<PAGE> 1
SEMIANNUAL REPORT / APRIL 30 1999
AIM CAPITAL DEVELOPMENT FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
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UNION SQUARE GREENMARKET BY PATTI MOLLICA
SMALL-BUSINESS ENTERPRISES ARE FREQUENTLY FOUND NESTLED AMONG TALL SKYSCRAPERS
HOUSING LARGE MULTINATIONAL CORPORATIONS. SOME OF THESE SMALLER BUSINESSES
EVENTUALLY CARVE OUT THEIR OWN PARTICULAR NICHES IN THE MARKET AND EXPERIENCE
STRONG EARNINGS GROWTH. THAT'S THE KIND OF COMPANY WE ENDEAVOR TO OWN IN AIM
CAPITAL DEVELOPMENT FUND, SMALL FIRMS WITH STRONG LONG-TERM GROWTH PROSPECTS.
-----------------------------------------------
AIM Capital Development Fund is for shareholders who seek long-term growth
through investments in the stocks of small-and medium-size companies.
ABOUT FUND PERFORMANCE AND PORTFOLIO 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.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differences in sales charge structure and
expenses.
o The Fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Investing in smaller companies may involve greater risk and potential reward
than investing in more established companies.
o The Fund's average annual total returns, including sales charges, for the
periods ended 4/30/99 are as follows: For Class A shares, one year, -20.14%;
since inception (6/17/96), 10.48%. For Class B shares, one year, -20.33%;
since inception (10/1/97), 7.24%. For Class C shares, one year, -16.99%;
since inception (8/4/97), 1.40%.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Small Cap Funds Index represents an average of the
performance of the 30 largest small-capitalization growth funds.
o The unmanaged Russell 2000 Index is generally considered representative of
the performance of stocks of small-capitalization companies.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF
AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons who
have received a current prospectus of the Fund.
AIM CAPITAL DEVELOPMENT FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
[PHOTO OF With only several months remaining in 1999, the question on
Charles T. many of your minds may be, "How will the year 2000 computer
Bauer, issue affect AIM and my investments?" We would like you to
Chairman of feel comfortable.
the Board of During March and April, AIM participated in an
THE FUND industrywide test that gave us a chance to see how our
APPEARS HERE] technology systems might be affected by the changeover to
the year 2000 (Y2K). Everything went as well as we had
hoped; in general, the industry sailed through the testing
process with flying colors. The financial industry has been
seen as a leader in planning for year 2000 concerns. Thus,
it was no surprise to most participants that the test was an
overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in
the United States and to follow transactions through a
typical trading cycle--from order entry to the settlement process. Investment
banks, broker-dealers, custodian banks and mutual-fund companies all worked
together to make this possible. Approximately 400 firms were involved in the
testing; AIM was one of 70 asset managers.
THE FINANCIAL INDUSTRY HAS BEEN SEEN AS A LEADER IN PLANNING FOR YEAR 2000
CONCERNS.
TEST RESULTS EXCELLENT
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing
the year 2000 issue for several years. During 1998, we made substantial
progress on our preparations. We are now in the final phases of the project,
continually testing internal applications and our interfaces with outside
parties. On the investment side, our portfolio-management staff is evaluating
the Y2K preparedness of the companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if there are
unexpected problems. Our plans will give AIM employees guidelines to follow for
a wide variety of situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance over
the last six months. If you have any questions or comments, please contact our
Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--. We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-----------------------------------------------
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
-----------------------------------------------
AIM CAPITAL DEVELOPMENT FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
FUND RECORDS RESPECTABLE GAINS AS
MARKET ENVIRONMENT IMPROVES
SMALL-CAP STOCKS MADE A COMEBACK DURING THE REPORTING PERIOD. HOW DID AIM
CAPITAL DEVELOPMENT FUND PERFORM?
An upswing in the performance of small-cap stocks boosted the Fund's gains for
the six months ended April 30, 1999. Excluding sales charges, cumulative total
returns were 9.23%, 8.82%, and 8.83% for Class A, B, and C shares, respectively.
WHAT WERE SOME OF THE KEY TRENDS IN THE STOCK MARKET IN GENERAL?
The venerable Dow Jones Industrial Average (the Dow) achieved a milestone on
March 29, 1999, when it closed above the 10,000 mark for the first time.
However, this record-setting performance masked a very narrow market. The stocks
of a handful of extremely large firms--the so-called "mega-caps"--along with the
equities of fledgling Internet companies, including several that have yet to
realize a profit, outperformed other issues by a wide margin.
In a world of economic uncertainty, exemplified by the Brazilian currency
crisis in January, U.S. investors favored mega-cap stocks because of their
relative safety and liquidity. Internet stocks were attractive because of the
growth of the Web as a medium of commerce, communication and entertainment.
Toward the end of the reporting period, however, relatively expensive mega-cap
and Internet stocks lost some of their luster. Investors shifted their focus to
mid- and small-cap stocks and to equities that were undervalued relative to the
rest of the market.
================================================================================
[BAR CHART]
YOUR FUND'S PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM Capital Development Fund
Class A Shares vs. Benchmark Indexes
6/17/96-4/30/99
$13,308
$12,972
$11,528
AIM CAPITAL RUSSELL LIPPER
DEVELOPMENT 2000 INDEX SMALL CAP
FUND CLASS FUNDS INDEX
A SHARES
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.
Past performance cannot guarantee comparable future results.
================================================================================
HOW DID SMALL-CAP STOCKS FARE?
When the reporting period began, small-cap stocks were rebounding strongly
following a steep decline that lasted several months. The recovery continued
into 1999 before sustaining a significant setback in February when investors
became concerned that the Federal Reserve Board (the Fed) might raise interest
rates to slow strong economic growth and contain inflation. However, when it
became evident that inflation was minimal and the Fed would likely leave
interest rates unchanged for the near term, small-cap stocks rallied in April.
The rally in the small-cap market also tended to be relatively narrow. The
strong showing of Internet stocks was responsible for a significant portion of
the Russell 2000 Index's gains during the reporting period.
HOW WAS THE PORTFOLIO STRUCTURED AT THE END OF THE REPORTING PERIOD?
The Fund had about 300 holdings, nearly 100 fewer than at the beginning of the
reporting period. We continued to sell the stocks of companies that failed to
meet our earnings criteria and to focus on the stocks of firms we believe have
strong, long-term growth potential.
We continued to emphasize the consumer-cyclical and technology sectors. As
of April 30, 1999, consumer-cyclical and technology stocks composed about 24%
and 20% of the portfolio, respectively. Both these figures represent slight
decreases from the outset of the reporting period.
WHAT WERE SOME OF THE TRENDS IN THE CONSUMER-CYCLICAL SECTOR?
Low unemployment, rising wages and minimal inflation meant healthy consumer
spending. That was great news for the consumer-cyclical sector, a broad category
that includes advertising, restaurants, airlines, hotels and certain retailers.
This sector usually thrives when economic growth is healthy.
Consumer cyclical stocks that performed well for the Fund included CEC
Entertainment, operator of the popular Chuck E. Cheese restaurants. The company,
which has more than 330 outlets in 44 states, reported strong first-quarter
earnings growth. The Fund also benefited from owning the stocks of Lamar
Advertising, which uses billboards, benches and displays on buses to convey
commercial messages, and Linens `N Things, the nation's second largest
household-goods chain, which operates nearly 200 stores in 38 states.
