5,180,000
- --------------------------------------------------------------
Kimberly-Clark Corp. 80,000 4,155,000
- --------------------------------------------------------------
Procter & Gamble Co. (The) 90,000 6,120,000
- --------------------------------------------------------------
15,455,000
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.15%
Conseco Inc. 110,000 4,798,750
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-(CONTINUED)
Torchmark Corp. 100,000 $ 3,987,500
- --------------------------------------------------------------
8,786,250
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.82%
American International Group, Inc. 80,000 8,165,000
- --------------------------------------------------------------
CIGNA Corp. 35,000 5,433,750
- --------------------------------------------------------------
Travelers Group, Inc. 115,000 8,050,000
- --------------------------------------------------------------
21,648,750
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-1.68%
Allstate Corp. 105,000 8,708,437
- --------------------------------------------------------------
Progressive Corp. 40,000 4,170,000
- --------------------------------------------------------------
12,878,437
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.01%
Merrill Lynch & Co., Inc. 115,000 7,776,875
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-1.00%
Franklin Resources, Inc. 85,000 7,639,375
- --------------------------------------------------------------
LODGING (HOTELS)-1.61%
Carnival Corp.-Class A 170,000 8,245,000
- --------------------------------------------------------------
ITT Corp.(a) 55,000 4,107,812
- --------------------------------------------------------------
12,352,812
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.80%
Caterpillar Inc. 55,000 2,818,750
- --------------------------------------------------------------
Deere & Co. 105,000 5,525,625
- --------------------------------------------------------------
Ingersoll-Rand Co. 139,500 5,431,781
- --------------------------------------------------------------
13,776,156
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-3.48%
Corning Inc. 85,000 3,835,625
- --------------------------------------------------------------
Thermo Electron Corp.(a) 210,000 7,835,625
- --------------------------------------------------------------
Tyco International Ltd. 230,000 8,682,500
- --------------------------------------------------------------
United Technologies Corp. 90,000 6,300,000
- --------------------------------------------------------------
26,653,750
- --------------------------------------------------------------
NATURAL GAS-0.98%
El Paso Natural Gas Co. 125,000 7,492,187
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.20%
Danka Business Systems PLC-ADR
(United Kingdom) 40,700 1,505,900
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-3.19%
Exxon Corp. 150,000 9,215,625
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York shares (Netherlands) 160,000 8,420,000
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL (INTERNATIONAL INTEGRATED)-(CONTINUED)
Texaco, Inc. 120,000 $ 6,832,500
- --------------------------------------------------------------
24,468,125
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-1.78%
Halliburton Co. 90,000 5,366,250
- --------------------------------------------------------------
Schlumberger Ltd. 95,000 8,312,500
- --------------------------------------------------------------
13,678,750
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.52%
Apache Corp. 95,000 3,990,000
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.90%
Bowater, Inc. 85,000 3,554,062
- --------------------------------------------------------------
Mead Corp. 55,000 3,327,500
- --------------------------------------------------------------
6,881,562
- --------------------------------------------------------------
PERSONAL CARE-1.09%
Avon Products, Inc. 60,000 3,930,000
- --------------------------------------------------------------
Gillette Co. 50,000 4,453,125
- --------------------------------------------------------------
8,383,125
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.98%
Xerox Corp. 95,000 7,534,687
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.45%
CalEnergy, Inc.(a) 100,000 3,425,000
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.61%
New York Times Co.-Class A 85,000 4,653,750
- --------------------------------------------------------------
RAILROADS-0.42%
Canadian National Railway Co.
