<PAGE> 1
[PHOTO OF CERTIFICATES AND PLANT APPEARS HERE]
[AIM LOGO AIM GROWTH FUND
APPEARS HERE]
SEMIANNUAL REPORT JUNE 30, 1996
<PAGE> 2
AIM GROWTH FUND
For shareholders who seek long-term growth of capital. The Fund invests
primarily in the common stocks of established medium- to large-size companies
with prospects for above-average, long-term earnings growth.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Growth Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
Unless otherwise indicated, the Fund's performance is computed without
a sales charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B 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 performance of the Fund's Class B shares will
differ from that of Class A shares due to differences in sales charge
structure and Fund expenses.
o The Fund's investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less
than their original cost.
o The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Lipper Analytical Services, Inc., is an independent mutual fund
performance monitor. The unmanaged Lipper Growth Fund Index represents
an average of the performance of the 30 largest growth funds.
o Standard & Poor's Corporation (S&P) is a credit-rating agency. The
unmanaged Standard & Poor's Composite Index of 500 Stocks is widely
regarded by investors as representative of the stock market in
general.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not
reflect sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE FDIC OR
ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
"Past performance cannot guarantee comparable future
results."
[PHOTO OF
Charles T. Bauer, As a mutual fund investor, you've seen this
Chairman of disclaimer on every piece of mail you've ever
the Board of received about your fund. You've seen it so often that
the Fund you probably don't even think about it or question
APPEARS HERE] what it means. But you should.
That sentence about past performance is true now
more than ever. These days it bluntly means, "Don't
expect the 25% to 35% returns you received last year." Don't automatically
expect the 15% to 20% returns of the past decade, either. History shows that
the average annual return on stocks is about 9% to 10%. If you're investing in
mutual funds with expectations of double-digit returns every year, you will be
disappointed. Maybe not today, but sometime in the future.
What is a realistic expectation for 1996? In this uncertain market, it
is easier to discuss what is unrealistic. Last year's performance was an
anomaly--the equivalent of euphoria. To expect a repeat is unrealistic.
I realize I am sounding a warning bell during the mutual fund
industry's best year ever. Investors like you poured $122.1 billion into stock
mutual funds during the first six months of 1996--the highest inflows on record.
At $3 trillion in assets, the industry has grown 1,500 times over the past 50
years. If we are to sustain that growth, we must have the public's confidence.
Our industry has a long-standing reputation for honesty and integrity. To
maintain that reputation as our assets swell into the trillions of dollars, we
must make sure that we don't promise anything we can't produce.
The industry's concern about investors' expectations goes beyond
stamping all our advertising with a standard disclaimer about performance.
Mutual fund leaders recently met for a conference in New York, and foremost on
our minds was educating investors about market volatility.
A whole generation of investors has seen nothing but a bull market, which
started in 1982. Except for the 1987 market crash, they've enjoyed a heady
rise. They may expect the same throughout this decade. I've been in the mutual
fund industry for more than 25 years, and I have seen a 5% to 10% market
correction about every five years. The last major correction was in 1990. If
history is any kind of teacher, we are overdue. Indeed, the bellwether Dow
Jones Industrial Average was off more than 4% from its peak in May to July 15,
1996.
The challenge for investors is not to panic when the market takes a
downturn. We have another saying in the industry: "Focus on time, not timing."
Over time, the stock market has proven to be the only investment that
consistently beats inflation. But investing in it takes a long-term view.
Market timing--trying to play the market and "rescue" your money in a
downturn--has proven to be an inefficient strategy for most investors.
The challenge for the mutual fund industry is to keep your trust
during a bear market. The industry has survived and thrived because of its
built-in integrity: By law, we must operate in the best interests of our
shareholders. The Investment Company Act of 1940, which governs our industry,
protects shareholders against self-dealing, conflicts of interest,
misappropriation of funds, and other fraudulent activities. At AIM we have an
exhaustive Code of Ethics that governs each of our 1,200 employees.
On a very basic level, it boils down to this: We are dealing with your
money, and if we lose your trust, we lose our business. We are vulnerable to
even the hint of impropriety. That's why the mutual fund industry is set up to
avoid even the appearance of self-dealing. Fund managers succeed to the extent
that they attract and keep investors. If they lose your faith, managers
ultimately will fail.
Mutual funds are highly liquid investments. Any time you choose, you
can pull out of a fund and receive a redemption price reflective of the market
that day. If you become dissatisfied with a fund manager, it's easy to leave
and go elsewhere. With more than 7,000 funds available, it's a buyers' market.
The next time you read, "Past performance cannot guarantee comparable
future results," think about your own expectations as an investor. We cannot
promise you another year like 1995. But we can promise to manage your money
with honesty and integrity.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-------------------------
At $3 trillion
in assets, the industry
has grown
1,500 times
over the past 50 years.
If we are to sustain
that growth,
we must have the
public's confidence.
-------------------------
<PAGE> 4
The Managers' Overview
MARKET VOLATILITY CHALLENGES
INVESTORS IN 1996
A roundtable discussion with the Fund management team for AIM Growth Fund about
the six-month reporting period ended June 30, 1996.
- -------------------------------------------------------------------------------
Q. HOW DID AIM GROWTH FUND PERFORM DURING THE LAST SIX MONTHS?
A. The Fund's total returns for Class A and Class B shares were 10.50% and
10.02%, respectively, during the reporting period. Such performance was
enough to handily outperform the 7.99% return logged for the average stock
fund, as measured by the Lipper Growth Fund Index. The S&P 500 posted a
total return of 10.09% for the same period. Net assets in the Fund
increased from $306 million to $434 million as of June 30, 1996.
Q. WHAT FACTORS INFLUENCED THE MARKET DURING THE REPORTING PERIOD?
A. Investors were concerned that conditions that prompted 1995's remarkable
advance in stocks--robust corporate earnings, moderate economic growth,
and mild inflation--would not continue following reports that the economy
had slowed to a feeble annual growth rate of 0.5% in the fourth quarter of
1995. But that began to turn around early this year. The rate of growth of
the gross domestic product shot up to 2.0% in the first quarter of 1996,
and growth in the second quarter had been predicted at 3.5% to 5%.
The foremost concern was that the Federal Reserve Board would nudge
interest rates higher to slow economic growth and forestall inflation, and
that drove stocks dramatically lower as investors worried that rising
market interest rates and inflation would contribute to eroding corporate
profit margins.
Q. HOW DID THE MARKETS REACT TO SUBSEQUENT ECONOMIC REPORTS?
A. We saw more stability in stock markets as reports began to indicate that
the U.S. economy had grown with surprising strength, but with little
evidence of inflation. Stocks resumed a halting advance, but market
leadership was broadly divided across selected sectors including cyclical
consumer, energy, industrial, and technology.
However, prospects for mixed second-quarter corporate earnings reports
and the possibility of higher interest rates later in 1996 drained the
market's resolve. Stocks weakened as the reporting period drew to a close.
Q. HOW DID THE FUND REACT TO THE MARKET INSTABILITY?
A. The changing earnings environment set the stage for significant changes in
market leadership during the reporting period. The Fund increased its
holdings to more than 360, spread across more than 60 industry categories.
Among the Fund's top equity holdings were securities in the technology,
19%; health care, 15%; and retail sectors, 11%.
Q. WASN'T TECHNOLOGY ONE OF THE MORE VOLATILE SECTORS?
A. Technology is a broad category including stocks of software developers,
hardware manufacturers, networking equipment providers, electronics firms,
and telecommunications. It's true that prospects for certain groups have
weakened --semi-conductor makers, for example, have suffered from rising
inventories and slowing order rates. Other areas, such as software
developers and virtually anything Internet-related, have prospered.
The Fund's investment discipline focuses on earnings growth momentum on
a company-by-company basis. It's very impersonal--only those companies
that meet our criteria are held in the portfolio.
===============================================
PERFORMANCE
FOR SIX-MONTH PERIOD
ENDED 6/30/96
AIM Growth Fund (A) 10.50%
AIM Growth Fund (B) 10.02
Lipper Growth Fund Index 7.99
Fund total return performance is compared
to the performance of the 30 largest
growth funds tracked by Lipper, excluding
all sales charges, and including fees
and expenses.
===============================================
===============================================
AVERAGE ANNUAL TOTAL RETURNS
INCLUDING SALES CHARGES.
FOR PERIODS ENDED 6/30/96.
CLASS A SHARES
1 Year 13.78%*
5 Years 10.49
10 Years 9.59
CLASS B SHARES
1 Year 14.33%**
Inception (9/1/93) 10.75
*20.40% excluding sales charges. **19.33%
excluding sales charges. Past performance
is no guarantee of comparable future results.
===============================================
2
<PAGE> 5
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
AS OF 6/30/96
<TABLE>
<CAPTION>
<S> <C>
TOP 10 INDUSTRIES TOP 10 EQUITY HOLDINGS
1. RETAIL (STORES) 1. FORE SYSTEMS, INC.
2. COMPUTER SOFTWARE/SERVICES 2. MICROSOFT CORP.
3. MEDICAL (PATIENT SERVICES) 3. CARDINAL HEALTH, INC.
4. MEDICAL (DRUGS) 4. TENET HEALTHCARE CORP.
5. FINANCE (CONSUMER CREDIT) 5. CABLETRON SYSTEMS, INC.
6. COMPUTER NETWORKING 6. HEALTHSOUTH CORP.
7. TELECOMMUNICATIONS 7. CISCO SYSTEMS, INC.
8. MEDICAL INSTRUMENTS/PRODUCTS 8. U.S. ROBOTICS CORP.
9. COMPUTER PERIPHERALS 9. SAFEWAY INC.
10. INSURANCE (MULTI-LINE PROPERTY) 10. MBNA CORP.
</TABLE>
- --------------------------------------------------------------------------------
Keep in mind, the Fund's portfolio composition may change and there is no
assurance the Fund will continue to hold any particular security.