HOW DID TECHNOLOGY STOCKS PERFORM?
The performance of technology stocks, stellar in 1998, fell off in the initial
months of 1999 as investors shifted their focus to other sectors. Many Internet
companies did not meet our earnings criteria for ownership of their stocks. They
had no earnings. Moreover, in some instances, their market capitalizations
quickly reached the point where they no longer qualified for inclusion in a fund
that invests primarily in smaller companies.
The Fund's technology holdings included Comverse Technology, a manufacturer
-----------------------------------------------
See important Fund and index disclosures inside front cover.
AIM CAPITAL DEVELOPMENT FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
<TABLE>
<CAPTION>
=============================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Quanta Services, Inc. 0.76% 1. Services (Commercial & Consumer) 8.46%
2. Comverse Technology, Inc. 0.73 2. Computers (Software & Services) 5.18
3. Stewart Enterprises, Inc. - Class A 0.71 3. Retail (Specialty) 4.86
4. BISYS Group, Inc. 0.71 4. Services (Advertising/Marketing) 4.25
5. Linens `N Things, Inc. 0.66 5. Health Care (Specialized Services) 3.53
6. CSG Systems International, Inc. 0.65 6. Services (Data Processing) 3.25
7. CEC Entertainment Inc. 0.65 7. Broadcasting (Television, Radio & Cable) 3.20
8. Lamar Advertising Co. 0.64 8. Electrical Equipment 2.73
9. Mettler-Toledo International Inc. 0.61 9. Communications Equipment 2.61
10. DSP Communications, Inc. 0.61 10. Oil & Gas (Exploration & Production) 2.15
The Fund's portfolio is subject to change, and there is no assurance that the
Fund will continue to hold any particular security.
=============================================================================================================
</TABLE>
of enhanced telecommunications systems; DSP Communications, which makes and
markets digital signal-processing software and other wireless communications
technologies; and the BISYS Group, which provides outsourcing services for more
than 6,000 financial institutions and corporations in the United States.
WHAT OTHER STOCKS DID YOU LIKE?
Quanta Services, the Fund's top holding, designs, installs and maintains
traffic-control lights and highway lighting. The firm also installs lines for
electrical utilities, cellular-telephone service providers and cable television
companies. Mettler-Toledo International makes precision weighing instruments
such as scales, balances and meters.
WHAT IS YOUR OUTLOOK?
We continue to be upbeat about the long-term prospects for small-cap stocks.
Many smaller companies are enjoying greater earnings growth than their larger
counterparts. Moreover, most smaller companies transact the majority of their
business in the United States and are thus less susceptible to downturns in
foreign markets. The strong economic growth in the United States could bode well
for the continued profitability of many smaller companies.
Additionally, small-cap stocks remain favorably priced in comparison to
large-cap issues. That could continue to make them attractive to investors.
One ominous development was the dramatic and unexpected rise of the
inflation rate in April, which was disclosed after the reporting period ended.
For several years, inflation and interest rates have been low. If inflation
resurfaces as a threat, the Fed may raise interest rates, which could have a
negative effect on stock performance.
Regardless of economic trends, we will strive to select reasonably priced
stocks of smaller companies with outstanding growth prospects for inclusion in
the Fund's portfolio.
MERGERS, ACQUISITIONS AND "GRADUATES" SCOREBOARD
We believe the nearly incessant wave of mergers and acquisitions involving
companies in the Fund's portfolio attests to the attractiveness of these firms.
In 1998, 42 companies in the portfolio were involved in mergers or acquisitions,
generally boosting their stock prices. During the first four months of 1999,
another nine companies in the portfolio were involved in acquisitions or
mergers. From the Fund's inception on June 17, 1996, through the end of the
latest reporting period, 116 companies represented in the portfolio have been
acquired or merged with other firms.
We also sold the stocks of companies when they exceeded $10 billion in
market valuation and could no longer be considered smaller companies. In 1998,
there were 25 "graduates" from the Fund, while in the first four months of 1999,
there were four.
-----------------------------------------------
See important Fund and index disclosures inside front cover.
AIM CAPITAL DEVELOPMENT FUND
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-96.01%
AEROSPACE/DEFENSE-0.93%
HEICO Corp. 200,000 $ 4,212,500
- ---------------------------------------------------------------
Kroll-O'Gara Co. (The)(a) 160,000 3,830,000
- ---------------------------------------------------------------
TriStar Aerospace Co.(a) 275,000 2,921,875
===============================================================
10,964,375
===============================================================
AIRLINES-0.87%
Atlantic Coast Airlines
Holdings(a) 190,000 5,866,250
- ---------------------------------------------------------------
Ryanair Holdings PLC-ADR
(Ireland)(a) 100,000 4,475,000
===============================================================
10,341,250
===============================================================
AUTO PARTS & EQUIPMENT-0.98%
Dura Automotive Systems, Inc.(a) 160,000 4,580,000
- ---------------------------------------------------------------
Keystone Automotive Industries,
Inc.(a) 187,900 2,818,500
- ---------------------------------------------------------------
Stoneridge, Inc.(a) 251,300 4,209,275
===============================================================
11,607,775
===============================================================
BANKS (REGIONAL)-1.96%
Banco Santandr Puerto Rico 186,300 3,656,138
- ---------------------------------------------------------------
Bank United Corp.-Class A 155,000 6,258,125
- ---------------------------------------------------------------
Colonial BancGroup, Inc. (The) 400,000 4,950,000
- ---------------------------------------------------------------
Independence Community Bank Corp. 227,000 3,305,687
- ---------------------------------------------------------------
North Fork Bancorporation, Inc. 220,000 4,950,000
===============================================================
23,119,950
===============================================================
BEVERAGES (ALCOHOLIC)-0.68%
Beringer Wine Estates Holdings,
Inc.(a) 80,000 3,150,000
- ---------------------------------------------------------------
Canandaigua Wine Co., Inc.-Class
A(a) 95,000 4,892,500
===============================================================
8,042,500
===============================================================
BIOTECHNOLOGY-0.78%
Albany Molecular Research,
Inc.(a) 47,100 1,177,500
- ---------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 160,000 3,620,000
- ---------------------------------------------------------------
Pharmaceutical Product
Development, Inc.(a) 150,000 4,368,750
===============================================================
9,166,250
===============================================================
BROADCASTING (TELEVISION, RADIO & CABLE)-3.20%
Capstar Broadcasting Corp.-Class
A(a) 228,200 6,047,300
- ---------------------------------------------------------------
Cox Radio, Inc.-Class A(a) 115,000 5,606,250
- ---------------------------------------------------------------
Emmis Broadcasting Corp.-Class
A(a) 115,000 5,175,000
- ---------------------------------------------------------------
Entercom Communications Corp.(a) 154,500 5,735,812
- ---------------------------------------------------------------
Heftel Broadcasting Corp.(a) 85,000 4,621,875
- ---------------------------------------------------------------
Metro Networks, Inc.(a) 105,000 4,725,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO &
CABLE)-(CONTINUED)
Univision Communications Inc.(a) 103,000 $ 5,961,125
===============================================================
37,872,362
===============================================================
BUILDING MATERIALS-0.19%
White Cap Industries, Inc.(a) 190,000 2,303,750
===============================================================
COMMUNICATIONS EQUIPMENT-2.61%
Comverse Technology, Inc.(a) 135,000 8,656,875
- ---------------------------------------------------------------
Digital Microwave Corp.(a) 250,000 3,187,500
- ---------------------------------------------------------------
General Instrument Corp.(a) 150,000 5,475,000
- ---------------------------------------------------------------
Gilat Satellite Networks Ltd.(a) 50,000 2,600,000
- ---------------------------------------------------------------
NorthEast Optic Network, Inc.(a) 275,000 4,709,375
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a) 285,000 3,651,562
- ---------------------------------------------------------------
REMEC, Inc.(a) 200,000 2,587,500
===============================================================
30,867,812
===============================================================
COMPUTERS (HARDWARE)-0.31%
Bell & Howell Co.(a) 110,000 3,678,125
===============================================================
COMPUTERS (PERIPHERALS)-1.07%
Actel Corp.(a) 250,000 3,375,000
- ---------------------------------------------------------------
DSP Communications, Inc.(a) 265,000 7,221,250
- ---------------------------------------------------------------
QLogic Corp.(a) 30,000 2,098,125
===============================================================
12,694,375
===============================================================
COMPUTERS (SOFTWARE &
SERVICES)-5.18%
AppliedTheory Corp.(a) 60,500 1,240,250
- ---------------------------------------------------------------
Aris Corp.(a) 75,200 613,350
- ---------------------------------------------------------------
Avant! Corp.(a) 205,419 2,773,157
- ---------------------------------------------------------------
Best Software, Inc.(a) 240,500 3,111,469
- ---------------------------------------------------------------
Check Point Software Technologies
Ltd. (Israel)(a) 60,000 2,115,000
- ---------------------------------------------------------------
Dendrite International, Inc.(a) 128,800 3,332,700
- ---------------------------------------------------------------
Descartes Systems Group Inc.