(Canada) 60,000 3,236,250
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.83%
Home Depot, Inc. 115,000 6,396,875
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.14%
CompUSA, Inc.(a) 140,000 4,585,000
- --------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 140,000 4,173,750
- --------------------------------------------------------------
8,758,750
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.53%
Kohl's Corp.(a) 60,000 4,027,500
- --------------------------------------------------------------
RETAIL (DRUG STORES)-1.53%
CVS Corp. 85,000 5,211,562
- --------------------------------------------------------------
Rite Aid Corp. 110,000 6,531,250
- --------------------------------------------------------------
11,742,812
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.32%
Kroger Co.(a) 150,000 4,893,750
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-(CONTINUED)
Safeway, Inc.(a) 90,000 $ 5,231,250
- --------------------------------------------------------------
10,125,000
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.54%
Costco Companies, Inc.(a) 160,000 6,160,000
- --------------------------------------------------------------
Wal-Mart Stores, Inc. 160,000 5,620,000
- --------------------------------------------------------------
11,780,000
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.38%
Toys "R" Us, Inc.(a) 85,000 2,895,312
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.54%
TJX Companies, Inc. (The) 140,000 4,147,500
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.61%
Ahmanson (H.F.) & Co. 105,000 6,195,000
- --------------------------------------------------------------
Washington Mutual, Inc. 90,000 6,159,375
- --------------------------------------------------------------
12,354,375
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.50%
Interpublic Group of Companies, Inc. 80,000 3,800,000
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.16%
HFS, Inc.(a) 105,000 7,402,500
- --------------------------------------------------------------
Service Corp. International 300,000 9,131,250
- --------------------------------------------------------------
16,533,750
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.33%
Equifax, Inc. 250,000 7,765,625
- --------------------------------------------------------------
First Data Corp. 165,000 4,795,312
- --------------------------------------------------------------
Fiserv, Inc.(a) 119,000 5,325,250
- --------------------------------------------------------------
17,886,187
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.32%
WorldCom, Inc.(a) 300,000 10,087,500
- --------------------------------------------------------------
TELEPHONE-2.41%
BellSouth Corp. 130,000 6,150,625
- --------------------------------------------------------------
Cincinnati Bell, Inc. 210,000 5,670,000
- --------------------------------------------------------------
SBC Communications, Inc. 105,000 6,680,625
- --------------------------------------------------------------
18,501,250
- --------------------------------------------------------------
TOBACCO-1.65%
Philip Morris Companies, Inc. 320,000 12,680,000
- --------------------------------------------------------------
WASTE MANAGEMENT-0.59%
Browning-Ferris Industries, Inc. 140,000 4,550,000
- --------------------------------------------------------------
Total Common Stocks 709,910,701
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY BILLS-4.61%(b)
5.093%, 01/02/98 $35,635,000(c) $ 35,350,632
- --------------------------------------------------------------
REPURCHASE AGREEMENT-2.03%(d)
SBC Warburg Inc., 5.65%,
11/03/97(e) 15,547,344 15,547,344
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.26% 760,808,677
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.74% 5,653,936
- --------------------------------------------------------------
NET ASSETS-100.00% $766,462,613
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) U. S. Treasury bills are traded on a discount. In such cases the interest
rate shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(d) 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 insure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$350,164,792. Collateralized by $355,329,000 U.S. Government obligations,
7.00% to 9.875% due 11/15/15 to 10/01/27 with an aggregate market value at
10/31/97 of $359,463,470.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$649,808,633) $760,808,677
- --------------------------------------------------------
Foreign currencies, at market value (cost
$8,858) 9,027
- --------------------------------------------------------
Receivables for:
Investments sold 82,523
- --------------------------------------------------------
Capital stock sold 8,460,104
- --------------------------------------------------------
Dividends and interest 436,117
- --------------------------------------------------------
Variation margin 783,750
- --------------------------------------------------------
Investment for deferred compensation plan 6,203
- --------------------------------------------------------
Other assets 64,526
- --------------------------------------------------------
Total assets 770,650,927
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,692,125
- --------------------------------------------------------
Capital stock reacquired 1,153,581
- --------------------------------------------------------
Deferred compensation 6,203
- --------------------------------------------------------
Accrued advisory fees 668,541
- --------------------------------------------------------
Accrued administrative service fees 7,205
- --------------------------------------------------------
Accrued directors' fees 3,732
- --------------------------------------------------------
Accrued distribution fees 377,470
- --------------------------------------------------------
Accrued transfer agent fees 178,284
- --------------------------------------------------------
Accrued operating expenses 101,173
- --------------------------------------------------------
Total liabilities 4,188,314
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $766,462,613
========================================================
NET ASSETS:
Class A $498,178,315
========================================================