Q. HOW WAS THE FUND POSITIONED IN THE TECHNOLOGY SECTOR AS OF JUNE 30?
A. Among the Fund's largest holdings were securities in software, networking,
and peripheral hardware companies including Cabletron Systems, Inc., Computer
Associates International, Inc., and Oracle Systems Corp. We also remain
broadly diversified: our largest holding, network equipment maker FORE
Systems, Inc., represented only 0.78% of the portfolio as of June 30, 1996.
Q. WHAT SEEMS TO BE BEHIND THE POSITIVE EARNINGS TRENDS IN THE HEALTH CARE
INDUSTRY?
A. Stocks of large hospital chains and managed care companies have improved
efficiency through major restructuring efforts including consolidations,
networking, and increased reliance on managed care. Drugmakers worldwide are
benefiting from ongoing cost-cutting efforts, price increases, and the
introduction of new drugs. Among the Fund's largest holdings were Cardinal
Health, Inc. and HEALTHSOUTH Corp.
Q. HOW HAVE RETAILERS FARED SINCE THE LAST QUARTER OF 1995?
A. After a dismal Christmas, earnings picked up for retailers during the
reporting period. That can be attributed to several factors: improved
efficiency in inventory and operating costs, and better inventory tracking
and distribution systems thanks to new technologies. We also have noted
increased sales in California, which tend to indicate sales trends to come
across the country. We were particularly interested in a variety of companies
that dominated specific themes--Nike Inc., Viking Office Products, Inc., and
Staples Inc.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. We anticipate continued volatility in financial markets given investors'
concerns about the possibility of rising inflation. Reports of accelerating
economic growth have prompted some analysts to predict that the Fed will
raise short-term interest rates in the coming months.
Others have suggested that market interest rates that have been rising
for most of the year may have forestalled any inflation threat, precluding
the necessity for Fed intervention. The Fed expects economic growth will slow
during the second half of the year, and that would lessen the likelihood
that monetary policy would be tightened.
The outlook for corporate earnings is mixed for the rest of 1996. The
continued pace of economic growth is the key, and interestingly, the consumer
may play an important role. Strong consumer demand has helped to spur
economic growth. While there has been much speculation about the climbing
levels of consumer debt and its eroding effect on demand, household balance
sheets have thus far remained healthy.
------------------------
Interestingly,
the consumer may play
an important role
in determining
the strength
of the economy
in the
second half of the year.
------------------------
3
<PAGE> 6
Financials
SCHEDULE OF INVESTMENTS
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-71.61%
ADVERTISING/BROADCASTING-0.61%
9,000 American Radio Systems Corp.(a) $ 387,000
- ----------------------------------------------------------------------------------------
10,000 Chancellor Corp.-Class A(a) 312,500
- ----------------------------------------------------------------------------------------
6,600 Clear Channel Communications, Inc.(a) 543,675
- ----------------------------------------------------------------------------------------
17,100 Infinity Broadcasting Corp.-Class A(a) 513,000
- ----------------------------------------------------------------------------------------
20,000 Jacor Communications, Inc.(a) 617,500
- ----------------------------------------------------------------------------------------
10,000 Paxson Communications Corp.(a) 106,250
- ----------------------------------------------------------------------------------------
7,500 True North Communications, Inc. 166,875
- ----------------------------------------------------------------------------------------
2,646,800
- ----------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-0.21%
7,900 Boeing Co. 688,287
- ----------------------------------------------------------------------------------------
3,500 General Dynamics Corp. 217,000
- ----------------------------------------------------------------------------------------
905,287
- ----------------------------------------------------------------------------------------
AIRLINES-0.38%
13,000 Delta Air Lines Inc. 1,079,000
- ----------------------------------------------------------------------------------------
20,000 Southwest Airlines Co. 582,500
- ----------------------------------------------------------------------------------------
1,661,500
- ----------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.32%
8,800 Chrysler Corp. 545,600
- ----------------------------------------------------------------------------------------
26,000 Ford Motor Co. 841,750
- ----------------------------------------------------------------------------------------
1,387,350
- ----------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.16%
31,500 Mark IV Industries, Inc. 712,688
- ----------------------------------------------------------------------------------------
BANKING-0.26%
12,500 Bank of Boston Corp. 618,750
- ----------------------------------------------------------------------------------------
18,000 PNC Bank Corp. 535,500
- ----------------------------------------------------------------------------------------
1,154,250
- ----------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.28%
17,408 Chase Manhattan Corp. 1,229,440
- ----------------------------------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.16%
9,000 Anheuser-Busch Companies, Inc. 675,000
- ----------------------------------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-0.21%
26,000 PepsiCo Inc. 919,750
- ----------------------------------------------------------------------------------------
BIOTECHNOLOGY-0.49%
12,000 AMGEN Inc.(a) 648,000
- ----------------------------------------------------------------------------------------
30,300 Guidant Corp. 1,492,275
- ----------------------------------------------------------------------------------------
2,140,275
- ----------------------------------------------------------------------------------------
BUILDING MATERIALS-0.28%
12,000 Georgia Pacific Corp. 852,000
- ----------------------------------------------------------------------------------------
16,500 ServiceMaster L.P. 379,500
- ----------------------------------------------------------------------------------------
1,231,500
- ----------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 7
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
BUSINESS SERVICES-1.08%
10,000 AccuStaff, Inc.(a) $ 272,500
- ----------------------------------------------------------------------------------------
8,900 APAC Teleservices, Inc.(a) 320,400
- ----------------------------------------------------------------------------------------
6,400 Career Horizons, Inc.(a) 224,000
- ----------------------------------------------------------------------------------------
11,500 CUC International Inc.(a) 408,250
- ----------------------------------------------------------------------------------------
26,000 Equifax Inc. 682,500
- ----------------------------------------------------------------------------------------
19,800 Healthcare COMPARE Corp.(a) 965,250
- ----------------------------------------------------------------------------------------
18,600 Manpower, Inc. 730,050
- ----------------------------------------------------------------------------------------
36,450 Olsten Corp. 1,070,719
- ----------------------------------------------------------------------------------------
4,673,669
- ----------------------------------------------------------------------------------------
CHEMICALS-0.13%
15,000 Agrium, Inc. 196,641
- ----------------------------------------------------------------------------------------
20,000 Polymer Group, Inc.(a) 350,000
- ----------------------------------------------------------------------------------------
546,641
- ----------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.25%
37,200 Airgas Inc.(a) 706,800
- ----------------------------------------------------------------------------------------
10,000 IMC Global, Inc. 376,250
- ----------------------------------------------------------------------------------------
1,083,050
- ----------------------------------------------------------------------------------------
COMPUTER MINI/PCS-1.98%
11,600 CDW Computer Centers, Inc.(a) 806,200
- ----------------------------------------------------------------------------------------
30,500 COMPAQ Computer Corp.(a) 1,502,126
- ----------------------------------------------------------------------------------------
42,600 Dell Computer Corp.(a) 2,167,276
- ----------------------------------------------------------------------------------------
14,300 Gateway 2000 Inc.(a) 486,200
- ----------------------------------------------------------------------------------------
10,100 Hewlett-Packard Co. 1,006,212
- ----------------------------------------------------------------------------------------
14,100 Stratus Computer, Inc.(a) 408,900
- ----------------------------------------------------------------------------------------
37,500 Sun Microsystems, Inc.(a) 2,207,812
- ----------------------------------------------------------------------------------------
8,584,726
- ----------------------------------------------------------------------------------------
COMPUTER NETWORKING-3.58%
22,800 Ascend Communications, Inc.(a) 1,282,500
- ----------------------------------------------------------------------------------------
41,500 Cabletron Systems, Inc.(a) 2,847,937
- ----------------------------------------------------------------------------------------
31,800 Cascade Communications Corp.(a) 2,162,400
- ----------------------------------------------------------------------------------------
10,000 Cheyenne Software, Inc.(a) 192,500
- ----------------------------------------------------------------------------------------
50,000 Cisco Systems, Inc.(a) 2,831,250
- ----------------------------------------------------------------------------------------
93,600 FORE Systems, Inc.(a) 3,381,300
- ----------------------------------------------------------------------------------------
20,100 Gandalf Technologies, Inc.(a) 160,800
- ----------------------------------------------------------------------------------------
4,200 Shiva Corp.(a) 336,000
- ----------------------------------------------------------------------------------------
5,000 Sync Research, Inc.(a) 71,250
- ----------------------------------------------------------------------------------------
49,400 3Com Corp.(a) 2,260,050
- ----------------------------------------------------------------------------------------
15,525,987
- ----------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-2.44%
42,000 Adaptec, Inc.(a) 1,989,750
- ----------------------------------------------------------------------------------------
23,200 EMC Corp.(a) 432,100
- ----------------------------------------------------------------------------------------
10,200 Komag, Inc.(a) 269,025
- ----------------------------------------------------------------------------------------
9,400 Microchip Technology, Inc.(a) 232,650
- ----------------------------------------------------------------------------------------
61,350 Oracle Systems Corp.(a) 2,419,490
- ----------------------------------------------------------------------------------------
9,000 Seagate Technology Inc.(a) 405,000
- ----------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER PERIPHERALS-continued
43,000 Storage Technology Corp.(a) $ 1,644,750
- ----------------------------------------------------------------------------------------
32,000 U.S. Robotics Corp.(a) 2,736,000
- ----------------------------------------------------------------------------------------
17,400 Western Digital Corp.(a) 454,575
- ----------------------------------------------------------------------------------------
10,583,340
- ----------------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES-7.27%
33,000 BMC Software, Inc.(a) 1,971,750