(The)(a) 200,000 1,262,500
- ---------------------------------------------------------------
HNC Software Inc.(a) 100,000 2,150,000
- ---------------------------------------------------------------
InfoCure Corp.(a) 235,000 6,183,438
- ---------------------------------------------------------------
Lycos, Inc.(a) 30,000 2,990,625
- ---------------------------------------------------------------
Medical Manager Corp.(a) 90,000 2,565,000
- ---------------------------------------------------------------
Mentor Graphics Corp.(a) 375,000 4,546,875
- ---------------------------------------------------------------
Mercury Interactive Corp.(a) 110,500 3,114,718
- ---------------------------------------------------------------
PSINet Inc., Series C-$3.375
Conv. Pfd. 55,800 2,873,700
- ---------------------------------------------------------------
Rational Software Corp.(a) 150,000 4,443,750
- ---------------------------------------------------------------
SERENA Software, Inc.(a) 120,000 1,230,000
- ---------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE &
SERVICES)-(CONTINUED)
Structural Dynamics Research
Corp.(a) 300,000 $ 5,831,250
- ---------------------------------------------------------------
Symantec Corp.(a) 260,000 5,167,500
- ---------------------------------------------------------------
Transaction Systems Architects,
Inc.-Class A(a) 100,000 3,243,750
- ---------------------------------------------------------------
Unigraphics Solutions Inc.(a) 160,300 2,384,462
===============================================================
61,173,494
===============================================================
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.21%
Blyth Industries, Inc.(a) 106,800 2,429,700
===============================================================
CONSUMER FINANCE-1.10%
American Capital Strategies, Ltd. 85,100 1,510,525
- ---------------------------------------------------------------
AmeriCredit Corp.(a) 400,000 6,625,000
- ---------------------------------------------------------------
Cash America International, Inc. 385,000 4,908,750
===============================================================
13,044,275
===============================================================
DISTRIBUTORS (FOOD &
HEALTH)-0.92%
JP Foodservice, Inc.(a) 100,750 4,237,797
- ---------------------------------------------------------------
Patterson Dental Co.(a) 55,000 1,983,437
- ---------------------------------------------------------------
Performance Food Group Co.(a) 175,000 4,637,500
===============================================================
10,858,734
===============================================================
ELECTRIC COMPANIES-0.38%
Avista Corp. 300,000 4,500,000
===============================================================
ELECTRICAL EQUIPMENT-2.73%
Conexant Systems, Inc.(a) 85,000 3,463,750
- ---------------------------------------------------------------
Cree Research, Inc.(a) 105,000 4,410,000
- ---------------------------------------------------------------
DII Group, Inc.(a) 100,000 3,100,000
- ---------------------------------------------------------------
PCD, Inc.(a) 150,000 1,659,375
- ---------------------------------------------------------------
Pinnacle Systems, Inc.(a) 85,000 4,621,875
- ---------------------------------------------------------------
Sawtek Inc.(a) 100,000 3,525,000
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 140,000 5,328,750
- ---------------------------------------------------------------
SLI, Inc.(a) 225,000 6,173,437
===============================================================
32,282,187
===============================================================
ELECTRONICS (DEFENSE)-0.46%
Aeroflex Inc.(a) 370,000 5,411,250
===============================================================
ELECTRONICS
(INSTRUMENTATION)-0.87%
Alpha Industries, Inc.(a) 117,300 4,134,825
- ---------------------------------------------------------------
Methode Electronics, Inc.-Class A 149,500 2,223,812
- ---------------------------------------------------------------
Varian Inc.(a) 100,000 906,250
- ---------------------------------------------------------------
Varian Medical Systems, Inc. 100,000 1,718,750
- ---------------------------------------------------------------
Varian Semiconductor Equipment
Associates, Inc.(a) 100,000 1,300,000
===============================================================
10,283,637
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS
(SEMICONDUCTORS)-1.95%
Apex PC Solutions, Inc.(a) 145,000 $ 2,410,625
- ---------------------------------------------------------------
Celestica Inc.(a) 115,000 4,499,375
- ---------------------------------------------------------------
Micrel, Inc.(a) 70,000 4,121,250
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 160,000 5,600,000
- ---------------------------------------------------------------
Unitrode Corp.(a) 229,900 4,066,356
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 49,800 2,306,362
===============================================================
23,003,968
===============================================================
ENTERTAINMENT-1.35%
Loews Cineplex Entertainment
Corp.(a) 444,500 5,611,812
- ---------------------------------------------------------------
Pixar, Inc.(a) 100,000 4,150,000
- ---------------------------------------------------------------
SFX Entertainment, Inc.-Class
A(a) 100,000 6,175,000
===============================================================
15,936,812
===============================================================
EQUIPMENT (SEMICONDUCTOR)-1.36%
DuPont Photomasks, Inc.(a) 150,000 6,562,500
- ---------------------------------------------------------------
Lam Research Corp.(a) 130,000 4,095,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 115,000 5,426,562
===============================================================
16,084,062
===============================================================
FINANCIAL (DIVERSIFIED)-1.78%
FINOVA Group, Inc. 100,000 4,831,250
- ---------------------------------------------------------------
FirstCity Financial Corp.(a) 160,000 1,700,000
- ---------------------------------------------------------------
Hamilton Bancorp, Inc.(a) 100,000 2,575,000
- ---------------------------------------------------------------
Insignia Financial Group, Inc.(a) 130,000 1,633,125
- ---------------------------------------------------------------
Medallion Financial Corp. 100,000 1,687,500
- ---------------------------------------------------------------
MicroFinancial Inc. 219,400 3,908,062
- ---------------------------------------------------------------
SEI Investments Co. 50,000 4,750,000
===============================================================
21,084,937
===============================================================
FOODS-1.93%
American Italian Pasta Co.-Class
A(a) 221,000 5,939,375
- ---------------------------------------------------------------
International Home Foods, Inc.(a) 245,000 4,057,812
- ---------------------------------------------------------------
Keebler Foods Co.(a) 140,500 4,513,563
- ---------------------------------------------------------------
Suiza Foods Corp.(a) 99,900 3,752,494
- ---------------------------------------------------------------
United Natural Foods, Inc.(a) 180,000 4,522,500
===============================================================
22,785,744
===============================================================
HEALTH CARE (DIVERSIFIED)-0.28%
IVAX Corp.(a) 250,000 3,281,250
===============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.71%
Alpharma, Inc.-Class A 130,000 3,835,000
- ---------------------------------------------------------------
Barr Laboratories, Inc.(a) 150,700 4,530,418
- ---------------------------------------------------------------
Forest Laboratories, Inc.(a) 90,000 4,005,000