Class B $264,337,181
========================================================
Class C $ 3,947,117
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 16,091,502
========================================================
Class B:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 8,594,415
========================================================
Class C:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 128,351
========================================================
CLASS A:
Net asset value and redemption price per
share $ 30.96
========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $30.96 divided
by 94.50%) $ 32.76
========================================================
CLASS B:
Net asset value and offering price per
share $ 30.76
========================================================
CLASS C:
Net asset value and offering price per
share $ 30.75
========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $34,796 foreign
withholding tax) $ 5,144,832
- --------------------------------------------------------
Interest 2,993,589
- --------------------------------------------------------
Total investment income 8,138,421
- --------------------------------------------------------
EXPENSES:
Advisory fees 3,254,853
- --------------------------------------------------------
Custodian fees 69,458
- --------------------------------------------------------
Directors' fees 9,788
- --------------------------------------------------------
Distribution fees -- Class A 1,128,115
- --------------------------------------------------------
Distribution fees -- Class B 1,268,502
- --------------------------------------------------------
Distribution fees -- Class C 4,842
- --------------------------------------------------------
Transfer agent fees -- Class A 516,695
- --------------------------------------------------------
Transfer agent fees -- Class B 386,081
- --------------------------------------------------------
Transfer agent fees -- Class C 1,447
- --------------------------------------------------------
Administrative service fees 73,653
- --------------------------------------------------------
Other 272,781
- --------------------------------------------------------
Total expenses 6,986,215
- --------------------------------------------------------
Less: Fees waived by advisor (100,380)
- --------------------------------------------------------
Expenses paid indirectly (10,722)
- --------------------------------------------------------
Net expenses 6,875,113
- --------------------------------------------------------
Net investment income 1,263,308
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FUTURES CONTRACTS:
Net realized gain on sales of:
Investment securities 11,511,488
- --------------------------------------------------------
Foreign currencies 8,772
- --------------------------------------------------------
Futures contracts 5,311,129
- --------------------------------------------------------
16,831,389
- --------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 83,738,179
- --------------------------------------------------------
Foreign currencies 157
- --------------------------------------------------------
Futures contracts (951,557)
- --------------------------------------------------------
82,786,779
- --------------------------------------------------------
Net gain on investment securities, foreign
currencies and futures contracts 99,618,168
- --------------------------------------------------------
Net increase in net assets resulting from
operations $100,881,476
========================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 1997, the one month ended October 31, 1996 and
the year ended September 30, 1996
<TABLE>
<CAPTION>
ONE MONTH
ENDED
OCTOBER 31, OCTOBER 31, SEPTEMBER 30,
1997 1996 1996
------------ ------------ -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,263,308 $ 7,068 $ 413,986
- -----------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies and futures contracts 16,831,389 1,953,887 17,138,864
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures contracts 82,786,779 254,588 (1,172,983)
- -----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 100,881,476 2,215,543 16,379,867
- -----------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (271,127) -- (616,045)
- -----------------------------------------------------------------------------------------------------------
Class B (24,561) -- --
- -----------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (12,005,450) -- (8,878,928)
- -----------------------------------------------------------------------------------------------------------
Class B (1,655,534) -- --
- -----------------------------------------------------------------------------------------------------------
Capital stock transactions -- net:
Class A 314,611,429 11,821,515 28,205,736
- -----------------------------------------------------------------------------------------------------------
Class B 232,350,533 8,096,586 --
- -----------------------------------------------------------------------------------------------------------
Class C 4,027,493 -- --
- -----------------------------------------------------------------------------------------------------------
Net increase in net assets 637,914,259 22,133,644 35,090,630
- -----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 128,548,354 106,414,710 71,324,080
- -----------------------------------------------------------------------------------------------------------
End of period $766,462,613 $128,548,354 $106,414,710
===========================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $638,472,344 $ 87,482,889 $ 67,564,788
- -----------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,185,397 209,005 201,937
- -----------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies and futures contracts 16,786,046 13,624,413 11,670,526
- -----------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 110,018,826 27,232,047 26,977,459
- -----------------------------------------------------------------------------------------------------------
$766,462,613 $128,548,354 $106,414,710
===========================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip Fund (the "Fund") is a series portfolio of AIM Equity Funds, Inc.