- ----------------------------------------------------------------------------------------
57,000 Cadence Design Systems, Inc.(a) 1,923,750
- ----------------------------------------------------------------------------------------
40,000 Ceridian Corp.(a) 2,020,000
- ----------------------------------------------------------------------------------------
36,500 Computer Associates International, Inc. 2,600,625
- ----------------------------------------------------------------------------------------
10,000 Computer Sciences Corp.(a) 747,500
- ----------------------------------------------------------------------------------------
40,000 Computervision Corp.(a) 400,000
- ----------------------------------------------------------------------------------------
25,000 CompuWare Corp.(a) 987,500
- ----------------------------------------------------------------------------------------
11,200 CSG Systems International, Inc.(a) 291,200
- ----------------------------------------------------------------------------------------
19,500 DST Systems, Inc.(a) 624,000
- ----------------------------------------------------------------------------------------
10,000 Electronic Arts, Inc.(a) 267,500
- ----------------------------------------------------------------------------------------
8,800 First Data Corp. 700,700
- ----------------------------------------------------------------------------------------
5,400 Gartner Group, Inc.(a) 197,775
- ----------------------------------------------------------------------------------------
28,800 HBO & Co. 1,951,200
- ----------------------------------------------------------------------------------------
10,000 HPR, Inc.(a) 212,500
- ----------------------------------------------------------------------------------------
6,700 Imnet Systems, Inc.(a) 204,350
- ----------------------------------------------------------------------------------------
14,900 Informix Corp.(a) 335,250
- ----------------------------------------------------------------------------------------
8,500 Integrated Systems, Inc.(a) 340,531
- ----------------------------------------------------------------------------------------
15,000 Intuit, Inc.(a) 708,750
- ----------------------------------------------------------------------------------------
20,100 Macromedia(a) 439,687
- ----------------------------------------------------------------------------------------
10,500 McAffee Associates, Inc.(a) 514,500
- ----------------------------------------------------------------------------------------
27,500 Microsoft Corp.(a) 3,303,438
- ----------------------------------------------------------------------------------------
10,000 National Data Corp. 342,500
- ----------------------------------------------------------------------------------------
43,400 Network General Corp.(a) 933,100
- ----------------------------------------------------------------------------------------
27,600 PairGain Technologies, Inc.(a) 1,711,200
- ----------------------------------------------------------------------------------------
49,000 Parametric Technology Corp.(a) 2,125,375
- ----------------------------------------------------------------------------------------
10,000 PC Docs Group International, Inc.(a) 198,750
- ----------------------------------------------------------------------------------------
20,000 Physician Computer Network, Inc.(a) 231,250
- ----------------------------------------------------------------------------------------
2,300 Pure Software, Inc.(a) 78,200
- ----------------------------------------------------------------------------------------
12,200 Rational Software Corp.(a) 655,750
- ----------------------------------------------------------------------------------------
4,200 Red Brick Systems, Inc.(a) 154,350
- ----------------------------------------------------------------------------------------
15,200 S3, Inc.(a) 187,150
- ----------------------------------------------------------------------------------------
1,600 Shared Medical Systems Corp. 102,800
- ----------------------------------------------------------------------------------------
6,300 SoftKey International, Inc.(a) 119,306
- ----------------------------------------------------------------------------------------
20,500 Sterling Commerce, Inc.(a) 761,063
- ----------------------------------------------------------------------------------------
11,500 Sterling Software, Inc.(a) 885,500
- ----------------------------------------------------------------------------------------
15,000 Structural Dynamics Research Corp.(a) 330,000
- ----------------------------------------------------------------------------------------
10,400 SunGard Data Systems Inc.(a) 417,300
- ----------------------------------------------------------------------------------------
27,700 Synopsys, Inc.(a) 1,101,075
- ----------------------------------------------------------------------------------------
2,100 Systemsoft Corp.(a) 98,700
- ----------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES-continued
2,400 Transition Systems, Inc.(a) $ 68,400
- ----------------------------------------------------------------------------------------
10,800 Verity, Inc.(a) 310,500
- ----------------------------------------------------------------------------------------
31,554,775
- ----------------------------------------------------------------------------------------
CONGLOMERATES-1.49%
11,000 Allied Signal Inc. 628,375
- ----------------------------------------------------------------------------------------
10,500 ITT Corp.(a) 695,625
- ----------------------------------------------------------------------------------------
31,000 Loews Corp. 2,445,125
- ----------------------------------------------------------------------------------------
13,000 Textron Inc. 1,038,375
- ----------------------------------------------------------------------------------------
28,000 Tyco International Ltd. 1,141,000
- ----------------------------------------------------------------------------------------
21,500 U.S. Industries Inc. 518,688
- ----------------------------------------------------------------------------------------
6,467,188
- ----------------------------------------------------------------------------------------
CONTAINERS-0.12%
19,000 First Brands Corp. 513,000
- ----------------------------------------------------------------------------------------
COSMETICS & TOILETRIES-0.63%
12,000 Colgate-Palmolive Co. 1,017,000
- ----------------------------------------------------------------------------------------
18,000 Gillette Co. (The) 1,122,750
- ----------------------------------------------------------------------------------------
6,600 Procter & Gamble Co. 598,125
- ----------------------------------------------------------------------------------------
2,737,875
- ----------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.63%
9,700 Amphenol Corp.(a) 223,100
- ----------------------------------------------------------------------------------------
9,800 Berg Electronics, Inc.(a) 232,750
- ----------------------------------------------------------------------------------------
9,700 BMC Industries, Inc. 278,875
- ----------------------------------------------------------------------------------------
10,300 Cable Design Technologies Corp.(a) 337,325
- ----------------------------------------------------------------------------------------
7,500 Checkpoint Systems, Inc.(a) 257,813
- ----------------------------------------------------------------------------------------
4,950 Parker-Hannifin Corp. 209,755
- ----------------------------------------------------------------------------------------
10,600 Symbol Technologies, Inc.(a) 471,700
- ----------------------------------------------------------------------------------------
22,000 Thermo Instrument Systems, Inc.(a) 709,500
- ----------------------------------------------------------------------------------------
2,720,818
- ----------------------------------------------------------------------------------------
ELECTRONIC/DEFENSE-0.25%
30,000 Sunstrand Corp. 1,098,750
- ----------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.15%
10,200 Arrow Electronics, Inc.(a) 439,875
- ----------------------------------------------------------------------------------------
5,300 Avnet, Inc. 223,262
- ----------------------------------------------------------------------------------------
663,137
- ----------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.91%
20,275 Bear Stearns Companies, Inc. (The) 478,997
- ----------------------------------------------------------------------------------------
9,500 Finova Group Inc. 463,125
- ----------------------------------------------------------------------------------------
12,700 Franklin Resources, Inc. 774,700
- ----------------------------------------------------------------------------------------
15,000 Imperial Credit Industries, Inc.(a) 453,750
- ----------------------------------------------------------------------------------------
27,700 PaineWebber Group, Inc. 657,875
- ----------------------------------------------------------------------------------------
20,000 Salomon Inc. 880,000
- ----------------------------------------------------------------------------------------
7,900 T. Rowe Price Associates, Inc. 242,925
- ----------------------------------------------------------------------------------------
3,951,372
- ----------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE (CONSUMER CREDIT)-4.53%
6,700 ADVANTA Corp.-Class A $ 341,700
- ----------------------------------------------------------------------------------------
17,000 ADVANTA Corp.-Class B 769,250
- ----------------------------------------------------------------------------------------
16,000 Beneficial Corp. 898,000
- ----------------------------------------------------------------------------------------
20,300 Capital One Financial Corp. 578,550
- ----------------------------------------------------------------------------------------
10,000 Cityscape Financial Corp.(a) 512,500
- ----------------------------------------------------------------------------------------
28,500 Credit Acceptance Corp.(a) 598,500
- ----------------------------------------------------------------------------------------
26,000 Federal Home Loan Mortgage Corp. 2,223,000
- ----------------------------------------------------------------------------------------
70,000 Federal National Mortgage Association 2,345,000
- ----------------------------------------------------------------------------------------
27,000 First USA, Inc. 1,485,000
- ----------------------------------------------------------------------------------------
46,700 Green Tree Financial Corp. 1,459,375
- ----------------------------------------------------------------------------------------
20,000 Household International, Inc. 1,520,000
- ----------------------------------------------------------------------------------------
93,000 MBNA Corp. 2,650,500
- ----------------------------------------------------------------------------------------
25,700 Medaphis Corp.(a) 1,021,575
- ----------------------------------------------------------------------------------------
20,700 Money Store, Inc. (The) 457,987
- ----------------------------------------------------------------------------------------
14,200 Olympic Financial Ltd.(a) 326,600
- ----------------------------------------------------------------------------------------
17,700 PMI Group, Inc. (The) 752,250
- ----------------------------------------------------------------------------------------
15,000 PMT Services, Inc. 429,375
- ----------------------------------------------------------------------------------------
12,500 Student Loan Marketing Association 925,000
- ----------------------------------------------------------------------------------------
6,600 SunAmerica, Inc. 372,900
- ----------------------------------------------------------------------------------------
19,667,062
- ----------------------------------------------------------------------------------------
FOOD PROCESSING-0.42%
21,000 ConAgra, Inc. 952,875
- ----------------------------------------------------------------------------------------