- ---------------------------------------------------------------
Jones Medical Industries, Inc. 112,000 3,598,000
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC &
OTHER)-(CONTINUED)
Parexel International Corp.(a) 175,000 $ 4,210,938
===============================================================
20,179,356
===============================================================
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.26%
Health Management Associates,
Inc.-Class A(a) 197,250 3,082,031
===============================================================
HEALTH CARE (LONG TERM
CARE)-0.36%
Sunrise Assisted Living, Inc.(a) 105,000 4,200,000
===============================================================
HEALTH CARE (MANAGED CARE)-0.37%
Express Scripts, Inc.-Class A(a) 60,000 4,417,500
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.70%
Biomet, Inc. 75,000 3,075,000
- ---------------------------------------------------------------
Cyberonics, Inc.(a) 155,000 1,259,375
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 170,000 4,451,875
- ---------------------------------------------------------------
Lifecore Biomedical, Inc.(a) 248,000 2,077,000
- ---------------------------------------------------------------
MiniMed, Inc.(a) 60,000 3,750,000
- ---------------------------------------------------------------
Sybron International Corp.(a) 199,900 5,534,731
===============================================================
20,147,981
===============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-3.53%
Advance Paradigm, Inc.(a) 92,000 4,830,000
- ---------------------------------------------------------------
Capital Senior Living Corp.(a) 200,000 1,975,000
- ---------------------------------------------------------------
Covance, Inc.(a) 130,000 2,851,875
- ---------------------------------------------------------------
First Consulting Group, Inc.(a) 255,800 2,941,700
- ---------------------------------------------------------------
MAXIMUS, Inc.(a) 177,000 4,602,000
- ---------------------------------------------------------------
Omnicare, Inc. 215,700 5,190,281
- ---------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 349,900 4,330,013
- ---------------------------------------------------------------
Renal Care Group, Inc.(a) 180,000 3,757,500
- ---------------------------------------------------------------
Renex Corp.(a) 200,000 800,000
- ---------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 80,000 2,160,000
- ---------------------------------------------------------------
United Payors & United Providers,
Inc.(a) 230,000 4,053,750
- ---------------------------------------------------------------
Ventana Medical Systems, Inc.(a) 173,000 4,216,875
===============================================================
41,708,994
===============================================================
HOUSEHOLD FURNITURE &
APPLIANCES-0.35%
Service Experts, Inc.(a) 252,300 4,084,106
===============================================================
HOUSEWARES-0.15%
Windmere-Durable Holdings Inc.(a) 150,000 1,725,000
===============================================================
INSURANCE (LIFE/HEALTH)-0.96%
Annuity and Life Re, Ltd.
(Bermuda) 134,300 2,652,425
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE
(LIFE/HEALTH)-(CONTINUED)
ESG Re Ltd. (United Kingdom) 77,700 $ 1,320,900
- ---------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 105,000 4,869,375
- ---------------------------------------------------------------
Sutton Group Financial Services
Ltd. (Cayman Islands) 253,600 2,536,000
===============================================================
11,378,700
===============================================================
INSURANCE (MULTI-LINE)-0.26%
Century Business Services,
Inc.(a) 260,000 3,120,000
===============================================================
INSURANCE
(PROPERTY-CASUALTY)-1.29%
Amerin Corp.(a) 200,000 4,687,500
- ---------------------------------------------------------------
Automobile Protection Corp.(a) 250,000 2,203,125
- ---------------------------------------------------------------
CNA Surety Corp. 249,700 3,370,950
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 235,000 4,964,375
===============================================================
15,225,950
===============================================================
INVESTMENT
BANKING/BROKERAGE-0.43%
Hambrecht & Quist Group(a) 145,000 5,111,250
===============================================================
INVESTMENT MANAGEMENT-0.55%
Affiliated Managers Group,
Inc.(a) 185,000 5,376,563
- ---------------------------------------------------------------
Conning Corp. 70,000 1,155,000
===============================================================
6,531,563
===============================================================
IRON & STEEL-0.32%
Nucor Corp. 65,000 3,814,688
===============================================================
LAND DEVELOPMENT-0.02%
Silverleaf Resorts, Inc.(a) 24,700 196,056
===============================================================
LEISURE TIME (PRODUCTS)-0.36%
Family Golf Centers, Inc.(a) 99,800 717,313
- ---------------------------------------------------------------
International Speedway
Corp.-Class A 67,700 3,486,550
===============================================================
4,203,863
===============================================================
LODGING-HOTELS-0.35%
Prime Hospitality Corp.(a) 340,000 4,143,750
===============================================================
MACHINERY (DIVERSIFIED)-0.51%
Applied Power, Inc.-Class A 191,400 6,041,063
===============================================================
MANUFACTURING (SPECIALIZED)-2.02%
Alpine Group, Inc. (The)(a) 209,700 2,909,588
- ---------------------------------------------------------------
American Bank Note Holographics,
Inc.(a) 380,500 975,031
- ---------------------------------------------------------------
Amor Holdings, Inc.(a) 100,000 1,262,500
- ---------------------------------------------------------------
First Years, Inc. (The) 300,000 4,556,250
- ---------------------------------------------------------------
Howmet International Inc.(a) 250,000 4,000,000
- ---------------------------------------------------------------
Mettler-Toledo International
Inc.(a) 277,000 7,236,625
- ---------------------------------------------------------------
Superior TeleCom Inc. 118,875 2,964,445
===============================================================
23,904,439
===============================================================
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE EQUIPMENT & SUPPLIES-0.77%
Daisytek International Corp.(a) 295,000 $ 4,941,250
- ---------------------------------------------------------------
School Specialty, Inc.(a) 219,402 4,141,213
===============================================================
9,082,463
===============================================================
OIL (DOMESTIC INTEGRATED)-0.11%
Pennzoil-Quaker State Co. 100,000 1,293,750
===============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-1.72%
BJ Services Co.(a) 210,000 5,617,500
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 94,800 3,661,650
- ---------------------------------------------------------------
Newpark Resources, Inc.(a) 425,000 3,904,688
- ---------------------------------------------------------------
Petroleum Geo-Services ASA-ADR
(Norway)(a) 255,100 4,272,925
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 180,000 2,880,000
===============================================================
20,336,763
===============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-2.15%
Anadarko Petroleum Corp. 100,000 3,793,750
- ---------------------------------------------------------------
Apache Corp. 155,000 4,756,563
- ---------------------------------------------------------------
Devon Energy Corp. 185,000 6,151,250