(the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of six diversified portfolios:
AIM Blue Chip Fund, AIM Aggressive Growth Fund, AIM Capital Development Fund,
AIM Charter Fund, AIM Constellation Fund, and AIM Weingarten Fund. The Fund
currently offers three different classes of shares: the Class A shares, Class B
shares and the Class C shares. Class C shares commenced sales on August 4, 1997.
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 such shareholders. The
assets, liabilities and operations of each portfolio are accounted for
separately. The Fund's investment objective is long-term growth of capital.
Information presented in these financial statements pertains only to the Fund.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. 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.
10
<PAGE> 13
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last price on the exchange where the
security is principally traded, or lacking any sales on a particular day, the
security is valued at the mean between the closing bid and asked prices on
that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices based upon quotes furnished
by market makers for such securities. If a mean is not available, as in the
case of some foreign markets, the closing bid will be used absent a last
sales price. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date or absent a last sales
price, at the mean of the closing bid and asked prices. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Company's officers in a manner specifically authorized
by the Board of Directors of the Company. Short-term obligations having 60
days or less to maturity are valued at amortized cost which approximates
market value. Generally, trading in foreign securities is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the New
York Stock Exchange. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which they
are determined and the close of the New York Stock Exchange which will not be
reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair market value as determined
in good faith by or under the supervision of the Board of Directors.
B. 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.
C. 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.
D. Securities Transactions, Investment Income and Distributions--Securities
transactions are recorded on a trade date basis. Realized gains or losses on
sales are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date paid annually. On October
31, 1997, undistributed net investment income was increased by $8,772 and
undistributed net realized gains decreased by $8,772 in order to comply with
the requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
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.
F. 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 or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to market"
on a daily basis to reflect the market value of the contracts at the end of
each day's trading. Variation margin payments are made or received depending
upon whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the Fund's
basis in the contract. Risks include the possibility of an illiquid market
and that a change in the value of contracts may not correlate with changes in
the value of the securities being hedged.
G. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated between the
classes.
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 for two years to the extent necessary to keep the annual
expense ratio for Class A shares at 1.31% for such period. During the year ended
October 31, 1997, AIM voluntarily waived advisory fees in the amounts of
$100,380.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1997, AIM was
reimbursed $73,653 for such services.
11
<PAGE> 14
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Fund. During the year ended October 31, 1997,
AFS was paid $497,304 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of 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 (the "Class A Plan"), the Fund's Class B shares (the "Class B Plan")
and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans").
The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual
rate of 0.35% of the average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class C shares. The Plan is designed to compensate
AIM Distributors for certain promotional and other sales related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. 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 this amount, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class B shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class B shares of the Fund. Any amounts not paid
as a service fee under such 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 assignees, its
rights to all or a 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 payable to AIM Distributors related to the Class B shares. During the
year ended October 31, 1997 for the Class A shares and Class B shares and the
period August 4, 1997 (date sales commenced) through October 31, 1997 the Class
C shares paid AIM Distributors $1,128,115, $1,268,502, and $4,842 respectively,
as compensation pursuant to the Plans.
AIM Distributors received commissions of $1,139,512 from sales of Class A
shares of the Fund during the year ended October 31, 1997. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1997,
AIM Distributors received commissions of $50,289 in contingent deferred sales
charges imposed on redemption of Fund Shares. Certain officers and directors of
the Company are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 1997, the Fund paid legal fees of $4,723,
respectively, 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
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $2,729 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodial fees of $5,443 and $2,550, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $10,722 during the year ended October
31, 1997.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $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.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1997 was $677,575,974 and
$167,965,875, respectively.
The amount of unrealized appreciation (depreciation) of investment securities on
a tax basis is as follows:
<TABLE>
<CAPTION>
<S> <C>
Aggregate unrealized appreciation
of investment securities $119,477,923
- -------------------------------------------------
Aggregate unrealized (depreciation)
of investment securities (8,899,599)
- -------------------------------------------------
Net unrealized appreciation of
investment securities $110,578,324
=================================================
</TABLE>
Costs of investments for tax purposes is $650,230,353.