11,400 Lancaster Colony Corp. 426,075
- ----------------------------------------------------------------------------------------
13,200 Richfood Holdings, Inc. 429,000
- ----------------------------------------------------------------------------------------
1,807,950
- ----------------------------------------------------------------------------------------
FUNERAL SERVICES-0.54%
36,800 Service Corp. International 2,116,000
- ----------------------------------------------------------------------------------------
7,650 Stewart Enterprises, Inc.-Class A 239,062
- ----------------------------------------------------------------------------------------
2,355,062
- ----------------------------------------------------------------------------------------
GAMING-0.32%
15,800 GTECH Holdings Corp.(a) 468,075
- ----------------------------------------------------------------------------------------
17,000 Mirage Resorts, Inc.(a) 918,000
- ----------------------------------------------------------------------------------------
1,386,075
- ----------------------------------------------------------------------------------------
HOME BUILDING-0.20%
36,250 Clayton Homes, Inc. 725,000
- ----------------------------------------------------------------------------------------
6,000 Oakwood Homes Corp. 123,750
- ----------------------------------------------------------------------------------------
848,750
- ----------------------------------------------------------------------------------------
HOTELS/MOTELS-0.62%
3,100 Doubletree Corp.(a) 110,050
- ----------------------------------------------------------------------------------------
28,000 Hospitality Franchise Systems, Inc.(a) 1,960,000
- ----------------------------------------------------------------------------------------
4,000 Promus Hotel Corp.(a) 118,500
- ----------------------------------------------------------------------------------------
10,300 Sun International Hotels Ltd. 499,550
- ----------------------------------------------------------------------------------------
2,688,100
- ----------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
INSURANCE (LIFE & HEALTH)-0.59%
9,500 Compdent Corp.(a) $ 441,750
- ----------------------------------------------------------------------------------------
10,000 Conseco, Inc. 400,000
- ----------------------------------------------------------------------------------------
19,900 Riscorp, Inc.(a) 363,175
- ----------------------------------------------------------------------------------------
39,300 United Companies Financial Corp. 1,336,200
- ----------------------------------------------------------------------------------------
2,541,125
- ----------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-2.38%
10,500 Ace, Ltd. 493,500
- ----------------------------------------------------------------------------------------
20,000 Aetna Life & Casualty Co. 1,430,000
- ----------------------------------------------------------------------------------------
11,500 American International Group, Inc. 1,134,188
- ----------------------------------------------------------------------------------------
19,000 CIGNA Corp. 2,239,625
- ----------------------------------------------------------------------------------------
41,300 Everest Re Holdings, Inc. 1,068,638
- ----------------------------------------------------------------------------------------
42,000 MGIC Investment Corp. 2,357,250
- ----------------------------------------------------------------------------------------
14,100 TIG Holdings, Inc. 408,900
- ----------------------------------------------------------------------------------------
26,250 Travelers Group, Inc. 1,197,656
- ----------------------------------------------------------------------------------------
10,329,757
- ----------------------------------------------------------------------------------------
LEISURE & RECREATION-1.32%
19,600 Callaway Golf Co. 651,700
- ----------------------------------------------------------------------------------------
29,200 Carnival Corp.-Class A 843,150
- ----------------------------------------------------------------------------------------
18,500 Coleman Co., Inc. (The)(a) 783,938
- ----------------------------------------------------------------------------------------
27,300 Eastman Kodak Co. 2,122,575
- ----------------------------------------------------------------------------------------
15,500 Harley-Davidson, Inc. 637,438
- ----------------------------------------------------------------------------------------
17,687 Mattel, Inc. 506,290
- ----------------------------------------------------------------------------------------
7,200 Speedway Motorsports, Inc.(a) 184,500
- ----------------------------------------------------------------------------------------
5,729,591
- ----------------------------------------------------------------------------------------
MACHINE TOOLS-0.04%
5,300 Kennametal Inc. 180,200
- ----------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.48%
10,000 Pentair, Inc. 300,000
- ----------------------------------------------------------------------------------------
42,750 Thermo Electron Corp.(a) 1,779,468
- ----------------------------------------------------------------------------------------
2,079,468
- ----------------------------------------------------------------------------------------
MACHINERY (HEAVY)-0.19%
25,000 Harnischfeger Industries, Inc. 831,250
- ----------------------------------------------------------------------------------------
MEDICAL (DRUGS)-3.89%
30,500 Abbott Laboratories 1,326,750
- ----------------------------------------------------------------------------------------
29,000 American Home Products Corp. 1,743,625
- ----------------------------------------------------------------------------------------
12,000 AmeriSource Health Corp.(a) 399,000
- ----------------------------------------------------------------------------------------
12,500 Bristol-Myers Squibb Co. 1,125,000
- ----------------------------------------------------------------------------------------
43,500 Cardinal Health, Inc. 3,137,438
- ----------------------------------------------------------------------------------------
8,000 Express Scripts, Inc.(a) 368,000
- ----------------------------------------------------------------------------------------
40,500 ICN Pharmaceuticals, Inc. 941,625
- ----------------------------------------------------------------------------------------
16,000 Johnson & Johnson 792,000
- ----------------------------------------------------------------------------------------
4,800 Jones Medical Industries, Inc. 159,600
- ----------------------------------------------------------------------------------------
17,000 Merck & Co., Inc. 1,098,625
- ----------------------------------------------------------------------------------------
4,400 Parexel International Corp.(a) 212,300
- ----------------------------------------------------------------------------------------
8,000 Pfizer Inc. 571,000
- ----------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MEDICAL (DRUGS)-continued
28,000 Pharmacia & Upjohn, Inc. $ 1,242,500
- ----------------------------------------------------------------------------------------
40,000 Schering-Plough Corp. 2,510,000
- ----------------------------------------------------------------------------------------
33,000 Watson Pharmaceuticals, Inc.(a) 1,249,875
- ----------------------------------------------------------------------------------------
16,877,338
- ----------------------------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-2.55%
10,000 Advanced Technology Laboratories, Inc.(a) 365,000
- ----------------------------------------------------------------------------------------
2,500 Arterial Vascular Engineering, Inc.(a) 90,625
- ----------------------------------------------------------------------------------------
24,900 Baxter International Inc. 1,176,525
- ----------------------------------------------------------------------------------------
14,400 Becton, Dickinson & Co. 1,155,600
- ----------------------------------------------------------------------------------------
12,200 Biomet, Inc.(a) 175,375
- ----------------------------------------------------------------------------------------
47,040 Boston Scientific Corp.(a) 2,116,800
- ----------------------------------------------------------------------------------------
10,000 CardioThoracic Systems Inc.(a) 132,500
- ----------------------------------------------------------------------------------------
11,500 CONMED Corp.(a) 306,188
- ----------------------------------------------------------------------------------------
10,800 DENTSPLY International, Inc. 459,000
- ----------------------------------------------------------------------------------------
3,100 Endosonics Corp.(a) 55,413
- ----------------------------------------------------------------------------------------
2,400 Gulf South Medical Supply, Inc.(a) 93,600
- ----------------------------------------------------------------------------------------
17,900 Idexx Laboratories, Inc.(a) 702,575
- ----------------------------------------------------------------------------------------
14,600 Invacare Corp. 343,100
- ----------------------------------------------------------------------------------------
29,000 Medtronic, Inc. 1,624,000
- ----------------------------------------------------------------------------------------
7,500 Nellcor Puritan-Bennett, Inc.(a) 363,750
- ----------------------------------------------------------------------------------------
7,000 Physician Sales & Service, Inc.(a) 169,750
- ----------------------------------------------------------------------------------------
8,000 Quintiles Transnational Corp.(a) 526,000
- ----------------------------------------------------------------------------------------
10,000 Spine-Tech, Inc.(a) 290,000
- ----------------------------------------------------------------------------------------
30,300 U.S. Surgical Corp. 939,300
- ----------------------------------------------------------------------------------------
11,085,101
- ----------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-6.26%
10,200 American Medical Response, Inc.(a) 359,550
- ----------------------------------------------------------------------------------------
14,000 American Oncology Resources, Inc.(a) 304,500
- ----------------------------------------------------------------------------------------
51,000 Apria Healthcare Group, Inc.(a) 1,600,125
- ----------------------------------------------------------------------------------------
33,920 Columbia/HCA Healthcare Corp. 1,810,480
- ----------------------------------------------------------------------------------------
10,300 Foundation Health Corp.(a) 369,513
- ----------------------------------------------------------------------------------------
21,750 Genesis Health Ventures, Inc.(a) 682,406
- ----------------------------------------------------------------------------------------
46,350 Health Care & Retirement Corp.(a) 1,100,813
- ----------------------------------------------------------------------------------------
92,925 Health Management Associates, Inc.-Class A(a) 1,881,731
- ----------------------------------------------------------------------------------------
79,000 HEALTHSOUTH Corp.(a) 2,844,000
- ----------------------------------------------------------------------------------------
27,000 Lincare Holdings, Inc.(a) 1,059,750
- ----------------------------------------------------------------------------------------
20,200 Living Centers of America, Inc.(a) 694,375
- ----------------------------------------------------------------------------------------
24,800 Manor Care, Inc. 976,500
- ----------------------------------------------------------------------------------------
51,800 MedPartners/Mullikin, Inc.(a) 1,081,325
- ----------------------------------------------------------------------------------------
8,600 OccuSystems Inc.(a) 321,425
- ----------------------------------------------------------------------------------------
49,000 Omnicare, Inc. 1,298,500