- ---------------------------------------------------------------
Newfield Exploration Co.(a) 140,000 3,762,500
- ---------------------------------------------------------------
Noble Affiliates, Inc. 130,000 4,168,125
- ---------------------------------------------------------------
Union Pacific Resources Group
Inc.(b) 199,800 2,797,200
===============================================================
25,429,388
===============================================================
PAPER & FOREST PRODUCTS-0.65%
Potlatch Corp. 65,000 2,693,438
- ---------------------------------------------------------------
Rayonier Inc. 110,000 5,018,750
===============================================================
7,712,188
===============================================================
PERSONAL CARE-1.43%
Chattem, Inc.(a) 149,900 5,855,469
- ---------------------------------------------------------------
Playtex Products, Inc.(a) 349,700 5,770,050
- ---------------------------------------------------------------
Steiner Leisure Ltd.(a) 165,000 5,238,750
===============================================================
16,864,269
===============================================================
PUBLISHING-0.99%
IDG Books Worldwide, Inc.-Class
A(a) 229,800 4,969,425
- ---------------------------------------------------------------
Scholastic Corp.(a) 120,000 5,673,750
- ---------------------------------------------------------------
Ziff-Davis Inc.(a) 28,900 1,018,725
===============================================================
11,661,900
===============================================================
RAILROADS-0.39%
MotivePower Industries, Inc.(a) 270,000 4,606,875
===============================================================
REAL ESTATE INVESTMENT
TRUST-1.57%
AMRESCO Capital Trust Inc. 240,500 2,525,250
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT
TRUST-(CONTINUED)
Apartment Investment & Management
Co. 126,790 $ 5,079,524
- ---------------------------------------------------------------
Colonial Properties Trust 130,000 3,558,750
- ---------------------------------------------------------------
Correctional Properties Trust 237,400 4,109,988
- ---------------------------------------------------------------
Manufactured Home Communities,
Inc. 130,000 3,290,625
===============================================================
18,564,137
===============================================================
RESTAURANTS-1.69%
Brinker International, Inc.(a) 132,000 3,646,500
- ---------------------------------------------------------------
CEC Entertainment Inc.(a) 205,000 7,687,500
- ---------------------------------------------------------------
Dave & Buster's, Inc.(a) 189,800 3,890,900
- ---------------------------------------------------------------
Luby's, Inc. 100,000 1,675,000
- ---------------------------------------------------------------
Starbucks Corp.(a) 82,000 3,028,875
===============================================================
19,928,775
===============================================================
RETAIL (COMPUTERS &
ELECTRONICS)-0.53%
CDW Computer Centers, Inc.(a) 69,900 6,256,050
===============================================================
RETAIL (DISCOUNTERS)-0.58%
Family Dollar Stores, Inc. 283,600 6,841,850
===============================================================
RETAIL (FOOD CHAINS)-0.98%
BJ's Wholesale Club, Inc.(a) 210,000 5,578,125
- ---------------------------------------------------------------
Wild Oats Markets Inc.(a) 215,000 5,952,813
===============================================================
11,530,938
===============================================================
RETAIL (GENERAL
MERCHANDISE)-0.33%
Signet Group PLC (United
Kingdom)(a) 2,320,000 2,257,830
- ---------------------------------------------------------------
Signet Group PLC-ADR (United
Kingdom) 60,000 1,725,000
===============================================================
3,982,830
===============================================================
RETAIL (SPECIALTY)-4.86%
Casey's General Stores, Inc. 130,000 1,722,500
- ---------------------------------------------------------------
CSK Auto Corp.(a) 252,400 6,310,000
- ---------------------------------------------------------------
Electronics Boutique Holdings
Corp.(a) 200,000 3,175,000
- ---------------------------------------------------------------
Footstar, Inc.(a) 6,600 223,163
- ---------------------------------------------------------------
Guitar Center Inc.(a) 225,000 3,515,625
- ---------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 195,000 5,325,937
- ---------------------------------------------------------------
Just for Feet, Inc.(a) 100,000 1,262,500
- ---------------------------------------------------------------
Linens 'N Things, Inc.(a) 170,300 7,791,225
- ---------------------------------------------------------------
Lithia Motors, Inc.-Class A(a) 200,000 3,762,500
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 122,000 2,760,250
- ---------------------------------------------------------------
Rainbow Rentals, Inc.(a) 172,000 2,021,000
- ---------------------------------------------------------------
Rent-A-Center, Inc.(a) 199,900 6,196,900
- ---------------------------------------------------------------
Rent-Way, Inc.(a) 237,190 6,463,427
- ---------------------------------------------------------------
Select Comfort Corp.(a) 41,900 678,256
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-(CONTINUED)
Zale Corp.(a) 165,000 $ 6,239,063
===============================================================
57,447,346
===============================================================
RETAIL (SPECIALTY-APPAREL)-1.09%
Abercrombie & Fitch Co.-Class
A(a) 60,000 5,707,500
- ---------------------------------------------------------------
Goody's Family Clothing, Inc.(a) 225,000 2,025,000
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 190,000 5,201,250
===============================================================
12,933,750
===============================================================
SAVINGS & LOAN COMPANIES-0.42%
Allied Capital Corp. 275,000 4,950,000
===============================================================
SERVICES
(ADVERTISING/MARKETING)-4.25%
Abacus Direct Corp.(a) 45,000 3,330,000
- ---------------------------------------------------------------
ACNielsen Corp.(a) 200,000 5,575,000
- ---------------------------------------------------------------
Acxiom Corp.(a) 246,000 6,211,500
- ---------------------------------------------------------------
Forrester Research, Inc.(a) 74,300 2,526,200
- ---------------------------------------------------------------
HA-LO Industries, Inc.(a) 275,000 3,231,250
- ---------------------------------------------------------------
Lamar Advertising Co.(a) 225,000 7,565,625
- ---------------------------------------------------------------
Market Facts, Inc.(a) 173,800 5,300,900
- ---------------------------------------------------------------
Nielsen Media Research(a) 250,000 6,843,750
- ---------------------------------------------------------------
Snyder Communications, Inc.(a) 190,000 5,581,250
- ---------------------------------------------------------------
Young & Rubicam, Inc. 103,500 4,120,594
===============================================================
50,286,069
===============================================================
SERVICES (COMMERCIAL &
CONSUMER)-8.46%
Apollo Group, Inc.(a) 100,000 2,475,000
- ---------------------------------------------------------------
Bright Horizons Family Solutions,
Inc.(a) 189,992 4,084,828
- ---------------------------------------------------------------
Central Parking Corp. 160,000 5,070,000
- ---------------------------------------------------------------
Copart, Inc.(a) 200,000 3,625,000
- ---------------------------------------------------------------
Corporate Executive Board Co.