12
<PAGE> 15
NOTE 7-FUTURES CONTRACTS
On October 31, 1997, $1,451,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF MONTH/ APPRECIATION/
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- --------- ---------- --------------
<S> <C> <C> <C>
S&P 500 Index 75 Dec. '97 $ (981,375)
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in capital stock outstanding during the year ended October 31, 1997,
the one month ended October 31, 1996 and the year ended September 30, 1996 were
as follows:
<TABLE>
<CAPTION>
OCTOBER 31, 1997 OCTOBER 31, 1996 SEPTEMBER 30, 1996
-------------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sold:
Class A 16,335,583 $ 455,558,096 620,358 $16,142,093 1,504,902 $36,636,393
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 8,938,415 251,600,263 313,256 8,163,778 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C* 130,145 4,084,511 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 475,797 11,419,078 -- -- 178,537 4,200,245
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 59,879 1,437,104 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (5,338,702) (152,365,745) (165,098) (4,320,578) (513,296) (12,630,902)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (714,558) (20,686,834) (2,577) (67,192) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C* (1,794) (57,018) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
19,884,765 $ 550,989,455 765,939 $19,918,101 1,170,143 $28,205,736
=================================================================================================================================
</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 year ended October 31, 1997, the one month ended October
31, 1996 and each of the years in the four-year period ended September 30, 1996,
for a share of Class B capital stock outstanding during 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 period
August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
OCTOBER 31, SEPTEMBER 30,
-------------------------- ---------------------------------------------
1997 1996 1996(a) 1995 1994 1993
CLASS A: --------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.08 $ 25.56 $ 23.83 $ 19.22 $ 18.89 $ 18.24
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Income from investment operations:
Net investment income 0.17(b) -- 0.33 0.14 0.15 0.19
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Net gains on securities (both realized and
unrealized) 6.93 0.52 4.61 5.05 1.24 0.63
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Total from investment operations 7.10 0.52 4.94 5.19 1.39 0.82
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.05) -- (0.21) (0.12) (0.21) (0.17)
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Distributions from net realized gains (2.17) -- (3.00) (0.46) (0.85) --
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Total distributions (2.22) -- (3.21) (0.58) (1.06) (0.17)
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Net asset value, end of period $ 30.96 $ 26.08 $ 25.56 $ 23.83 $ 19.22 $ 18.89
================================================ ========= ========= ========= ======== ======== ========
Total return(c) 29.68% 2.04% 22.39% 27.84% 7.69% 4.54%
================================================ ========= ========= ========= ======== ======== ========
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 498,178 $ 120,448 $ 106,415 $ 71,324 $ 60,115 $ 65,112
================================================ ========= ========= ========= ======== ======== ========
Ratio of expenses to average net assets(d) 1.31%(e)(f) 1.30%(g) 1.26% 1.3% 1.4% 1.3%
================================================ ========= ========= ========= ======== ======== ========
Ratio of net investment income to average net
assets(h) 0.50%(e) 0.12%(g) 0.53% 0.7% 0.8% 1.0%
================================================ ========= ========= ========= ======== ======== ========
Portfolio turnover rate 43% 10% 58% 17% 13% 25%
================================================ ========= ========= ========= ======== ======== ========
Average brokerage commission rate paid(i) $ 0.0619 $ 0.0665 $ 0.0696 N/A N/A N/A
================================================ ========= ========= ========= ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 3, 1996.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.32%, 1.37% (annualized) and 1.28% for the periods 1997-1996, and September
30, 1996, respectively.
(e) Ratios are based on average net assets of $322,318,404.
(f) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(g) Annualized.
(h) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 0.49%, 0.05% (annualized) and 0.51% for the periods
1997-1996 and September 30, 1996, respectively.