- ----------------------------------------------------------------------------------------
32,700 OrNda HealthCorp(a) 784,800
- ----------------------------------------------------------------------------------------
7,900 Orthodontic Centers of America, Inc.(a) 209,350
- ----------------------------------------------------------------------------------------
25,600 Oxford Health Plans, Inc.(a) 1,052,800
- ----------------------------------------------------------------------------------------
14,700 PhyCor, Inc.(a) 558,600
- ----------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES)-continued
20,000 Physician Reliance Network, Inc.(a) $ 445,000
- ----------------------------------------------------------------------------------------
11,000 Quorum Health Group, Inc.(a) 290,125
- ----------------------------------------------------------------------------------------
55,900 Sybron International Corp.(a) 1,397,500
- ----------------------------------------------------------------------------------------
140,000 Tenet Healthcare Corp.(a) 2,992,500
- ----------------------------------------------------------------------------------------
11,000 Total Renal Care Holdings Inc.(a) 464,750
- ----------------------------------------------------------------------------------------
86,000 Vencor, Inc.(a) 2,623,000
- ----------------------------------------------------------------------------------------
27,203,418
- ----------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-0.17%
15,000 Williams Companies Inc. (The) 742,500
- ----------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.16%
12,800 Xerox Corp. 684,800
- ----------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.40%
12,100 Avery Dennison Corp. 663,987
- ----------------------------------------------------------------------------------------
19,800 Reynolds & Reynolds Co.-Class A 1,054,350
- ----------------------------------------------------------------------------------------
1,718,337
- ----------------------------------------------------------------------------------------
OIL & GAS (DRILLING)-0.25%
50,000 Reading & Bates Corp.(a) 1,106,250
- ----------------------------------------------------------------------------------------
OIL & GAS (EXPLORATION)-0.02%
2,800 Belco Oil & Gas Corp.(a) 99,400
- ----------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-0.74%
5,000 Chesapeake Energy Corp.(a) 449,375
- ----------------------------------------------------------------------------------------
11,600 Halliburton Co. 643,800
- ----------------------------------------------------------------------------------------
14,500 Louisiana Land & Exploration Co. 835,563
- ----------------------------------------------------------------------------------------
35,200 NorAm Energy Corp. 382,800
- ----------------------------------------------------------------------------------------
17,900 Sonat Offshore Drilling Inc. 903,950
- ----------------------------------------------------------------------------------------
3,215,488
- ----------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.70%
13,500 Diamond Offshore Drilling, Inc. 772,875
- ----------------------------------------------------------------------------------------
32,000 Dresser Industries, Inc. 944,000
- ----------------------------------------------------------------------------------------
8,500 Schlumberger Ltd. 716,125
- ----------------------------------------------------------------------------------------
8,100 Smith International, Inc.(a) 244,012
- ----------------------------------------------------------------------------------------
20,000 Varco International, Inc.(a) 362,500
- ----------------------------------------------------------------------------------------
3,039,512
- ----------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.42%
13,000 Kimberly-Clark Corp. 1,004,250
- ----------------------------------------------------------------------------------------
17,000 Union Camp Corp. 828,750
- ----------------------------------------------------------------------------------------
1,833,000
- ----------------------------------------------------------------------------------------
POLLUTION CONTROL-0.09%
11,800 United Waste Systems, Inc.(a) 380,550
- ----------------------------------------------------------------------------------------
PUBLISHING-0.28%
15,600 New York Times Co. 508,950
- ----------------------------------------------------------------------------------------
5,300 Times Mirror Co. (The) 230,550
- ----------------------------------------------------------------------------------------
6,800 Tribune Co. 493,850
- ----------------------------------------------------------------------------------------
1,233,350
- ----------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST-0.13%
21,000 Universal Health Services, Inc.(a) $ 548,625
- ----------------------------------------------------------------------------------------
RESTAURANTS-0.80%
30,400 Applebee's International, Inc. 976,600
- ----------------------------------------------------------------------------------------
4,600 Cracker Barrel Old Country Store, Inc. 111,550
- ----------------------------------------------------------------------------------------
12,800 Darden Restaurants, Inc. 137,600
- ----------------------------------------------------------------------------------------
26,800 Lone Star Steakhouse & Saloon, Inc.(a) 1,011,700
- ----------------------------------------------------------------------------------------
23,700 Outback Steakhouse, Inc.(a) 817,280
- ----------------------------------------------------------------------------------------
15,500 Planet Hollywood International, Inc.(a) 418,500
- ----------------------------------------------------------------------------------------
3,473,230
- ----------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-1.55%
23,000 Albertson's, Inc. 951,625
- ----------------------------------------------------------------------------------------
37,800 Eckerd (Jack) Corp.(a) 855,225
- ----------------------------------------------------------------------------------------
20,000 Kroger Co. (The)(a) 790,000
- ----------------------------------------------------------------------------------------
18,000 Rite Aid Corp. 535,500
- ----------------------------------------------------------------------------------------
81,000 Safeway, Inc.(a) 2,673,000
- ----------------------------------------------------------------------------------------
25,300 Vons Companies, Inc. (The)(a) 945,588
- ----------------------------------------------------------------------------------------
6,750,938
- ----------------------------------------------------------------------------------------
RETAIL (STORES)-8.36%
30,700 AutoZone, Inc.(a) 1,066,825
- ----------------------------------------------------------------------------------------
2,700 Barnett, Inc.(a) 77,625
- ----------------------------------------------------------------------------------------
39,200 Bed Bath & Beyond, Inc.(a) 1,048,600
- ----------------------------------------------------------------------------------------
9,800 Boise Cascade Office Products Corp.(a) 339,325
- ----------------------------------------------------------------------------------------
14,400 CompUSA, Inc.(a) 491,400
- ----------------------------------------------------------------------------------------
54,900 Consolidated Stores Corp.(a) 2,017,575
- ----------------------------------------------------------------------------------------
25,500 Dayton-Hudson Corp. 2,629,687
- ----------------------------------------------------------------------------------------
20,000 Dillard Department Stores, Inc. 730,000
- ----------------------------------------------------------------------------------------
19,575 Dollar General Corp. 572,569
- ----------------------------------------------------------------------------------------
10,000 Dollar Tree Stores, Inc. 317,500
- ----------------------------------------------------------------------------------------
10,000 Finish Line, Inc. (The)(a) 286,250
- ----------------------------------------------------------------------------------------
69,000 Gap, Inc. (The) 2,216,625
- ----------------------------------------------------------------------------------------
14,400 Global DirectMail Corp.(a) 568,800
- ----------------------------------------------------------------------------------------
19,500 Gymboree Corp.(a) 594,750
- ----------------------------------------------------------------------------------------
18,800 Heilig-Meyers Co. 451,200
- ----------------------------------------------------------------------------------------
40,000 Home Depot, Inc. (The) 2,160,000
- ----------------------------------------------------------------------------------------
15,800 Kohl's Corp.(a) 578,675
- ----------------------------------------------------------------------------------------
30,000 Lowe's Companies, Inc. 1,083,750
- ----------------------------------------------------------------------------------------
9,000 Men's Wearhouse Inc. (The)(a) 290,250
- ----------------------------------------------------------------------------------------
5,200 Mercantile Stores Co., Inc. 304,850
- ----------------------------------------------------------------------------------------
14,300 Meyer (Fred), Inc.(a) 420,062
- ----------------------------------------------------------------------------------------
10,900 Micro Warehouse, Inc.(a) 218,000
- ----------------------------------------------------------------------------------------
19,000 Nordstrom, Inc. 845,500
- ----------------------------------------------------------------------------------------
14,600 Oakley, Inc.(a) 664,300
- ----------------------------------------------------------------------------------------
53,500 Office Depot, Inc.(a) 1,090,063
- ----------------------------------------------------------------------------------------
7,500 Orchard Supply Hardware Stores Corp.(a) 225,937
- ----------------------------------------------------------------------------------------
40,000 Pep Boys-Manny, Moe & Jack 1,360,000
- ----------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RETAIL (STORES)-continued
13,000 Petco Animal Supplies, Inc.(a) $ 373,750
- ----------------------------------------------------------------------------------------
27,200 PetSmart, Inc. 1,298,800
- ----------------------------------------------------------------------------------------
56,300 Price/Costco Inc.(a) 1,217,488
- ----------------------------------------------------------------------------------------
8,000 Ross Stores, Inc. 278,000
- ----------------------------------------------------------------------------------------
25,000 Sears, Roebuck & Co. 1,215,625
- ----------------------------------------------------------------------------------------
25,600 Sports Authority, Inc. (The)(a) 838,400
- ----------------------------------------------------------------------------------------
89,250 Staples Inc.(a) 1,740,375
- ----------------------------------------------------------------------------------------
7,800 Starbucks Corp.(a) 220,350
- ----------------------------------------------------------------------------------------
42,900 Sunglass Hut International, Inc.(a) 1,045,688
- ----------------------------------------------------------------------------------------
29,000 Tech Data Corp.(a) 630,750
- ----------------------------------------------------------------------------------------
2,600 Tiffany & Co. 189,800
- ----------------------------------------------------------------------------------------
31,000 Toys "R" Us Inc.(a) 883,500
- ----------------------------------------------------------------------------------------
14,900 U.S. Office Products Co.(a) 625,800
- ----------------------------------------------------------------------------------------
74,000 Viking Office Products, Inc.(a) 2,321,750
- ----------------------------------------------------------------------------------------
24,400 Waban Inc.(a) 582,550
- ----------------------------------------------------------------------------------------