(The)(a) 100,800 2,835,000
- ---------------------------------------------------------------
F.Y.I. Inc.(a) 115,000 3,565,000
- ---------------------------------------------------------------
Galileo International, Inc. 81,700 4,003,300
- ---------------------------------------------------------------
INSpire Insurance Solutions,
Inc.(a) 300,500 6,535,875
- ---------------------------------------------------------------
Iron Mountain, Inc.(a) 175,000 4,867,188
- ---------------------------------------------------------------
ITT Educational Services, Inc.(a) 79,300 1,947,806
- ---------------------------------------------------------------
Jones Lang LaSalle Inc.(a) 101,900 2,719,456
- ---------------------------------------------------------------
MemberWorks, Inc.(a) 100,000 4,375,000
- ---------------------------------------------------------------
Metzler Group, Inc.(a) 180,000 5,017,500
- ---------------------------------------------------------------
PalEx, Inc.(a) 27,300 170,625
- ---------------------------------------------------------------
Pegasus Systems, Inc.(a) 100,000 4,675,000
- ---------------------------------------------------------------
Pre-Paid Legal Services, Inc.(a) 215,000 6,127,500
- ---------------------------------------------------------------
Primark Corp.(a) 187,000 4,312,688
- ---------------------------------------------------------------
Quanta Services, Inc.(a) 310,300 8,940,518
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMMERCIAL &
CONSUMER)-(CONTINUED)
Regis Corp. 212,700 $ 5,450,437
- ---------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 424,900 8,444,888
- ---------------------------------------------------------------
Strayer Education, Inc. 55,000 1,904,375
- ---------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 225,000 5,653,125
- ---------------------------------------------------------------
Trammell Crow Co.(a) 176,400 3,175,200
===============================================================
99,975,309
===============================================================
SERVICES (COMPUTER SYSTEMS)-1.99%
Insight Enterprises, Inc.(a) 202,300 5,462,100
- ---------------------------------------------------------------
Policy Management Systems
Corp.(a) 135,000 4,244,063
- ---------------------------------------------------------------
Safeguard Scientifics, Inc.(a) 41,200 3,337,200
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 200,000 6,387,500
- ---------------------------------------------------------------
Sykes Enterprises, Inc.(a) 201,900 4,138,950
===============================================================
23,569,813
===============================================================
SERVICES (DATA PROCESSING)-3.25%
4Front Software International,
Inc.(a) 365,000 3,216,563
- ---------------------------------------------------------------
BISYS Group, Inc.(a) 165,000 8,373,750
- ---------------------------------------------------------------
CSG Systems International,
Inc.(a) 200,000 7,725,000
- ---------------------------------------------------------------
Lason Holdings, Inc.(a) 121,400 4,802,887
- ---------------------------------------------------------------
MedQuist, Inc.(a) 165,000 5,651,250
- ---------------------------------------------------------------
National Data Corp. 105,000 4,843,125
- ---------------------------------------------------------------
NOVA Corp.(a) 144,400 3,754,400
===============================================================
38,366,975
===============================================================
SERVICES (EMPLOYMENT)-1.62%
AHL Services, Inc.(a) 125,500 3,796,375
- ---------------------------------------------------------------
Heidrick & Struggles
International, Inc.(a) 373,900 5,211,231
- ---------------------------------------------------------------
Korn/Ferry International(a) 275,000 3,231,250
- ---------------------------------------------------------------
Labor Ready, Inc.(a) 174,500 6,849,125
===============================================================
19,087,981
===============================================================
SERVICES (FACILITIES &
ENVIRONMENTAL)-2.14%
Casella Waste Systems, Inc.(a) 234,500 5,862,500
- ---------------------------------------------------------------
Cornell Corrections, Inc.(a) 274,600 5,526,325
- ---------------------------------------------------------------
Tetra Tech, Inc.(a) 140,700 3,403,182
- ---------------------------------------------------------------
Wackenhut Corrections Corp.(a) 279,700 5,191,931
- ---------------------------------------------------------------
Waste Connections, Inc.(a) 200,000 5,275,000
===============================================================
25,258,938
===============================================================
SPECIALTY PRINTING-0.38%
World Color Press, Inc.(a) 175,000 4,473,438
===============================================================
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.83%
Associated Group, Inc.
(The)-Class A(a) 120,000 $ 6,840,000
- ---------------------------------------------------------------
Metromedia Fiber Network, Inc.(a) 35,000 2,948,750
===============================================================
9,788,750
===============================================================
TELECOMMUNICATIONS (LONG
DISTANCE)-0.57%
IXC Communications, Inc.(a) 170,000 6,736,250
===============================================================
TELEPHONE-0.91%
Intermedia Communications Inc.(a) 170,000 5,471,875
- ---------------------------------------------------------------
NTL Inc. (United Kingdom)(a) 70,000 5,337,500
===============================================================
10,809,375
===============================================================
WASTE MANAGEMENT-1.77%
Catalytica, Inc.(a) 300,000 4,106,250
- ---------------------------------------------------------------
Safety-Kleen Corp.(a) 375,000 5,953,125
- ---------------------------------------------------------------
Superior Services, Inc.(a) 210,000 3,858,750
- ---------------------------------------------------------------
U.S. Liquids Inc.(a) 261,700 5,299,426
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-(CONTINUED)
Waste Industries, Inc.(a) 92,500 $ 1,711,250
===============================================================
20,928,801
===============================================================
Total Common Stocks & Other
Equity Interests (Cost
$954,293,892) 1,134,739,835
===============================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENTS-3.89%(c)
Credit Swisse First Boston Corp.,
4.93%, 05/03/99(d) $27,011,481 27,011,481
- ---------------------------------------------------------------
Greenwich Capital Markets, Inc.,
4.93%, 05/03/99(e) 18,945,613 18,945,613
===============================================================
Total Repurchase Agreements
(Cost $45,957,094) 45,957,094
===============================================================
TOTAL INVESTMENTS-99.90% 1,180,696,929
===============================================================
OTHER ASSETS LESS
LIABILITIES-0.10% 1,177,367
===============================================================
NET ASSETS-100.00% $1,181,874,296
===============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
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 insure its market value is at least 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 04/30/99 with a maturing value of
$500,205,417. Collateralized by $527,642,000 U.S. Government obligations,
4.60% to 9.05% due 05/03/99 to 04/28/14 with an aggregate market value at
04/30/99 of $531,179,320.
(e) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$400,164,333. Collateralized by $419,743,169 U.S. Government obligations, 0%
to 10.00% due 04/01/00 to 05/01/29 with an aggregate market value at
04/30/99 of $408,002,417.