(i) 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, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
13
<PAGE> 16
<TABLE>
<CAPTION>
1997 1996
CLASS B: -------- --------
<S> <C> <C>
Net asset value, beginning of period $ 26.07 $ 25.56
- ------------------------------------------------------------ -------- --------
Income from investment operations:
Net investment income (0.03)(a) (0.01)
- ------------------------------------------------------------ -------- --------
Net gains on securities (both realized and unrealized) 6.92 0.52
- ------------------------------------------------------------ -------- --------
Total from investment operations 6.89 0.51
- ------------------------------------------------------------ -------- --------
Less distributions:
Dividends from net investment income (0.03) --
- ------------------------------------------------------------ -------- --------
Distributions from net realized gains (2.17) --
- ------------------------------------------------------------ -------- --------
Total distributions (2.20) --
- ------------------------------------------------------------ ======== ========
Net asset value, end of period $ 30.76 $ 26.07
============================================================ ======== ========
Total return(b) 28.81% 2.00%
============================================================ ======== ========
Ratios/supplement data:
Net assets, end of period (000s omitted) $264,337 $ 8,101
============================================================ ======== ========
Ratio of expenses to average net assets(c) 2.09%(d)(e) 2.01%(f)
============================================================ ======== ========
Ratio of net investment income (loss) to average net
assets(g) (0.28)%(d) (0.58)%(f)
============================================================ ======== ========
Portfolio turnover rate 43% 10%
============================================================ ======== ========
Average brokerage commission rate paid(h) $ 0.0619 $ 0.0665
============================================================ ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.12% and 2.08% (annualized) for the periods 1997-1996, respectively.
(d) Ratios are based on average net assets of $126,850,228.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been
2.10%.
(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 (0.31)% and (0.65)% (annualized) for the periods
1997-1996, respectively.
(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, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
1997
CLASS C: ----------
<S> <C>
Net asset value, beginning of period $ 31.72
- ------------------------------------------------------------ --------
Income from investment operations:
Net investment income (0.01)(a)
- ------------------------------------------------------------ --------
Net gains (losses) on securities (both realized and
unrealized) (0.96)
- ------------------------------------------------------------ --------
Total from investment operations (0.97)
- ------------------------------------------------------------ --------
Less distributions:
Dividends from net investment income --
- ------------------------------------------------------------ --------
Distributions from net realized gains --
- ------------------------------------------------------------ --------
Total distributions --
============================================================ ========
Net asset value, end of period $ 30.75
============================================================ ========
Total return(b) (3.06)%
============================================================ ========
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 3,947
============================================================ ========
Ratio of expenses to average net assets(c) 2.09%(d)(e)
============================================================ ========
Ratio of net investment income (loss) to average net
assets(f) (0.28)%(d)
============================================================ ========
Portfolio turnover rate 43%
============================================================ ========
Average brokerage commission rate paid(g) $ 0.0619
============================================================ ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one
year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of
expenses to average net assets prior to fee waivers and/or
expense reimbursements was 2.12% (annualized).
(d) Ratios are annualized and based on average net assets of
$1,985,899.
(e) Ratio includes expenses paid indirectly. Excluding expenses
paid indirectly, the ratio of expenses to average net assets
would have remained the same.
(f) After fee waivers and/or expense reimbursements. Ratio of
net investment income (loss) to average net assets prior to
fee waivers and/or expense reimbursements was (0.31)%
annualized).
(g) 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, which is required to be
disclosed for fiscal years beginning September 1, 1995 and
thereafter.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Blue Chip Fund:
We have audited the accompanying statements of assets and
liabilities of AIM Blue Chip Fund (a portfolio of AIM
Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1997, the related statement
of operations for the year then ended, the statement of
changes in net assets and financial highlights for the
year ended October 31, 1997, the one month period ended
October 31, 1996, and the year ended September 30, 1996.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
The financial highlights for each of the years in the
three year period ended September 30, 1995 were audited by
other auditors whose report thereon, dated October 25,
1995, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1997, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM Blue
Chip Fund as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net
assets and financial highlights for the year ended October
31, 1997, the one-month ended October 31, 1996, and the
year ended September 30, 1996 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
15
<PAGE> 18
SUPPLEMENTAL PROXY INFORMATION
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of the AIM Equity Funds, Inc. (the "Company")
was held on February 7, 1997 at the offices of A I M Management Group Inc., 11
Greenway Plaza, Houston, Texas. The meeting was held for the following purposes:
(1) To elect Directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson and Louis S. Sklar.
(2) To approve a new Master Investment Advisory Agreement between the AIM Blue
Chip Fund (the "Fund") and A I M Advisors, Inc.