9,000 Williams-Sonoma, Inc.(a) 212,625
- ----------------------------------------------------------------------------------------
36,325,369
- ----------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.32%
10,500 Millipore Corp. 439,687
- ----------------------------------------------------------------------------------------
18,200 Varian Associates, Inc. 941,850
- ----------------------------------------------------------------------------------------
1,381,537
- ----------------------------------------------------------------------------------------
SEMICONDUCTORS-1.81%
71,150 Analog Devices, Inc.(a) 1,814,325
- ----------------------------------------------------------------------------------------
7,300 Integrated Process Equipment Corp.(a) 151,475
- ----------------------------------------------------------------------------------------
34,200 Intel Corp. 2,511,563
- ----------------------------------------------------------------------------------------
23,400 International Rectifier Corp.(a) 377,325
- ----------------------------------------------------------------------------------------
12,900 Lattice Semiconductor Corp.(a) 311,213
- ----------------------------------------------------------------------------------------
9,500 Linear Technology Corp. 285,000
- ----------------------------------------------------------------------------------------
29,000 LSI Logic Corp.(a) 754,000
- ----------------------------------------------------------------------------------------
20,000 MEMC Electronic Materials, Inc.(a) 775,000
- ----------------------------------------------------------------------------------------
13,400 SCI Systems, Inc.(a) 544,375
- ----------------------------------------------------------------------------------------
10,000 Vitesse Semiconductor Corp.(a) 240,000
- ----------------------------------------------------------------------------------------
4,400 Zilog, Inc.(a) 105,600
- ----------------------------------------------------------------------------------------
7,869,876
- ----------------------------------------------------------------------------------------
SHOES & RELATED APPAREL-0.81%
16,000 NIKE, Inc.-Class B 1,644,000
- ----------------------------------------------------------------------------------------
21,500 Nine West Group, Inc.(a) 1,099,188
- ----------------------------------------------------------------------------------------
30,800 Thrifty PayLess Holdings, Inc.(a) 531,300
- ----------------------------------------------------------------------------------------
7,500 Wolverine World Wide, Inc. 243,750
- ----------------------------------------------------------------------------------------
3,518,238
- ----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-3.46%
6,000 ACC Corp.(a) 291,750
- ----------------------------------------------------------------------------------------
24,000 ADC Telecommunications, Inc.(a) 1,080,000
- ----------------------------------------------------------------------------------------
18,000 Allen Group Inc. 391,500
- ----------------------------------------------------------------------------------------
29,400 Andrew Corp.(a) 1,580,250
- ----------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TELECOMMUNICATIONS-continued
13,700 Aspect Telecommunications Corp.(a) $ 678,150
- ----------------------------------------------------------------------------------------
19,000 Frontier Corp. 581,875
- ----------------------------------------------------------------------------------------
34,200 Glenayre Technologies, Inc.(a) 1,710,000
- ----------------------------------------------------------------------------------------
30,000 Lucent Technologies, Inc. 1,136,250
- ----------------------------------------------------------------------------------------
33,000 MCI Communications Corp. 845,625
- ----------------------------------------------------------------------------------------
38,000 Octel Communications Corp.(a) 750,500
- ----------------------------------------------------------------------------------------
8,300 Premier Technologies, Inc.(a) 261,450
- ----------------------------------------------------------------------------------------
18,000 Premisys Communications, Inc.(a) 1,098,000
- ----------------------------------------------------------------------------------------
26,300 Scientific-Atlanta, Inc. 407,650
- ----------------------------------------------------------------------------------------
37,900 Tellabs, Inc.(a) 2,534,562
- ----------------------------------------------------------------------------------------
6,666 360 Communications Co.(a) 159,984
- ----------------------------------------------------------------------------------------
2,350 TransPro, Inc. 16,156
- ----------------------------------------------------------------------------------------
8,400 U.S. Long Distance Corp.(a) 298,200
- ----------------------------------------------------------------------------------------
21,400 WorldCom, Inc. 1,185,025
- ----------------------------------------------------------------------------------------
15,006,927
- ----------------------------------------------------------------------------------------
TELEPHONE-0.32%
2,300 Century Telephone Enterprises, Inc. 73,313
- ----------------------------------------------------------------------------------------
25,000 Cincinnati Bell, Inc. 1,303,125
- ----------------------------------------------------------------------------------------
1,376,438
- ----------------------------------------------------------------------------------------
TEXTILES-0.93%
3,400 Designer Holdings Ltd.(a) 90,525
- ----------------------------------------------------------------------------------------
25,000 Fruit of The Loom, Inc.(a) 637,500
- ----------------------------------------------------------------------------------------
50,000 Liz Claiborne, Inc. 1,731,250
- ----------------------------------------------------------------------------------------
20,000 Nautica Enterprises, Inc.(a) 575,000
- ----------------------------------------------------------------------------------------
18,400 Tommy Hilfiger Corp.(a) 986,700
- ----------------------------------------------------------------------------------------
4,020,975
- ----------------------------------------------------------------------------------------
TOBACCO-1.06%
24,000 Philip Morris Companies, Inc. 2,496,000
- ----------------------------------------------------------------------------------------
35,000 RJR Nabisco Holdings Corp. 1,085,000
- ----------------------------------------------------------------------------------------
30,000 UST, Inc. 1,027,500
- ----------------------------------------------------------------------------------------
4,608,500
- ----------------------------------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-0.15%
20,000 JB Hunt Transport Services, Inc. 417,500
- ----------------------------------------------------------------------------------------
7,500 Rural/Metro Corp.(a) 256,875
- ----------------------------------------------------------------------------------------
674,375
- ----------------------------------------------------------------------------------------
TRUCKING-0.08%
12,000 American Freightways Corp.(a) 133,500
- ----------------------------------------------------------------------------------------
11,100 US Freightways Corp. 216,450
- ----------------------------------------------------------------------------------------
349,950
- ----------------------------------------------------------------------------------------
Total Domestic Common Stocks 310,936,580
========================================================================================
</TABLE>
14
<PAGE> 17
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN STOCKS-3.59%
CANADA-0.59%
22,100 Newbridge Networks Corp.(a) (Computer Networking) $ 1,447,550
- ----------------------------------------------------------------------------------------
20,400 Northern Telcom Ltd. (Telecommunications) 1,109,250
- ----------------------------------------------------------------------------------------
2,556,800
- ----------------------------------------------------------------------------------------
FRANCE-0.21%
14,000 Rhone-Poulenc Rorer, Inc.-ADR (Medical-Drugs) 939,750
- ----------------------------------------------------------------------------------------
IRELAND-0.39%
29,700 Elan Corp. PLC-ADR(a) (Medical-Drugs) 1,696,613
- ----------------------------------------------------------------------------------------
ISRAEL-0.49%
60,600 ECI Telecommunications Ltd. (Computer Networking) 1,408,950
- ----------------------------------------------------------------------------------------
18,500 Teva Pharmaceutical Industries Ltd.-ADR (Medical-Drugs) 700,687
- ----------------------------------------------------------------------------------------
2,109,637
- ----------------------------------------------------------------------------------------
JAPAN-0.27%
45,000 Honda Motor Co. (Automobile-Manufacturers) 1,168,564
- ----------------------------------------------------------------------------------------
SWEDEN-0.54%
12,000 Astra AB-A Shares (Medical-Drugs) 531,109
- ----------------------------------------------------------------------------------------
85,040 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications) 1,828,360
- ----------------------------------------------------------------------------------------
2,359,469
- ----------------------------------------------------------------------------------------
SWITZERLAND-0.22%
125 Roche Holding AG-Genuss (Medical-Drugs) 954,347
- ----------------------------------------------------------------------------------------
UNITED KINGDOM-0.88%
17,400 Danka Business Systems PLC-ADR (Office Automation) 508,950
- ----------------------------------------------------------------------------------------
145,000 Glaxo Wellcome PLC (Medical-Drugs) 1,951,273
- ----------------------------------------------------------------------------------------
25,000 SmithKline Beecham PLC-ADR (Medical-Drugs) 1,359,375
- ----------------------------------------------------------------------------------------
3,819,598
- ----------------------------------------------------------------------------------------
Total Foreign Stocks 15,604,778
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS-0.26%
RESTAURANTS-0.26%
$ 930,000 Boston Chicken, Inc., Conv. Sub. Deb., 4.50%, 02/01/04 1,113,675
- ----------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-16.31%
U.S. TREASURY BILLS(b)-16.31%
33,000,000(c) 4.90%, 07/05/96 32,982,638
- ----------------------------------------------------------------------------------------
8,700,000 4.94%, 07/11/96 8,688,062
- ----------------------------------------------------------------------------------------
29,515,000(c) 5.06%, 09/26/96 29,164,656
- ----------------------------------------------------------------------------------------
Total U.S. Treasury Securities 70,835,356
- ----------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-7.08%(d)
758,503 Daiwa Securities America Inc., 5.50%, 07/01/96(e) 758,503
- ----------------------------------------------------------------------------------------
30,000,000 Nomura Securities International Inc., 5.53%,
07/01/96(f) 30,000,000
- ----------------------------------------------------------------------------------------
Total Repurchase Agreements 30,758,503
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.85% 429,248,892
- ----------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.15% 4,978,065
- ----------------------------------------------------------------------------------------
NET ASSETS-100.00% $ 434,226,957
========================================================================================
</TABLE>
15
<PAGE> 18
Financials
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open future contracts. See Note 7.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 06/28/96 with a maturing value of
$270,069,404. Collateralized by $258,303,000 U.S. Treasury obligations,
7.875% due 11/15/07.