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,000,250,986) $1,180,696,929
- ------------------------------------------------------------
Receivables for:
Investments sold 22,860,649
- ------------------------------------------------------------
Capital stock sold 1,743,331
- ------------------------------------------------------------
Dividends and interest 309,286
- ------------------------------------------------------------
Investment for deferred compensation plan 14,874
- ------------------------------------------------------------
Other assets 118,379
- ------------------------------------------------------------
Total assets 1,205,743,448
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 16,780,752
- ------------------------------------------------------------
Capital stock reacquired 4,838,834
- ------------------------------------------------------------
Deferred compensation 14,874
- ------------------------------------------------------------
Options written (Premiums received
$109,386) 443,306
- ------------------------------------------------------------
Accrued advisory fees 645,088
- ------------------------------------------------------------
Accrued administrative services fees 7,632
- ------------------------------------------------------------
Accrued directors' fees 7,850
- ------------------------------------------------------------
Accrued distribution fees 822,742
- ------------------------------------------------------------
Accrued transfer agent fees 261,630
- ------------------------------------------------------------
Accrued operating expenses 46,444
- ------------------------------------------------------------
Total liabilities 23,869,152
- ------------------------------------------------------------
Net assets applicable to shares outstanding $1,181,874,296
============================================================
NET ASSETS:
Class A $ 644,958,656
============================================================
Class B $ 483,673,180
============================================================
Class C $ 53,242,460
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 45,804,635
============================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 34,992,803
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 3,854,095
============================================================
Class A:
Net asset value and redemption price per
share $ 14.08
============================================================
Offering price per share:
(Net assets value of $14.08 / 94.50%) $ 14.90
============================================================
Class B:
Net asset value and offering price per
share $ 13.82
============================================================
Class C:
Net asset value and offering price per
share $ 13.81
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $2,049 foreign withholding
tax) $ 2,630,878
- -----------------------------------------------------------
Interest 1,645,875
- -----------------------------------------------------------
Total investment income 4,276,753
- -----------------------------------------------------------
EXPENSES:
Advisory fees 4,286,282
- -----------------------------------------------------------
Administrative services fees 48,652
- -----------------------------------------------------------
Custodian fees 72,619
- -----------------------------------------------------------
Directors' fees 11,971
- -----------------------------------------------------------
Distribution fees-Class A 1,265,747
- -----------------------------------------------------------
Distribution fees-Class B 2,619,659
- -----------------------------------------------------------
Distribution fees-Class C 274,848
- -----------------------------------------------------------
Transfer agent fees-Class A 1,018,729
- -----------------------------------------------------------
Transfer agent fees-Class B 981,216
- -----------------------------------------------------------
Transfer agent fees-Class C 102,947
- -----------------------------------------------------------
Other 332,519
- -----------------------------------------------------------
Total expenses 11,015,189
- -----------------------------------------------------------
Less: Expenses paid indirectly (25,503)
- -----------------------------------------------------------
Net expenses 10,989,686
- -----------------------------------------------------------
Net investment income (loss) (6,712,933)
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 16,330,470
- -----------------------------------------------------------
Option contracts written 201,938
- -----------------------------------------------------------
16,532,408
- -----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 102,115,195
- -----------------------------------------------------------
Option contracts written (333,920)
- -----------------------------------------------------------
101,781,275
- -----------------------------------------------------------
Net gain from investment securities and
option contracts 118,313,683
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $111,600,750
============================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 and the year ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (6,712,933) $ (8,332,574)
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities, foreign currencies, futures and option
contracts 16,532,408 (67,636,533)
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currencies, futures and option
contracts 101,781,275 (114,227,472)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 111,600,750 (190,196,579)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A (138,084,944) 242,830,301
- ---------------------------------------------------------------------------------------------
Class B (51,952,473) 274,584,791
- ---------------------------------------------------------------------------------------------
Class C 761,416 44,827,215
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (77,675,251) 372,045,728
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,259,549,547 887,503,819
- ---------------------------------------------------------------------------------------------
End of period $1,181,874,296 $1,259,549,547
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,071,122,709 $1,260,398,710
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (6,734,268) (21,335)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities, foreign currencies, futures and
option contracts (62,626,168) (79,158,576)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 180,112,023 78,330,748
- ---------------------------------------------------------------------------------------------
$1,181,874,296 $1,259,549,547
=============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(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 nine separate
portfolios. 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 closing bid price 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 closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market 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
11
<PAGE> 14
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 would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Directors.
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 and are paid annually.
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
$75,941,588 (which may be carried forward to offset future taxable gains, if
any) which expires, if not previously utilized, in the year 2006.
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.
12
<PAGE> 15
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. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized gain or loss from
investments.
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 to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. 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.
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.
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, 1999, AIM
was reimbursed $48,652 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, 1999, AFS was paid
$1,259,748 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 of 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. During the six months ended
April 30, 1999, the Class A, Class B and Class C shares paid AIM Distributors
$1,265,747, $2,619,659 and $274,848, respectively, as compensation under the
Plans.
AIM Distributors received commissions of $270,027 from Class A capital stock
transactions during the six months ended April 30, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A capital stock. During the six months ended April
30, 1999, AIM Distributors received $82,703 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, 1999, the Fund paid legal fees of $2,292
for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $8,544 and $16,959, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $25,503 during the six months ended April 30, 1999.
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) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended April 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.05% 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.
13
<PAGE> 16
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, 1999 was
$698,051,770 and $853,872,921, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1999, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $239,500,191
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (59,376,952)
- --------------------------------------------------------------------------
Net unrealized appreciation of
investment securities $180,123,239
==========================================================================
</TABLE>
Cost of investments for tax purposes is $1,000,573,690.