(3) To ratify the selection of KPMG Peat Marwick LLP as independent accountants
for the Fund for the Company's fiscal year ending October 31, 1997.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Votes Withhold/
Director/Matter Votes For Against Abstentions
--------------- --------- ------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 618,811,245 N/A 19,923,485
Bruce L. Crockett........................................... 619,427,685 N/A 19,307,045
Owen Daly II................................................ 618,919,919 N/A 19,814,811
Carl Frischling............................................. 619,275,356 N/A 19,459,374
Robert H. Graham............................................ 619,431,576 N/A 19,303,154
John F. Kroeger............................................. 618,878,096 N/A 19,856,634
Lewis F. Pennock............................................ 619,272,998 N/A 19,461,732
Ian W. Robinson............................................. 618,944,840 N/A 19,789,890
Louis S. Sklar.............................................. 619,462,714 N/A 19,272,016
(2) Approval of Master Investment Advisory Agreement............ 4,528,722 62,834 129,363
(3) KPMG Peat Marwick LLP....................................... 609,690,634 5,519,782 23,524,314
</TABLE>
16
<PAGE> 19
Directors & Officers
<TABLE>
<S> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director,
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Chief Senior Vice President and Treasurer 11 Greenway Plaza
Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Carol F. Relihan
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
and Secretary P.O. Box 4739
Jack Fields Houston, TX 77210-4739
Formerly Member of the Jonathan C. Schoolar
U.S. House of Representatives Vice President CUSTODIAN
Carl Frischling Melville B. Cox State Street Bank & Trust Company
Partner Vice President 225 Franklin Street
Kramer, Levin, Naftalis & Frankel Boston, MA 02110
Dana R. Sutton
Robert H. Graham Vice President and Assistant Treasurer COUNSEL TO THE FUND
President and Chief Executive Officer
A I M Management Group Inc. P. Michelle Grace Ballard Spahr
Assistant Secretary Andrews & Ingersoll
John F. Kroeger 1735 Market Street
Formerly Consultant Nancy L. Martin Philadelphia, PA 19103
Wendell & Stockel Associates, Inc. Assistant Secretary
COUNSEL TO THE DIRECTORS
Lewis F. Pennock Ofelia M. Mayo
Attorney Assistant Secretary Kramer, Levin, Naftalis & Frankel
919 Third Avenue
Ian W. Robinson Kathleen J. Pflueger New York, NY 10022
Consultant; Formerly Executive Assistant Secretary
Vice President and DISTRIBUTOR
Chief Financial Officer Samuel D. Sirko
Bell Atlantic Management Assistant Secretary A I M Distributors, Inc.
Services, Inc. 11 Greenway Plaza
Stephen I. Winer Suite 100
Louis S. Sklar Assistant Secretary Houston, TX 77046
Executive Vice President
Hines Interests Mary J. Benson AUDITORS
Limited Partnership Assistant Treasurer
KPMG Peat Marwick LLP
700 Louisiana
Houston, TX 77002
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Blue Chip Fund Class A and Class B shares paid ordinary dividends in the
amount of $0.122 and $0.032, respectively, to shareholders during the Fund's tax
year ended October 31, 1997. Of these amounts, 100% is eligible for the
dividends received deduction for corporations. The Fund also distributed
long-term capital gains of $2.168 per share for Class A and Class B shares
during the year ended October 31, 1997.
STATE TAX INFORMATION
Of the total ordinary dividends paid, 22.69% for Class A shares and Class B
shares were derived from U.S. Treasury obligations.
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH OF CAPITAL
AIM Advisor International Value Fund
[PHOTO OF AIM Blue Chip Fund
11 GREENWAY PLAZA AIM Global Growth Fund
APPEARS HERE] AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
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
HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
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 leadership in the *AIM Aggressive Growth Fund was closed to new investors on
mutual fund industry since 1976 and managed approximately June 5, 1997. For more complete information about any AIM
$82 billion in assets for more than 3.6 million shareholders, Fund(s), including sales charges and expenses, ask your
including individual investors, corporate clients, and financial financial consultant or securities dealer for a free
institutions as of September 30, 1997. The AIM Family of prospectus(es). Please read the prospectus(es) carefully
Funds--Registered Trademark-- is distributed nationwide, and before you invest or send money.
AIM today ranks among the nation's top 15 mutual fund
companies in assets under management, according to Lipper INVEST WITH DISCIPLINE(SM)
Analytical Services, Inc.
[AIM LOGO APPEARS HERE] -----------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 100 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
-----------------
</TABLE>