(f) Joint repurchase agreement entered into 06/28/96 with a maturing value of
$330,152,075. Collateralized by $335,544,000 U.S. Government and Treasury
obligations, 0.00% to 9.55% due 07/01/96 to 09/08/15.
Abbreviations:
ADR - American Depository Receipts
Conv. - Convertible
Deb. - Debentures
Sub. - Subordinated
See Notes to Financial Statements.
16
<PAGE> 19
Financials
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $364,197,518) $429,248,892
- -----------------------------------------------------------------------------------
Foreign currencies, at market value (cost $219) 223
- -----------------------------------------------------------------------------------
Receivables for:
Investments sold 3,982,002
- -----------------------------------------------------------------------------------
Fund shares sold 3,036,824
- -----------------------------------------------------------------------------------
Dividends and interest 194,032
- -----------------------------------------------------------------------------------
Variation margin 397,500
- -----------------------------------------------------------------------------------
Investment for deferred compensation plan 57,972
- -----------------------------------------------------------------------------------
Other assets 26,092
- -----------------------------------------------------------------------------------
Total assets 436,943,537
- -----------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,669,497
- -----------------------------------------------------------------------------------
Fund shares reacquired 287,601
- -----------------------------------------------------------------------------------
Deferred compensation plan 57,972
- -----------------------------------------------------------------------------------
Accrued advisory fees 242,313
- -----------------------------------------------------------------------------------
Accrued administrative service fees 5,649
- -----------------------------------------------------------------------------------
Accrued distribution fees 307,581
- -----------------------------------------------------------------------------------
Accrued trustees' fees 1,950
- -----------------------------------------------------------------------------------
Accrued transfer agent fees 50,281
- -----------------------------------------------------------------------------------
Accrued operating expenses 93,736
- -----------------------------------------------------------------------------------
Total liabilities 2,716,580
- -----------------------------------------------------------------------------------
Net assets applicable to shares outstanding $434,226,957
===================================================================================
NET ASSETS:
Class A $210,581,590
===================================================================================
Class B $223,645,367
===================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 14,605,981
===================================================================================
Class B 15,917,207
===================================================================================
Class A:
Net asset value and redemption price per share $ 14.42
===================================================================================
Offering price per share:
(Net asset value of $14.42 divided by 94.50%) $ 15.26
===================================================================================
Class B:
Net asset value and offering price per share $ 14.05
===================================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 20
Financials
STATEMENT OF OPERATIONS
For the six months ended June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $10,336 foreign withholding tax) $ 994,798
- -----------------------------------------------------------------------------------
Interest 2,102,566
- -----------------------------------------------------------------------------------
Total investment income 3,097,364
- -----------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,278,798
- -----------------------------------------------------------------------------------
Custodian fees 53,371
- -----------------------------------------------------------------------------------
Transfer agent fees-Class A 103,693
- -----------------------------------------------------------------------------------
Transfer agent fees-Class B 234,719
- -----------------------------------------------------------------------------------
Administrative service fees 33,895
- -----------------------------------------------------------------------------------
Trustees' fees 3,943
- -----------------------------------------------------------------------------------
Distribution fees-Class A 238,475
- -----------------------------------------------------------------------------------
Distribution fees-Class B 851,306
- -----------------------------------------------------------------------------------
Other 124,626
- -----------------------------------------------------------------------------------
Total expenses 2,922,826
- -----------------------------------------------------------------------------------
Net investment income 174,538
- -----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain from:
Investment securities 11,737,484
- -----------------------------------------------------------------------------------
Foreign currencies 7,332
- -----------------------------------------------------------------------------------
Futures contracts 4,530,455
- -----------------------------------------------------------------------------------
16,275,271
- -----------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 17,746,951
- -----------------------------------------------------------------------------------
Futures contracts 96,810
- -----------------------------------------------------------------------------------
Foreign currencies (32)
- -----------------------------------------------------------------------------------
17,843,729
- -----------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies and
futures contracts 34,119,000
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations $34,293,538
===================================================================================
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 21
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 and for the year ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 174,538 $ (245,146)
- ----------------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and options contracts 16,275,271 23,173,371
- ----------------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies and futures
contracts 17,843,729 36,741,565
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 34,293,538 59,669,790
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains
on investment securities, foreign currencies,
futures and options contracts:
Class A -- (9,550,061)
- ----------------------------------------------------------------------------------------
Class B -- (7,736,264)
- ----------------------------------------------------------------------------------------
Share transactions-net:
Class A 23,641,599 13,074,357
- ----------------------------------------------------------------------------------------
Class B 70,041,756 89,072,917
- ----------------------------------------------------------------------------------------
Net increase in net assets 127,976,893 144,530,739
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 306,250,064 161,719,325
- ----------------------------------------------------------------------------------------
End of period $434,226,957 $306,250,064
========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $348,646,644 $254,963,289
- ----------------------------------------------------------------------------------------
Undistributed net investment income (loss) 116,100 (58,438)
- ----------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and
options contracts 19,882,822 3,607,551
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and futures contracts 65,581,391 47,737,662
- ----------------------------------------------------------------------------------------
$434,226,957 $306,250,064
========================================================================================
</TABLE>
See Notes to Financial Statements.
19
<PAGE> 22
Financials
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Growth Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust 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 series portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class are 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 objective is to achieve long-term growth
of capital by investing primarily in the common stocks of established medium- to
large-size companies with prospects for above-average, long-term earnings
growth. Realization of current income is an incidental consideration.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations - A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the mean
of the closing bid and asked prices. Exchange listed convertible debt is
valued at the mean between the closing bid and asked prices obtained from a
broker-dealer. Debt obligations that are issued or guaranteed by the U.S.
Treasury are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued at the
mean between last bid and asked prices based upon quotes furnished by
independent sources. Securities for which market quotations either are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of
the New York Stock Exchange. Occasionally, events affecting the values of
such securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange which will
not be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value as determined in
good faith by or under the supervision of the Board of Trustees.
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 of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is
20
<PAGE> 23
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
E. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash 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 the change in the value of the contracts may not correlate with changes
in the value of the securities being hedged.
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 last sale price, or in
the absence of a sale, 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. The Fund will
not write a covered call option if, immediately thereafter, the aggregate
value of the securities underlying all such options, determined as of the
dates such options were written, would exceed 5% of the net assets of the
Fund.
21
<PAGE> 24
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 an annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. This agreement
requires AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the securities
laws or regulations thereunder of any state in which the Fund's shares are
qualified for sale.
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 June 30, 1996, AIM
was reimbursed $33,895 for such services.
The Fund, pursuant to a transfer agency and shareholder service agreement, has
agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer
agency and shareholder services to the Fund. During the six months ended June
30, 1996, AFS was paid $201,198 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Trust has adopted Plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares (the "Class A Plan") and with respect to the Fund's Class B shares (the
"Class B Plan")(collectively, the "Plans"). The Fund, pursuant to the Class A
Plan, pays AIM Distributors compensation at an annual rate of 0.25% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs and provides for payments to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class A shares of the Fund. The Fund, pursuant to
the Class B Plan, pays AIM Distributors compensation at an annual rate of 1.00%
of the average daily net assets attributable to the Class B shares. Of this
amount, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee under such
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges, that may be
paid by the respective classes. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more assignees, its rights to all or a portion of
(a) compensation received by AIM Distributors from the Fund pursuant to the
Class B Plan (but not AIM Distributors' duties and obligations pursuant to Class
B Plan) and (b) any contingent deferred sales charges payable to AIM
Distributors related to Class B shares. During the six months ended June 30,
1996, the Class A shares and the Class B shares paid AIM Distributors $238,475
and $851,306, respectively, as compensation under the Plans.
AIM Distributors received commissions of $139,109 from sales of the Class A
shares of the Fund during the six months ended June 30, 1996. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended June 30,
1996, AIM Distributors received $54,401 in contingent deferred sales charges
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AIM Distributors and AFS.
During the six months ended June 30, 1996, the Fund paid legal fees of $1,630
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
22
<PAGE> 25
Financials
NOTE 4 - BANK BORROWINGS
The Fund has a $3,400,000 committed line of credit with a syndicate administered
by The Chase Manhattan Bank d/b/a Chemical Bank. Interest on borrowings under
the line of credit is payable on maturity or prepayment date. During the six
months ended June 30, 1996, the Fund did not borrow under the line of credit
agreement. The Fund is charged a commitment fee, payable quarterly, at the rate
of 1/10 of 1% per annum on the unused balance of the Fund's committed line.
Effective July 19, 1996, the Fund may borrow up to the lesser of i)
$325,000,000 or ii) the limits set by its prospectus for borrowings under the
line of credit administered by The Chase Manhattan d/b/a Chemical Bank. The Fund
and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first serve basis.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 1996 was
$206,934,169 and $156,658,813, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $69,976,604
- -----------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (4,938,952)
- -----------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $65,037,652
===================================================================================
Cost of investments for tax purposes is $364,211,240.