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended April 30, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Beginning of period 0 $ 0
- ------------------------------------------------------------------------------------
Written 5,446 792,183
- ------------------------------------------------------------------------------------
Closed (1,999) (194,945)
- ------------------------------------------------------------------------------------
Exercised (250) (86,747)
- ------------------------------------------------------------------------------------
Expired (2,198) (401,105)
- ------------------------------------------------------------------------------------
End of period 999 $ 109,386
====================================================================================
</TABLE>
Open call contracts written at April 30, 1999 were as follows:
<TABLE>
<CAPTION>
APRIL 30,
NUMBER 1999
CONTRACT STRIKE OF PREMIUMS MARKET UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE APPRECIATION
----- -------- ------ --------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Union Pacific Resource Group, Inc. July 99 10 999 $109,386 $443,306 $333,920
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in the capital stock outstanding during six months ended April 30, 1999
and the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
--------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 22,713,643 $ 318,873,099 101,121,530 $ 1,487,557,560
- -------------------------------------------------------------------------------------------------------
Class B 6,016,844 82,122,144 25,176,788 370,811,453
- -------------------------------------------------------------------------------------------------------
Class C 1,738,241 23,977,499 4,336,475 62,530,399
- -------------------------------------------------------------------------------------------------------
Reacquired:
Class A (32,567,180) (456,958,043) (85,122,675) (1,244,727,259)
- -------------------------------------------------------------------------------------------------------
Class B (9,930,034) (134,074,617) (6,860,398) (96,226,662)
- -------------------------------------------------------------------------------------------------------
Class C (1,688,785) (23,216,083) (1,375,616) (17,703,184)
- -------------------------------------------------------------------------------------------------------
(13,717,271) $(189,276,001) 37,276,104 $ 562,242,307
=======================================================================================================
</TABLE>
14
<PAGE> 17
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, 1999, each of the years in the
two-year period ended October 31, 1998 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, 1999, each of the years
in the two-year period ended October 31, 1998 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, 1999, the year
ended October 31, 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, --------------------------------
1999 1998 1997 1996 1999 1998 1997 1996
--------- -------- -------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 12.89 $ 14.57 $ 11.09 $ 10.00 $ 12.70 $ 14.46 $ 11.08 $ 11.26
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment
income (loss) (0.05)(a) (0.06)(a) (0.10)(a) (0.01)(a) (0.10)(a) (0.16)(a) (0.20)(a) (0.01)(a)
- ----------------------------------------------------------------------------------------------------------------------------
Net gains (losses)
on securities
(both realized and
unrealized) 1.24 (1.62) 3.58 1.10 1.22 (1.60) 3.58 (0.17)
============================================================================================================================
Total from
investment
operations 1.19 (1.68) 3.48 $ 1.09 1.12 (1.76) 3.38 (0.18)
============================================================================================================================
Net asset value, end of
period $ 14.08 $ 12.89 $ 14.57 $ $11.09 $ 13.82 $ 12.70 $ 14.46 $ 11.08
============================================================================================================================
Total return(b) 9.23% (11.53)% 31.38% 10.90% 8.82% (12.17)% 30.51% (1.60)%
============================================================================================================================
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000s omitted) $ 644,959 $717,263 $577,685 $ 251,253 $ 483,673 $493,993 $297,623 $ 22,435
============================================================================================================================
Ratio of expenses to
average net assets(c) 1.36%(d) 1.28% 1.33% 1.35%(e) 2.11%(d) 2.02% 2.09% 1.89%(e)
============================================================================================================================
Ratio of net investment
income (loss) to
average net assets(f) (0.70)%(d) (0.40)% (0.83)% (0.29)%(e) (1.44)%(d) (1.14)% (1.59)% (0.83)%(e)
============================================================================================================================
Portfolio turnover rate 56% 78% 41% 13% 56% 78% 41% 13%
============================================================================================================================
<CAPTION>
CLASS C
-----------------------------------
OCTOBER 31,
APRIL 30, --------------------
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Net asset value,
beginning of period $ 12.69 $ 14.45 $ 13.48
- -------------------------------------------------------------
Income from investment
operations:
Net investment
income (loss) (0.10) (0.16)(a) (0.06)(a)
- -------------------------------------------------------------
Net gains (losses)
on securities
(both realized and
unrealized) 1.22 (1.60) 1.03
=============================================================
Total from
investment
operations 1.12 (1.76) 0.97
=============================================================
Net asset value, end of
period $ 13.81 $ 12.69 $ 14.45
=============================================================
Total return(b) 8.83% (12.18)% 7.20%
=============================================================
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000s omitted) $ 53,242 $ 48,293 $ 12,195
=============================================================
Ratio of expenses to
average net assets(c) 2.10%(d) 2.02% 2.14%(e)
=============================================================
Ratio of net investment
income (loss) to
average net assets(f) (1.44)%(d) (1.14)% (1.64)%(e)
=============================================================
Portfolio turnover rate 56% 78% 41%
=============================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is 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 $729,278,315,
$528,273,810 and $55,425,119 for Class A, Class B and Class C, respectively.
(e) Annualized.
(f) 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.
15
<PAGE> 18
<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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Mary J. Benson Boston, MA 02110
Chief Executive Officer Assistant Vice President
Texana Global, Inc.; and Assistant Treasurer COUNSEL TO THE FUND
Formerly Member
of the U.S. House of Representatives Sheri Morris Ballard Spahr
Assistant Vice President Andrews & Ingersoll, LLP
Carl Frischling and Assistant Treasurer 1735 Market Street
Partner Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli
Assistant Secretary COUNSEL TO THE DIRECTORS
Robert H. Graham
President and Chief Executive Officer P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
A I M Management Group Inc. Assistant Secretary 919 Third Avenue
New York, NY 10022
Prema Mathai-Davis Jeffrey H. Kupor
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary DISTRIBUTOR
Commissioner, New York City Dept. for the
Aging; and member of the Board of Directors, Nancy L. Martin A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
Ofelia M. Mayo Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney
Lisa A. Moss
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Kathleen J. Pflueger
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
16
<PAGE> 19
HOW AIM MAKES INVESTING
EASY FOR YOU
-----------------------------------------------
CURRENT SHAREHOLDERS
CAN CALL OUR
AIM INVESTOR LINE AT
800-246-5463
FOR 24-HOUR-A-DAY
ACCOUNT INFORMATION.
-----------------------------------------------
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 an AIM fund for your Individual
Retirement Account (IRA), Roth 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.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual-fund industry
AIM Blue Chip Fund AIM Asian Growth Fund since 1976 and managed approximately $112
AIM Capital Development Fund AIM Developing Markets Fund(2) billion in assets for more than 6.3 million
AIM Constellation Fund AIM Europe Growth Fund(2) shareholders, including individual investors,
AIM Dent Demographic Trends Fund AIM European Development Fund corporate clients, and financial institutions,
AIM Large Cap Growth Fund AIM International Equity Fund as of March 31, 1999.
AIM Mid Cap Equity Fund(2), (A) AIM Japan Growth Fund(2) The AIM Family of Funds--Registered
AIM Select Growth Fund(3) AIM Latin American Growth Fund(2) Trademark-- is distributed nationwide,
AIM Small Cap Growth Fund(2), (B) AIM New Pacific Growth Fund(2) and AIM today is the 10th-largest
AIM Small Cap Opportunities Fund mutual-fund complex in the United States in
AIM Value Fund GLOBAL GROWTH FUNDS assets under management, according to Strategic
AIM Weingarten Fund AIM Global Aggressive Growth Fund Insight, an independent mutual-fund monitor.
AIM Global Growth Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund GLOBAL GROWTH & INCOME FUNDS
AIM Advisor Large Cap Value Fund AIM Global Growth & Income Fund(2)
AIM Advisor Real Estate Fund AIM Global Utilities Fund
AIM Balanced Fund
AIM Basic Value Fund(2), (C) GLOBAL INCOME FUNDS
AIM Charter Fund AIM Emerging Markets Debt Fund(2), (D)
AIM Global Government Income Fund(2)
INCOME FUNDS AIM Global Income Fund
AIM Floating Rate Fund(2) AIM Strategic Income Fund(2)
AIM High Yield Fund
AIM High Yield Fund II THEME FUNDS
AIM Income Fund AIM Global Consumer Products and Services Fund(2)
AIM Intermediate Government Fund AIM Global Financial Services Fund(2)
AIM Limited Maturity Treasury Fund AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
TAX-FREE INCOME FUNDS AIM Global Resources Fund(2)
AIM High Income Municipal Fund AIM Global Telecommunications and Technology Fund(2), (E)
AIM Municipal Bond Fund AIM Global Trends Fund(2), (F)
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E) On June 1, 1999, AIM Global
Telecommunications Fund was renamed AIM Global Telecommunications and
Technology Fund. (F) On September 8, 1998, AIM New Dimension Fund was renamed
AIM Global Trends Fund. For more complete information about any AIM Fund(s),
including sales charges and expenses, ask your financial consultant or
securities dealer for a free prospectus(es). Please read the prospectus(es)
carefully before you invest or send money.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE--Registered Trademark--