</TABLE>
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 1996 and the
year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
<S> <C> <C> <C> <C>
------------------------------ -----------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- ------------
Sold:
Class A 7,105,077 $ 97,255,455 11,797,896 $152,090,445
- ------------------------------------------------------------------------------------------------
Class B 7,067,829 96,393,962 7,675,619 97,224,008
- ------------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A -- -- 714,727 9,127,169
- ------------------------------------------------------------------------------------------------
Class B -- -- 577,277 7,221,770
- ------------------------------------------------------------------------------------------------
Reacquired:
Class A (5,389,121) (73,613,856) (11,562,734) (148,143,257)
- ------------------------------------------------------------------------------------------------
Class B (1,956,368) (26,352,206) (1,213,971) (15,372,861)
- ------------------------------------------------------------------------------------------------
6,827,417 $ 93,683,355 7,988,814 $102,147,274
================================================================================================
</TABLE>
NOTE 7 - OPEN FUTURES CONTRACTS
On June 30, 1996, $2,945,000 principal amount of U.S. Treasury bills were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts at June 30, 1996 were as follows:
<TABLE>
<CAPTION>
NO. OF UNREALIZED
CONTRACT CONTRACTS MONTH COMMITMENT APPRECIATION
<S> <C> <C> <C> <C>
S&P 500 212
Index contracts Sept 96 Buy $530,000
=======================================================================
</TABLE>
23
<PAGE> 26
Financials
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during the six months ended June 30, 1996 and each of the years in
the nine-year period ended December 31, 1995 and for a Class B share outstanding
during the six months ended June 30, 1996, each of the years in the two-year
period ended December 31, 1995 and the period September 1, 1993 (date sales
commenced) through December 31, 1993.
<TABLE>
<CAPTION>
December 31,
June 30, --------------------------------------------------------------------
1996 1995 1994 1993 1992(a) 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 13.05 $ 10.32 $ 11.32 $ 12.28 $ 14.73 $ 12.35 $ 13.92
- -------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.03 0.02 -- -- 0.06 0.11 0.21
- -------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 1.34 3.50 (0.57) 0.41 (0.04) 4.33 (0.91)
- -------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 1.37 3.52 (0.57) 0.41 0.02 4.44 (0.70)
- -------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- -- (0.06) (0.13) (0.20)
- -------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Distributions from capital gains -- (0.79) (0.43) (1.37) (2.41) (1.93) (0.67)
- -------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions -- (0.79) (0.43) (1.37) (2.47) (2.06) (0.87)
- -------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 14.42 $ 13.05 $ 10.32 $ 11.32 $ 12.28 $ 14.73 $ 12.35
============================================ ======== ======== ======== ======== ======== ======== ========
Total return(b) 10.50% 34.31% (4.99)% 3.64% 0.19% 37.05% (5.04)%
============================================ ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $210,582 $168,217 $123,271 $146,723 $168,395 $185,461 $153,245
============================================ ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.18%(c) 1.28% 1.22% 1.17% 1.17% 1.21% 1.16%
============================================ ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average
net assets 0.50%(c) 0.20% 0.02% 0.02% 0.42% 0.73% 1.41%
============================================ ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 48% 87% 201% 192% 133% 73% 61%
============================================ ======== ======== ======== ======== ======== ======== ========
<CAPTION>
December 31,
-----------------------------------
1989 1988 1987
-------- -------- ---------
<S> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 11.93 $ 11.04 $ 12.91
- -------------------------------------------- -------- -------- --------
Income from investment operations:
Net investment income 0.25 0.23 0.24
- -------------------------------------------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 3.16 0.89 0.30
- -------------------------------------------- -------- -------- --------
Total from investment operations 3.41 1.12 0.54
- -------------------------------------------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.27) (0.23) (0.31)
- -------------------------------------------- -------- -------- --------
Distributions from capital gains (1.15) -- (2.10)
- -------------------------------------------- -------- -------- --------
Total distributions (1.42) (0.23) (2.41)
- -------------------------------------------- -------- -------- --------
Net asset value, end of period $ 13.92 $ 11.93 $ 11.04
============================================ ======== ======== ========
Total return(b) 28.87% 10.13% 3.62%
============================================ ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $187,805 $180,793 $203,329
============================================ ======== ======== ========
Ratio of expenses to average net assets 1.00% 0.98% 0.84%
============================================ ======== ======== ========
Ratio of net investment income to average
net assets 1.62% 1.73% 1.51%
============================================ ======== ======== ========
Portfolio turnover rate 53% 38% 78%
============================================ ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges and for periods less than one year
are not annualized.
(c) Ratios are annualized and based on average net assets of $192,294,304.
<TABLE>
<CAPTION>
DECEMBER 31,
June 30, ---------------------------------
1996 1995 1994 1993
-------- ------- ------- -------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 12.77 $ 10.21 $ 11.31 $ 12.83
- ----------------------------------------------------------------------- -------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.02) (0.08)(a) (0.06) (0.01)
- ----------------------------------------------------------------------- -------- ------- ------- -------
Net gains (losses) on securities (both realized and unrealized) 1.30 3.43(a) (0.61) (0.14)
- ----------------------------------------------------------------------- -------- ------- ------- -------
Total from investment operations 1.28 3.35 (0.67) (0.15)
- ----------------------------------------------------------------------- -------- ------- ------- -------
Less distributions:
Distributions from capital gains -- (0.79) (0.43) (1.37)
- ----------------------------------------------------------------------- -------- ------- ------- -------
Total distributions -- (0.79) (0.43) (1.37)
- ----------------------------------------------------------------------- -------- ------- ------- -------
Net asset value, end of period $ 14.05 $ 12.77 $ 10.21 $ 11.31
======================================================================= ======== ======== ======== =======
Total return(b) 10.02% 33.00% (5.88)% (0.92)%
======================================================================= ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $223,645 $138,034 $ 38,448 $11,053
======================================================================= ======== ======== ======== =======
Ratio of expenses to average net assets 2.02%(c) 2.13% 2.18% 1.91%(d)
======================================================================= ======== ======== ======== =======
Ratio of net investment income (loss) to average net assets (0.34)%(c) (0.65)% (0.94)% (0.72)%(d)
======================================================================= ======== ======== ======== =======
Portfolio turnover rate 48% 87% 201% 192%
======================================================================= ======== ======== ======== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns do not reflect deduction of contingent deferred sales charges
and are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $178,156,512.
(d) Annualized.
24
<PAGE> 27
Trustees & Officers
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Formerly Director, President, and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Gary T. Crum Houston, TX 77046
Director Senior Vice President
Cortland Trust Inc. TRANSFER AGENT
Scott G. Lucas
Carl Frischling Senior Vice President A I M Fund Services, Inc.
Partner P. O. Box 4739
Kramer, Levin, Naftalis & Frankel Carol F. Relihan Houston, TX 77210-4739
Senior Vice President and Secretary
Robert H. Graham CUSTODIAN
President and Chief Operating Officer Robert G. Alley
A I M Management Group Inc. Vice President State Street Bank & Trust Company
225 Franklin Street
John F. Kroeger Stuart W. Coco Boston, MA 02110
Formerly Consultant Vice President
Wendell & Stockel Associates, Inc. COUNSEL TO THE FUND
Melville B. Cox
Lewis F. Pennock Vice President Ballard Spahr
Attorney Andrews & Ingersoll
Karen Dunn Kelley 1735 Market Street
Ian W. Robinson Vice President Philadelphia, PA 19103
Consultant; Formerly Executive
Vice President and Jonathan C. Schoolar COUNSEL TO THE TRUSTEES
Chief Financial Officer Vice President
Bell Atlantic Management Kramer, Levin, Naftalis & Frankel
Services, Inc. Dana R. Sutton 919 Third Avenue
Vice President and Assistant Treasurer New York, NY 10022
Louis S. Sklar
Executive Vice President P. Michelle Grace DISTRIBUTOR
Hines Interests Assistant Secretary
Limited Partnership A I M Distributors, Inc.
David L. Kite 11 Greenway Plaza
Assistant Secretary Suite 1919
Houston, TX 77046
Nancy L. Martin
Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
[PHOTO OF 11 GREENWAY PLAZA] THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE
OF SAFETY
AIM Intermediate Government Fund**
HIGH DEGREE OF SAFETY AND
CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND
CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND
CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
AIM Management Group has provided leadership
in the mutual fund industry since 1976 and
currently manages approximately $55 billion *AIM Aggressive Growth Fund was closed to new
in assets for more than 3 million investors on July 18, 1995. **On September 25,
shareholders, including individual investors, 1995, AIM Government Securities Fund became AIM
corporate clients, and financial institutions. Intermediate Government Fund. For more complete
The AIM Family of Funds--Registered Trademark-- information about any AIM Fund(s), including
is distributed nationwide, and AIM today sales charges and expenses, ask your financial
ranks among the nation's top 15 mutual fund consultant or securities dealer for a free
companies in assets under management, according prospectus(es). Please read the prospectus(es)
to Lipper Analytical Services, Inc. carefully before you invest or send money.
----------------------
BULK RATE
[AIM LOGO APPEARS HERE] U.S. POSTAGE
PAID
A I M Distributors, Inc. HOUSTON, TX
11 Greenway Plaza, Suite 763 Permit No. 1919
Houston, TX 77046 ----------------------
</TABLE>
